SANTA ANA, Calif., March 30, 2009 (GLOBE NEWSWIRE) -- ACME Communications, Inc. (Pink Sheets:ACME) today announced financial results for the fourth quarter and full year ended December 31, 2008.
Our net revenues from continuing operations decreased 6% to $7.9 million for the fourth quarter compared to net revenues of $8.4 million in the fourth quarter of 2007. The decrease was driven by an accelerating weak national economy and the resulting adverse impact on advertising demand, especially in November and December. Net revenues for the quarter for our television stations declined 5% compared to the fourth quarter of 2007 and net revenue at the Daily Buzz declined 9%.
Operating expenses at our stations for the quarter were adversely impacted by a $24.5 million non-cash charge related to the impairment to our broadcast licenses, and to a lesser extent, our goodwill. This impairment was based on the results of our year-end formal valuation efforts and is attributable to the sharp decline in advertising demand, industry revenues, higher financing costs and reduced transaction demand. On a cash-based basis, our station operating expenses decreased 9%, driven by a 13% reduction in program payments and the impact of cost controls implemented in the fourth quarter on our discretionary spending. Our resulting broadcast cash flow for the quarter was $529,000 compared to $453,000 for the fourth quarter of 2007, a 17% increase. Our net loss from continuing operations and overall was $18.8 million and $2.1 million for the fourth quarter of 2008 and 2007, respectively, with the higher loss in the current quarter attributable to the aforementioned write-down of our intangible assets.
For the full year, revenues at our six continuing stations were essentially unchanged at $30.1 million. Our Daily Buzz revenues increased 55% compared to 2007 due to a combination of an underlying 19% increase in its annual revenues and the fact that the 2007 year revenues did not include the first quarter's results because we accounted for the venture during that period using the equity accounting method. Our station revenues were unchanged as a near 10% decline in non-political revenues in our markets for 2008 compared to 2007 was offset by a growth in our group market share of those revenues and record-high political revenue of $1.5 million for the year. Total operating expenses for the year were $74.0 million compared to $42.2 million in 2007 driven principally by a $31.2 million increase in intangible asset impairment charges. On a cash-based basis, however, our station operating expenses increased just 1%. Our broadcast cash flow for the year was $2.5 million compared to $2.3 million in 2007, an 8% increase.
Our full year loss from continuing operations was $32.7 million compared to $6.7 million for 2007 driven principally by the increased intangible impairment charges. Our income from discontinued operations for the year was $13,000 compared to $22.0 million in 2007 which resulted primarily from the gain on the sale of our Ft. Myers station in February 2007. Our net loss for 2008 was $32.7 million compared to $15.3 million of net income for 2007.
Commenting on the quarter's results, Jamie Kellner, ACME's Chairman and CEO, said, "As an industry, we're obviously in uncharted water with significant declines in advertiser spending due to the severe economic recession and little visibility as to when that demand might return to previous levels. In the meantime, we continue to work hard to uncover new efficiencies and have implemented as many reductions in our variable costs as we believe prudently possible. On a positive note, our stations, as a group, increased their viewing share in our key demographics in the November 2008 sweeps period and we achieved record political dollars in the fourth quarter and increased our market share of non-political advertising revenue. Nonetheless, we expect that 2009 will prove to be a very difficult year for us and the entire broadcast industry."
Use of Broadcast Cash Flow, Adjusted EBITDA and Same Station Results
GAAP refers to generally accepted accounting principles in the United States. Broadcast cash flow, station cash-based operating expenses and adjusted EBITDA are non-GAAP measures. Broadcast cash flow is commonly used as an indicator of operating performance for broadcasting companies and is also used to value broadcasting assets. Station cash-based operating expenses, which use program payments in place of program amortization, exclude our Daily Buzz production costs and exclude non-cash operating expenses like depreciation and amortization, impairment of intangibles and equity-based compensation, are an important metric in determining our cash expense growth. Adjusted EBITDA is also used as a performance measure and often used to measure a company's ability to service debt, as evidenced by the fact that our senior credit facility historically contained financial covenants relating to our adjusted EBITDA.
Broadcast cash flow, station cash-based operating expenses and adjusted EBITDA should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. We consider operating loss to be the most comparable GAAP measure to broadcast cash flow and to adjusted EBITDA; therefore, the Company has included a reconciliation of operating loss to broadcast cash flow and adjusted EBITDA in Supplemental Table 1. A reconciliation of operating expenses to cash-based station operating expenses is included in Supplemental Table 2. Because broadcast cash flow, cash-based station operating expenses and adjusted EBITDA are not measurements determined in accordance with GAAP and are thus susceptible to varying calculations, the broadcast cash flow, cash-based station operating expenses and adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies.
Delisting and Deregistration and Revolver Amendment
As previously announced, in an effort to reduce corporate costs, the Company delisted its shares from Nasdaq and deregistered with the Securities and Exchange Commission in the fourth quarter of 2008. The Company's corporate expenses in the fourth quarter of 2008 were $680,000 compared to $899,000 for the fourth quarter of 2007, largely reflecting the reduction and elimination of public-company related costs.
Because of the Company's delisting and deregistration as discussed above, the 2008 quarterly information included herein has been prepared by Company management without audit or quarterly review by its independent public accountants. The quarterly unaudited information contained herein has been prepared, however, on the same basis as the Company's audited full-year consolidated financial statements.
On March 25, 2009, the Company entered into an amendment with its lender to extend the maturity date of its revolving credit agreement (the "Revolver") to May 8, 2011. The maximum borrowings under the amended Revolver remain unchanged at $6.0 million, but are still capped at 20% of the appraised STAC value of our stations (a lender metric which assumes a start-up station with a network affiliation sold in a compressed time period). Based on our most recent lender-required appraisal, our current maximum borrowings are approximately $4.4 million, less required liquidity and interest reserves. As of this date, the Company remains unborrowed under the Revolver.
Fourth Quarter Conference Call
Senior management of ACME will host a conference call to discuss their fourth quarter and full year 2008 results on Monday, March 30th at 2:00 p.m. Eastern Time. To access the conference call, please dial 888-562-3356 ten minutes prior to the start time and enter passcode 92208711. In addition, we will provide a live webcast of the conference call on our Web site, located at http://www.acmecommunications.com. The webcast will also be archived on our Web site until April 13, 2009. We anticipate that we will post our annual audited financial statements on our Web site on or around April 1, 2009.
About ACME Communications
ACME Communications, Inc. owns and operates six television stations serving markets covering 2.2% of the nation's television households. The Company's stations are: KWBQ-TV and KASY-TV, Albuquerque-Santa Fe, NM; WBXX-TV, Knoxville, TN; WBDT-TV, Dayton, OH; WIWB-TV, Green Bay-Appleton, WI and WBUW-TV, Madison, WI. All of the Company's stations, except KASY-TV, a MyNetworkTV affiliate, are affiliates of The CW Network. The Company also produces The Daily Buzz, a nationally syndicated morning news and lifestyle program which airs on more than 140 television stations across the country. Our shares are traded on the over-the-counter market under the symbol: ACME.
ACME Communications, Inc. and Subsidiaries
Consolidated Statements of Operations
(Quarterly Data Unaudited)
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
Net revenues $ 7,891 $ 8,379 $ 33,201 $ 32,000
-------- -------- -------- --------
Operating expenses:
Cost of service:
Programming, including
program amortization 3,371 4,434 14,821 13,047
Other costs of service
(excluding depreciation and
amortization of $657 and
$760 for the three months
ended December 31, 2008 and
2007, respectively, and
$2,758 and $3,172 for the
twelve months ended
December 31, 2008 and 2007,
respectively) 1,269 1,431 5,278 5,248
Selling, general and
administrative expenses 2,711 3,019 11,531 11,820
Depreciation and amortization 661 768 2,783 3,202
Impairment of goodwill 881 -- 881 --
Impairment of broadcast
licenses 23,609 1,557 35,568 5,257
Lease termination costs -- -- 653 --
Corporate expenses 680 899 2,449 3,589
-------- -------- -------- --------
Operating expenses 33,182 12,108 73,964 42,163
-------- -------- -------- --------
Operating loss (25,291) (3,729) (40,763) (10,163)
Other income (expenses):
Interest, net (57) (82) (454) (43)
Equity in loss of
unconsolidated affiliate -- -- -- (251)
-------- -------- -------- --------
Loss from continuing
operations before income
taxes (25,348) (3,811) (41,217) (10,457)
Income tax benefit 6,538 1,688 8,502 3,734
-------- -------- -------- --------
Loss from continuing
operations (18,810) (2,123) (32,715) (6,723)
-------- -------- -------- --------
Discontinued operations:
Income (loss) from
discontinued operations,
before income taxes (4) (188) 13 24,304
Income tax expense -- (860) -- (2,288)
-------- -------- -------- --------
Income (loss) from
discontinued operations (4) (1,048) 13 22,016
-------- -------- -------- --------
Net income (loss) $(18,814) $ (3,171) $(32,702) $ 15,293
======== ======== ======== ========
Net income (loss) per share,
basic and diluted:
Continuing operations $ (1.17) $ (0.13) $ (2.04) $ (0.42)
Discontinued operations -- (0.07) -- 1.37
-------- -------- -------- -------
Net income (loss) per share $ (1.17) $ (0.20) $ (2.04) $ 0.95
======== ======== ======== ========
Weighted average basic and
diluted common shares
outstanding 16,047 16,047 16,047 16,047
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Supplemental Table 1
--------------------
ACME Communications Inc. and Subsidiaries
Reconciliation of Operating Loss to Broadcast Cash Flow and Adjusted
EBITDA
(Unaudited)
(In thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
Operating loss $(25,291) $ (3,729) $(40,763) $(10,163)
Add (less):
Stock-based compensation at
stations -- 50 74 191
Depreciation and amortization 661 768 2,783 3,202
Impairment of goodwill 881 -- 881 --
Impairment of broadcast
licenses 23,609 1,557 35,568 5,257
Amortization of program
rights 1,498 2,637 7,222 6,942
Lease termination costs -- -- 653 --
Corporate expenses 680 899 2,449 3,589
Implied contribution from
former Daily Buzz venture
partner -- -- -- (310)
Equity in loss of The Daily
Buzz, before depreciation -- -- -- (161)
Program payments (1,509) (1,729) (6,337) (6,205)
-------- -------- -------- --------
Broadcast cash flow (1) 529 453 2,530 2,342
Add (less):
Corporate expenses (680) (899) (2,449) (3,589)
Stock-based compensation at
corporate 3 41 60 202
-------- -------- -------- --------
Adjusted EBITDA $ (148) $ (405) $ 141 $ (1,045)
======== ======== ======== ========
Broadcast cash flow margin (1) 6.7% 5.4% 7.6% 7.3%
Adjusted EBITDA margin (1) -1.9% -4.8% 0.4% -3.3%
======== ======== ======== ========
(1) We define:
* Broadcast cash flow as operating income (loss), plus stock-based
compensation, depreciation and amortization, amortization of program
rights, impairment of broadcast licenses and goodwill and corporate
expenses, less program payments (excluding program payments related
to construction permits);
* Adjusted EBITDA as broadcast cash flow less corporate expenses,
exclusive of stock-based compensation;
* Broadcast cash flow margin is broadcast cash flow as a percentage
of net revenues; and
* Adjusted EBITDA margin is adjusted EBITDA as a percentage of net
revenues.
Supplemental Table 2
--------------------
ACME Communications Inc. and Subsidiaries
Reconciliation of Operating Expenses to Cash-Based Station Operating
Expenses
(Unaudited)
(In thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
Operating expenses $ 33,182 $ 12,108 $ 73,964 $ 42,163
Add (less):
Program payments 1,509 1,729 6,337 6,205
Depreciation and amortization (661) (768) (2,783) (3,202)
Impairment of goodwill (881) -- (881) --
Impairment of broadcast
licenses (23,609) (1,557) (35,568) (5,257)
Corporate expense (680) (899) (2,449) (3,589)
Barter program costs (726) (747) (3,069) (2,992)
Program amortization (1,498) (2,637) (7,222) (6,942)
Daily Buzz production costs (889) (845) (3,501) (2,383)
Lease termination costs -- -- (653) --
Stock-based compensation at
stations -- (50) (74) (191)
-------- -------- -------- --------
Total cash-based station
operating expenses $ 5,747 $ 6,334 $ 24,101 $ 23,812
======== ======== ======== ========
Supplemental Table 3
--------------------
ACME Communications Inc. and Subsidiaries
Reconciliation of Net Revenues to Station Net Revenues
(Unaudited)
(In thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
Net revenues $ 7,891 $ 8,379 $ 33,201 $ 32,000
Less: Daily Buzz net revenues (805) (884) (3,141) (2,029)
-------- -------- -------- --------
Station net revenues $ 7,086 $ 7,495 $ 30,060 $ 29,971
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