New Frontier Media Reports First Quarter Results

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Source: New Frontier Media, Inc.

BOULDER, Colo., Aug. 10 /PRNewswire/ — New Frontier Media, Inc. (Nasdaq: NOOF – news), a leader in the electronic distribution of adult entertainment, announced its first fiscal quarter results. Net revenue was reported as $14.2 million for the quarter ended June 30, 2000 compared to $10.7 million for the quarter ended June 30, 1999, an increase of 33%. EBITDA (earnings before interest, taxes, depreciation and amortization) was reported as $1.9 million in the first quarter of fiscal 2000, including corporate overhead, compared to an EBITDA loss of $34,000 for the prior year period. Net income was reported as $741,000 for the first quarter compared to a net loss of $605,000 in the year ago period. Earnings per share was reported as $0.04 per basic share, or $0.03 per fully diluted share, compared to a loss of $0.03 per basic and fully diluted share during the first quarter a year ago.

During the quarter, the Company’s Subscription/PPV TV subsidiary (“CSB”) generated $5.5 million in revenue compared to $3.2 million during the first quarter a year ago, or an increase of 72%. A substantial component of the total increase in revenue came from the subsidiary’s Cable/DBS (direct broadcast satellite) products reporting $2.7 million over the $.5 million generated last year, or an increase of 480%.

In addition, the Company reported that as a result of the high fixed cost component of its business, cost of sales as a percentage of revenue declined to 51% of sales compared to 81% a year ago. “Our network broadcasting operations are supported by a state-of-the art, fully automated technology infrastructure that provides us with tremendous operating leverage — and now that we’re adding more cable and DBS affiliates, we’re seeing its benefits,” stated Mark H. Kreloff, Chairman and CEO of New Frontier Media. Similarly, operating expenses as a percentage of sales for CSB improved to 46% for the first quarter ended June 30, 2000 compared to 65% for the same period a year ago. CSB reported a substantial improvement in EBITDA for the quarter, generating a positive $632,000 for the quarter ended June 30, 2000 compared to an EBITDA loss of $1.2 million a year ago.

IGallery, the Company’s Internet Content Provider, reported $8.5 million in revenue for the quarter ended June 30, 2000 compared to $6.9 million for the year ago period, or an increase of 23%. IGallery increased the number of member websites from 17 last year to 29 at the end of June 30, 2000. In addition, traffic to its sites doubled year over year to 2.2 million visitors each day. “We’ve been very conservative in how we grow our revenue stream from membership websites given the current credit card chargeback limitations imposed by the major credit companies. That said, the adult Internet market continues to offer tremendous growth opportunities for us. Our opportunities extend beyond member sites and include, among other efforts, augmenting our other revenue streams such as sale of content and sale of traffic,” said Kreloff. As a result of these efforts, IGallery reported that revenue from its sale of content and traffic increased by 164% year over year to $2.9 million for the quarter ended June 30, 2000 from $1.1 million a year ago. Overall, cost of sales for IGallery improved as a percent of total sales to 56% of sales compared to 61% a year ago. Operating expenses as a percent of sales improved to 16% for the quarter ended June 30, 2000 compared to 19% a year ago. IGallery reported an increase of 100% in EBIDTA growth generating $2.6 million during the quarter compared to $1.3 million a year ago.

“As we look to the future, opportunities to increase our market share domestically and expand our market internationally continue to show promise. As a quality provider of adult entertainment, we believe we can impact the market on a global scale,” Kreloff believes. “The opportunities that our Internet Service Provider Group (Interactive Telecom Network, Inc.) and our Payment Service Provider Group (Card Transactions, Inc.) represent are also very compelling. We’re focusing on establishing those subsidiaries as leaders in their respective markets primarily because we’ve amassed a considerable level of expertise the areas of broadband content delivery, streaming media, transaction processing and alternate payment solutions over the Internet,” he added.

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of Securities & Exchange Act. The Company intends forward-looking statements to be covered by the safe harbor provisions for forward-looking statements. All statements regarding the Company’s expected financial position and operating results, its business strategy, its ability to develop international business opportunities, its ability to increase its domestic market share, its financing plans 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.

ABOUT NEW FRONTIER MEDIA, INC.

New Frontier Media, Inc. is a leader in the electronic distribution of adult entertainment with an unparalleled library of content. Through its television subsidiary, the Company distributes adult entertainment via pay-per-view and subscription cable/satellite video networks. Cable/DBS networks include Pleasure(TM), the most-edited standard available in the category; TeN(TM) and ETC (Erotic Television Clips)(TM) which incorporate a partial-editing standard, and Extasy(TM) and True Blue(TM) which incorporate the least-edited standard.

Through its Internet subsidiaries, New Frontier Media designs, creates and implements Company-owned subscription/membership-based web sites for the adult Internet consumer markets. It also operates Internet traffic sales and acquisition programs for the adult webmaster community. In addition, the Company serves as a single source for a comprehensive range of high-performance Internet products and services, including transaction processing, dedicated access, web hosting, co-location, e-commerce application development, streaming media, and bandwidth management. New Frontier Media’s network infrastructure enables the delivery of live and on-demand video events to millions of Internet users.

For more information contact Keely Hawk, VP Corporate Communications at (303) 444-0900, extension 145.