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FriendFinder Networks Inc. Reports Financial Results for Fourth Quarter and Year End 2012

 FriendFinder Networks Inc. Reports Financial Results for Fourth Quarter and
                                Year End 2012

- Live Interactive Records 12th Consecutive Quarter of Year-Over-Year Growth

- Member to Subscriber Conversions Increase 15% Year-Over-Year

- Company Continues to Work With its Advisors and Lenders to Achieve a
Refinancing of its Debt

PR Newswire

SUNNYVALE, Calif., April 1, 2013

SUNNYVALE, Calif., April 1, 2013 /PRNewswire/ --FriendFinder Networks Inc.
(NasdaqGM: FFN) (the "Company"), a leading internet and technology company
providing services to the rapidly expanding markets of social networking and
web-based video sharing, today announced financial results for the fourth
quarter and year ended December 31, 2012.

"FriendFinder Networks continues to focus resources to support and grow our
flagship brands, which are our most profitable properties, and represent the
greatest promise over the long-term. Our success in becoming more efficient
with our marketing spend has resulted in improved operating margins and an
increase in conversion of members to subscribers. For example, our conversion
of members to subscribers increased 15% year-over-year," said Anthony Previte,
Chief Executive Officer of FriendFinder Networks. "Additionally, we were able
to achieve $21.9 million in Adjusted EBITDA for the quarter and $74.7 million
for the full year, in line with our previous guidance. Going forward, in the
near term we anticipate that we will remain at approximately the same run rate
we achieved during the second half of the year for Adjusted EBITDA and that
additional operational adjustments will allow us to attract higher
credit-quality customers, resulting in a more stable, revenue base and
increasing levels of EBITDA."

"We continue to experience pockets of success throughout our operations. Our
Live Interactive segment, which currently represents 29% of total revenues, up
from 25% last year, extended its streak of consecutive quarters of
year-over-year revenue growth to twelve in the fourth quarter. We have also
experienced additional operational success as a result of our recent
consolidation of our General Audience and Mobile segments. As mobile
increasingly represents a larger component of casual dating, we expect to
continue to gain traction in this segment. In fact, over 30% of Adult Dating
members and 20% of Live Interactive members registered via mobile devices."

"Finally, on February 4, 2013, we entered into an extension on the forbearance
agreements with approximately 94% of the holders of our 14% Senior Secured
Notes due 2013 and 100% of the holders of our Cash Pay Secured Notes due
2013. We continue to work closely with our advisors, CRT Capital Group, and
our lenders in order to refinance our debt and remain confident in our ability
to achieve a successful resolution in this matter."

Fourth Quarter Financial Results

Revenue for the fourth quarter of 2012 was $74.5 million. Revenue was
negatively impacted by a decrease in affiliate based traffic and lower
resulting internet revenue as the Company continues to eliminate lower margin
co-brands.

Gross profit for the fourth quarter of 2012 was $51.9 million. Gross profit
was negatively impacted by the reduced revenue offset partially by reduced
affiliate expense.

Income from operations for the fourth quarter of 2012 was $17.4 million.

Net loss for the fourth quarter of 2012 was ($9.6) million, or ($0.30) per
share.

Adjusted EBITDA for the fourth quarter of 2012 was $21.9 million.

Full Year Financial Results:

Revenue for the year ended December 31, 2012 was $314.4 million.

Gross profit for the year ended December 31, 2012 was $205.4 million.

Income from operations for the year ended December 31, 2012 was $55.1 million.

Loss from continuing operations was ($35.8) million and loss from discontinued
operations was ($13.6) million.

Net Loss for the year ended December 31, 2012 was ($49.4) million, or ($1.57)
per share.

Adjusted EBITDA for the year ended December 31, 2012 was $74.7 million.

Balance Sheet, Cash and Debt

As of December 31, 2012, the Company had unrestricted cash and cash
equivalents of $16.8 million, compared to $14.6 million at September 30,
2012. As of December 31, 2012, the Company had outstanding principal debt of
$521.8 million. Free Cash Flow per Share was $0.21 for the fourth quarter
ended December 31, 2012.

Non-GAAP Financial Measures

Management believes that certain non-GAAP financial measures of earnings
before deducting net interest expense, income taxes, depreciation and
amortization, or EBITDA, and Adjusted EBITDA are helpful financial measures as
investors, analysts and others frequently use EBITDA and Adjusted EBITDA in
the evaluation of other companies in FriendFinder Networks Inc.'s industry.
For example, these measures eliminate one-time adjustments made for accounting
purposes in connection with the Company's Various acquisition in order to
provide information that is directly comparable to its historical and current
financial statements. For more information regarding the Company's
acquisition of Various, please refer to the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations — Our
History" in the Form 10-K for the year ended December 31, 2012.

These non-GAAP financial measures may not provide information that is directly
comparable to that provided by other companies in FriendFinder Networks Inc.'s
industry, as other companies in FriendFinder Networks Inc.'s industry may
calculate such financial measures differently, particularly as it relates to
nonrecurring, unusual items. The Company's non-GAAP financial measures of
EBITDA, Adjusted EBITDA and Free Cash Flow per Common Share are not
measurements of financial performance under GAAP and should not be considered
as alternatives to cash flow from operating activities or as measures of
liquidity or as alternatives to net income or as indications of operating
performance or any other measure of performance derived in accordance with
GAAP.

Management derived EBITDA and Adjusted EBITDA for the three months and full
year ended December 31, 2012 and 2011 using the adjustments shown in the
attached reconciliation table. Free Cash Flow per Common Share was derived by
subtracting capital expenditures and cash interest from Adjusted EBITDA and
dividing the result by the weighted average shares outstanding for the period.

SAFE HARBOR

This press release includes "forward-looking statements" within the meaning of
the safe harbor provisions of the United States Private Securities Litigation
Reform Act of 1995. Actual results may differ from expectations, estimates
and projections and, consequently, you should not rely on these forward
looking statements as predictions of future events. Words such as "expect,"
"estimate," "project," "budget," "forecast," "anticipate," "intend," "plan,"
"may," "will," "could," "should," "believes," "predicts," "potential,"
"continue," and similar expressions are intended to identify such
forward-looking statements. These forward-looking statements involve
significant risks and uncertainties that could cause the actual results to
differ materially from the expected results.

Additional information concerning these and other risk factors is contained in
the Company's most recent filings with the SEC, including its Form 10-K for
the year ended December 31, 2012. All subsequent written and oral
forward-looking statements concerning the Company are expressly qualified in
their entirety by the cautionary statements above and subject to such risk
factors discussed in the Company's recent SEC filings. The Company cautions
readers not to place undue reliance upon any forward-looking statements, which
speak only as of the date made. The Company does not undertake or accept any
obligation or undertaking to release publicly any updates or revisions to any
forward-looking statement to reflect any change in their expectations or any
change in events, conditions or circumstances on which any such statement is
based.

ABOUT FRIENDFINDER NETWORKS INC.

FriendFinder Networks Inc. (www.FFN.com) is an internet-based social
networking and technology company operating several of the most heavily
visited websites in the world, including AdultFriendFinder.com, Amigos.com,
AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and
SeniorFriendFinder.com. FriendFinder Networks Inc. also produces and
distributes original pictorial and video content and engages in brand
licensing.

Investor Contact for FriendFinder Networks Inc.
Jeffrey Goldberger / Rob Fink
KCSA Strategic Communications
212.896.1206 or jgoldberger@kcsa.com / rfink@kcsa.com 

Media Contact for FriendFinder Networks Inc.
Lindsay Trivento
Director, Corporate Communications
561.912.7010 or ltrivento@ffn.com 





FRIENDFINDER NETWORKS INC. AND SUBSIDIARIES



CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
                                                    December 31,
                                                    2012          2011
ASSETS
Current assets:
Cash                                                $ 16,839      $ 23,364
Restricted cash                                       10,064        11,177
Accounts receivable, less allowance for doubtful      12,323        8,939
accounts of $1,284 and $1,155, respectively
Inventories                                           763           822
Prepaid expenses                                      3,436         5,645
Deferred tax asset                                    1,844         4,405
Total current assets                                  45,269        54,352
Film costs, net                                       3,627         4,105
Property and equipment, net                           5,120         7,830
Goodwill                                              328,061       332.292
Domain names                                          56,614        56,093
Trademarks                                            5,643         6,613
Other intangible assets, net                          330           16,920
Unamortized debt costs, net                           6,179         11,754
Other assets                                          1,310         3,405
                                                    $ 452,153     $ 493,364
LIABILITIES
Current liabilities:
Long-term debt in default, which matures on
September 30, 2013 and April 30, 2014 and in 2011,

current installment of long term debt, net of         500,920       8,270
unamortized discount of $20,851 and $260,

respectively
Accounts payable                                      5,040         11,324
Accrued expenses and other liabilities                62,227        68,930
Deferred revenue                                      34,741        42,299
Total current liabilities                             602,928       130,823
Deferred tax liability                                25,639        28,310
Long-term debt, net of unamortized discount of        —             462,515
$34,170
Total liabilities                                     628,567       621,648
Commitments and contingencies (Notes Q and R)


STOCKHOLDERS' DEFICIENCY
Preferred stock, $0.001 par value — authorized
22,500,000 shares; issued and outstanding no
shares in

2012 or 2011.
Common stock, $0.001 par value — authorized
125,000,000 shares in 2012 and 2011
Common stock voting — authorized 112,500,000
shares, issued and outstanding 32,572,761 shares
in                                                    32            31

 2012 and 31,219,644 in 2011.
Series B common stock non-voting – authorized
12,500,000 shares, issued and outstanding no
shares in

 2012 or 2011.
Capital in excess of par value                        134,759       133,734
Accumulated deficit                                   (311,205)     (261,764)
Accumulated other comprehensive loss                  —             (285)
Total stockholders' deficiency                        (176,414)     (128,284)
                                                    $ 452,153     $ 493,364





FRIENDFINDER NETWORKS INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                         Year Ended December 31,
                                         2012         2011         2010
Net revenue
Service                                  $ 295,241    $ 310,512    $ 324,211
Product                                    19,138       19,924       21,786
Total                                      314,379      330,436      345,997
Cost of revenue
Service                                    94,225       92,996       97,959
Product                                    14,717       15,067       12,531
Total                                      108,942      108,063      110,490
Gross profit                               205,437      222,373      235,507
Operating expenses:
Product Development                        15,070       16,885       12,834
Selling and marketing                      31,324       30,444       37,258
General and administrative                 85,927       87,347       79,855
Amortization of acquired intangibles       13,855       15,759       24,461
and software
Depreciation and other amortization        3,160        3,998        4,704
Impairment of other intangible assets      970          2,600        4,660
Total operating expenses                   150,306      157,033      163,772
Income from operations                     55,131       65,340       71,735
Interest expense, net of interest          (89,243)     (85,989)     (88,508)
income
Other finance expenses                     (500)        —            (4,562)
Interest related to VAT liability not      (1,660)      (1,808)      (2,293)
charged to customers
Net loss on extinguishment and             —            (7,312)      (7,457)
modification of debt
Foreign exchange (loss) gain, including
amounts related to VAT liability           (958)        (498)        610

not charged to customers
Change in fair value of acquisition        1,400        (920)        —
related contingent consideration
Gain on liability related to warrants      —            391          38
Other non-operating expenses, net          (59)         (3,530)      (13,202)
Loss from continuing operations before     (35,889)     (34,326)     (43,639)
income tax benefit
Income tax benefit                         (71)         (6,472)      (486)
Loss from continuing operations            (35,818)     (27,854)     (43,153)
Loss from discontinued operations          (13,623)     (3,289)      —
Net loss                                 $ (49,441)   $ (31,143)   $ (43,153)
Net loss per common share – basic and
diluted:
Continuing operations                      (1.14)       (1.15)       (3.14)
Discontinued operations                    (0.43)       (0.13)       —
Net loss                                 $ (1.57)     $ (1.28)     $ (3.14)
Weighted average shares outstanding —      31,560       24,249       13,735
basic and diluted





Reconciliation of GAAP Net Loss to EBITDA and Adjusted EBITDA

(IN THOUSANDS)
                           Consolidated Data
                           Quarter Ended             Year Ended

                           December 31,              December 31,
                           2012         2011         2012        2011
                           (in thousands)
GAAP net loss              $  (9,638) $ (10,205)  $ (49,441) $ (31,143)
Add: Interest expense, net 25,040       20,892       89,243      85,989
(Subtract): Income tax     (71)         (930)        —           (6,472)
benefit
Add: Amortization of
acquired intangible assets 2,735        4,293        13,855      15,759
and software 
Add: Depreciation and      799          730          3,160       3,998
other amortization
EBITDA                     $  18,865  $  14,780  $  56,817  $  68,131
Add: Impairment of other   $        $   2,600 $ 970      $   2,600
intangible assets          970
Add: Broadstream           —            —            —           7,050
arbitration provision
Add: Loss related to VAT
liability not charged to
customers and foreign      1,681        (626)        2,618       2,306
exchange

gains/(losses)
Add: Net Loss on
extinguishment and         —            —            —           7,312
modification of debt
Add: Discontinued          —            —            13,623      3,289
operations
Add: Other finance         --           —            500         —
expenses
Add: Stock compensation    338          1,183        1,141       3,737
expense
Add: Severance costs      93           —            527         388
(Subtract)Add: Change in
Acquisition related        --           920          (1,400)     920
contingent consideration
Adjusted EBITDA            $  21,947  $  18,857   $  74,725  $  95,733





Internet Segment Historical Operating Data


                                       For the Year Ended December 31,
                                       2012        2011        2010
Adult Websites
 New Members                           33,043,853  38,657,203  40,130,064
 Beginning Subscribers                 827,728     950,705     940,444
 New Subscribers                       1,568,567   1,595,736   1,804,669
 Terminations                          1,672,575   1,718,713   1,794,408
 Ending Subscribers                    723,720     827,728     950,705
 Conversion of Members to Subscribers  4.7%        4.1%        4.5%
 Churn                                 18.0%       16.1%       15.8%
 ARPU                                  $21.16      $20.21      $20.36
 CPGA                                  $45.00      $44.02      $47.41
 Average Lifetime Net Revenue per      $72.77      $81.45      $81.34
 Subscriber
 Net Revenue (in millions)             $197.0      $215.6      $231.4
 Affiliate Commission Expense (in      $54.1       $54.6       $59.1
 millions)
 Ad Buy Expense (in millions)          $16.5       $15.6       $26.5
  Subscriber Acquisition Costs (in    $70.6       $70.2       $85.6
 millions)
General Audience Websites
 New Members                           3,737,796   6,294,789   9,312,953
 Beginning Subscribers                 44,519      53,194      57,426
 New Subscribers                       80,144      98,105      114,688
 Terminations                          91,526      106,780     118,920
 Ending Subscribers                    33,137      44,519      53,194
 Conversion of Members to Subscribers  2.1%        1.6%        1.2%
 Churn                                 19.6%       18.2%       17.9%
 ARPU                                  $13.20      $19.42      $20.72
 CPGA                                  $36.60      $27.96      $29.27
 Average Lifetime Net Revenue per      $30.59      $78.67      $86.37
 Subscriber
 Net Revenue (in millions)             $6.2        $11.4       $13.8
 Affiliate Commission Expense (in      $0.9        $1.8        $2.8
 millions)
 Ad Buy Expense (in millions)          $2.0        $1.0        $0.5
  Subscriber Acquisition Costs (in    $2.9        $2.7        $3.4
 millions)
Live Interactive Video Websites
 Total Minutes                         36,681,368  34,922,953  35,459,839
 Average Revenue per Minute            $2.47       $2.34       $2.15
 Net Revenue (in millions)             $90.5       $81.6       $76.3

SOURCE FriendFinder Networks Inc.

Website: http://www.ffn.com
 
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