New Frontier Media Reports Fourth
Consecutive Profitable Quarter
BOULDER, COLORADO, February 5, 2004 -- New Frontier Media, Inc. (Nasdaq: NOOF),
a leader in the electronic distribution of adult entertainment, announced fiscal
2004 third quarter results for the quarter ended December 31, 2003. The Company
reported net income for the quarter of $2.7 million, or $0.12 cents per fully
diluted common share, as compared to a net loss of $5.9 million, or $0.28 per
fully diluted common share for the quarter a year ago. Net revenue for the
current year quarter was $10.8 million compared to $8.6 million for the quarter
a year ago, representing an increase of 26%.
The Company reported EBITDA (earnings before interest, taxes, depreciation and
non-content related amortization) of $3.7 million for the quarter ended December
31, 2003, as compared to $1.0 million for the quarter ended December 31, 2002,
determined prior to restructuring charges of $0.5 million related to the
Internet Group.
"We continue to be pleased with how our fiscal 2004 year is progressing", said
Michael Weiner, Chief Executive Officer of New Frontier Media, Inc. "We are
reporting our fourth consecutive quarter of profits and remain on track to meet
our guidance for the full fiscal year."
PAY TV
The Company's Subscription/PPV TV Group ("Pay TV Group") reported revenue of
$10.0 million for the quarter ended December 31, 2003, as compared to $6.8
million for the quarter ended December 31, 2002, which represents an increase of
47%. Of this, revenue from the Pay TV Group's Cable/DBS/Hotel services increased
72% from $5.0 million for the quarter ended December 31, 2002 to $8.6 million
for the quarter ended December 31, 2003. This increase in Cable/DBS/Hotel
revenue is related to an increase in the distribution of the Pay TV Group's
video-on-demand ("VOD") service. The Pay TV Group's VOD service, branded as
TEN*On Demand, is now distributed to 8.9 million VOD enabled cable households
and 900,000 hotel rooms in the U.S.
Revenue from the Pay TV Group's C-Band services declined 22% to $1.4 million for
the quarter ended December 31, 2003, from $1.8 million for the quarter a year
ago. This market continues to be profitable for the Pay TV Group, but management
is monitoring the margins closely as the consumer market continues to migrate
away from this platform. To this effort, at the end of January 2004, the Pay TV
Group discontinued one of its C-Band services, TEN*BluePlus, thereby saving on
uplink and transponder costs for this network.
EBITDA for the Pay TV Group was $4.8 million for the quarter ended December 31,
2003, as compared to EBITDA of $1.9 million for the quarter ended December 31,
2002. Gross margin for the Pay TV Group increased from 47% for the quarter a
year ago to 61% for the quarter ended December 31, 2003. Operating expenses
declined from 26% of net revenue for the quarter ended December 31, 2002 to 18%
for the quarter ended December 31, 2003, as overall operating expenses remained
flat at $1.8 million for both quarters ended December 31, 2003 and 2002,
respectively.
INTERNET GROUP
The Company's Internet Group reported net revenue of $0.8 million for the
quarter ended December 31, 2003, as compared to $1.8 million for the quarter
ended December 31, 2002, representing a decrease of 56%. Gross margin for the
Internet Group increased to 57% for the current year quarter from 53% for the
quarter a year ago. EBITDA for the Internet Group was $0.2 million for the
quarter ended December 31, 2003 as compared to EBITDA of $0.4 million for the
quarter ended December 31, 2002, representing a decrease of 50%. EBITDA was
determined before restructuring charges of $0.5 million for the quarter ended
December 31, 2002.
CORPORATE ADMINISTRATION EXPENSES
Corporate administration expenses were $1.3 million for both quarters ended
December 31, 2003 and 2002, respectively.
FUTURE OUTLOOK
The Company reaffirms its guidance for the fiscal year ended March 31, 2004 as
revenue of $40 - 43 million and net income of $9 - 11 million, or $0.39 - $0.49
cents per share.
CONFERENCE CALL INFORMATION
New Frontier Media, Inc. will be conducting its conference call and web cast to
discuss earnings today at 4:15 p.m. Eastern Time. The participant phone number
for the conference call is (800)-366-7417. To participate in the web cast please
log on to www.noof.com and click on Investor Relations and then Webcasts &
Events. A replay of the conference call will be available for seven days after
5:15 p.m. Eastern Time on February 5th at (800)-405-2236, access code 568771.
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.
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. Words such as "anticipates",
"expects", "intends", "plans", "believes", "seeks", "estimates", or variations
of such words are intended to identify such forward-looking statements. All
statements related to remaining on track to meet our guidance for the full
fiscal year and the outcome of any contingencies are 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. 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. 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, 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, video-on-demand, and
subscription TV networks and services to over 58 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*Blox(TM), TEN*Max(TM) and TEN*On Demand(TM). These networks
and services 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)
(UNAUDITED) (UNAUDITED)
Quarter Ended Nine Months Ended
December December
2003 2002 2003 2002
Revenue $10,779 $8,590 $31,778 $27,467
Cost of Sales (4,220) (4,413) (12,407) (14,141)
------------ ------------ ------------- ------------
Gross Profit 6,559 4,177 19,371 13,326
Operating Expenses (3,553) (4,439) (10,970) (19,231)
------------ ------------ ------------- ------------
Operating Income (Loss) 3,006 (262) 8,401 (5,905)
Other Expense (276) (420) (815) (1,437)
------------ ------------ ------------- ------------
Net Income (Loss) Before Taxes $2,730 ($682) $7,586 ($7,342)
Provision for income taxes 0 (5,266) (2) (5,266)
------------ ------------ ------------- ------------
Net Income (Loss) $2,730 ($5,948) $7,584 ($12,608)
============ ============ ============= ============
Basic Income (Loss) Per Share $0.13 ($0.28) $0.38 ($0.59)
============ ============ ============= ============
Diluted Income (Loss) Per Share $0.12 ($0.28) $0.35 ($0.59)
============ ============ ============= ============
Basic shares outstanding 20,603 21,323 19,998 21,302
============ ============ ============= ============
Diluted shares outstanding 22,590 21,323 21,706 21,302
============ ============ ============= ============
Reconciliation of Net Income (Loss) to EBITDA as reported
(UNAUDITED) (UNAUDITED)
Quarter Ended Nine Months Ended
December 31, December 31,
2003 2002 2003 2002
Net Income (Loss) $2,730 ($5,948) $7,584 ($12,608)
Adjustments:
Dep'n and Amort.(1) 541 749 1,598 2,725
Interest Expense 416 432 1,086 1,370
Interest Income (10) (13) (29) (52)
Income Taxes 0 5,267 2 5,267
Loss on non-cash write off 0 0 0 118
Restructuring/Impair. 0 549 72 4,267
------------ ------------ ------------- ------------
EBITDA as reported $3,677 $1,036 $10,313 $1,087
============ ============ ============= ============
(1) Amortization excludes amortization of content licenses
The Condensed Statement of Operations should be read in conjunction with the
Company's Form 10Q, 10-K and other fiilings with the Securities and Exchange
Commission. To obtain a copy please contact New Frontier Media, Inc.
Consolidated Balance Sheet
(in 000s)
(Unaudited)
December 31 March 31,
2003 2003
CURRENT ASSETS:
Cash and cash equivalents $12,583 $4,264
Accounts receivable, net 7,013 5,680
Prepaid expenses 456 610
Other 769 452
------------ -------------
TOTAL CURRENT ASSETS 20,821 11,006
------------ -------------
FURNITURE AND EQUIPMENT, net 3,381 3,951
------------ -------------
OTHER ASSETS:
Prepaid distribution rights, net 12,067 11,520
Goodwill 3,743 3,743
Other identifiable intangible assets, net 420 1,124
Deposits 185 567
Other 619 3,114
------------ -------------
TOTAL OTHER ASSETS 17,034 20,068
------------ -------------
TOTAL ASSETS $41,236 $35,025
============ =============
CURRENT LIABILITIES:
Accounts payable $2,297 $2,606
Current portion of capital lease obligations 486 996
Deferred revenue 1,282 2,223
Accrued restructuring expense 1,029 1,304
Note Payable 1,170 0
Accrued Compensation 1,098 478
Other accrued liabilities 1,054 747
------------ -------------
TOTAL CURRENT LIABILITIES 8,416 8,354
------------ -------------
LONG TERM LIABILITIES:
Obligations under capital lease, net of
current portion 220 465
Note Payable, net of current portion 360 0
Redeemable preferred stock 0 3,750
------------ -------------
TOTAL LONG-TERM LIABILITIES 580 4,215
------------ -------------
------------ -------------
TOTAL LIABILITIES 8,996 12,569
------------ -------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock 2 2
Additional paid-in capital 48,143 45,943
Accumulated deficit (15,905) (23,489)
------------ -------------
TOTAL SHAREHOLDERS' EQUITY 32,240 22,456
------------ -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $41,236 $35,025
============ =============