New Frontier Media Reports Fiscal 2010 Second Quarter Results

New Frontier Media Reports Fiscal 2010 Second Quarter Results

BOULDER, Colo., Nov. 9 /PRNewswire-FirstCall/ -- New Frontier Media, Inc. (NASDAQ:NOOF) , a leading provider of transactional television and the international distribution of independent general motion picture entertainment, today reported its results for the fiscal 2010 second quarter and six month period ended September 30, 2009.

"New Frontier Media improved net income by 22% during the second quarter of fiscal year 2010 as compared to the first quarter results in the same fiscal year," said Michael Weiner, chief executive officer of New Frontier Media, Inc. "Although our second quarter net income is lower by $0.3 million as compared to the same prior year quarter, we are continuing to gain momentum with our Transactional TV segment's international distribution initiative, and our Film Production segment has identified new opportunities due to our ability to react quickly, leverage our customer relationships and fund productions with existing cash on hand, giving us a strong pipeline of large production deals."

Mr. Weiner continued, "We had approximately $17.3 million in cash and investments as of September 30, 2009, and the Company generated cash flow from operations during the first half of the fiscal year of $2.2 million after spending $2.0 million of cash for the Film Production segment's producer-for-hire services which we expect to recover later in the current fiscal year. New Frontier Media continues to generate solid results and pursue new opportunities for growth. Overall, the Company is executing upon its long-term objectives. We are growing our distribution in a number of countries outside the U.S. using the same business model that has proven successful in the U.S., and at the same time diversifying into the distribution of mainstream content domestically. We expect these efforts will provide a stable and long-term growth path for the Company."

Second Fiscal Quarter Financial Highlights: September 30, 2009 Compared to September 30, 2008

   --  Revenue was $11.4 million for the quarter as compared to $13.4 million       in the same prior year quarter and reflected the following results:       --  Transactional TV segment revenue was $9.3 million as compared to           $10.8 million in the same prior year quarter.  Video-on-demand           ("VOD") revenue was $5.0 million as compared to $5.6 million in           the same prior year period and declined as a result of lower           domestic revenue.  Pay-per-view ("PPV") revenue was $4.2 million           as compared to $5.0 million in the same prior year quarter, and           revenue was also lower from a decline in domestic revenue.  We           believe this decline in domestic revenue is due to the economic           downturn and corresponding reduction in consumer buys.   Partially           offsetting the declines in domestic VOD and PPV revenue was           international VOD revenue of $0.6 million and international PPV           revenue of $0.2 million.       --  Film Production segment revenue decreased to $1.7 million from           $2.2 million in the same prior year quarter.  Owned content           revenue declined from $1.7 million to $1.2 million primarily           because the prior year quarter results included revenue from the           delivery of titles to premium cable channel customers including           the partial delivery of titles from an episodic series. Repped           content revenue increased to approximately $0.5 million from $0.3           million in the same prior year quarter primarily as a result of           the new distribution of mainstream repped content on domestic VOD           platforms and through retail DVD markets.       --  Direct-to-Consumer segment revenue declined to $0.3 million from           $0.4 million in the same prior year quarter due to a reduction in           website traffic which we also believe is primarily related to the           economic downturn.   --  Cost of sales declined to $4.2 million from $4.4 million and was       primarily impacted by:       --  a $0.3 million decline in the Film Production segment's film cost           amortization related to lower owned content revenue; and       --  an increase of $0.1 million in Direct-to-Consumer segment costs           primarily associated with internet traffic purchases and employee           costs incurred in an effort to improve our website membership           revenue.   --  Operating expenses declined to $5.5 million as compared to $6.8       million due to the following:       --  a $0.5 million reduction in Corporate Administration segment           expenses from lower third-party advisor fees, legal fees, employee           costs and travel related costs as a result of general cost           reduction efforts;       --  a $0.4 million reduction in Direct-to-Consumer segment expenses           from the restructuring of new product initiative operations in the           fourth quarter of fiscal year 2009;       --  a $0.1 million decline in Film Production segment expenses from           lower recoupable cost impairment and bad debt charges as well as a           reduction in employee costs; and       --  a $0.1 million decline in Transactional TV segment advertising and           promotion costs.    --  Net income for the quarter was $1.0 million, or $0.05 per share, as       compared to $1.3 million, or $0.06 per share, in the same prior year       quarter.    

Fiscal Year to Date Financial Highlights: September 30, 2009 Compared to September 30, 2008

For the six month period ended September 30, 2009, net sales were $23.9 million as compared to $26.4 million in the same prior year period. The Company reported net income during the six month period ended September 30, 2009 of $1.8 million, or $0.09 per share, compared to net income of $2.5 million, or $0.11 per share, in the same prior year period. Cash flow from operations during the six month period ended September 30, 2009 was $2.2 million as compared to $6.0 million during the same prior year period. Cash flow from operations during the six month period ended September 30, 2009 reflects $2.0 million of cash outflows related to producer-for-hire services which we expect to fully recover during the fourth quarter of fiscal year 2010.

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, 2009 and 2008. The Company's EBITDA and Adjusted EBITDA may not be calculated the same as other companies using those same terms. The Company believes these measures provide useful information regarding the Company's financial performance 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. The Company's EBITDA is calculated as net income plus depreciation, amortization, and income taxes, plus or minus other income (expense); and the Company's Adjusted EBITDA is calculated as EBITDA less cash paid for content, plus 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 (877) 941-6010. 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 November 9, 2009 at (800) 406-7325, access code 4180598. 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 as well as video-on-demand services to cable and satellite operators world-wide. These services reach over 229 million network homes. 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® and Showtime®, 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 the globe.

The Company is headquartered in Boulder, Colorado, and its common stock is listed on the Nasdaq Global Select Market under the symbol "NOOF." For more information about New Frontier Media, Inc. please contact Grant Williams, Chief Financial Officer, at (303) 444-0900, extension 2185, or visit our web site at www.noof.com.

   Company Contact:   Grant Williams   Chief Financial Officer   (303) 444-0900 x 2185   gwilliams@noof.com       Consolidated Operating Results   (in thousands, except per share amounts)                                    (Unaudited)         (Unaudited)                                   Three Months         Six Months                                Ended September 30, Ended September 30,                                ------------------- -------------------                                   2009     2008     2009     2008                                   ----     ----     ----     ----    Net sales                     $11,388  $13,375  $23,892  $26,436    Cost of sales                   4,200    4,429    8,826    8,358                                   -----    -----    -----    -----    Gross margin                    7,188    8,946   15,066   18,078    Operating expenses excluding    impairment charges             5,528    6,735   11,995   13,881   Asset impairment charges            -       65       28       65                                      --       --       --       --   Total operating expenses        5,528    6,800   12,023   13,946                                   -----    -----   ------   ------    Operating income                1,660    2,146    3,043    4,132    Other income (expense)            (46)       9     (115)      31                                     ---      ---     ----      ---    Income before provision for    income taxes                   1,614    2,155    2,928    4,163    Provision for income taxes       (608)    (860)  (1,095)  (1,689)                                    ----     ----   ------   ------    Net income                     $1,006   $1,295   $1,833   $2,474                                  ======   ======   ======   ======    Basic income per share          $0.05    $0.06    $0.09    $0.11                                   =====    =====    =====    =====    Diluted income per share        $0.05    $0.06    $0.09    $0.11                                   =====    =====    =====    =====    Average outstanding shares    of common stock               19,494   23,202   19,494   23,445                                  ======   ======   ======   ======    Common stock and common    stock equivalents             19,498   23,216   19,498   23,474                                  ======   ======   ======   ======     EBITDA and Adjusted EBITDA                                     (Unaudited)           (Unaudited)                                   Three Months           Six Months                                Ended September 30,   Ended September 30,                                -------------------   -------------------                                   2009     2008         2009     2008                                   ----     ----         ----     ----    Net Income                     $1,006   $1,295       $1,833   $2,474    Adjustments:     Other income (expense)           46       (9)         115      (31)     Provision for income taxes      608      860        1,095    1,689     Depreciation and      amortization                 2,152    2,396        4,616    4,575                                   -----    -----        -----    -----   EBITDA                          3,812    4,542        7,659    8,707     Cash paid for content(1)     (1,852)  (2,282)      (2,937)  (3,671)     Asset impairment charges          -       65           28       65                                      --       --           --       --   Adjusted EBITDA                $1,960   $2,325       $4,750   $5,101                                  ======   ======       ======   ======    (1) Amount includes total cash paid for prepaid distribution rights and       capitalized film costs.      Consolidated Balance Sheets   (in thousands)                                      September 30, 2009   March 31, 2009                                     ------------------   --------------   Assets                               (Unaudited)   Current assets:     Cash and cash      equivalents                          $16,303            $16,049     Restricted cash                            93                 16     Marketable securities                   1,000                 90     Accounts receivable,      net                                    9,741             10,242     Deferred producer-for-      hire costs                             2,049                 60     Taxes receivable                          761                683     Deferred tax assets                       434                358     Prepaid and other      assets                                 1,732              1,592                                             -----              -----   Total current assets                     32,113             29,090                                            ------             ------   Equipment and    furniture, net                           5,130              5,573   Prepaid distribution    rights, net                             11,015             10,933   Recoupable costs and    producer advances, net                   4,625              4,999   Film costs, net                           6,181              6,672   Goodwill                                  8,599              8,599   Other identifiable    intangible assets, net                   1,265              1,630   Other assets                              1,048              1,043                                             -----              -----   Total assets                            $69,976            $68,539                                           =======            =======    Liabilities and shareholders' equity   Current liabilities:     Accounts payable                       $2,018             $2,144     Producers payable                         784                950     Deferred revenue                          789                737     Accrued compensation                    1,719              1,188     Deferred producer      liabilities                            2,088              1,970     Short-term debt                         3,500              4,000     Accrued other      liabilities                            1,435              2,112                                             -----              -----   Total current    liabilities                             12,333             13,101                                            ------             ------   Deferred tax liabilities                  1,007                903   Taxes payable                               309                242   Other long-term    liabilities                                575                718                                               ---                ---   Total liabilities                        14,224             14,964                                            ------             ------    Commitments and contingencies    Shareholders' equity:     Common stock                                2                  2     Additional paid-in      capital                               54,963             54,702     Retained earnings      (accumulated deficit)                    836               (997)     Accumulated other      comprehensive loss                       (49)              (132)                                               ---               ----   Total shareholders'    equity                                  55,752             53,575                                            ------             ------     Total liabilities and      shareholders' equity                 $69,976            $68,539                                           =======            =======      Consolidated Statements of Cash Flows   (in thousands)                                           (Unaudited)                                                         Six Months Ended                                                           September 30,                                                        -------------------                                                           2009     2008                                                           ----     ----   Cash flows from operating activities:   Net income                                             $1,833   $2,474     Adjustments to reconcile net income to net cash      provided by operating activities:     Depreciation and amortization                         4,616    4,575     Share-based compensation                                333      537     Deferred taxes                                          (16)     (99)     Asset impairment charges                                 28       65   Changes in operating assets and liabilities       Accounts receivable                                   501    2,680       Accounts payable                                      (51)    (263)       Prepaid distribution rights                        (1,982)  (2,504)       Film costs                                           (955)  (1,167)       Deferred costs - producer-for-hire                 (1,989)       -       Deferred revenue                                       52      273       Producers payable                                    (166)     (55)       Taxes receivable and payable                          (10)   1,184       Recoupable costs and producer advances                346   (1,517)       Accrued compensation                                  531     (369)       Other assets and liabilities                         (886)     170                                                            -----    -----         Net cash provided by operating activities         2,185    5,984                                                           -----    -----    Cash flows from investing activities:     Purchase of marketable securities                    (1,000)  (1,730)     Redemption of marketable securities                      90    1,184     Purchases of equipment and furniture                   (432)  (2,222)     Purchases of intangible assets                          (18)    (688)     Payment of related party note arising from      business acquisition                                     -      (21)                                                           ------   ------         Net cash used in investing activities            (1,360)  (3,477)                                                          ------   ------    Cash flows from financing activities:     Purchases of common stock                                 -   (4,303)     Payment of dividends                                      -   (2,982)     Payments on short-term debt                            (500)       -     Payment of long-term seller financing                   (75)       -                                                             ----   ------         Net cash used in financing activities              (575)  (7,285)                                                            ----   ------    Net increase (decrease) in cash and cash equivalents      250   (4,778)   Effect of exchange rate changes on cash and cash    equivalents                                                4       (3)   Cash and cash equivalents, beginning of period         16,049   18,325                                                          -------  -------   Cash and cash equivalents, end of period              $16,303  $13,544                                                         =======  =======      Segment Summary Data (1)   (in millions)                           (Unaudited)             (Unaudited)                        Three Months Ended       Six Months Ended                           September 30,           September 30,                           ------------            ------------                                            %                       %                           2009    2008   change   2009    2008   change                           ----    ----   ------   ----    ----   ------    Net sales     Transactional TV      $9.3   $10.8     -14%  $19.0   $21.3     -11%     Film Production        1.7     2.2     -23%    4.3     4.2       2%     Direct-to-Consumer     0.3     0.4     -25%    0.7     0.9     -22%                            ---     ---             ---     ---       Total net sales     11.4    13.4     -15%   23.9    26.4      -9%                           ----    ----            ----    ----    Cost of sales     Transactional TV       2.9     2.9       0%    5.9     5.5       7%     Film Production        0.7     1.0     -30%    1.8     1.9      -5%     Direct-to-Consumer     0.6     0.5      20%    1.1     0.9      22%                            ---     ---             ---     ---       Total cost of        sales               4.2     4.4      -5%    8.8     8.4       5%                            ---     ---             ---     ---    Operating expenses     Transactional TV       2.3     2.4      -4%    5.0     4.8       4%     Film Production        1.0     1.1      -9%    2.0     2.4     -17%     Direct-to-Consumer     0.1     0.5     -80%    0.3     1.1     -73%     Corporate      Administration        2.2     2.7     -19%    4.7     5.6     -16%                            ---     ---             ---     ---       Total operating        expenses            5.5     6.8     -19%   12.0    13.9     -14%                            ---     ---            ----    ----    Operating income (loss)     Transactional TV       4.1     5.5     -25%    8.1    11.0     -26%     Film Production        0.1       -       #     0.4       -       #     Direct-to-Consumer    (0.4)   (0.7)     43%   (0.8)   (1.2)     33%     Corporate      Administration       (2.2)   (2.7)     19%   (4.7)   (5.6)     16%                           ----    ----            ----    ----       Total operating        income             $1.7    $2.1     -19%   $3.0    $4.1     -27%                           ====    ====            ====    ====    (1) Amounts in this schedule may not sum due to rounding.    # Represents an increase or decrease in excess of 100%.      Supplemental Revenue Data (1)   (in millions)                             (Unaudited)                (Unaudited)                         Three Months Ended          Six Months Ended                            September 30,              September 30,                           --------------             --------------                                              %                         %                           2009      2008   change    2009      2008  change                           ----      ----   ------    ----      ---- --------    Transactional TV   VOD                     $5.0      $5.6    -11%     $10.1     $10.8     -6%   PPV                      4.2       5.0    -16%       8.5      10.0    -15%   Other                    0.2       0.2      0%       0.4       0.4      0%                            ---       ---               ---       ---     Total                 $9.3     $10.8    -14%     $19.0     $21.3    -11%                           ====     =====             =====     =====    Film Production   Owned content           $1.2      $1.7    -29%      $3.2      $3.4     -6%   Repped content           0.5       0.3     67%       1.0       0.7     43%   Other                      -       0.1      #        0.1       0.2    -50%                              -       ---               ---       ---     Total                 $1.7      $2.2    -23%      $4.3      $4.2      2%                           ====      ====              ====      ====    Direct-to-Consumer   Net membership          $0.3      $0.3      0%      $0.6      $0.7    -14%   Other                      -       0.1      #        0.1       0.1      0%                            ---       ---               ---       ---     Total                 $0.3      $0.4    -25%      $0.7      $0.9    -22%                           ====      ====              ====      ====    (1) Amounts in this schedule may not sum due to rounding.    # Represents an increase or decrease in excess of 100%.  

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

Web Site: http://www.noof.com/

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Profile: International Entertainment