CONTACT:
Andy Wrobel
Chief Financial Officer
NTN Communications, Inc.
(760) 930-1177
Andy.Wrobel@ntn.com
NTN COMMUNICATIONS ANNOUNCES RESULTS
FOR SECOND QUARTER 2005
Second Quarter Highlights:
o iTV Hospitality Network Registers Highest Q2 Domestic Site Growth in
Company History, and Ends Quarter at All-Time High of 3,832 Sites
o Buzztime(R) Mobile Game Distribution is Broadened to Sprint PCS, Verizon
Wireless and Alltel Mobile Phone Subscribers
o NTN Software Solutions Signs Major National Account Agreement
o NTN Communications Joins Russell Microcap Index
CARLSBAD, CA, August 8, 2005 - NTN Communications, Inc. (AMEX: NTN), a leader in
interactive communications and entertainment products for the home and for the
hospitality industry, today announced results for the second quarter ended June
30, 2005. NTN will host a live webcast and conference call today at 4:15 pm EDT
to discuss the results (see conference call details below).
Second Quarter 2005 Results
- ---------------------------
Consolidated Results
Consolidated revenues for the second quarter of 2005 increased by $1.1 million
or 12.9% to $9.63 million, compared to revenues of $8.53 million in the second
quarter of 2004. The company reported a consolidated net loss of $1,092,000, or
$(0.02) per common share for the Q2 2005 period, which was an $18,000 increase
over the net loss of $1,074,000, or $(0.02) per common share in the Q2 2004
period. The 2005 consolidated net loss represented the combination of a net loss
of $99,000 from the NTN Hospitality Technologies division and a net loss of
$993,000 from NTN's Buzztime subsidiary.
Consolidated EBITDA improved by $82,000 to negative $23,000 in the three months
ended June 30, 2005 from EBITDA of negative $105,000 in the three months ended
June 30, 2004.
Both EBITDA and Net Income for the 2005 second quarter included $307,000 due to
costs incurred for the launch of our iTV Hospitality Network in the UK, while
there were no comparable costs last year. In contrast, both EBITDA and Net
Income in last year's second quarter benefited from the Company's receipt of
$225,000 for a one-time legal settlement. Thus, in comparison, net income from
equivalent operations improved by $514,000 over Q2 2004, rather than decreasing;
and 2005 Q2 EBITDA from equivalent operations improved an additional $532,000,
or $614,000, over last year's second quarter results.
Consolidated revenues for the first six months of 2005 increased by $1.76
million or 10.2% to $19,136,000, compared to the $17,372,000 in the first six
months of 2004.
Hospitality Technologies Division Results
Revenues for the Hospitality Technologies division increased by $908,000 or 11%,
to $9,397,000 in the second quarter of 2005, compared to revenues of $8,489,000
in the second quarter of 2004. The revenue growth arose primarily from the NTN
iTV Network both domestically and in Canada.
NTN iTV Network's net site growth of 118 sites in North America in the second
quarter of 2005 was the strongest second quarter net site growth in the company
history. The quarter ended with a record North America site count of 3,832 which
was 364 sites higher than at June 30, 2004.
Management attributes the strong site growth during the first six months of 2005
to the launch of its new NTN Blast(TM) content, including the Texas Hold `em
poker game, and a restructured sales force. The growth came on second quarter
sales of 323 new subscribers, and six-month sales of 672 new subscribers. The
six-month sales number is a 44% improvement over sales in the first six months
of 2004, when Blast was announced, and 97% above the first six month average
sales for the five prior years. As revenues in the iTV Network segment are
derived monthly, most revenues as a result of this six-month sales increase will
be realized in future quarters.
The NTN Hospitality Technologies division's net loss of $99,000 in the second
quarter of 2005 compares to a net profit of $25,000 in the second quarter of
2004. Within the Hospitality Technologies division, the three segments reported
the following revenue and income contributions:
Three Months Ended June 30,
2005 2004
---- ----
Revenues by Segment:
NTN iTV Network $ 6,920,000 $ 6,029,000
NTN Wireless 1,504,000 1,551,000
Software Solution 973,000 909,000
----------- -----------
Hospitality Technologies Division Revenues $ 9,397,000 $ 8,489,000
=========== ===========
Income (Loss) by Segment:
NTN iTV Network $ 82,000 $ 420,000
NTN Wireless 240,000 115,000
Software Solutions (421,000) (510,000)
----------- -----------
Hospitality Technologies Division Income (Loss) $ (99,000) $ 25,000
============ ===========
a) Net Income of the NTN iTV Network segment declined $338,000, primarily as a
result of the $534,000 attributed to the UK launch and the one-time legal
settlement in 2004 noted above. Without these items, net income would have
increased by $196,000 in the second quarter. The Company continues to invest in
its UK initiative, with pro-active sales efforts having begun in July 2005
following a four-month trial period.
b) Net Income in the Wireless Segment increased by $125,000 due to higher
margins on its product sales and the absence of legal costs compared to Q2 2004.
c) Net Loss in the Software Solutions segment improved by $89,000, due primarily
to the sale of some of the segment's software products to Intura Solutions LP in
Q1 2005. During the second quarter, the Company signed an agreement with a
national hospitality operator that is expected to bring the company over $1
million in licensing revenues in the coming 12 months. In addition, the Company
is aggressively seeking to increase points of distribution of its hospitality
products via software resellers, and has increased reseller relationships from
zero at the beginning of 2005 to 22 at the end of six months, with a goal of
growing this number to achieve a revenue run rate that exceeds the operating
costs of this segment.
Buzztime Subsidiary Results
Buzztime revenues increased by $193,000 to $232,000 in the second quarter of
2005, from $39,000 in the second quarter of 2004. The primary components of the
$193,000 revenue increase were subscription revenues and royalties on game
products as the Company recognized its first licensing revenues, summing to
$100,000, from sales of the new Buzztime Home Trivia System as well as an
increase in revenues from mobile and satellite TV distribution.
The net loss for Buzztime was $993,000 in the second quarter of 2005, a
reduction of $106,000 from the net loss of $1,099,000 in the second quarter of
2004.
Management believes that Buzztime results for the second half of the year will
be impacted by higher license revenues from sales of its Buzztime Home Trivia
System product and lower costs associated with building its business. During the
second quarter, Buzztime received the first royalty payment from its game and
toy licensee, Cadaco Inc., from the sale of the new Buzztime Home Trivia System
plug-and-play electronic game. Cadaco has achieved broad distribution of this
new game in stores across the U.S., and is scheduled to be in 9,000 North
America retail outlets including Wal-Mart, Kmart, Target, Toys R Us, Sears and
others by the end of September 2005 in preparation for holiday sales. The
Company believes that royalties from the sale of this new product will bring a
substantial growth in Buzztime revenues in Q4, ending December 31, 2005.
"We are very pleased with the state of the Company's operations," stated
chairman and CEO Stanley B. Kinsey. "Though our progress is not entirely
apparent in the current quarter's results, we are seeing positive trends in our
operations that are in line with our expectations, especially investment
initiatives where we have a goal of driving increased revenues over the next
several quarters."
A detailed schedule reconciling net income and loss, the nearest GAAP measure,
to EBITDA is included in the supplemental tables below. EBITDA is included
herein because management believes that certain investors find it to be a useful
tool for measuring a company's operating performance. EBITDA should be
considered in addition to results prepared in accordance with GAAP but should
not be considered a substitute for, or superior to, GAAP results. Non-GAAP
financial information such as EBITDA, by its nature, departs from traditional
accounting conventions; accordingly, its use can make it difficult to compare
NTN's current results with results from other reporting periods and with the
results of other companies.
Conference Call
A conference call to review the second quarter earnings is scheduled for today
at 4:15 pm EDT. Investors may access the teleconference call by dialing (800)
540-0559 and approximately 15 minutes prior to the starting time and ask to be
connected to the NTN Communications Second Quarter Earnings Conference Call.
International callers please dial 785-832-1508. This call is also being
simultaneously webcast and can be accessed at NTN Communications' web site at
www.ntn.com. A replay will be available beginning on immediately following the
conclusion of the conference call through August 22, 2005 at 11:59 p.m. EST.
Please dial (888)562-0906 to access the replay. International callers please
dial (402) 220-7348. An archive of the webcast will also be available on the
Company's Web site at www.ntn.com.
About NTN Communications, Inc.
Based in Carlsbad, CA, NTN Communications, Inc. is the parent corporation of the
NTN Hospitality Technologies(TM) division and Buzztime Entertainment, Inc., a
subsidiary. The NTN Hospitality Technologies segment, which focuses on the
out-of-home hospitality industries, is comprised of the NTN interactive
Television (iTV) Network, NTN Wireless Communications, Inc., and NTN Software
Solutions, Inc. Buzztime Entertainment, Inc. produces Buzztime(R), the
play-along games channel, live sports prediction games such as QB1(R) and many
other games that allow one or many players to participate. In addition to the
NTN iTV Network, Buzztime's games are available on cable TV, satellite TV,
mobile phones and plug-n-play home versions. For more information, please see
www.ntn.com.
This release contains forward-looking statements which reflect management's
current views of future events and operations, including, but not limited to,
future expansion in the hospitality and cable industry as well as in the
satellite, mobile and in-home retail markets, changes in business lines such as
the reduction in losses, anticipated license revenues and engagement of
independent resellers for Software Solutions, ongoing sales growth in the iTV
Network, expected reductions in the cost of a site installation in the iTV
Network, and consummation of contracts, are all based on current expectations
and assumptions that are subject to risks and uncertainties that could cause
actual results to differ materially. These risks and uncertainties include the
risk of changing economic conditions, failure of product demand or market
acceptance of both existing and new products, delays in closing of sales or
agreements, unforeseen and uncontrollable increases in expenses or costs and the
impact of competitive products and pricing. Other important factors that may
cause actual results to differ materially from the forward-looking statements
are discussed in the "Risk Factors" section and other sections of NTN's Form
10-K/A for the year ended December 31, 2004, which is on file with the
Securities and Exchange Commission. All forward-looking statements included in
this release are based on information available to us on the date hereof. These
statements speak only as of the date hereof, and NTN does not undertake to
publicly update or revise any of its forward-looking statements even if
experience or future changes show that the indicated results or events will not
be realized.
For additional free information on NTN Communications at no charge,
please call 1-800-PRO-INFO and enter ticker symbol NTN
-- Tables to Follow -
NTN COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
JUNE 30,
2005 DECEMBER 31,
(UNAUDITED) 2004
-------------- --------------
Current assets:
Cash and cash equivalents $ 4,647,000 $ 6,710,000
Restricted cash 65,000 66,000
Accounts receivable, net 3,609,000 3,405,000
Investment available-for-sale 422,000 304,000
Inventory 411,000 399,000
Deposits on broadcast equipment 653,000 534,000
Deferred costs 1,041,000 960,000
Prepaid expenses and other current assets 1,168,000 1,128,000
------------ ------------
Total current assets 12,016,000 13,506,000
Broadcast equipment and fixed assets, net 7,772,000 6,451,000
Software development costs, net 728,000 763,000
Deferred costs 1,159,000 922,000
Intangible assets, net 3,289,000 4,011,000
Goodwill 3,658,000 3,658,000
Other assets 141,000 77,000
------------ ------------
Total assets $ 28,763,000 $ 29,388,000
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 1,221,000 $ 1,590,000
Accrued expenses 1,346,000 1,125,000
Revolving line of credit 700,000 --
Accrued salaries 282,000 447,000
Accrued vacation 666,000 635,000
Taxes payable 589,000 558,000
Obligations under capital leases 306,000 148,000
Equipment note payable 157,000 620,000
Deferred revenue - Buzztime 706,000 291,000
Deferred revenue - Hospitality Technologies 2,031,000 1,448,000
------------ ------------
Total current liabilities 8,004,000 6,862,000
Obligations under capital leases, excluding current portion 338,000 123,000
Deferred revenue, excluding current portion 256,000 368,000
------------ ------------
Total liabilities 8,598,000 7,353,000
------------ ------------
Shareholders' equity:
Series A 10% cumulative convertible preferred stock,
$.005 par value, $161,000 liquidation preference,
5,000,000 shares authorized; 161,000
shares issued and outstanding at June 30, 2005 and
December 31, 2004 1,000 1,000
Common stock, $.005 par value, 84,000,000 shares
authorized; 53,519,000 and 53,026,000 shares issued and
outstanding at June 30, 2005 and December 31,2004,
respectively 266,000 264,000
Additional paid-in capital 109,464,000 109,008,000
Accumulated deficit (89,208,000) (86,769,000)
Accumulated other comprehensive loss (358,000) (469,000)
-------------- ------------
Total shareholders' equity 20,165,000 22,035,000
-------------- ------------
Total liabilities and shareholders' equity $ 28,763,000 $ 29,388,000
============== =============
NTN COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------- ------------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2005 2004 2005 2004
--------------- --------------- --------------- --------------
Revenues:
Hospitality Technologies revenues $ 9,397,000 $ 8,477,000 $18,610,000 $17,276,000
Buzztime service revenues 232,000 39,000 526,000 82,000
Other revenues -- 12,000 -- 14,000
----------- ----------- ----------- -----------
Total revenues 9,629,000 8,528,000 19,136,000 17,372,000
----------- ----------- ----------- -----------
Operating expenses:
Direct operating costs (includes depreciation of
$837,000, $737,000, $1,565,000 and
$1,457,000 for the three months ended June 30,
2005 and 2004 and for the six months
ended June 30, 2005 and 2004, 3,438,000 2,922,000 6,858,000 6,139,000
respectively)
Non-cash charge related to software -- -- 276,000 --
product sales
Selling, general and administrative 6,710,000 6,175,000 13,036,000 12,320,000
Litigation, legal and professional fees 190,000 370,000 570,000 748,000
Stock based compensation 85,000 40,000 192,000 94,000
Depreciation and amortization 165,000 215,000 420,000 435,000
Research and development 66,000 88,000 125,000 172,000
----------- ----------- ----------- -----------
Total operating expenses 10,654,000 9,810,000 21,477,000 19,908,000
----------- ----------- ----------- -----------
Operating loss (1,025,000) (1,282,000) (2,341,000) (2,536,000)
----------- ----------- ----------- -----------
Other income (expense):
Interest income 25,000 23,000 51,000 42,000
Interest expense (49,000) (28,000) (73,000) (66,000)
Other income -- 225,000 -- 225,000
----------- ----------- ----------- -----------
Total other income (expense) (24,000) 220,000 (22,000) 201,000
------------ ----------- ------------ -----------
Net loss before income taxes (1,049,000) (1,062,000) (2,363,000) (2,335,000)
Provision for income taxes 43,000 12,000 76,000 33,000
----------- ----------- ----------- -----------
Net loss $(1,092,000) $(1,074,000) $(2,439,000) $(2,368,000)
=========== =========== =========== ===========
Net loss per common share - basic and diluted: $ (0.02) $ (0.02) $ (0.05) $ (0.05)
=========== =========== =========== ===========
Weighted average shares outstanding - basic 53,403,000 52,703,000 53,313,000 52,290,000
and diluted =========== =========== =========== ===========
NTN COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss)
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2005 2004 2005 2004
---- ---- ---- ----
Net loss...................................... $(1,092,000) $(1,074,000) $ (2,439,000) $ (2,368,000)
------------ ------------ ------------- -------------
Other comprehensive income, net of tax:
Foreign currency translation adjustments.... (8,000) (44,000) (7,000) (59,000)
Unrealized holding gain in investment (62,000) (29,000) 118,000 (19,000)
available for sale.......................... ------------ ------------ ------------- -------------
Other comprehensive income (loss)............. (70,000) (73,000) 111,000 (78,000)
------------ ------------ ------------- --------------
Comprehensive net loss........................ $(1,162,000) $(1,147,000) $ (2,328,000) $ (2,446,000)
============ ============ ============= ==============
EBITDA Calculation
THREE MONTHS ENDED JUNE 30
($000)
-------------------
EBITDA Calculation: 2005 2004
Total Total
----- -----
Net income (loss) $(1,092) $(1,074)
Interest expense (net) 24 5
Depreciation and amortization 1,002 952
Income taxes 43 12
-- --
EBITDA $(23) $(105)
===== ======