Exhibit 99.1
NEW FRONTIER MEDIA REPORTS THIRD QUARTER EARNINGS PER SHARE OF $0.14
BOULDER, Colo., Feb. 6 /PRNewswire-FirstCall/ --
New Frontier Media, Inc. (Nasdaq: NOOF), a worldwide producer and distributor of
general and adult-themed motion picture entertainment, today reported earnings
per fully diluted share of $0.14 for the quarter ended December 31, 2006,
representing a 17% increase over earnings per fully diluted share of $0.12 for
the quarter ended December 31, 2005. The Company reported a 44% increase in
quarterly revenue to $16.6 million from $11.5 million for the same quarter a
year ago. Net income for the current year quarter was $3.4 million compared to
$2.9 million for the same quarter a year ago, representing an increase of 17%.
Post-tax free cash flow, which going forward will be the basis for the
computation of the Company's recently announced semi-annual dividend program,
was $3.5 million for the quarter ended December 31, 2006. The first dividend
under this program, based upon 60% of post-tax free cash flow, will be payable
after the Company's quarter ended September 30, 2007.
"This quarter's results were driven largely by the strong performance of our
newly acquired content production group, MRG Entertainment. MRG delivered an
unexpectedly large quantity of titles this quarter, some of which were delivered
earlier than originally forecast," stated Michael Weiner, Chief Executive
Officer of New Frontier Media, Inc.
"Our core adult services are performing well. On the largest VOD platform in
the country we are observing material retail market share advantages versus our
competition. We have worked hard to improve our services this year and we
believe we are now seeing the results of those efforts. We look forward to the
payment of our special $0.60 per share dividend on February 14," Mr. Weiner
continued.
Pay TV
The Company's Pay TV Group reported revenue of $11.2 million for the quarter
ended December 31, 2006, as compared to $10.9 million for the quarter ended
December 31, 2005, which represents an increase of 3%. Of this increase, revenue
from the Pay TV Group's pay-per-view ("PPV") services increased 11% to $6.9
million for the quarter ended December 31, 2006 from $6.2 million for the
quarter ended December 31, 2005. Revenue from the Pay TV Group's video-on-demand
("VOD") service provided both to the cable and hotel markets, decreased 5% to
$3.8 million for the quarter ended December 31, 2006, from $4.0 million for the
quarter ended December 31, 2005. Revenue from the Pay TV Group's C-Band service
decreased 29% to $0.5 million for the quarter ended December 31, 2006, from $0.7
million for the quarter ended December 31, 2005.
The Pay TV Group's PPV revenue increased primarily due to the launch of two
of its PPV services on the largest DBS platform in the United States. This
increase in revenue was mitigated by the finalization of a new contract with our
largest customer during the current quarter which adjusted our historical
revenue splits.
The decrease in the Pay TV Group's VOD revenue year-over-year for the
quarter is related to the sale of a smaller MSO's systems to larger
multi-channel operators which resulted in a lower license fee on our VOD content
from those systems. This decrease in revenue was partially offset by increases
in revenue from the largest cable MSO in the United States and new launches of
our VOD content to other top ten cable MSOs.
Operating income generated by the Pay TV Group was $5.9 million for the
quarter ended December 31, 2006, as compared to operating income of $5.6 million
for the quarter ended December 31, 2005, representing an increase of 5%. Gross
margin for the Pay TV Group increased to 76% for the quarter ended December 31,
2006 from 72% for the quarter ended December 31, 2005. Operating expenses
increased 18% to $2.6 million for the quarter ended December 31, 2006 from $2.2
million for the quarter ended December 31, 2005.
Internet Group
The Company's Internet Group reported revenue of $0.6 million for the
quarter ended December 31, 2006 as compared to $0.7 million for the quarter
ended December 31, 2005, which represents a decrease of 14%. Operating income
for the Internet Group was breakeven, prior to a write-down taken for the
impairment of licensed content in the amount of $0.4 million, for the quarter
ended December 31, 2006 as compared to $0.1 million for the quarter ended
December 31, 2005. The Company will be focusing additional resources on website
redesign and marketing efforts in order to reinvigorate its web business, which
currently accounts for the majority of revenue and profitability within the
Internet Group.
During the current year quarter, the Company recognized an impairment loss
of $0.4 million associated with the Internet Group's licensed content. The
Company has undertaken an ongoing project to assess all of its content under
license for use across all of its delivery platforms. As part of this continuing
effort, this particular content was identified as content that did not meet the
Company's stringent quality requirements for use within the Internet Group's
products. Accordingly, the Company recognized an impairment loss for the
remaining unamortized cost basis of the content. The Company does not anticipate
any further write-offs related to its licensed content.
Film Production Group
The Film Production Group reported revenue of $4.8 million, cost of sales of
$1.8 million and operating income of $1.8 million for the quarter ended December
31, 2006. Operating income for the quarter was positively impacted by higher
third quarter revenues, increasing margins on owned content as the Film
Production Group begins to monetize newly produced movies and events, and flat
consecutive quarter operating costs. The Film Production Group expects that its
third quarter revenues will typically trend higher than other fiscal year
quarters as it generally delivers a larger number of titles to its customers
during this quarter.
Corporate Administration Expenses
Corporate administration expenses increased 47% to $2.2 million for the
quarter ended December 31, 2006 from $1.5 million for the quarter ended December
31, 2005. The increase in year-over-year quarterly corporate administration
expenses is primarily related to an increase in stock compensation expense due
to the Company's adoption during the current fiscal year of the new accounting
pronouncement requiring the expensing of the fair value of stock options over
the vesting period, and the addition of an executive vice president to the
executive team in January 2006.
Future Outlook
The Company is updating its fiscal 2007 guidance as follows:
Revenue guidance is updated to $62 - $63 million from $60 - $62 million
Net income guidance is updated to $12.0 - $13.0 million from
$10.0 - $11.4 million
EPS guidance is updated to $0.50 - $0.53 per share from $0.42 - $0.47 per
share
Pre-tax free cash flow guidance is updated to $22.8 - $23.8 million from
$22.0 - $24.0 million
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)-257-2101. 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
2 p.m. Eastern Time on February 6, 2007 at (800)-405-2236, access code
11083200#. 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 the Company's expectations of paying a
semi-annual dividend after the quarter ended September 30, 2007, payment of a
special $0.60 per share dividend on February 14, its expectations of no further
write-offs related to its licensed content, its updated fiscal 2007 guidance to
revenue of $62 -$63 million, net income of $12.2 - $13.0 million, EPS of $0.50 -
$0.53 per share, and pre-tax free cash flow of $23 - $23.8 million, 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 "The Erotic
Networks" trademark, the Company delivers seven, full-time adult-themed
pay-per-view networks to cable and satellite operators across the United States.
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. These services reach over 135 million network homes.
New Frontier Media's MRG Entertainment unit produces original, adult-themed
content and series that are distributed on premium movie channels in the United
States 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 United States. 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.
Consolidated Operating Results
(in '000's except per share amounts)
(Unaudited) (Unaudited)
Quarter Ended Nine Months Ended
December 31, December 31,
---------------------------- ----------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
Net Sales $ 16,569 $ 11,524 $ 49,063 $ 33,912
Cost of Sales (4,744) (3,324) (15,268) (10,440)
Gross Margin 11,825 8,200 33,795 23,472
Operating Expenses (6,741) (3,952) (17,581) (11,657)
Operating Income 5,084 4,248 16,214 11,815
Other Income 376 373 876 869
Income Before Provision for
Income Taxes 5,460 4,621 17,090 12,684
Provision For Income Taxes (2,076) (1,743) (6,503) (4,702)
Net Income $ 3,384 $ 2,878 $ 10,587 $ 7,982
Basic Income Per Share $ 0.14 $ 0.13 $ 0.44 $ 0.35
Diluted Income Per Share $ 0.14 $ 0.12 $ 0.44 $ 0.34
Dividends declared by
common share $ 0.60 $ -- $ 0.60 $ --
Average outstanding shares
of common stock 23,769 22,863 23,811 22,738
Common stock and common
stock equivalents 24,279 23,258 24,285 23,196
EBITDA and Adjusted EBITDA
(Unaudited) (Unaudited)
Quarter Ended Nine Months Ended
December 31, December 31,
---------------------------- ----------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
Net Income $ 3,384 $ 2,878 $ 10,587 $ 7,982
Adjustments:
Depreciation/
Amortization(1) 519 352 1,470 998
Interest Expense 28 9 85 38
Interest Income (388) (369) (948) (893)
Income Taxes 2,076 1,743 6,503 4,702
EBITDA 5,619 4,613 17,697 12,827
Content Amortization 2,359 1,002 7,980 3,080
Cash Investments
in Content (1,502) (849) (5,467) (2,446)
Capital Expenditures (288) (375) (874) (598)
Stock Based Compensation 278 0 706 0
Adjusted EBITDA $ 6,466 $ 4,391 $ 20,042 $ 12,863
(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 Sheets
(Unaudited) (Audited)
(in 000s) (in 000s)
December 31, March 31,
2006 2006
------------ ------------
CURRENT ASSETS:
Cash and Cash Equivalents $ 21,445 $ 12,611
Restricted Cash 1,699 2,646
Marketable Securities 14,410 8,730
Accounts Receivable, net 14,324 12,395
Deferred Tax Asset 466 444
Other 1,447 871
TOTAL CURRENT ASSETS 53,791 37,697
EQUIPMENT AND FURNITURE, net 4,017 4,082
OTHER ASSETS:
Prepaid Distribution Rights, net 9,067 8,877
Marketable Securities 1,013 1,936
Recoupable Costs and Producer
Advances 1,279 1,203
Film Costs, net 7,274 10,412
Goodwill 18,503 16,744
Other Identifiable Intangible
Assets, net 2,962 4,687
Other 929 1,127
TOTAL OTHER ASSETS 41,027 44,986
TOTAL ASSETS $ 98,835 $ 86,765
CURRENT LIABILITIES:
Accounts Payable $ 2,347 $ 2,151
Cash Dividend Payable 14,559 0
Taxes Payable 1,006 677
Producers Payable 1,152 546
Deferred Revenue 1,012 754
Due to Related Party 0 250
Accrued Compensation 2,463 1,857
Accrued Transport Fees 645 645
Accrued Liabilities and Other 3,761 1,605
TOTAL CURRENT LIABILITIES 26,945 8,485
LONG TERM LIABILITIES:
Deferred Tax Liability 509 1,268
Due to Related Party 723 1,000
Taxes Payable 1,509 1,359
Other 771 3,408
TOTAL LONG-TERM LIABILITIES 3,512 7,035
TOTAL LIABILITIES 30,457 15,520
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common Stock 2 2
Additional Paid-in Capital 62,552 61,488
Retained Earnings 5,857 9,829
Accumulated Other
Comprehensive Loss (33) (74)
TOTAL SHAREHOLDERS' EQUITY 68,378 71,245
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 98,835 $ 86,765
SOURCE New Frontier Media, Inc.
-0- 02/06/2007
/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 /
(NOOF)