CARLSBAD, Calif., Aug. 7 /PRNewswire-FirstCall/ -- NTN Buzztime, Inc.
(Amex: NTN), an out-of-home interactive entertainment company, today announced
results for the fiscal 2008 second quarter ended June 30, 2008.
"In my new role as interim CEO, I am pleased to report ongoing growth
initiatives in site sales, advertising and marketing areas are showing early
evidence of success," commented NTN Buzztime's Chairman and interim CEO,
Michael Fleming. "Further, our 'rookie' program, designed to increase
retention of newly launched sites, contributed in the second quarter of 2008
to the highest levels of site retention in more than two years. In other good
news, surveys we commissioned from marquee research firms and received in the
second quarter have confirmed numerous key selling points for our
entertainment products. One is that Buzztime players love our games, prefer
subscriber sites as leisure-time destinations, visit Buzztime sites more
often, stay longer and spend more time at these sites compared to non-players.
Another key finding is that a Buzztime subscription delivers strong return on
investment for the venue operator, typically paying for itself and becoming a
profit center within an average of three months."
Mr. Fleming continued, "As part of our continuing efforts to focus on
growing our core Entertainment division which now includes our promising new
digital signage product, we have determined to discontinue our United Kingdom
operations as currently constituted, and began winding down our U.K.
operations in July. However with proper market conditions and appropriate
timing, the potential for expansion into territories outside North America
remains in place."
For the three and six months ended June 30, 2008, U.K. operations
accounted for approximately 1% of total Company revenues. U.K. assets as of
June 30, 2008 represented less than 3% of total Company assets. Net of
severance and other costs related to this action, management expects the
discontinuation of U.K. operations to contribute approximately $300,000 toward
profitability for the remainder of 2008 and to aid management in focusing on
growing continuing operations.
Results for the Second Quarter Ended June 30, 2008
Revenue from continuing operations decreased $0.6 million or 8% to $7.0
million for the second quarter of 2008, compared to revenues of $7.6 million
for the second quarter of 2007. Net loss from continuing operations for the
second quarter of 2008 was $2.1 million compared to a net loss from continuing
operations of $377,000 for the second quarter of 2007. Although site count
declined by only 3.6% compared to the same prior year date, revenue decreased
by a higher percentage due to the longer-term effect on recurring revenues of
a net decline in sites over recent quarters.
Gross margin as a percentage of revenue remained consistent at 71% for
both the second quarter of 2008 and the second quarter of 2007.
Selling, general and administrative expenses increased $1.3 million or
23%, to approximately $6.9 million for the second quarter of 2008 from $5.6
million for the second quarter of 2007. This increase is primarily related to
increased employee costs in key areas including sales, marketing, content and
business development as well as increased severance costs stemming from a
workforce reduction implemented in the second quarter of 2008 and the
departure of the former CEO. Other elements of increased SG&A expenses
included increases in marketing expenses related to research and audience
measurement studies as well as increases in professional fees, including
increased legal fees related to corporate governance matters and a trademark
infringement case.
For the quarter ended June 30, 2008, results from continuing operations
reflected solely the results from the Entertainment division, following the
discontinuation of the Hospitality division.
Results for the Six Months Ended June 30, 2008
Revenue from continuing operations decreased $1.2 million or 8% to $14.2
million for the six months ended June 30, 2008 from $15.4 million in the
corresponding period of 2007. Net loss from continuing operations for the
first half of 2008 was $4.4 million, compared to a net loss from continuing
operations of $1.1 million in the corresponding period of 2007.
Gross margin as a percentage of revenue remained consistent at 71%
comparing the six-month periods of 2008 and 2007.
Selling, general and administrative expenses increased $2.8 million, or
25%, to $14.2 million in the first six months of 2008 from $11.4 million in
the corresponding period of 2007. This increase is primarily related to
increased employee costs, including increased severance payments, as well as
marketing and legal expenses as noted above in connection with second-quarter
results.
Additionally, the Entertainment division incurred $478,000 of
restructuring costs during the first six months of 2007, compared to none in
2008, related to the restructuring of Canada operations completed in January
2007. This restructuring resulted in annual cost savings of approximately
$360,000.
For the six months ended June 30, 2008, results from continuing operations
reflected solely the results from the Entertainment division, following the
discontinuation of the Hospitality division.
Discontinued Operations
Discontinued operations of the Company's Hospitality division consisted of
two segments, Wireless and Software Solutions. On March 30, 2007, the Company
reported the sale of substantially all assets of the NTN Wireless segment for
$2.4 million, which resulted in a gain of approximately $396,000 in the first
quarter of 2007. On October 31, 2007, the Company announced that it had
completed the sale and transfer of the Software Solutions intellectual
property assets and began winding down the operation.
Discontinued operations generated losses of $216,000 and $507,000 for the
three and six months ended June 30, 2008, respectively, compared to losses of
$177,000 and $181,000, respectively, for the corresponding periods of 2007.
The Company completed the wind-down of the discontinued operations in July
2008.
Conference Call
Management will review these results today at 4:30 p.m. ET. The call is
open to the public. Interested parties may access the teleconference call by
dialing (866) 360-7027 approximately 15 minutes prior to the starting time and
asking to be connected to the NTN Buzztime Earnings Conference Call.
International callers please dial (706) 643-3291. This call is being
simultaneously webcast and can be accessed at NTN's web site at
http://www.ntnbuzztime.com.
A replay of the conference call will be available beginning on August 7,
2008, following the conclusion of the call, through August 13 at 11:59 p.m.
ET. Please dial (800) 642-1687. International callers please dial
(706) 645-9291. Please use passcode 57562093 to access the replay.
An archive of the webcast will also be available on the Company's web site
at http://www.ntnbuzztime.com.
About NTN Buzztime, Inc.
NTN Buzztime, Inc., a leader in multi-point social interactive
entertainment for more than 20 years, is based in Carlsbad, CA. Buzztime is
distributed in-home and out-of-home across broadband platforms including
online, cable TV, satellite TV, and in approximately 3,750 restaurants, sports
bars and pubs throughout North America and the United Kingdom. Buzztime
entertainment is also available on electronic games and in books. For more
information, please visit http://www.buzztime.com.
Buzztime is a proud member of the OVAB | Out-of-home Video Advertising
Bureau.
Buzztime is a registered trademark of Buzztime Entertainment, Inc. and
Playmaker is a registered trademark of NTN Buzztime, Inc.
Forward-looking Statements
This release contains forward-looking statements which reflect
management's current views of future events and operations including but not
limited to estimates of financial performance and cash flows, trends in
subscriber preference and engagement and results of marketing strategies.
These statements are based on current expectations and assumptions that are
subject to risks and uncertainties that could cause actual results to differ
materially. These risks and uncertainties include the risk of changing
economic conditions, failure of product demand or market acceptance of both
existing and new products and services and the impact of competitive products
and pricing. Please see NTN Buzztime, Inc.'s recent filings with the
Securities and Exchange Commission for information about these and other risks
that may affect the Company. All forward-looking statements included in this
release are based on information available to us on the date hereof. These
statements speak only as of the date hereof, and NTN Buzztime, Inc. does not
undertake to publicly update or revise any of its forward-looking statements,
even if experience or future changes show that the indicated results or events
will not be realized.
(financial tables follow)
NTN BUZZTIME, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share data)
June 30, December 31,
2008 2007
ASSETS
Current assets:
Cash and cash equivalents $6,616 $10,273
Restricted cash 37 55
Accounts receivable, net of allowances
of $300 and $396, respectively 1,051 1,354
Investments available-for-sale 146 264
Prepaid expenses and other current assets 511 745
Assets held for sale 7 212
Total current assets 8,368 12,903
Broadcast equipment and fixed assets, net 3,701 4,101
Software development costs, net of
accumulated amortization of $1,195 and
$1,071, respectively 935 895
Deferred costs 1,129 1,204
Goodwill 1,248 1,285
Intangible assets, net 263 318
Other assets 150 154
Total assets $15,794 $20,860
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $601 $838
Accrued expenses 1,250 901
Sales taxes payable 1,071 982
Accrued salaries 704 357
Accrued vacation 469 447
Income taxes payable 88 36
Deferred revenue 797 972
Liabilities of discontinued operations 309 672
Total current liabilities 5,289 5,205
Deferred revenue, excluding current portion 90 87
Total liabilities 5,379 5,292
Commitments and contingencies Shareholders'
equity:
Series A 10% cumulative convertible
preferred stock, $.005 par value, $161
liquidation preference, 5,000,000 shares
authorized; 161,000 shares issued and
outstanding at June 30, 2008 and
December 31, 2007 1 1
Common stock, $.005 par value, 84,000,000
shares authorized; 55,657,000 and 55,640,000
shares issued and outstanding at June 30,
2008 and December 31, 2007, respectively 277 277
Treasury stock, at cost, 454,000 shares at
June 30, 2008 and December 31, 2007 (444) (444)
Additional paid-in capital 113,159 112,942
Accumulated deficit (103,789) (98,870)
Accumulated other comprehensive income 1,211 1,662
Total shareholders' equity 10,415 15,568
Total shareholders' equity and
liabilities $15,794 $20,860
NTN BUZZTIME, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except share data)
Three months ended Six months ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
Revenues $7,017 $7,640 $14,199 $15,373
Operating expenses:
Direct operating costs (includes
depreciation and amortization
of $666 and $857 for the three
months ended June 30, 2008 and
2007, respectively, and
depreciation and amortization
of $1,385 and $1,698 for the
six months ended June 30, 2008
and 2007, respectively 2,028 2,213 4,124 4,426
Selling, general and
administrative 6,952 5,643 14,217 11,370
Depreciation and amortization
(excluding depreciation and
amortization included
in direct operating costs) 145 139 267 292
Restructuring costs - 26 - 478
Total operating expenses $9,125 $8,021 $18,608 $16,566
Operating loss $(2,108) $(381) $(4,409) $(1,193)
Other income (expense):
Interest income 43 105 102 146
Interest expense - (8) - (22)
Other income - - - 82
Total other income $43 $97 $102 $206
Loss from continuing operations
before income taxes $(2,065) $(284) $(4,307) $(987)
Provision for income taxes 64 93 105 153
Loss from continuing operations $(2,129) $(377) $(4,412) $(1,140)
Loss from discontinued
operations, net of tax (including
gain on sale of NTN Wireless
of $396 for the six months ended
June 30, 2007) (216) (177) (507) (181)
Net loss $(2,345) $(554) $(4,919) $(1,321)
Net loss per common share
Loss from continuing operations,
basic and diluted $(0.04) $(0.01) $(0.08) $(0.02)
Loss from discontinued
operations, basic and diluted $(0.00) $(0.00) $(0.01) $(0.00)
Net loss $(0.04) $(0.01) $(0.09) $(0.02)
Weighted average shares
outstanding
Basic and diluted 55,203 54,691 55,195 54,722
NTN BUZZTIME, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Six months ended
June 30, June 30,
2008 2007
Cash flows (used in) provided by
operating activities:
Net loss $(4,919) $(1,321)
Loss from discontinued operations, net
of tax (507) (181)
Loss from continuing operations $(4,412) $(1,140)
Adjustments to reconcile net loss to
net cash (used in) provided from
operating activities Depreciation
and amortization 1,652 1,990
Provision for doubtful accounts 338 204
Stock-based compensation 219 339
Loss from disposition of equipment
and capitalized software 369 156
Changes in operating assets and liabilities:
Accounts receivable (41) 746
Prepaid expenses and other assets 233 475
Accounts payable and accrued expenses 171 (930)
Income taxes payable 29 (48)
Deferred costs 73 251
Deferred revenue (573) (812)
Net cash (used in) provided by operating
activities from continuing operations (1,942) 1,231
Discontinued operations 151 (1,170)
Net cash (used in) provided by
operating activities (1,791) 61
Cash flows (used in) provided by investing
activities:
Purchases of broadcast equipment and
fixed assets (1,119) (105)
Software development expenditures (512) (251)
Deposits on broadcast equipment - (161)
Restricted cash 16 10
Net cash (used in) provided by investing
activities from continuing operations (1,615) (507)
Discontinued operations 20 2,298
Net cash (used in) provided by investing
activities (1,595) 1,791
Cash flows (used in) provided by financing
activities:
Principal payments on capital lease (4) (219)
Proceeds from exercise of warrants and
options - 639
Net cash (used in) provided by financing
activities (4) 420
Net (decrease) increase in cash and cash
equivalents (3,390) 2,272
Effect of exchange rate on cash (267) 349
Cash and cash equivalents at beginning
of period 10,273 8,774
Cash and cash equivalents at end of
period $6,616 $11,395
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $- $19
Income taxes $94 $172
Supplemental disclosure of non-cash
investing and financing activities:
Reclassification of investment to
accounts receivable $- $69
Reclassification of royalty receivable
to prepaid maintenance contracts $- $73
Reclassification of deposits for
equipment placed in service $- $524
Unrealized holding loss on investments
available-for-sale $(119) $(24)
Sale of certain assets of Interactive
Events business in lieu of severance
payment $- $100
.gif)
