New Frontier Media Reports Third Quarter Results of $0.12/share

New Frontier Media Reports Third Quarter Results of $0.12/share

BOULDER, Colo., Feb. 7 /PRNewswire-FirstCall/ -- New Frontier Media, Inc. (NASDAQ:NOOF), a leader in the electronic distribution of adult entertainment, announced its third quarter results of $0.12 per fully diluted share, net of a quarterly tax rate of 38%. This compares with $0.13 per fully diluted share, net of a 36% quarterly tax rate, for the same quarter a year ago.

The Company reported net revenue for the current year quarter of $11.5 million compared to $12.0 million for the same quarter a year ago, representing a decrease of 4%. Net income for both the current year quarter and the quarter a year ago was $2.9 million.

"We are extremely pleased by the fact that we added 6 million new network households during our third quarter, most of which were a result of new launches of our pay-per-view networks. We now provide our services to over 89 million network households," stated Michael Weiner, Chief Executive Officer of New Frontier Media, Inc.

Pay TV

The Company's Pay TV Group reported revenue of $10.9 million for the quarter ended December 31, 2005, as compared to $11.3 million for the quarter ended December 31, 2004, which represents a decrease of 4%. Of this, revenue from the Pay TV Group's pay-per-view ("PPV") services declined 2% to $6.2 million for the quarter ended December 31, 2005 from $6.3 million for the quarter ended December 31, 2004. Revenue from the Pay TV Group's video-on-demand ("VOD") service, provided both to the cable and hotel markets, declined 2% to $4.0 million for the quarter ended December 31, 2005, from $4.1 million for the quarter ended December 31, 2004. Revenue from the Pay TV Group's C-Band service decreased 22% to $0.7 million for the quarter ended December 31, 2005, from $0.9 million for the quarter ended December 31, 2004.

The Pay TV Group's PPV revenue increased due to new launches of TEN*Clips and TEN*Blox by a top five cable operator. The increase in revenue from these new launches was offset by two affiliated systems of two different cable operators transitioning adult from their digital PPV platform to VOD only. We do not anticipate that any other cable operators will be transitioning their adult content in this manner in the near future. Additionally, one of these affiliated cable systems re-launched our TEN*Blox network during the current year quarter in order to recapture some of these lost purchases.

The decrease in the Pay TV Group's VOD revenue is related to increased competition on platforms where the Pay TV Group had previously been the only provider of adult content. Declines in the Pay TV Group's cable VOD revenue as a result of increased competition was slightly offset by an increase in revenue from new VOD launches during the year.

EBITDA for the Pay TV Group was $5.9 million for the quarter ended December 31, 2005, as compared to EBITDA of $6.1 million for the quarter ended December 31, 2004, representing a decrease of 3%. Gross margin for the Pay TV Group increased to 71% for the quarter ended December 31, 2005 from 67% for the quarter ended December 31, 2004. Operating expenses increased 11% year-over-year for the quarter primarily due to an increase in commission expense.

Internet Group

The Company's Internet Group reported net revenue of $0.7 million for both quarters ended December 31, 2005 and 2004. EBITDA for the Internet Group declined to $0.1 million for the quarter ended December 31, 2005 from $0.2 million for the quarter ended December 31, 2004. EBITDA for the quarter ended December 31, 2004 excludes a one-time restructuring gain of $0.1 million.

Corporate Administration Expenses

Corporate administration expenses were flat at $1.5 million for both quarters ended December 31, 2005 and 2004.

Future Outlook
The Company is updating its Fiscal 2006 guidance to be as follows:

Revenue is updated to $47 - 48 million from $44.5 - 46 million
Net Income is updated to $10.4 - $11.0 million from $9.1 - $ 10.0 million
EPS is updated to $0.44 - $0.47/share from $0.39 - $0.43/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)-250-2351. 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 7, 2006 at (800)-405-2236, access code 11052886#. 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 2006 guidance, 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 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, wireless 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 89 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 000s except per share amounts)

(Unaudited) (Unaudited)
Quarter Ended Nine Months Ended
December 31, December 31,
2005 2004 2005 2004

Revenue $11,524 $11,991 $33,912 $35,493
Cost of Sales (3,441) (4,000) (10,735) (12,078)
Gross Profit 8,083 7,991 23,177 23,415
Operating Expenses (3,835) (3,553) (11,362) (10,763)
Operating Income 4,248 4,438 11,815 12,652
Other Income/(Expense) 373 118 869 195
Net Income Before Taxes 4,621 4,556 12,684 12,847
Provision for income taxes (1,743) (1,632) (4,702) (4,133)
Net Income $2,878 $2,924 $7,982 $8,714
Basic Income Per Share $0.13 $0.13 $0.35 $0.39
Diluted Income Per Share $0.12 $0.13 $0.34 $0.38
Basic shares outstanding 22,863 21,995 22,738 22,194
Diluted shares outstanding 23,258 22,864 23,196 23,143

Reconciliation of Net Income to EBITDA
as reported

(Unaudited) (Unaudited)
Quarter Ended Nine Months Ended
December 31, December 31,
2005 2004 2005 2004

Net Income $2,878 $2,924 $7,982 $8,714

Adjustments:
Depreciation/Amortization(1) 293 427 939 1,331
Interest Expense 9 23 38 85
Interest Income (369) (120) (893) (235)
Income Taxes 1,743 1,632 4,702 4,133
Restructuring Recovery 0 (146) 0 (146)

EBITDA as reported $4,554 $4,740 $12,768 $13,882

(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 (Unaudited) (Audited)
(in 000s) (in 000s)
December 31, 2005 March 31, 2005
CURRENT ASSETS:
Cash and cash equivalents $22,910 $18,403
Marketable Securities 15,192 9,075
Accounts receivable, net 9,195 8,034
Prepaid expenses 568 529
Deferred Tax Asset 404 382
Income Tax Receivable 0 157
Other 422 564

TOTAL CURRENT ASSETS 48,691 37,144

FURNITURE AND EQUIPMENT, net 3,874 4,191

OTHER ASSETS:
Prepaid distribution rights, net 9,088 9,721
Marketable Securities 3,888 4,547
Deferred Tax Asset 83 0
Goodwill 3,743 3,743
Other identifiable intangible
assets, net 17 101
Other 938 837

TOTAL OTHER ASSETS 17,757 18,949

TOTAL ASSETS $70,322 $60,284

CURRENT LIABILITIES:
Accounts payable $1,537 $1,868
Current portion of capital
lease obligations 19 154
Deferred revenue 509 484
Current portion of notes payable 0 275
Taxes Payable 1,597 0
Accrued Liabilities 2,941 2,871

TOTAL CURRENT LIABILITIES 6,603 5,652

LONG TERM LIABILITIES:
Deferred Rent 204 205
Deferred tax liability 0 5
Other 679 756
TOTAL LONG-TERM LIABILITIES 883 966
TOTAL LIABILITIES 7,486 6,618

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
Common stock 2 2
Additional paid-in capital 56,393 55,173
Accumulated deficit 6,528 (1,454)
Other comprehensive
income/(loss) (87) (55)
TOTAL SHAREHOLDERS' EQUITY 62,836 53,666

TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $70,322 $60,284

Source: New Frontier Media, Inc.

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/

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