-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CSgjFdBLfuewkq7RDTIHxnZyFevk6Aoz4iXA1LHgmsTC0hWegGjQlC02scIhcEcK 3KfmjJwpmaha/jUKOGEweg== 0001144204-07-059080.txt : 20071108 0001144204-07-059080.hdr.sgml : 20071108 20071108094509 ACCESSION NUMBER: 0001144204-07-059080 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20071108 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20071108 DATE AS OF CHANGE: 20071108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW FRONTIER MEDIA INC CENTRAL INDEX KEY: 0000847383 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE DISTRIBUTION [7822] IRS NUMBER: 841084061 STATE OF INCORPORATION: CO FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-23697 FILM NUMBER: 071223724 BUSINESS ADDRESS: STREET 1: 7007 WINCHESTER CIRCLE STREET 2: SUITE 200 CITY: BOULDER STATE: CO ZIP: 80301 BUSINESS PHONE: 3037868700 MAIL ADDRESS: STREET 1: 7007 WINCHESTER CIRCLE STREET 2: SUITE 200 CITY: BOULDER STATE: CO ZIP: 80301 FORMER COMPANY: FORMER CONFORMED NAME: NEW FRONTIER MEDIA INC /CO/ DATE OF NAME CHANGE: 19970627 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL SECURITIES HOLDING CORPORATION DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: STRATEGIC ACQUISITIONS INC DATE OF NAME CHANGE: 19600201 8-K 1 v092938_8k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ----------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported): November 8, 2007 ---------------- New Frontier Media, Inc. - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Colorado 0-23697 84-1084061 - -------------------------------------------------------------------------------- (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 7007 Winchester Circle, Suite 200, Boulder, Colorado 80301 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (303) 444-0900 -------------- N/A - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition. On November 8, 2007, New Frontier Media, Inc., a Colorado corporation (the "Registrant"), issued the attached press release that included financial information for its fiscal second quarter 2008. A copy of the press release is furnished as Exhibit 99.1 to this report on Form 8-K, and shall not be deemed incorporated by reference into any of the Registrant's registration statements or other filings with the Securities and Exchange Commission. The press release presents EBITDA and Adjusted EBITDA, both of which are non-GAAP financial measures. EBITDA and Adjusted EBITDA are presented in the press release because the Registrant's management uses this information in evaluating the operating efficiency and overall financial performance of its business. The Registrant's management also believes that this information provides the users of the Registrant's financial statements a valuable insight into its operating results. EBITDA and Adjusted EBITDA measure the amount of income generated each period by the Registrant that could be used to service debt, pay taxes and fund capital expenditures. It is important to note, however, that EBITDA and Adjusted EBITDA as presented do not represent cash provided or used by operating activities and may not be comparable to similarly titled measures reported by other companies. EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Item 9.01 Financial Statements and Exhibits. (d) Exhibits Exhibit No. Exhibit Description - ----------- ------------------- 99.1 Press Release issued by New Frontier Media, Inc. dated November 8, 2007 furnished herewith. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: November 8, 2007 NEW FRONTIER MEDIA, INC. By: /s/ Michael Weiner ------------------------- Name: Michael Weiner Title: Chief Executive Officer 3 EXHIBIT INDEX Exhibit No. Exhibit Description - ----------- ------------------- 99.1 Press Release issued by New Frontier Media, Inc. dated November 8, 2007 furnished herewith. 4 EX-99.1 2 v092938_ex99-1.txt [COMPANY LOGO] NEW FRONTIER MEDIA For Immediate Release Contact: Grant Williams, Corporate Controller (303) 444-0900 x185 gwilliams@noof.com New Frontier Media Reports Fiscal 2008 Second Quarter Results BOULDER, Colo., Nov. 8 /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 share of $0.09 for the quarter ended September 30, 2007, as compared to $0.15 per share for the same period last year. The Company reported quarterly revenue of $12.4 million, representing a decline of $3.8 million as compared to the same period in the prior year. "On a consecutive quarter basis, we believe New Frontier Media is now returning to a growth trend both in terms of adjusted EBITDA and earnings per share" said Michael Weiner, Chief Executive Officer of New Frontier Media, Inc. "We believe that our newly announced distribution and programming contracts will provide us with continued and material growth as we move into the second half of the fiscal year." During the second fiscal quarter, New Frontier Media, Inc. provided shareholders with a $0.125 quarterly dividend and repurchased almost 570,000 shares of its common stock. Since fiscal 2007, the Company has provided shareholders with over $20.6 million in cash dividends, and has repurchased approximately $5.8 million of its common stock. Quarterly Results - ----------------- On a quarterly basis, the Company reported a decrease in second quarter revenue to $12.4 million from $16.2 million for the same quarter a year ago. Net income for the current year quarter was $2.1 million compared to $3.7 million for the same quarter a year ago. The Company reported earnings per share of $0.09 for the quarter ended September 30, 2007, as compared with $0.15 per share for the same quarter a year ago. Pay TV - ------ The Company's Pay TV segment reported revenue of $10.0 million for the quarter ended September 30, 2007, as compared to $12.2 million for the quarter ended September 30, 2006, representing a decrease of 18%. Within the Pay TV segment, the following detailed results were reported for the current quarter compared to the same quarter last year: * Pay-per-view ("PPV") revenue declined 33% to $5.0 million from $7.5 million for the same period last year. The decrease is primarily a result of the renegotiated agreement with one of our key customers in October 2006, which resulted in a downward adjustment of our historical revenue split. * Video-on-demand ("VOD") revenue was $4.7 million representing a 12% increase from the $4.2 million in revenue recognized during the same prior year quarter. The increase is attributable to an improvement in the performance of our services. * C-Band revenue decreased 40% to $0.3 million from $0.5 million in the prior year. Operating income for the Pay TV segment was $5.1 million for the quarter ended September 30, 2007, as compared to operating income of $7.8 million for the quarter ended September 30, 2006, representing a decrease of 35%. Gross margin for the Pay TV segment decreased to 72% for the quarter ended September 30, 2007 from 77% for the quarter ended September 30, 2006. Operating expenses increased 31% to $2.1 million for the quarter ended September 30, 2007 from $1.6 million for the quarter a year ago primarily as a result of higher costs associated with promotion and marketing activities in anticipation of new channel launches. The Company launched two of these new channels in October 2007 on the largest direct broadcast satellite platform in the U.S. Film Production - --------------- The Company's Film Production segment reported revenue of $2.0 million for the quarter ended September 30, 2007 as compared to revenue of $3.3 million for the quarter ended September 30, 2006, representing a decrease of 39%. The decline in revenue is primarily related to different delivery schedules between years. In the prior year quarter, the Film Production segment delivered four episodes of a 13 episode series. This same episodic business has completed production and is expected to be delivered during the third quarter of the current fiscal year. Offsetting these revenue declines was higher revenue from the delivery of the Film Production segment's content on the video-on-demand platforms of four major cable operators in the U.S. and higher revenue from the distribution of several horror films to home video and video-on-demand platforms through a mainstream film distributor. Cost of sales declined 76% to $0.5 million for the quarter ended September 30, 2007 from $2.1 million for the quarter ended September 30, 2006. This decline is primarily from lower film amortization from a decline in revenue and from the Film Production segment's monetization of titles produced subsequent to its acquisition by New Frontier Media in February 2006. Also contributing to the decline was the delivery and recognition of revenue for several older titles and a horror title whose film costs had been fully amortized in prior periods. As a result of this decline in cost of sales, the Film Production segment's gross margin increased to 75% for the current fiscal quarter as compared to 36% for the same quarter in the prior year. The Film Production segment generated operating income of $0.4 million for the quarter ended September 30, 2007 as compared to $0.1 million during the quarter ended September 30, 2006 as a result of the higher gross margins. Internet - -------- The Company's Internet segment reported net revenue of $0.4 million for the quarter ended September 30, 2007 as compared to net revenue of $0.6 million for the quarter ended September 30, 2006, representing a decrease of 33%. Operating income for the Internet segment was $0.1 million for the quarter ended September 30, 2007 and breakeven for the quarter ended September 30, 2006. Corporate Administration Expenses - --------------------------------- Corporate administration expenses were $2.4 million for the quarter ended September 30, 2007 and were relatively flat from the $2.3 million in corporate administration expenses reported for the comparable quarter last year. Other Results - ------------- The Company reported Adjusted EBITDA for the quarter ended September 30, 2007 of $2.4 million compared to $6.3 million last year. A schedule reconciling Adjusted EBITDA to the most directly comparable GAAP (defined below) financial measure -- Net Income -- is provided below. The Company believes EBITDA and Adjusted EBITDA are important financial measures and they are used by management to monitor the financial performance of the Company. The decline in Adjusted EBITDA compared to the same period last year is primarily attributable to the following: * lower net income attributable to a decline in the PPV revenue reported in the Pay TV segment from the renegotiated contract with a key customer; * lower revenue from the Film Production segment primarily due to different delivery schedules associated with a 13 episode series. The series was delivered in the first half of fiscal 2007 but is not scheduled to occur until the third quarter of fiscal 2008; * the impact of lower amortization expenses in the Film Production segment; and * increased capital expenditure investments related to investments in our digital production facility. Total cash and investments as of September 30, 2007 were $16.6 million, down from $23.9 million as of June 30, 2007. The decrease from the previous quarter is primarily attributable to the following second quarter activities: * $3.6 million used to repurchase outstanding common stock during the quarter; * $3.0 million used to fund the $0.125 quarterly dividend to stockholders during the quarter; * $2.2 million used to acquire content and produce owned content during the quarter; and * $2.1 million used to fund a large "producer-for-hire" project in the Film Production segment during the quarter. 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) 366-3964. 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 beginning after 1 p.m. Eastern Time on November 8, 2007 at (800) 405-2236, access code 11100423#. 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. 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 most recent 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. Non-GAAP Financial Measures - --------------------------- This press release contains "non-GAAP financial measure(s)" as defined in Item 10 of Regulation S-K, including EBITDA and Adjusted EBITDA on a consolidated basis for the three months ended September 30, 2007 and September 30, 2006 and the six months ended September 30, 2007 and September 30, 2006. The Company believes these measures provide useful information to management and to investors; however, these "non-GAAP" measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with Generally Accepted Accounting Principles in the United States ("GAAP"). A reconciliation of EBITDA and Adjusted EBITDA, as compared to the most directly comparable GAAP financial measure, is presented in a reconciliation table that follows our presentation of Consolidated Operating Results below. EBITDA is calculated as net income plus depreciation, amortization (excluding content amortization), income taxes and interest expense less interest income. Adjusted EBITDA is calculated as EBITDA plus content amortization and share based compensation expenses, less cash investments for content and capital expenditures. 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"(R) 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. These services reach approximately 160 million network homes. New Frontier Media's Film Production segment produces original, adult-themed content and series that are distributed on premium movie channels in the United States and around the world. The Film Production segment also develops and produces original, adult-themed event programming that is widely distributed on satellite and cable platforms in the United States. Additionally, the Film Production segment 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 Grant Williams, Corporate Controller, at (303) 444-0900, extension 185, and please visit our web site at www.noof.com. Consolidated Operating Results (in thousands, except per share amounts)
(Unaudited) (Unaudited) Quarter Ended September 30, Six Months Ended September 30, ------------------------------- ------------------------------- 2007 2006 2007 2006 -------------- -------------- -------------- -------------- Net sales $ 12,430 $ 16,166 $ 25,370 $ 32,494 Cost of sales 3,459 5,195 7,256 10,524 -------------- -------------- -------------- -------------- Gross margin 8,971 10,971 18,114 21,970 Operating expenses 5,719 5,332 12,723 10,840 -------------- -------------- -------------- -------------- Operating income 3,252 5,639 5,391 11,130 Other income 149 298 385 500 -------------- -------------- -------------- -------------- Income before provision for income taxes 3,401 5,937 5,776 11,630 Provision for income taxes (1,256) (2,283) (2,134) (4,427) -------------- -------------- -------------- -------------- Net income $ 2,145 $ 3,654 $ 3,642 $ 7,203 ============== ============== ============== ============== Basic income per share $ 0.09 $ 0.15 $ 0.15 $ 0.30 ============== ============== ============== ============== Diluted income per share $ 0.09 $ 0.15 $ 0.15 $ 0.30 ============== ============== ============== ============== Dividends declared per common share $ 0.13 $ - $ 0.25 $ - ============== ============== ============== ============== Average outstanding shares of common stock 24,120 23,830 24,232 23,832 ============== ============== ============== ============== Common stock and common stock equivalents 24,225 24,276 24,424 24,287 ============== ============== ============== ==============
Reconciliations of EBITDA and Adjusted EBITDA
(Unaudited) (Unaudited) Quarter Ended September 30, Six Months Ended September 30, 2007 2006 2007 2006 -------------- -------------- -------------- -------------- Net Income $ 2,145 $ 3,654 $ 3,642 $ 7,203 Adjustments: Depreciation/Amortization (1) 556 488 1,081 951 Interest Expense 53 28 96 57 Interest Income (215) (322) (469) (560) Income taxes 1,256 2,283 2,134 4,427 -------------- -------------- -------------- -------------- EBITDA 3,795 6,131 6,484 12,078 -------------- -------------- -------------- -------------- Content Amortization 1,159 2,750 2,530 5,626 Cash Investments in Content (2,196) (2,569) (4,540) (3,965) Capital Expenditures (653) (286) (1,160) (586) Stock Based Compensation 288 225 563 428 -------------- -------------- -------------- -------------- Adjusted EBITDA $ 2,393 $ 6,251 $ 3,877 $ 13,581 ============== ============== ============== ==============
(1) Amortization excludes amortization of content. Consolidated Balance Sheets (In thousands)
(Unaudited) September 30, 2007 March 31, 2007 ------------------ ------------------ CURRENT ASSETS: Cash and Cash Equivalents $ 12,205 $ 17,345 Restricted Cash 10 1,710 Marketable Securities 3,845 8,681 Accounts Receivable, net 11,262 12,249 Deferred Cost 2,106 -- Deferred Tax Asset 407 528 Other Current Assets 2,175 2,863 ------------------ ------------------ TOTAL CURRENT ASSETS 32,010 43,376 ------------------ ------------------ Equipment and Furniture, net 4,722 4,534 Prepaid Distribution Rights, net 9,872 9,084 Marketable Securities 583 587 Recoupable Costs and Producer Advances 1,610 1,278 Film Costs, net 8,213 6,991 Goodwill 18,608 18,608 Other Identifiable Intangible Assets, net 2,390 2,771 Other Assets 984 987 ------------------ ------------------ TOTAL ASSETS $ 78,992 $ 88,216 ================== ================== CURRENT LIABILITIES: Accounts Payable $ 2,137 $ 1,942 Producer Payable 638 1,049 Deferred Revenue 1,131 889 Due to Related Party 92 647 Accrued Compensation 1,751 3,298 Deferred Producer Liabilities 2,309 1,344 Accrued and Other Liabilities 857 3,664 ------------------ ------------------ TOTAL CURRENT LIABILITIES 8,915 12,833 ------------------ ------------------ Deferred Tax Liability 355 976 Taxes Payable 1,849 1,726 Other Long-Term Liabilities 962 982 ------------------ ------------------ TOTAL LIABILITIES 12,081 16,517 ------------------ ------------------ COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Common Stock 2 2 Additional Paid-in Capital 61,789 64,191 Retained Earnings 5,136 7,536 Accumulated Other Comprehensive Loss (16) (30) ------------------ ------------------ TOTAL SHAREHOLDERS' EQUITY 66,911 71,699 ------------------ ------------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 78,992 $ 88,216 ================== ==================
Consolidated Statements of Cash Flows (In thousands) (Unaudited) Six Months Ended September 30, -------------------------------- Cash flows from operating activities: 2007 2006 --------------- --------------- Net income $ 3,642 $ 7,203 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,611 6,577 Tax benefit from option/warrant exercises 167 134 Share-based compensation 563 428 Charge for asset disposition and impairment 363 -- Changes in operating assets and liabilities Accounts receivable 987 11 Accounts payable 195 (441) Prepaid distribution rights (2,388) (2,468) Capitalized film costs (2,152) (1,497) Deferred costs (2,106) -- Deferred revenue, net 242 510 Producer payable (411) 58 Taxes receivable and payable, net 275 1,288 Deferred tax asset and liability, net (508) (1,218) Accrued compensation (1,547) (21) Other assets and liabilities, net (45) 247 --------------- --------------- Net cash provided by operating activities 888 10,811 --------------- --------------- Cash flows from investing activities: Payment for business acquisitions -- (18) Purchase of investments available-for-sale (2,671) (12,571) Redemption of investments available-for-sale 7,532 2,753 Purchase of equipment and furniture (1,160) (586) Payment of related party note arising from business acquisition (555) (468) --------------- --------------- Net cash provided by (used in) investing activities 3,146 (10,890) --------------- --------------- Cash flows from financing activities: Proceeds from exercise of stock options/warrants 512 636 Purchase of common stock (3,618) (2,160) Payment of dividend (6,042) -- Excess tax benefit from option/warrant exercise (26) 323 --------------- --------------- Net cash used in financing activities (9,174) (1,201) --------------- --------------- Net decrease in cash and cash equivalents (5,140) (1,280) Cash and cash equivalents, beginning of period 17,345 12,611 --------------- --------------- Cash and cash equivalents, end of period $ 12,205 $ 11,331 =============== =============== -----END PRIVACY-ENHANCED MESSAGE-----