SANTA ANA, Calif., Nov. 10, 2009 (GLOBE NEWSWIRE) -- ACME Communications, Inc. (Pink Sheets:ACME) today announced its financial results for the third quarter ended September 30, 2009. Our net revenues from continuing operations decreased 21% to $6.7 million for the third quarter compared to net revenues of $8.5 million in the third quarter of 2008. The decrease was driven primarily by continued sharply lower advertising demand resulting in a 24% decrease in net revenues at our television stations. Revenues at The Daily Buzz increased 5% for the quarter driven by broadening advertiser acceptance and support of the show. Total operating costs decreased 18% to $7.7 million for the third quarter compared to $9.4 million for the third quarter of 2008. Station cash-based operating expenses decreased 13%, primarily on reduced promotion and compensation expense reflecting the Company's continued efforts to reduce all discretionary costs in the face of a continued severe economic downturn. Our resulting broadcast cash flow for the quarter was negative $116,000 compared to $640,000 for the third quarter of 2008. Adjusted EBITDA from continuing operations decreased to negative $739,000 compared to EBITDA of $73,000 for the third quarter of 2008 on lower broadcast cash flow and higher corporate expenses. Our net loss for the third quarter of 2009 was $1.4 million compared to a $1.0 million net loss for the third quarter of 2008.
For the nine-month period, our net revenues for continuing operations decreased 21% to $20.0 million compared to net revenues of $25.3 million for the first nine months of 2008 on sharply lower advertising demand in our five television markets. Total operating costs decreased 43% to $23.3 million for the nine-month period compared to operating costs of $40.8 million for the first nine months of 2008 which included a $12.0 million impairment charge on our television licenses during the second quarter of 2008. Station cash-based operating expenses were down 11% from the prior year period and broadcast cash flow declined to negative $663,000 from $2.0 million for the first nine months of 2008. Adjusted EBITDA from continuing operations declined to negative $2.3 million from $289,000 and our net loss decreased to $4.2 million compared to the 2008 nine-month period's net loss of $13.9 million.
Commenting on the quarter's results, Jamie Kellner, ACME's Chairman and CEO, said, "Market conditions continue to be challenging, especially coupled with our larger competitors efforts to recapture share coming off a record 2008 political year. We expect, however, market revenues to decline less severely in the fourth quarter of 2009. Effective October 1, 2009, we modified the employment arrangements of our corporate management staff, reducing base compensation by an average of 42% while allowing each of them to become non-exclusive while working a majority of their time overseeing the Company's operations. This move will save the Company approximately $525,000 per year. We will continue to look for ways to further reduce operating expenses without jeopardizing asset value in an effort to dampen the adverse impact of reduced market and station revenues."
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 "The Daily Buzz" production costs and exclude non-cash operating expenses like depreciation and amortization, impairment of intangibles, lease abandonment costs 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.
Third Quarter Conference Call
Senior management of ACME will host a conference call to discuss their third quarter 2009 results on Tuesday, November 10th at 4:30 p.m. Eastern Time. To access the conference call, please dial 888-562-3356 no sooner than ten minutes prior to the start time and reference passcode 24501929. A replay of the conference call will be available on our Web site, www.acmecommunications.com, until Tuesday, November 24, 2009. The Company will post its full quarterly unaudited financial report on the Company's Web site no later than Thursday, November 12, 2009.
About ACME Communications, Inc.
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 150 television stations across the country. The Company's shares are traded over-the-counter under the symbol: ACME.PK.
ACME Communications, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2009 2008 2009 2008
-------- -------- -------- --------
Net revenues $ 6,667 $ 8,482 $ 20,048 $ 25,310
-------- -------- -------- --------
Operating expenses:
Cost of service:
Programming, including
program amortization 2,973 3,782 9,017 11,450
Other costs of service
(excluding
depreciation and
amortization of $587
and $681 for the
three months ended
September 30, 2009
and 2008,
respectively, and
$1,828 and $2,101 for
the nine months ended
September 30, 2009 and
2008, respectively) 1,006 1,440 3,081 4,009
Selling, general and
administrative expenses 2,530 2,880 7,794 8,820
Depreciation and
amortization 588 690 1,835 2,122
Impairment of broadcast
licenses -- -- -- 11,959
Lease termination costs -- -- -- 653
Corporate expenses 626 578 1,616 1,769
-------- -------- -------- --------
Operating expenses 7,723 9,370 23,343 40,782
-------- -------- -------- --------
Operating loss (1,056) (888) (3,295) (15,472)
Other expenses:
Interest, net (62) (64) (197) (397)
-------- -------- -------- --------
Loss from continuing
operations, before income
taxes (1,118) (952) (3,492) (15,869)
Income tax benefit
(expense) (316) (81) (650) 1,964
-------- -------- -------- --------
Loss from continuing
operations (1,434) (1,033) (4,142) (13,905)
-------- -------- -------- --------
Discontinued operations:
Income (loss) from
discontinued operations,
before income taxes (1) (11) (76) 17
Income tax benefit
(expense) -- -- -- --
-------- -------- -------- --------
Income (loss) from
discontinued
operations (1) (11) (76) 17
-------- -------- -------- --------
Net loss $ (1,435) $ (1,044) $ (4,218) $(13,888)
======== ======== ======== ========
Net income (loss) per
share, basic and diluted:
Continuing operations $ (0.09) $ (0.06) $ (0.26) $ (0.87)
Discontinued operations -- -- -- --
-------- -------- -------- --------
Net loss per share $ (0.09) $ (0.07) $ (0.26) $ (0.87)
======== ======== ======== ========
Weighted average basic
and diluted common shares
outstanding 16,047 16,047 16,047 16,047
-------- -------- -------- --------
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 Nine Months Ended
September 30, September 30,
------------------- -------------------
2009 2008 2009 2008
-------- -------- -------- --------
Operating loss $ (1,056) $ (888) $ (3,295) $(15,472)
Add (less):
Stock-based compensation
at stations -- 13 -- 74
Depreciation and
amortization 588 690 1,835 2,122
Impairment of broadcast
licenses -- -- -- 11,959
Amortization of program
rights 1,307 1,833 3,957 5,724
Lease termination costs -- -- -- 653
Corporate expenses 626 578 1,616 1,769
Program payments (1,581) (1,586) (4,776) (4,828)
-------- -------- -------- --------
Broadcast cash flow (1) (116) 640 (663) 2,001
Add (less):
Corporate expenses (626) (578) (1,616) (1,769)
Stock-based compensation
at corporate 3 11 10 57
-------- -------- -------- --------
Adjusted EBITDA $ (739) $ 73 $ (2,269) $ 289
======== ======== ======== ========
Broadcast cash flow
margin (1) -1.7% 7.5% -3.3% 7.9%
Adjusted EBITDA
margin (1) -11.1% 0.9% -11.3% 1.1%
-------- -------- -------- --------
(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, non-cash lease
termination costs and corporate expenses, less program payments
(before program supplier deferrals and 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 Nine Months Ended
September 30, September 30,
------------------- -------------------
2009 2008 2009 2008
-------- -------- -------- --------
Operating expenses $ 7,723 $ 9,370 $ 23,343 $ 40,782
Add (less):
Program payments 1,581 1,586 4,776 4,828
Depreciation and
amortization (588) (690) (1,835) (2,122)
Impairment of broadcast
licenses -- -- -- (11,959)
Corporate expense (626) (578) (1,616) (1,769)
Barter program costs (611) (794) (1,833) (2,343)
Program amortization (1,307) (1,833) (3,957) (5,724)
Daily Buzz production
costs (827) (875) (2,565) (2,612)
Lease termination costs -- -- -- (653)
Stock-based compensation
at stations -- (13) -- (74)
-------- -------- -------- --------
Total cash-based
station operating
expenses $ 5,345 $ 6,173 $ 16,313 $ 18,354
======== ======== ======== ========
Supplemental Table 3
--------------------
ACME Communications Inc. and Subsidiaries
Reconciliation of Net Revenues to Station Net Revenues
(Unaudited)
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2009 2008 2009 2008
-------- -------- -------- --------
Net revenues $ 6,667 $ 8,482 $ 20,048 $ 25,310
Less: Daily Buzz net
revenues (912) (871) (2,382) (2,336)
-------- -------- -------- --------
Station net revenues $ 5,755 $ 7,611 $ 17,666 $ 22,974
-------- -------- -------- --------