-----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, Nj3Ttard1aqrHFtm8JnVT7At1QDUxtWwfZajO3oIghKW+37bH9qr58Fvy3Mg0+xf 60iC6SNfrKSCYrS0jq/hng== 0001275287-05-000524.txt : 20050210 0001275287-05-000524.hdr.sgml : 20050210 20050210100053 ACCESSION NUMBER: 0001275287-05-000524 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050210 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050210 DATE AS OF CHANGE: 20050210 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: 05590926 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 nf2040.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): February 10, 2005 New Frontier Media, Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Colorado ---------------------------------------------- (State or Other Jurisdiction of Incorporation) 0-23697 84-1084061 ------------------------ ------------------------------------ (Commission File Number) (IRS Employer Identification Number) 7007 Winchester Circle, Suite 200, Boulder, Colorado 80301 ---------------------------------------------------------- (Address of Principal Executive Offices) (303) 444-0900 ---------------------------------------------------- (Registrant's Telephone Number, Including Area Code) 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 240.14-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13-e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ Item 2.02 Results of Operations and Financial Condition. On February 10, 2005, New Frontier Media, Inc., a Colorado corporation (the "Registrant") issued the attached press release that included financial information for its third fiscal quarter of fiscal 2005. A copy of the press release is attached as Exhibit 99.1 to this Report on Form 8-K. The information contained in the press release is being furnished to the Commission and shall not be deemed incorporated by reference into any of the Company's registration statements or other filings with the Commission. The press release presents EBITDA - - a non-GAAP financial measure. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of a registrant's historical or future financial performance, financial position or cash flows that exclude amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the issuer. In this regard, GAAP refers to generally accepted accounting principles in the United States. Pursuant to the requirements of Regulation G, the Registrant has provided a reconciliation within the earnings release of the non-GAAP financial measure to the most directly comparable GAAP financial measure. EBITDA measures 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 does not represent cash provided or used by operating activities. EBITDA should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. EBITDA is 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. Item 9.01 Financial Statements and Exhibits. (c) Exhibits Exhibit 99.1 Press release issued by New Frontier Media, Inc. dated February 10, 2005 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. NEW FRONTIER MEDIA, INC. (Registrant) Dated: February 10, 2005 By: /s/Michael Weiner ------------------- Michael Weiner, CEO EXHIBIT INDEX Exhibit No. Exhibits. - ----------- --------- 99.1 Press Release issued by New Frontier Media, Inc. dated February 10, 2005 EX-99.1 2 nf2040ex991.txt 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/ -----END PRIVACY-ENHANCED MESSAGE-----