CONTACT:
Andy Wrobel
Chief Financial Officer
NTN Communications, Inc.
(760) 930-1177
Andy.Wrobel@ntn.com
NTN COMMUNICATIONS ANNOUNCES PROFITS
AND POSITIVE CASH FLOW FOR THIRD QUARTER 2005
Third Quarter 2005 Consolidated EBITDA Improves by $1.5 Million to
Positive $1,264,000 over Third Quarter 2004
Third Quarter Highlights:
o iTV Hospitality Network reached all-time high of 3,959 North America
sites
o Company announced partnership with CBS Sportsline.com for fantasy sports
information
o Company signed a major reseller agreement for its software products
o Buzztime launched new single player games on four cable systems
o Buzztime extended its branding reach with book publishing deal
CARLSBAD, CA, November 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 third quarter ended
September 30, 2005. NTN will host a live webcast and conference call today at
4:30 pm EST to discuss the results (see conference call details below).
Third Quarter 2005 Results
Consolidated Results
Consolidated revenues for the third quarter of 2005 increased by $1.66 million
or 19% to $10.43million, compared to revenues of $8.77 million for the third
quarter of 2004.
Consolidated net income increased by $1,478,000 to $246,000 or $0.00 per common
share for the Q3 2005 period, compared with a net loss of $1,232,000 or $(0.02)
per common share in the Q3 2004 period. The 2005 consolidated net profit
represented the combination of a net profit of $740,000 from the NTN Hospitality
Technologies division and a net loss of $494,000 from NTN's Buzztime subsidiary.
Consolidated EBITDA improved by $1,498,000 to positive $1,264,000 for the three
months ended September 30, 2005 from EBITDA of negative $234,000 for the three
months ended September 30, 2004.
Consolidated revenues for the first nine months of 2005 increased by $3.4
million or 13% to $29,561,000, compared to $26,145,000 for the first nine months
of 2004.
Cash balance increased by $327,000 during the third quarter of 2005 as income
from operations offset investments in capital equipment.
Hospitality Technologies Division Results
Revenues for the Hospitality Technologies division increased by $1,318,000 or
15%, to $9,910,000 for the third quarter of 2005, compared to revenues of
$8,592,000 for the third quarter of 2004. The revenue growth arose from all
segments of NTN Hospitality Technology Division; the NTN iTV Network both
domestically and in Canada, NTN Wireless and Software Solutions.
The division's net profit increased by $1,137,000 to $740,000 for the third
quarter of 2005 compared to a net loss of $397,000 for the third quarter of
2004. Within the Hospitality Technologies division, net income of the NTN iTV
Network segment increased by $511,000, primarily as a result of increased
customer base. Net income in the Wireless segment increased by $260,000 due to
higher margins on its product sales and the absence of legal costs compared to
Q3 2004. Net loss in the Software Solutions segment was reduced by $366,000, due
primarily to increased sales.
NTN iTV Network's net site count grew by 127 sites in North America during the
third quarter of 2005 and by 381 sites since September 30, 2004. The quarter
ended with a record North America site count of 3,959.
Management attributes the strong site growth during the first nine 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. As revenues in the iTV Network
segment are derived monthly, most revenues as a result of this nine-month sales
increase will be realized in future quarters.
THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2005 2004 Change
------------- ------------
Revenues
NTN iTV Network $ 7,385,000 $ 6,545,000 840,000
NTN Wireless 1,269,000 1,041,000 228,000
Software Solutions 1,256,000 1,006,000 250,000
--------- ---------
NTN Hospitality Technologies division 9,910,000 8,592,000 1,318,000
Buzztime 515,000 180,000 335,000
----------- -----------
Total revenue $10,425,000 $ 8,772,000 1,653,000
=========== ===========
Net income (loss)
NTN iTV Network $ 800,000 $ 289,000 511,000
NTN Wireless 78,000 (182,000) 260,000
Software Solutions (138,000) (504,000) 366,000
------- --------
NTN Hospitality Technologies division 740,000 (397,000) 1,137,000
Buzztime (494,000) (835,000) 341,000
------------ -----------
Net income (loss) $ 246,000 $(1,232,000) 1,478,000
============ ===========
Buzztime Subsidiary Results
Buzztime revenues increased by $335,000 to $515,000 for the third quarter of
2005, from $180,000 for the third quarter of 2004. The primary components of the
$335,000 revenue increase were subscription revenues and royalties on game
products as the Company recognized licensing revenues 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 $494,000 for the third quarter of 2005, a
reduction of $341,000 from the net loss of $835,000 for the third quarter of
2004.
Overall Results and New Developments
"We are very pleased with the state of the Company's operations as we have
created a solid base from performance of our core assets while retaining
significant break-out potential," stated chairman and CEO Stanley B. Kinsey. "We
now enjoy a unique market position with a loyal player base and broad
distribution of our games across mobile, cable, satellite and our own Network,
and we plan to increasingly drive revenues from distribution, from advertising,
and from our players who want more ways to play.
"In Hospitality," continued Kinsey, "recent successes at Wynn and other major
casino and national accounts are positioning our products as market leaders. Our
new software reseller agreement positions us to take these products to venues
across the country."
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 third quarter earnings is scheduled for today at
4:30 pm EST. 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 Third Quarter Earnings Conference Call.
International callers please dial (785) 832-0326. 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 November 22, 2005 at 11:59 p.m. EST. Please dial
(800) 839-9302 to access the replay. International callers please dial (402)
220-6082.
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 and distribution of product and service lines, anticipated
revenues and performance of independent resellers 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
SEPTEMBER 30, JUNE 30,
2005 2005 DECEMBER 31,
(UNAUDITED) (UNAUDITED) 2004
------------- ----------- ------------
Current assets:
Cash and cash equivalents $ 4,974,000 $ 4,647,000 $ 6,710,000
Restricted cash 68,000 65,000 66,000
Accounts receivable, net 3,385,000 3,609,000 3,405,000
Investment available-for-sale 345,000 422,000 304,000
Inventory 303,000 411,000 399,000
Deposits on broadcast equipment 662,000 653,000 534,000
Deferred costs 1,102,000 1,041,000 960,000
Prepaid expenses and other current assets 1,070,000 1,168,000 1,128,000
------------ ------------ ------------
Total current assets 11,909,000 12,016,000 13,506,000
Broadcast equipment and fixed assets, net 8,228,000 7,772,000 6,451,000
Software development costs, net 723,000 728,000 763,000
Deferred costs 1,276,000 1,159,000 922,000
Intangible assets, net 3,130,000 3,289,000 4,011,000
Goodwill 3,658,000 3,658,000 3,658,000
Other assets 128,000 141,000 77,000
----------- ------------ ------------
Total assets $ 29,052,000 $ 28,763,000 $ 29,388,000
============ ============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 1,097,000 $ 1,221,000 $ 1,590,000
Accrued expenses 1,315,000 1,346,000 1,125,000
Revolving line of credit 700,000 700,000 --
Accrued salaries 76,000 282,000 447,000
Accrued vacation 613,000 666,000 635,000
Taxes payable 605,000 589,000 558,000
Obligations under capital leases 384,000 306,000 148,000
Equipment note payable 78,000 157,000 620,000
Deferred revenue - Buzztime 674,000 706,000 291,000
Deferred revenue - Hospitality Technologies 2,185,000 2,031,000 1,448,000
----------- ------------ ------------
Total current liabilities 7,727,000 8,004,000 6,862,000
Obligations under capital leases, excluding current
portion 490,000 338,000 123,000
Deferred revenue, excluding current portion - 270,000 256,000 368,000
Hospitality Technologies ------------ ------------ ------------
Total liabilities 8,487,000 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
September 30, 2005, June 30, 2005 and
December 31, 2004 1,000 1,000 1,000
Common stock, $.005 par value, 84,000,000 shares
authorized; 53,690,000, 53,519,000 and 53,026,000 shares
issued and outstanding at September 30, 2005,
June 30, 2005 and December 31, 2004,respectively 267,000 266,000 264,000
Additional paid-in capital 109,650,000 109,464,000 109,008,000
Accumulated deficit (88,962,000) (89,208,000) (86,769,000)
Accumulated other comprehensive loss (391,000) (358,000) (469,000)
-------------- ------------- -------------
Total shareholders' equity 20,565,000 20,165,000 22,035,000
----------- ------------ ------------
Total liabilities and shareholders' equity $ 29,052,000 $ 28,763,000 $ 29,388,000
=============== ============== ==============
NTN COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------------ -------------------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2005 2004 2005 2004
------------------ ----------------- ----------------- -------------------
Revenues:
Hospitality Technologies revenues $ 9,910,000 $ 8,592,000 $ 28,520,000 $25,883,000
Buzztime revenues 515,000 180,000 1,041,000 262,000
----------- ----------- ------------ -----------
Total revenues 10,425,000 8,772,000 29,561,000 26,145,000
----------- ----------- ------------ -----------
Operating expenses:
Direct operating costs (includes
depreciation of $821,000, $763,000, $2,386,000
and $2,218,000 for the three months ended
September 30,2005 and 2004 and for the
nine months ended September 30, 2005 and 2004,
respectively) 3,249,000 3,013,000 10,107,000 9,150,000
Non-cash charge related to software product sales -- -- 276,000 --
Selling, general and administrative 6,349,000 6,010,000 19,385,000 18,333,000
Litigation, legal and professional fees 267,000 603,000 837,000 1,350,000
Stock based compensation 47,000 59,000 239,000 152,000
Depreciation and amortization 212,000 217,000 632,000 654,000
Research and development 70,000 84,000 195,000 256,000
----------- ----------- ----------- -----------
Total operating expenses 10,194,000 9,986,000 31,671,000 29,895,000
----------- ----------- ----------- -----------
Operating income (loss) 231,000 (1,214,000) (2,110,000) (3,750,000)
----------- ----------- ----------- -----------
Other income (expense):
Interest income 20,000 24,000 71,000 66,000
Interest expense (55,000) (30,000) (128,000) (96,000)
Other income -- -- -- 225,000
----------- ----------- ----------- -----------
Total other income (expense) (35,000) (6,000) (57,000) 195,000
------------ ------------ ------------ -----------
Net income (loss) before income taxes 196,000 (1,220,000) (2,167,000) (3,555,000)
Provision (benefit) for income taxes (50,000) 12,000 26,000 45,000
------------ ----------- ----------- -----------
Net income (loss) $ 246,000 $(1,232,000) $ (2,193,000) $(3,600,000)
=========== =========== =========== ===========
Net income (loss) per common share - basic $ 0.00 $ (0.02) $ (0.04) $ (0.07)
=========== =========== =========== ===========
Weighted average shares outstanding - basic 53,604,000 52,868,000 53,411,000 52,484,000
=========== =========== =========== ===========
Net income (loss) per common share - diluted $ 0.00 (0.02) (0.04) (0.07)
=========== =========== =========== ===========
Weighted average shares outstanding - diluted 60,632,000 52,868,000 53,411,000 52,484,000
=========== =========== =========== ===========
EBITDA Calculation
The following table reconciles our net income (loss) per GAAP to EBITDA:
THREE MONTHS ENDED SEPTEMBER 30,
-----------------------------------------------
2005 2004 Change
-----------------------------------------------
EBITDA Calculation
Net income (loss) per GAAP $ 246,000 $(1,232,000) $ 1,478,000
Interest expense (net) 35,000 6,000 29,000
Depreciation and amortization 1,033,000 980,000 53,000
Income taxes (50,000) 12,000 (62,000)
----------- ----------- -----------
EBITDA $ 1,264,000 $ (234,000) $ 1,498,000
=========== =========== ===========