SANTA ANA, Calif., Aug. 5, 2003 (PRIMEZONE) -- ACME Communications, Inc. (Nasdaq:ACME), the nation's fourth largest affiliate group of The WB Television Network, today announced financial results for the second quarter ended June 30, 2003.
ACME's net revenues for the quarter increased 25% to $11.5 million compared to net revenues of $9.2 million in the second quarter of 2002. Broadcast cash flow for the quarter was $434,000 compared to a negative broadcast cash flow of $60,000 for the second quarter of 2002. Earnings before interest, taxes, depreciation and amortization (EBITDA, as defined herein) improved 51% to negative $535,000 compared to negative $1.1 million in the second quarter of 2002.
The improvement in broadcast cash flow results for the second quarter reflects continued ratings-driven revenue growth at eight of the Company's nine stations. Station operating expenses for the quarter increased 23% over the second quarter of 2002, reflecting the Company's continued investment in programming, promotion and sales related costs. On a same-station basis, excluding the results of WBUW-TV in Madison, which the Company acquired in the fourth quarter of 2002, net revenues and station operating expenses grew 21% and 17%, respectively, for the quarter.
In connection with the Company's redemption of all of its 10 7/8% notes and a majority of its 12% notes in April 2003, net interest expense for the quarter declined from $7.6 million in the second quarter of 2002 to $2.3 million in the second quarter of 2003 and the Company recorded an expense of $9.9 million related to the debt's early extinguishment.
The Company's net loss from continuing operations for the second quarter of 2003 was $14.4 million compared to an $8.8 million net loss in the second quarter of 2002. Our net loss for the second quarter of 2003 was $14.4 million compared to a net loss of $6.4 million for the second quarter of 2002, which was net of approximately $2.5 million after tax income from our discontinued operations -- our stations in St. Louis and Portland sold in March 2003.
Commenting on the quarter's results, Jamie Kellner, ACME's Chairman and CEO, said, "While second quarter advertising demand remained soft in the aftermath of the Iraqi conflict, our developing station group was still able to deliver significant gains in both absolute dollar revenue and market share. Our stations continue to grow their ratings, and we continue to convert these gains into top-line growth. During the May 2003 sweeps period, our stations delivered a 22% increase in the 5pm -- midnight daypart among viewers aged 18-49 years old, despite fierce prime-time competition from other networks. Although current market conditions remain relatively soft across the industry, we are cautiously optimistic that the advertising environment will improve later this year. Our station development strategy remains on track, as we focus on translating our ratings gains into continued revenue growth, while moderating the growth in our operating expenses, resulting in improving operating leverage."
Liquidity and Debt
Unrestricted cash on hand as of June 30, 2003 was $11.3 million. The Company's total debt as of June 30, 2003, including obligations for capital leases, was $38.1 million. Debt, net of restricted cash and cash on hand, was $18.4 million at June 30, 2003 compared to $270.2 million at December 31, 2002. The significant reduction of our debt resulted from our sale of stations KPLR - St. Louis and KWBP - Portland to Tribune Company in March 2003 and the repayment with those proceeds of all of our senior credit facility balance and the redemption of most of our notes. Based on our current debt at June 30, 2003, our annualized cash interest costs are approximately $4.5 million per year. We expect to have our amended senior credit facility in place this month.
Use of Broadcast Cash Flow, EBITDA and Same Station Results
GAAP refers to generally accepted accounting principles in the United States. Broadcast cash flow and 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. EBITDA is used as a performance measure and to measure a company's ability to service debt, as evidenced by the fact that our senior credit facility contains certain financial covenants relating to the Company's EBITDA.
Broadcast cash flow and EBITDA should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The Company considers operating loss to be the most comparable GAAP measure to broadcast cash flow and to EBITDA; therefore, the Company has included a reconciliation of broadcast cash flow and EBITDA to operating loss in Supplemental Table 1, as required by Regulation G. (See footnote (1) to Supplemental Table 1 for the definitions of broadcast cash flow and EBITDA). Because broadcast cash flow and EBITDA are not measurements determined in accordance with GAAP and are thus susceptible to varying calculations, the broadcast cash flow and EBITDA as presented may not be comparable to other similarly titled measures of other companies.
Same station results exclude the results of our December 2002 Madison acquisition. All of our other eight stations have been owned for the entire comparable periods of 2003 and 2002. A reconciliation of selected "As Reported" to "Same Station" operating results is presented in Supplemental Table 3.
Third Quarter 2003 Outlook
While visibility remains somewhat limited, the Company currently expects its same station third quarter 2003 revenue and station operating expenses to finish in the range of 15-20% and 14-16%, respectively, above corresponding net revenue and station operating expense for the third quarter of 2002. Third quarter broadcast cash flow is expected to improve modestly compared to a negative broadcast cash flow of $179,000 for the third quarter of 2002.
Second Quarter Conference Call
Senior management of ACME will hold a conference call to discuss its second quarter results on Tuesday, August 5, 2003, at 4:30 p.m. EDT. The dial-in number for the conference call is (973) 582-2706. A replay of the conference call will be available through August 12, 2003 by dialing (877) 519-4471 (U.S.), or (973) 341-3080 (International), reservation code 4046940. In addition, the Company will provide a live webcast of the conference call on the Company's website, located at www.acmecommunications.com. A seven day archived replay of the webcast will also be available at that link.
About ACME Communications
ACME Communications, Inc. owns and operates nine television stations serving markets covering 3.7% of the nation's television households, making the Company the fourth largest affiliate group of The WB Television Network. The Company's stations are: KUWB-TV, Salt Lake City, UT; KWBQ-TV and KASY-TV, Albuquerque-Santa Fe, NM; WBDT-TV, Dayton, OH; WBXX-TV, Knoxville, TN; WIWB-TV, Green Bay-Appleton, WI; WBUI-TV, Champaign-Springfield-Decatur, IL; WTVK-TV, Ft. Myers-Naples, FL and WBUW-TV, Madison, WI. All of the Company's stations, except KASY-TV, a UPN affiliate, are WB Network affiliates. ACME's shares are traded on the NASDAQ Stock Market under the symbol: ACME.
Forward-Looking Statements:
The matters discussed in this press release include forward-looking statements. In addition, when used in this press release, the words "will," "believe," "expects" and similar expressions are intended to identify forward-looking statements. Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ materially and adversely from those described in the forward-looking statements as a result of various important factors, including (but not limited to) the impact of changes in national and regional economies, including advertising demand, pricing fluctuations in local and national advertising, volatility in programming costs, the inability to secure Federal Communications Commission approval for construction permits, the inability to successfully negotiate an amendment to, or a replacement of, our current senior credit facility, or the possibility of future borrowing limitations under that credit facility and the other risk factors set forth in the Company's Form S-1 Registration Statement filed with the Securities and Exchange Commission (the "SEC") on September 29, 1999, pursuant to the Securities Act of 1933 and in the Company's 2002 Form 10-K filed with the SEC on April 1, 2003. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances.
ACME Communications, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
(In thousands, except share and per share data)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
---------------------- ----------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Net revenues $ 11,532 $ 9,240 $ 21,524 $ 16,727
Operating expenses:
Station operating
expenses 11,297 9,222 21,660 17,595
Depreciation
and amortization 1,131 1,002 2,192 1,965
Corporate
expenses 969 1,028 1,939 1,926
Equity-based
compensation 12 67 24 133
--------- --------- --------- ---------
Operating loss (1,877) (2,079) (4,291) (4,892)
Other income (expenses):
Interest income 198 8 294 79
Interest expense (2,496) (7,578) (10,880) (15,164)
Loss on
extinguishment
of debt (9,926) -- (9,926) --
Other expense,
net (3) (64) (40) (76)
--------- --------- --------- ---------
Loss from continuing
operations before
income taxes (14,104) (9,713) (24,843) (20,053)
Income tax benefit
(expense),
continuing
operations (300) 909 (783) (27,279)
--------- --------- --------- ---------
Loss from
continuing
operations (14,404) (8,804) (25,626) (47,332)
Income (loss)
from discontinued
operations
(including gain
on disposal),
net of tax (33) 2,450 111,658 4,024
--------- --------- --------- ---------
Net income (loss) (14,437) (6,354) 86,032 (43,308)
========= ========= ========= =========
Income (loss) per share, basic and diluted:
Continuing
operations $ (0.86) $ (0.53) $ (1.53) $ (2.83)
Discontinued
operations (0.00) 0.15 6.67 0.24
--------- --------- --------- ---------
Net income
(loss) per
share $ (0.86) $ (0.38) $ 5.14 $ (2.59)
========= ========= ========= =========
Basic and diluted
common shares
outstanding 16,752,964 16,750,000 16,751,482 16,750,000
============ =========== =========== ===========
Supplemental Table 1
ACME Communications Inc. and Subsidiaries
Reconciliation of Operating Loss to Broadcast Cash Flow
and EBITDA (Unaudited)
(In Thousands)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
-------------------------- ------------------------
2003 2002 2003 2002
--------- --------- --------- ---------
(Unaudited) (Unaudited)
Operating loss $ (1,877) $ (2,079) $ (4,291) $ (4,892)
Add back:
Equity-based
compensation 12 67 24 133
Depreciation
and
amortization 1,131 1,002 2,192 1,965
Amortization of
program rights 2,870 2,152 5,403 4,298
Corporate
expenses 969 1,028 1,939 1,926
Adjusted
program
payments (1) (2,671) (2,230) (5,313) (4,495)
--------- --------- --------- ---------
Broadcast cash
flow 434 (60) (46) (1,065)
Less:
Corporate
expenses 969 1,028 1,939 1,926
--------- --------- --------- ---------
EBITDA $ (535) $ (1,088) $ (1,985) $ (2,991)
Broadcast cash
flow margin (1) 3.8% -0.6% -0.2% -6.4%
EBITDA margin (1) -4.6% -11.8% -9.2% -17.9%
(1) We define
-- broadcast cash flow as operating income, plus equity-based
compensation, depreciation and amortization, LMA fees,
amortization of program rights, and corporate expenses,
less program payments -- the latter as adjusted to reflect
reductions for liabilities relating to expired rights or
rights which have been written-off in connection with
acquisitions;
-- EBITDA as broadcast cash flow less corporate expenses;
-- broadcast cash flow margin is broadcast cash flow as a
percentage of net revenues; and
-- EBITDA margin is EBITDA as a percentage of net revenues.
Supplemental Table 2
ACME Communications Inc. and Subsidiaries
Selected Comparative Balance Sheet Data
(In Thousands)
As of
-------------------------
June 30, December 31,
2003 2002
------------ ------------
(Unaudited)
(In thousands)
Cash (1) $ 11,258 $ 1,860
Total debt (2) $ 38,060 $ 275,001
Total debt, net of cash and
restricted cash $ 18,413 $ 270,231
(1) Cash excludes cash restricted as collateral under capital lease
facilities of $8.4 million at June 30, 2003 and $2.9 million at
December 31, 2002.
(2) Total debt includes the Company's 10 7/8% Senior Discount Notes
(zero at June 30, 2003), 12% Senior Secured Notes, notes payable
under its revolving credit facility (zero at June 30, 2003) and
its capital lease obligations.
Supplemental Table 3
ACME Communications Inc. and Subsidiaries
Reconciliation of "As Reported" to "Same Station" Selected Operating
Results (Unaudited)
(In Thousands)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
-------------------------- ------------------------
2003 2002 2003 2002
--------- --------- --------- ---------
(Unaudited) (Unaudited)
Net Revenue:
As reported $ 11,532 $ 9,240 $ 21,524 $ 16,727
Less: Madison
Station 354 -- 675 --
--------- --------- --------- ---------
Same station
net revenues $ 11,178 $ 9,240 $ 20,849 $ 16,727
--------- --------- --------- ---------
Station Operating
Expenses:
As reported $ 11,297 $ 9,222 $ 21,660 $ 17,595
Less: Madison
Station 502 -- 929 --
--------- --------- --------- ---------
Same station
operating
expenses $ 10,795 $ 9,222 $ 20,731 $ 17,595
--------- --------- --------- ---------
Broadcast Cash Flow:
As reported $ 434 $ (60) $ (46) $ (1,065)
Less: Madison
Station 141 -- 240 --
--------- --------- --------- ---------
Same station
broadcast cash
flow $ 575 $ (60) $ 194 $ (1,065)
--------- --------- --------- ---------