-----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, QeA0y/fAtAhfv4wI+twcY605FyKOZj9CeqOmKx/CwRZxIpisMUaFJObvwuo5vO+k GOAOgXTc8HyCvpxMBUy5Lw== 0001275287-07-000533.txt : 20070206 0001275287-07-000533.hdr.sgml : 20070206 20070206101528 ACCESSION NUMBER: 0001275287-07-000533 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070206 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070206 DATE AS OF CHANGE: 20070206 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: 07582817 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 nf8823.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): February 6, 2007 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 6, 2007, New Frontier Media, Inc., a Colorado corporation (the "Registrant") issued the attached press release that included financial information for its third quarter of fiscal 2007. 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 February 6, 2007 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 6, 2007 By: /s/ Michael Weiner ------------------------ Michael Weiner, CEO EXHIBIT INDEX Exhibit No. Exhibits. - ----------- ----------------------------------------------------------------- 99.1 Press Release issued by New Frontier Media, Inc. dated February 6, 2007 EX-99.1 2 nf8823ex991.txt EXHIBIT 99.1 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) -----END PRIVACY-ENHANCED MESSAGE-----