Exhibit 99.1
NEW FRONTIER MEDIA REPORTS 2006 FISCAL YEAR FOURTH QUARTER RESULTS
BOULDER, Colo., June 6 /PRNewswire-FirstCall/ --
New Frontier Media, Inc. (Nasdaq: NOOF), a worldwide producer and distributor
of general and adult-themed motion picture entertainment, today announced its
2006 fiscal year fourth quarter results.
The Company reported a 19% increase in quarterly revenue to $12.9 million
from $10.8 million for the same quarter a year ago. Net income for the current
year quarter was $3.3 million compared to $2.4 million for the same quarter a
year ago, representing an increase of 38%. Net income for the current year
quarter reflects a 25% tax rate due to the release of the Company's valuation
allowance for its deferred tax asset related to its net operating losses. The
Company reported earnings per share of $0.14 per fully diluted share for the
quarter ended March 31, 2006 as compared with $0.10 per fully diluted share for
the same quarter a year ago, representing a 40% increase.
"We are extremely pleased with our fourth quarter results. Overall, I feel
that the 2006 fiscal year was a complete success with the acquisition of MRG
Entertainment and the continued growth of our revenue from VOD even in the face
of increasing competition," stated Michael Weiner, Chief Executive Officer of
New Frontier Media, Inc. "With the recent launch of our two linear services on
the largest DBS platform in the U.S., we now reach over 120 million network
households, making us the most widely distributed brand of adult entertainment
in the country," continued Mr. Weiner.
Pay TV
The Company's Pay TV Group reported revenue of $11.1 million for the quarter
ended March 31, 2006, as compared to $10.1 million for the quarter ended March
31, 2005, which represents an increase of 10%. Of this, revenue from the Pay TV
Group's pay-per-view ("PPV") services declined 2% to $5.7 million for the
quarter ended March 31, 2006 from $5.8 million for the quarter ended March 31,
2005. Revenue from the Pay TV Group's video-on-demand ("VOD") service provided
both to the cable and hotel markets, increased 41% to $4.8 million for the
quarter ended March 31, 2006, from $3.4 million for the quarter ended March 31,
2005. Revenue from the Pay TV Group's C-Band service decreased 33% to $0.6
million for the quarter ended March 31, 2006, from $0.9 million for the quarter
ended March 31, 2005.
The Pay TV Group's PPV revenue decreased due to a decline in revenue from
the Company's largest customer. This decline was partially offset by an increase
in revenue from the re-launch of the Pay TV Group's TEN*Blox network by an
affiliated system that had removed most of its adult content on its PPV platform
over a year ago, as well as to an increase in revenue from new launches of its
PPV services.
The increase in the Pay TV Group's VOD revenue year-over-year for the
quarter is related to an increase in VOD revenue from the platform on which the
Pay TV Group had experienced the addition of competition a year ago, as well as
to an increase in revenue from distribution on the VOD platforms of several new
MSOs added during the 2006 fiscal year.
EBITDA for the Pay TV Group was $6.1 million for the quarter ended March 31,
2006, as compared to EBITDA of $4.7 million for the quarter ended March 31,
2005, representing an increase of 30%. Gross margin for the Pay TV Group
increased to 71% for the quarter ended March 31, 2006 from 64% for the quarter
ended March 31, 2005. Operating expenses were flat at $2.1 million for both
quarters ended March 31, 2006 and 2005, respectively.
Internet Group
The Company's Internet Group reported net revenue of $0.6 million for the
quarter ended March 31, 2006 as compared to revenue of $0.7 million for the
quarter ended March 31, 2005, representing a decrease of 14%. EBITDA for the
Internet Group declined to $0.1 million for the quarter ended March 31, 2006
from $0.2 million for the quarter ended March 31, 2005. EBITDA for the quarter
ended March 31, 2005 excludes a one-time restructuring gain of $0.4 million.
Film Production Group
The Company completed its acquisition of MRG Entertainment, Inc. and its
affiliated companies ("MRG") on February 10, 2006. This segment will be referred
to as the Film Production Group in the Company's filings. The results of this
segment are for the period February 11 - March 31, 2006.
The Film Production Group reported revenue of $1.1 million, cost of sales of
$0.6 million and breakeven EBITDA for the period ended March 31, 2006. Future
operating results for this segment will be impacted by the following factors: a)
higher than normal film amortization costs due to the valuation of the acquired
film library; b) amortization of identifiable purchased intangibles valued at
$4.7 million; and c) accrual of contingent earnout payments related to the
acquisition.
Corporate Administration Expenses
Corporate administration expenses declined 12% to $1.5 million for the
quarter ended March 31, 2006 from $1.7 million for the quarter ended March 31,
2005. The decline in year-over-year quarterly corporate administration expenses
is primarily related to a decrease in accounting costs related to the Company's
compliance with Section 404 of the Sarbanes-Oxley Act. The decline in these
costs was partially offset by an increase in consulting and legal fees during
the current year quarter.
Future Outlook
The Company is providing the following guidance for FY 2007:
Revenue $56.5 million - $58.5 million
Net Income of $7.7 million - $8.9 million
EPS of $0.32 - $0.37 per fully diluted share
Guidance for the 2007 fiscal year includes approximately $0.8 million in
pre-tax stock option expense for currently issued and outstanding stock options.
At this time, we are unable to predict what additional stock options may be
issued and what impact this would have on our guidance.
The Company's financial picture for FY 2007 is made clearer by a view of its
free cash flow, which is estimated to be $18.0 - $20.0 million. Earnings for the
year will be impacted by the following, non-cash items:
* Higher than normal film amortization due to the valuation of the MRG
library. Based on the valuation completed as part of the acquisition, the
value of MRG's acquired film library of $8.9 million is 2 1/2 times
greater than its pre-acquisition value, resulting in higher amortization
for the titles that existed at the acquisition date. As MRG begins to
monetize content that it is currently producing, the amortization expense
should decline.
* Amortization of over $4.6 million of purchased intangibles related to the
MRG acquisition. The Company is still assessing the value of these
intangibles and this valuation is subject to change.
* Approximately $0.8 million in stock option expense for currently issued
and outstanding stock options.
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)-219-6110. 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 June 6, 2006 at (800)-405-2236, access code 11062066#.
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 regarding our Fiscal 2007 guidance, estimated free
cash flow of $18 - $20 million, the future outlook related to New Frontier Media
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 worldwide producer and distributor of
adult-themed and general motion picture entertainment. Under the TEN trademark,
the Company delivers seven, full-time adult-themed pay-per-view networks to
cable and satellite operators across the United States. These services reach
over 120 million network homes. Additionally, the Company is a leading provider
of adult-themed Video-on-Demand content to cable and satellite platforms, as
well as to the hospitality industry.
New Frontier Media's MRG Entertainment unit produces original, adult-themed
content and series that are distributed on premium movie channels in the U.S.
and around the world. MRG Entertainment also develops and produces original,
adult-themed event programming that is widely distributed on satellite and cable
platforms in the U.S. Additionally, MRG Entertainment manages a sales operation,
which matches independent, mainstream film producers with film distributors
around the world.
New Frontier Media owns and operates a digital broadcast infrastructure in
Colorado, which serves content to broadcast, IP and wireless networks around the
world.
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.
Contact: Karyn L. Miller, Chief Financial Officer
(303) 444-0900 ext. 102
kmiller@noof.com
Consolidated Operating Results
(in '000's except per share amounts)
(Unaudited) (Audited)
Quarter Ended Fiscal Year Ended
March 31, March 31,
---------------------- ----------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Revenue $ 12,938 $ 10,785 $ 46,851 $ 46,277
Cost of Sales (4,113) (3,970) (14,848) (16,047)
Gross Profit 8,825 6,815 32,003 30,230
Operating Expenses (4,640) (4,051) (16,003) (14,413)
Operating Income 4,185 2,764 16,000 15,817
Other Income 238 551 1,107 346
Net Income Before Taxes 4,423 3,315 17,107 16,163
Provision For Income Taxes (1,123) (907) (5,824) (5,041)
Net Income $ 3,300 $ 2,408 $ 11,283 $ 11,122
Basic Income Per Share $ 0.13 $ 0.11 $ 0.49 $ 0.50
Diluted Income Per Share $ 0.14 $ 0.10 $ 0.48 $ 0.48
Basic Shares Outstanding 23,297 22,485 22,876 22,265
Diluted Shares Outstanding 23,770 23,192 23,338 23,067
Reconciliation of Net Income to EBITDA as reported
(Unaudited) (Audited)
Quarter Ended Fiscal Year Ended
March 31, March 31,
---------------------- ----------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Net Income $ 3,300 $ 2,408 $ 11,283 $ 11,122
Adjustments:
Depreciation/
Amortization (1) 489 382 1,489 1,713
Interest Expense 3 19 41 104
Interest Income (262) (168) (1,155) (403)
Income Taxes 1,123 907 5,824 5,041
Restructuring Recovery 0 (400) 0 (546)
EBITDA as reported 4,653 3,148 17,482 17,031
Content Amortization 1,425 1,050 4,502 4,125
Cash Investments in
Content (1,064) (798) (3,510) (2,287)
Adjusted EBITDA $ 5,014 $ 3,400 $ 18,474 $ 18,869
(1) Amortization excludes amortization of content
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
(Audited) (Audited)
(in 000s) (in 000s)
March 31, 2006 March 31, 2005
-------------- --------------
CURRENT ASSETS:
Cash and Cash Equivalents $ 12,611 $ 18,403
Restricted Cash 2,646 0
Marketable Securities 8,730 9,075
Accounts Receivable, net 12,395 8,034
Deferred Tax Asset 444 382
Other 871 1,250
TOTAL CURRENT ASSETS 37,697 37,144
FURNITURE AND EQUIPMENT, net 4,082 4,191
OTHER ASSETS:
Prepaid Distribution Rights, net 8,877 9,721
Marketable Securities 1,936 4,547
Recoupable Costs and Producer
Advances 1,203 0
Film Costs, net 10,412 0
Goodwill 16,744 3,743
Other Identifiable Intangible
Assets, net 4,687 101
Other 1,127 837
TOTAL OTHER ASSETS 44,986 18,949
TOTAL ASSETS $ 86,765 $ 60,284
CURRENT LIABILITIES:
Accounts Payable $ 2,151 $ 1,868
Taxes Payable 677 0
Producer Payables 546 0
Deferred Revenue 754 484
Due to Related Party 250 0
Accrued Compensation 1,857 1,263
Accrued Transport 645 647
Accrued Legal and Accounting fees 240 662
Accrued Liabilities 1,365 728
TOTAL CURRENT LIABILITIES 8,485 5,652
LONG TERM LIABILITIES:
Deferred Tax Liability 1,268 5
Due to Related Party 1,000 0
Taxes Payable 1,359 0
Other Long-Term Liabilities 3,408 961
TOTAL LONG-TERM LIABILITIES 7,035 966
TOTAL LIABILITIES 15,520 6,618
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common Stock 2 2
Additional Paid-in Capital 61,488 55,173
Retained Earnings
(Accumulated Deficit) 9,829 (1,454)
Accumulated Other
Comprehensive Loss (74) (55)
TOTAL SHAREHOLDERS' EQUITY 71,245 53,666
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 86,765 $ 60,284
SOURCE New Frontier Media, Inc.
-0- 06/06/2006
/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 /