NEW FRONTIER MEDIA
For Immediate Release
Contact: Karyn Miller, CFO
(303) 444-0900 x 102
kmiller@noof.com
New Frontier Media Announces Profitable Fourth Quarter
BOULDER, COLORADO, June 12, 2003 -- New Frontier Media, Inc. (Nasdaq: NOOF), a
leader in the electronic distribution of adult entertainment, announced its
results for the fourth quarter and full year ended March 31, 2003. On a
consolidated basis, the Company reported net income for the fourth quarter ended
March 31, 2003 of $0.7 million, or $0.04 per basic and fully diluted earnings
per share. EBITDA (earnings before interest, taxes, depreciation and
amortization) for the fourth quarter ended March 31, 2003, before $0.3 million
in restructuring costs, was reported as $2.0 million, representing a 25%
increase over fiscal 2002 fourth quarter EBITDA, before $3.2 million of
restructuring costs, of $1.6 million.
The Company reported revenue of $9.3 million for the fourth quarter ended March
31, 2003, representing a 17% decrease over fiscal 2002 fourth quarter net
revenue of $11.2 million. The decrease in fourth quarter revenue was driven by
the continued refocusing of the Company's Internet business, which experienced a
68% decrease in year-over-year quarterly revenue.
Revenue for New Frontier Media, Inc.'s core Pay TV business (Subscription/PPV TV
Group) for the fiscal 2003 fourth quarter was $8.0 million, representing an 11%
increase over revenue for the fiscal 2002 fourth quarter. Pay TV EBITDA for the
fiscal 2003 fourth quarter was $3.2 million, representing a 39% improvement over
fiscal 2002 fourth quarter EBITDA.
"We are very excited about the strong growth we are seeing in our core Pay TV
business. Our ability to deliver superior results in this segment gives us great
optimism for fiscal 2004. Today more people, in more places, are seeing our
networks and services than ever before," said Michael Weiner, President of New
Frontier Media, Inc.
FULL YEAR RESULTS
The Company reported fiscal 2003 net revenue of $36.7 million, representing a
30% decrease over fiscal 2002 net revenue of $52.4 million. The decrease in
revenue is, again, related primarily to a 66% decrease in revenue from the
Company's Internet Group. Fiscal 2003 adjusted EBITDA for the Company, before
restructuring and impairment charges of $4.6 million related to the Internet
Group, was reported as $3.1 million, or a 62% decrease over fiscal 2002 adjusted
EBITDA, before restructuring charges of $3.2 million related to the Internet
Group, of $8.1 million.
The Company reported a net loss for the fiscal year ended March 31, 2003 of
$11.9 million, or $0.56 per basic and fully diluted share, which included the
following items: a) $4.6 million of restructuring and impairment charges related
to the Company's Internet Group; b) a $5.3 million non-cash provision for income
taxes due to the Company providing a full valuation allowance against its
deferred tax assets; and c) $2.0 million in expenses related to the Company's
proxy fight and its lawsuit with a former director of the Company. Cash flow
from operations for the fiscal year ended March 31, 2003 was at breakeven.
SUBSCRIPTION/PPV TV GROUP
The Subscription/PPV TV Group reported revenue of $8.0 million for the fourth
quarter ended March 31, 2003, representing an 11% increase over fiscal 2002
fourth quarter revenue of $7.2 million. Revenue from the Group's cable/DBS
products was $6.1 million for the 2003 fiscal fourth quarter, representing a 22%
increase over 2002 fiscal fourth quarter cable/DBS revenue of $5.0 million. The
Subscription/PPV TV Group reported EBITDA of $3.2 million for the fourth quarter
ended March 31, 2003, representing a 39% increase over fiscal 2002 fourth
quarter EBITDA of $2.3 million.
This growth can be attributed to a significant expansion in distribution of the
Subscription/PPV TV Group's networks during the quarter. The Pay TV Group's
networks are now available in 41 million network homes, up from 29.7 million a
year ago. Further, the Company's Video-on-Demand ("VOD") product is available in
5.3 million addressable homes as of March 31, 2003, up from 1.1 million
addressable households a year ago.
In addition, the Subscription/PPV TV Group achieved the following milestones
during the 2003 fiscal year:
- Launched two new networks, TEN Blue and TEN Blox
- Signed a major VOD transport deal with TVN Entertainment Corporation,
giving the Subscription/PPV TV Group access to over 2 million
additional VOD households
- Signed a distribution agreement with On Command Corporation for
distribution of its VOD content through On Command's 895,000 hotel
rooms
- Unified its family of networks under the ten* name and logo
INTERNET GROUP
The Internet Group reported revenue of $1.3 million and adjusted EBITDA, before
restructuring costs of $0.3 million, of $0.2 million for the fourth quarter
ended March 31, 2003.
As of March 31, 2003, the Internet Group had merged all of its dial-up Internet
membership websites into its premiere broadband site, www.ten.com. The Internet
Group's core focus going forward will be on promoting the distribution of
www.ten.com through revenue-sharing agreements with mainstream third-party
gatekeepers such as hospitality providers, cable companies, and portals. Revenue
generated by memberships to www.ten.com is expected to decline further, but the
Internet Group expects to ultimately replace this revenue through its
third-party gatekeeper relationships.
The Company does not anticipate any further restructuring or impairment charges
related to the Internet Group.
FUTURE OUTLOOK
The Company is providing the following guidance for its fiscal year ended March
31, 2004:
- Revenue of $35 million to $40 million, which assumes a continued
decline in revenue generated by the Internet Group and the
Subscription/PPV TV Group's C-Band services, offset by double-digit
growth in the Subscription/PPV TV Group's cable/DBS revenue
- Net Income of $2.0 million to $4.0 million
CONFERENCE CALL
New Frontier Media will be conducting its conference call and webcast to discuss
earnings today at 2:15 p.m. Mountain Time. The participant phone number for the
conference call is (800)-218-0204. To participate in the webcast please log on
to www.noof.com and click on Investor Relations and then Webcasts and Events. A
replay of the conference call will be available for seven days after 5:15 p.m.
Mountain Time on June 12th at (800)-405-2236, access code 541321. The replay
will also be archived for twelve months on the Company's corporate web site at
www.noof.com under Investor Relations/Webcasts and Events. This press release
can be found on the Company's corporate web site, www.noof.com, under Investor
Relations/News Releases.
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. The
Company intends for the forward-looking statements to be covered by the safe
harbor provisions for forward-looking statements. All statements related to the
expected continued decline in revenue generated by memberships to www.ten.com,
the replacement of membership revenue for www.ten.com with revenue from
third-party gatekeeper relationships, the incurrence of further restructuring or
impairment charges related to the Internet Group, or the Company's guidance
provided for the 2004 fiscal year, and the outcome of any contingencies are
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. 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. These 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. Please refer to the
Company's Form 10-K and other filings with the 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
system (EDGAR) at www.sec.gov.
ABOUT NEW FRONTIER MEDIA, INC.
New Frontier Media, Inc. is a leading distributor of adult entertainment via
electronic platforms. The Company delivers the most extensive lineup of quality
programming over the broadest range of electronic means including cable,
satellite, Internet, Broadband and video-on-demand.
The Erotic Networks(TM), the umbrella brand for the Company's subscription and
pay television subsidiary, provides pay-per-view and subscription TV networks to
over 45 million cable, DBS (direct broadcast satellite) and C-band households
throughout North America. The Erotic Networks(TM) include Pleasure(TM), TEN(TM),
TEN Clips(TM), TEN Xtsy(TM), TEN Blue(TM), TEN BluePlus(TM), TEN Blox(TM), TEN
Max(TM) and TEN On Demand(TM). These networks represent the widest variety of
editing standards available and are programmed without duplication to offer the
most extensive selection of adult network programming under a single corporate
umbrella.
For more information contact Karyn Miller, Chief Financial Officer, at (303)
444-0900, extension 102, and please visit our web site at www.noof.com.
Consolidated Operating Results
(in '000's except per share amounts)
Three Months Ended Twelve Months Ended
March 31, March 31,
2003 2002 2003 2002
Revenue $9,280 $11,214 $36,747 $52,435
Cost of Sales (4,056) (5,510) (18,197) (25,634)
------- ------- ------- -------
Gross Profit 5,224 5,704 18,550 26,801
Operating Expenses (4,312) (8,561) (23,543) (27,429)
------- ------- ------- -------
Other Income (Expense) (195) (363) (1,631) 372
Income (Loss) Before Minority 717 (3,220) (6,624) (256)
Interest and Income Taxes
Minority Interest 0 (171) 0 (171)
Income tax (expense) benefit (5) 1,035 (5,271) (155)
Net Income (Loss) $ 712 ($2,356) ($11,895) ($582)
======= ======= ======= =======
Basic Income (Loss) Per Share $0.04 ($0.11) ($0.56) ($0.03)
Diluted Income (Loss) Per Share $0.04 ($0.11) ($0.56) ($0.03)
Weighted Average Shares 21,373 21,207 21,307 21,128
Outstanding
Reconciliation of Net Income (Loss) to EBITDA as reported
Net Income (Loss) $712 ($2,356) ($11,895) ($582)
Adjustments:
Dep'n and Amort.(1) 744 1,444 3,469 5,750
Interest Expense 261 392 1,631 1,843
Interest Income (10) (28) (61) (193)
Income Taxes 5 (1,035) 5,271 155
Restructuring/Impair. 303 3,158 4,570 3,158
Non-cash loss on stock 0 0 117 0
Legal reserve 0 0 0 (1,680)
Other income 0 0 0 (341)
EBITDA as reported $2,015 $1,575 $3,102 $8,110
(1) Amortization excludes amortization of content licenses
The Condensed Statement of Operations should be read in conjunction with the
Company's Form 10-K that will be filed with the Securities and Exchange
Commission. To obtain a copy please contact New Frontier Media, Inc.