-----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, JYptyeF1vb+vxtH5w3XH9hmNEvTSg3whHrloNHsI2i8J5fSv0hfL9HPJbyyZ9kjf 1CfIGGQDAw/Qy+L5jmaVqg== 0001275287-06-003127.txt : 20060606 0001275287-06-003127.hdr.sgml : 20060606 20060606100051 ACCESSION NUMBER: 0001275287-06-003127 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060606 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060606 DATE AS OF CHANGE: 20060606 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: 06888054 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 nf6071.txt FORM 8-K ================================================================================ 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): June 6, 2006 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 (17 CFR 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 June 6, 2006, New Frontier Media, Inc., a Colorado corporation (the "Registrant") issued the attached press release that included financial information for its fourth quarter of fiscal 2006. 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 and Adjusted EBITDA - -non-GAAP financial measures. 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 measures to the most directly comparable GAAP financial measure. 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 do not represent cash provided or used by operating activities. EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. 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. Item 9.01 Financial Statements and Exhibits. (d) Exhibits Exhibit 99.1 Press release issued by New Frontier Media, Inc. dated June 6, 2006 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: June 6, 2006 By: /s/ Michael Weiner -------------------- Michael Weiner, CEO EXHIBIT INDEX Exhibit No. Exhibits. - ----------- ----------------------------------------------------------------- 99.1 Press Release issued by New Frontier Media, Inc. dated June 6, 2006 EX-99.1 2 nf6071ex991.txt EXHIBIT 99.1 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 / -----END PRIVACY-ENHANCED MESSAGE-----