BOULDER, Colo., Feb. 4, 2011 /PRNewswire/ -- New Frontier Media, Inc. (Nasdaq: NOOF), a leading provider of transactional television services and distributor of independent general motion picture entertainment, today reported its results for the fiscal third quarter and nine month period ended December 31, 2010.
"New Frontier Media maintained a solid financial position during the third quarter of fiscal 2011," said Michael Weiner, chief executive officer of New Frontier Media, Inc. "Within the Transactional TV segment, we continue to generate gains from our expansion into international markets including a new launch in Asia. We also experienced the second consecutive quarter of stabilization within our domestic VOD revenue, and we are exploring options that we believe could stabilize our domestic PPV revenue. We have been focusing on our core Transactional TV segment and have been making investments to support the segment's growth. These investments have included expanding our PPV offerings to Latin America and Europe, making necessary investments to upgrade our technology infrastructure to support growth, and developing new content packages which are specifically tailored to these markets."
Mr. Weiner continued, "We were also pleased that the Film Production segment returned to profitability during the quarter. The segment completed a producer-for-hire arrangement during the quarter and continues to have success with the distribution of mainstream content on domestic VOD platforms and to retail customers through mainstream distribution agreements. Going forward, we are selectively reducing the cost structure and focusing on the most profitable components of the segment."
"New Frontier Media currently distributes over 15,000 video assets a month to over 28 countries worldwide. In the next several months, we expect that our distribution will grow in existing and new countries in Latin America and Asia, and we also expect to make inroads into Eastern Europe. We believe for reasons discussed above, the Company is well positioned for this growth. The Company had approximately $14.7 million in cash as of December 31, 2010, and we believe our cash position will allow us to execute against our growth plans and capitalize on strategic opportunities. We believe the strategic investments we are making in the Company will generate long-term shareholder value," concluded Mr. Weiner.
Third Fiscal Quarter Financial Highlights: December 31, 2010 Compared to December 31, 2009
Revenue was approximately $14.2 million as compared to $11.5 million in the same prior year quarter and reflected the following results:
Transactional TV segment revenue was $8.8 million as compared to $9.1 million in the same prior year quarter.
Video-on-demand ("VOD") revenue increased to $5.3 million as compared to $4.9 million in the same prior year quarter due to higher international revenue from (a) distributing content to new customers, (b) improving the content performance with existing customers, (c) increasing the quantity of content distributed to existing customers, and (d) changes our customers made to their menu structures. Domestic VOD revenue was generally flat, and we believe the domestic VOD revenue performance has stabilized.
Pay-per-view ("PPV") revenue declined to $3.4 million as compared to $4.0 million in the same prior year quarter primarily due to a $0.6 million decline in revenue from the loss of a channel on a U.S. digital broadcast satellite ("DBS") platform in November 2009. Revenue also declined as a result of lower buy rates on domestic DBS and top 10 cable operator platforms, and we believe the decline was due to lower consumer spending. The declines in domestic PPV revenue were partially offset by a $0.2 million increase in international PPV revenue primarily from channel launches in Latin America.
Film Production segment revenue increased to $5.2 million from $2.2 million due to the completion of a producer-for-hire arrangement during the quarter.
Direct-to-Consumer segment revenue was approximately $0.2 million and was consistent with the same prior year quarter.
Cost of sales increased to $7.2 million as compared to $4.0 million in the same prior year quarter primarily due to production costs incurred in connection with the Film Production segment's completion of a producer-for-hire arrangement.
Operating expenses increased to $6.7 million as compared to $6.1 million in the same prior year quarter and were primarily impacted by:
an increase in Transactional TV segment expenses including (a) a $0.2 million increase in employee costs incurred to support the development of new content packages, (b) a $0.1 million increase in depreciation expenses from storage equipment purchased primarily to support international growth initiatives, and (c) a $0.1 million increase in costs from the acceleration of tenant improvement depreciation expenses in anticipation of combining certain Company facilities in the first quarter of fiscal year 2012; and
a $0.2 million increase in Film Production segment costs primarily due to strategic consulting services.
Income from continuing operations attributable to New Frontier Media, Inc. was $0.2 million, or $0.01 per share, as compared to $1.6 million, or $0.08 per share, in the same prior year quarter.
Fiscal Year to Date Financial Highlights: December 31, 2010 Compared to December 31, 2009
For the nine month period ended December 31, 2010, revenue was $37.8 million as compared to $35.3 million in the same prior year period. The Company reported income from continuing operations attributable to New Frontier Media, Inc. during the nine month period ended December 31, 2010 of $0.6 million, or $0.03 per share, as compared to $3.7 million, or $0.19 per share, in the same prior year period. Cash flows from operating activities of continuing operations during each of the nine month periods ended December 31, 2010 and 2009 were $1.5 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 (877) 941-8609. To participate in the web cast please log onto www.noof.com and click on "Investor Relations" and then "Calendar of Events". A replay of the conference call will be available for seven days beginning after 1 p.m. Eastern Time on February 4, 2011 at (800) 406-7325, access code 4406727. 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 (the "1933 Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "1934 Act"). The forward-looking statements are based on current expectations, estimates and projections made by management. These forward-looking statements are covered by the safe harbor provisions for forward-looking statements under Section 27A of the 1933 Act and Section 21E of the 1934 Act. Words such as "anticipates", "expects", "intends", "plans", "believes'', "seeks", "estimates", or variations of such words are intended to identify such forward-looking statements. For example, our stated expectation that (i) the Company will support the Transactional TV segment's growth by making necessary investments to upgrade its technology infrastructure and expanding its PPV offerings to Latin America and Europe, and (ii) the Company's strategic investments will generate long-term shareholder value, 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 most recent annual report on Form 10-K, as amended, and other periodic filings with the Securities and Exchange Commission ("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 (EDGAR) system at www.sec.gov.
ABOUT NEW FRONTIER MEDIA, INC.
New Frontier Media, Inc. is a leading producer and distributor of branded television networks and on-demand programming. The Company delivers transactional, adult-themed pay-per-view networks as well as video-on-demand services to cable and satellite operators worldwide. The Company's programming originates at New Frontier Media's state of the art digital broadcast center in Boulder, Colorado. The Company owns thousands of hours of digital content and partners with movie studios to bring together a variety of transactional adult entertainment available today.
New Frontier Media's Film Production segment produces original motion pictures that are distributed in the U.S. on premium movie channels, such as Cinemax® and Showtime®, and internationally on similar services. The Film Production segment also develops and produces original programming that is widely distributed on satellite and cable pay-per-view and video-on-demand platforms. This segment also represents the work of a full range of independent film producers in markets around the globe.
The Company is headquartered in Boulder, Colorado, and its common stock is listed on the Nasdaq Global Select Market under the symbol "NOOF." For more information about New Frontier Media, Inc., contact Grant Williams, Chief Financial Officer, at (303) 444-0900, extension 2185, and please visit our web site at www.noof.com.