Exhibit 99.1
NEW FRONTIER MEDIA REPORTS OPERATING INCOME OF $4.4 MILLION FOR THIRD QUARTER
BOULDER, Colo., Feb. 10 /PRNewswire-FirstCall/ --
New Frontier Media, Inc. (Nasdaq: NOOF), a leader in the electronic
distribution of adult entertainment, announced that it generated operating
income of $4.4 million for the third quarter ended December 31, 2004, as
compared to operating income of $3.0 million for the same quarter a year ago,
representing an increase of 47%.
The Company reported earnings of $0.13 per fully diluted share for its
current year quarter, net of a quarterly tax rate of 35.8%. This compares with
$0.12 per fully diluted share for the same quarter a year ago, which reflects no
tax expense as taxes were offset fully by net operating losses. In the current
year third quarter, the Company's tax rate was higher than in the previous two
quarters due to an increase in the Company's annual effective tax rate, from 30%
to 32%. This change in annual effective tax rate is due to an increase in the
projected pre-tax book income that was used to calculate the Company's effective
tax rate earlier in the year, as well as other miscellaneous factors.
The Company reported net revenue for the current year quarter of $12.0
million compared to $10.8 million for the same quarter a year ago, representing
an increase of 11%. Net income for the current year quarter was $2.9 million,
net of tax, as compared to net income of $2.7 million for the third quarter a
year ago, which reflects no tax expense. Net income for the current year quarter
includes a restructuring gain of $0.2 million related to the reversal of a
portion of the Internet Group's rent-restructuring accrual.
"We continue to be pleased with our fiscal 2005 operating results. Cash flow
from operations remains strong and we now show over $30 million in cash and
investments on our balance sheet," stated Michael Weiner, Chief Executive
Officer of New Frontier Media, Inc. "Our distribution on the video-on-demand
platform is growing even in the face of increasing competition. Additionally, I
am particularly pleased that the Company is able to leverage its significant
content and technology resources to seek new revenue from emerging platforms
such as wireless," continued Mr. Weiner.
Pay TV
The Company's Pay TV Group reported revenue of $11.3 million for the quarter
ended December 31, 2004, as compared to $10.0 million for the quarter ended
December 31, 2003, which represents an increase of 13%. Of this, revenue from
the Pay TV Group's Cable/DBS/Hotel services increased 21% to $10.4 million for
the quarter ended December 31, 2004, from $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 16.2 million VOD-enabled cable households, an 82% increase over
the quarter a year ago, and 840,000 hotel rooms in the U.S. Revenue from the Pay
TV Group's VOD service increased 30% year-over-year for the quarter.
The Pay TV Group also experienced a 17% increase in its pay-per-view revenue
year-over-year for the quarter. This increase is related to an increase in the
Pay TV Group's network household distribution as well as to a 13% increase in
revenue from its largest customer. The Pay TV Group's network household
distribution, excluding VOD distribution, increased to 59.3 million as of
December 31, 2004 from 49.2 million as of the quarter a year ago, representing a
21% increase.
Revenue from the Pay TV Group's C-Band services declined 36% to $0.9 million
for the quarter ended December 31, 2004, from $1.4 million for the quarter a
year ago.
EBITDA for the Pay TV Group was $6.1 million for the quarter ended December
31, 2004, as compared to EBITDA of $4.8 million for the quarter ended December
31, 2003, representing an increase of 27%. Gross margin for the Pay TV Group
increased to 67% for the quarter ended December 31, 2004, from 61% for the
quarter a year ago. Operating expenses were 17% of net revenue for the quarter
ended December 31, 2004, as compared to 18% for the quarter a year ago. Overall,
operating expenses increased 6% year-over-year for the quarter due to an
increase in sales and marketing costs.
Internet Group
The Company's Internet Group reported net revenue of $0.7 million for the
quarter ended December 31, 2004, as compared to $0.8 million for the quarter
ended December 31, 2003, representing a decrease of 13%. EBITDA for the Internet
Group was $0.2 million for the quarters ended December 31, 2004 and 2003,
respectively. EBITDA for the current year third quarter was determined prior to
a restructuring gain of $0.2 million.
Corporate Administration Expenses
Corporate administration expenses were $1.5 million for the quarter ended
December 31, 2004 as compared to $1.3 million for the quarter a year ago,
representing an increase of 15%. This increase is primarily related to expenses
associated with the Company's efforts to comply with Section 404 of the
Sarbanes-Oxley Act.
Income Taxes
The Company's annual effective tax rate increased during the current quarter
due to an increase in the projected pre-tax book income upon which its annual
tax rate was based, as well as other miscellaneous factors. The annual effective
tax rate for the year is now 32%, up from 30% in prior quarters.
In addition, the Company expects to pay approximately $3.0 million in taxes
for the current fiscal year.
Future Outlook
Based on the increase in the Company's annual effective tax rate, and the
impact that increased competition may have on the Company's VOD's business, 2005
fiscal year annual guidance is being updated as follows:
Revenue guidance is being changed from $48 -- 50 million to $46.5 -- 48
million.
Net income guidance is being changed from $10.9 -- 12.4 million to $10.6 --
$11.6 million
EPS guidance is being changed from $0.46 -- $0.52 per share to $0.45 --
$0.50 per share
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 (800)-257-7087. 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
1 p.m. Eastern Time on February 10, 2005 at (800)-405-2236, access code
11023297#. 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 in this release about the future outlook related to New Frontier
Media and statements related to our expectation that we will pay approximately
$3.0 million in taxes for the current fiscal year, that we will achieve our
updated guidance, and the outcome of any contingencies are 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 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 75 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 about New Frontier Media, Inc. 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)
Quarter Ended Nine Months Ended
December 31, December 31,
---------- ---------- ---------- ----------
2004 2003 2004 2003
---------- ---------- ---------- ----------
Revenue $ 11,991 $ 10,779 $ 35,493 $ 31,778
Cost of Sales (4,000) (4,220) (12,078) (12,407)
Gross Profit 7,991 6,559 23,415 19,371
Operating Expenses (3,553) (3,553) (10,763) (10,970)
Operating Income 4,438 3,006 12,652 8,401
Other Income/(Expense) 118 (276) 195 (815)
Net Income Before Taxes $ 4,556 $ 2,730 $ 12,847 $ 7,586
Provision for income taxes (1,632) 0 (4,133) (2)
Net Income $ 2,924 $ 2,730 $ 8,714 $ 7,584
Basic Income Per Share $ 0.13 $ 0.13 $ 0.39 $ 0.38
Diluted Income Per Share $ 0.13 $ 0.12 $ 0.38 $ 0.35
Basic shares outstanding 21,995 20,603 22,194 19,998
Diluted shares outstanding 23,017 22,590 23,089 21,706
Reconciliation of Net Income to EBITDA
as reported
Quarter Ended Nine Months Ended
December 31, December 31,
---------- ---------- ---------- ----------
2004 2003 2004 2003
---------- ---------- ---------- ----------
Net Income $ 2,924 $ 2,730 $ 8,714 $ 7,584
Adjustments:
Dep'n and Amort.(1) 427 541 1,331 1,598
Restructuring Gain (146) 0 (146) 0
Interest Expense 23 416 84 1,086
Interest Income (121) (10) (235) (29)
Income Taxes 1,632 0 4,133 2
EBITDA as reported $ 4,739 $ 3,677 $ 13,881 $ 10,241
(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 filings with the Securities and Exchange
Commission.
To obtain a copy please contact New Frontier Media, Inc.
Consolidated Balance Sheet
(in 000s)
December 31, March 31,
2004 2004
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 17,448 $ 15,352
Investments 9,854 1,478
Accounts receivable, net 7,438 6,872
Prepaid expenses 456 497
Deferred Tax Asset 534 0
Other 711 236
TOTAL CURRENT ASSETS 36,441 24,435
FURNITURE AND EQUIPMENT, net 3,623 3,727
OTHER ASSETS:
Prepaid distribution rights, net 9,974 11,627
Goodwill 3,743 3,743
Investments 3,255 0
Other identifiable intangible
assets, net 165 356
Deposits 41 156
Other 618 718
TOTAL OTHER ASSETS 17,796 16,600
TOTAL ASSETS $ 57,860 $ 44,762
CURRENT LIABILITIES:
Accounts payable $ 1,449 $ 1,767
Current portion of capital
lease obligations 201 356
Deferred revenue 717 1,304
Current portion of notes payable 344 653
Taxes Payable 2,392 0
Accrued restructuring expense 494 1,026
Accrued Compensation 1,221 952
Accrued Liabilities 1,175 1,259
TOTAL CURRENT LIABILITIES 7,993 7,317
LONG TERM LIABILITIES:
Obligations under capital
lease, net of current portion 19 154
Note Payable, net of current
portion 0 275
Deferred tax liability 170 0
TOTAL LONG-TERM LIABILITIES 189 429
TOTAL LIABILITIES 8,182 7,746
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock 2 2
Additional paid-in capital 53,580 49,590
Accumulated deficit (3,862) (12,576)
Other comprehensive
income/(loss) (42) 0
TOTAL SHAREHOLDERS' EQUITY 49,678 37,016
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 57,860 $ 44,762
SOURCE New Frontier Media, Inc.
-0- 02/10/2005
/CONTACT: Karyn L. Miller, Chief Financial Officer of New Frontier Media,
Inc., +1-303-444-0900, ext. 102, kmiller@noof.com/
/Web site: http://www.noof.com/