SANTA ANA, Calif., Aug. 9, 2004 (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, 2004.
ACME's net revenues for the second quarter increased 6% to $12.2 million compared to net revenues of $11.5 million in the second quarter of 2003. As defined herein and set forth in Supplemental Table 1, broadcast cash flow for the quarter was $1,146,000 compared to $434,000 for the second quarter of 2003. The Company posted it first ever quarterly positive EBITDA of $203,000 compared to a negative EBITDA of $535,000 for the second quarter of 2003.
ACME's programming and total station operating expenses, net of the co-production minority interest credit related to its morning news show, The Daily Buzz, (set forth in Supplemental Table 2) grew 6% and 1%, respectively, during the second quarter of 2004 compared to the second quarter of 2003.
The improvement in broadcast cash flow and EBITDA results for the second quarter reflects continued better than market revenue growth combined with moderating station operating expenses.
The Company's loss from continuing operations for the second quarter of 2004 was $2.8 million compared to a $14.4 million loss from continuing operations in the second quarter of 2003. The significant reduction in the loss from continuing operations relates primarily to improved operating income and reduced interest expense and debt retirement costs resulting from the Company's repayment of a significant portion of its debt with the proceeds of the sale of the Company's St. Louis, MO and Portland, OR stations in April 2003.
For the six months ended June 30, 2004, net revenues were $23.2 million, an 8% increase over the prior year six-month period revenues of $21.5 million. Broadcast cash flow improved to $1.4 million compared to a negative $49,000 and EBITDA improved to negative $432,000 from negative $2.0 million for the prior year six-month period.
Commenting on the quarter's results, Jamie Kellner, ACME's Chairman and CEO, said, "Despite a lack of political advertising at our stations, we were able to grow our revenues by 6% during the quarter. However, our top line growth was at the low end of our guidance, reflecting a continued softness in advertising demand. In the May 2004 sweeps period, ratings at our stations were down overall in the key adults aged 18-49 demographic, during the 5 p.m. to midnight, Monday through Sunday, daypart compared to our ratings a year ago. We are hopeful that The WB Network will rebound from this season's declines and coupled with the improvements in our syndicated programming lineup this fall, we believe that we will regain our ratings momentum during the fourth quarter. In the meantime, our overall station operating costs have continued to moderate according to our plan. As a result, we expect to continue to convert an increasing amount of our revenue growth into gains in our cash flow and margins."
Stock Repurchase Update
The Company recently completed its previously announced $5 million common stock repurchase program. A total of 725,652 shares, or 4.3% of the Company's outstanding common stock, were purchased on the open market at an average cost of $6.89 per share.
Liquidity and Debt
Unrestricted cash on hand as of June 30, 2004 was $1.6 million. The Company's total debt as of June 30, 2004, including obligations for capital leases, was $37.1 million compared to $32.9 million at March 31, 2004. Total debt, net of restricted cash and cash on hand, was $35.4 million at June 30, 2004 compared to $29.9 million at March 31, 2004. Approximately $2.7 million of this increase in outstanding indebtedness related to stock repurchases through June 30, 2004. As of June 30, 2004, the Company had approximately $13.9 million remaining availability under its senior credit facility.
The Company's senior credit facility lenders have agreed to amend or waive certain of the Company's third and fourth quarter 2004 financial covenants. In addition, the Company is in advanced discussions with these lenders to amend the credit facility to increase the maximum borrowing amount under the facility, extend the term, relax future financial covenants and broaden the allowable permitted investments, including stock repurchases, under the agreement. The Company believes this broader amendment will be concluded by September 30, 2004.
Use of Broadcast Cash Flow, EBITDA
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. 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.
Third Quarter 2004 Outlook
Based on current sales pacings, the Company expects its third quarter 2004 revenue to increase in the mid-single digit range over the corresponding net revenue for the third quarter of 2003. We expect station operating expenses (net of co-production minority interest) for the third quarter to be in the range of 2-4% above the prior year quarter and resulting broadcast cash flow is expected to improve to $200,000-300,000 compared to $92,000 for the third quarter of 2003.
Second Quarter Conference Call
Senior management of ACME will hold a conference call to discuss its second quarter results on Monday, August 9, 2004, at 11:00 a.m. EDT. To access the conference call, please dial (973) 935-2403. A replay of the conference call will be available through Monday, August 16, 2004 by dialing (877) 519-4471 (U.S.), or (973) 341-3080 (International), passcode 4697235. In addition, the Company will provide a live webcast of the conference call on the Company's website, located at www.acmecommunications.com. The webcast will also be archived on the Company's website for one week.
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", "should", "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 amend or replace the Company's current senior credit facility by March 31, 2005, the possibility of future borrowing limitations under our senior credit facility and the other risk factors set forth in the Company's 2003 Form 10-K filed with the SEC on March 16, 2004. 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 per share data)
Three Months Six Months
Ended June 30, Ended June 30,
2004 2003 2004 2003
----- ------ ------ ------
(restated)
Net revenues $ 12,217 $ 11,532 $ 23,228 $ 21,524
------- -------- -------- --------
Operating expenses:
Cost of service:
Programming, including
program amortization 4,943 4,655 9,578 8,793
Other costs of service
(excluding depreciation and
amortization of $1,284 and
$1,182 for the three months
ended June 30, 2004 and
June 30, 2003, respectively,
and $2,573 and $2,158 for
the six months ended
June 30, 2004 and
June 30, 2003, respectively) 2,019 1,890 3,752 3,527
Selling, general and
administrative expenses 4,661 4,761 9,363 9,364
Depreciation and
amortization 1,297 1,131 2,599 2,192
Corporate expenses 946 972 1,819 1,939
--------- --------- --------- ---------
Operating expenses 13,866 13,409 27,111 25,815
--------- --------- --------- ---------
Operating loss (1,649) (1,877) (3,883) (4,291)
Other income
(expenses):
Interest income 3 198 5 294
Interest expense (836) (2,496) (1,559) (10,880)
Loss on early
extinguishment of debt -- (9,926) -- (9,926)
Other (34) (3) (55) (40)
--------- --------- --------- ---------
Loss from continuing
operations before
income taxes and
minority interest (2,516) (14,104) (5,492) (24,843)
Income tax expense,
continuing operations (493) (300) (1,108) (783)
--------- --------- --------- ---------
Loss from continuing
operations before
minority interest (3,009) (14,404) (6,600) (25,626)
Minority interest 218 -- 457 --
--------- --------- --------- ---------
Loss from continuing
operations (2,791) (14,404) (6,143) (25,626)
Discontinued operations:
Income from
discontinued operations -- (34) -- 113,998
Income tax benefit
(expense) -- 1 -- (907)
--------- --------- --------- ---------
Income from
discontinued
operations -- (33) -- 113,091
--------- --------- --------- ---------
Net income (loss) $ (2,791) $ (14,437) $ (6,143) $ 87,465
========= ========= ========= =========
Income (loss) per share,
basic and diluted:
Continuing operations $ (0.17) $ (0.86) $ (0.37) $ (1.53)
Discontinued operations -- (0.00) -- 6.75
--------- --------- --------- ---------
Net income (loss)
per share $ (0.17) $ (0.86) $ (0.37) $ 5.22
========= ========= ========= =========
Weighted average
basic and diluted
common shares
outstanding 16,739 16,753 16,754 16,751
========= ========= ========= =========
Supplemental Table 1
ACME Communications Inc. and Subsidiaries
Reconciliation of Operating Loss to Broadcast Cash Flow and
EBITDA (Unaudited)
(In Thousands)
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
----------------- -----------------
2004 2003 2004 2003
------- ------- ------- -------
Operating loss $(1,649) $(1,877) $(3,883) $(4,291)
Add:
Amortization of unearned
compensation at
stations 9 9 20 21
Depreciation and
amortization 1,297 1,131 2,599 2,192
Amortization of program
rights 2,991 2,870 5,752 5,403
Corporate expenses 946 972 1,819 1,939
Minority interest from
co-production 218 -- 457 --
Adjusted program
payments (1) (2,666) (2,671) (5,380) (5,313)
------- ------- ------- -------
Broadcast cash flow 1,146 434 1,384 (49)
Less:
Corporate expenses 946 972 1,819 1,939
Amortization of unearned
compensation at
corporate (3) (3) (3) (3)
------- ------- ------- -------
EBITDA $ 203 $ (535) $ (432) $(1,985)
======= ======= ======= =======
Broadcast cash flow
margin (1) 9.4% 3.8% 6.0% -0.2%
EBITDA margin (1) 1.7% -4.6% -1.9% -9.2%
======= ======= ======= =======
(1) We define
-- broadcast cash flow as operating income, plus
amortization of unearned compensation at stations,
depreciation and amortization (including impairment of
intangibles), LMA fees, amortization of program rights,
impairment of broadcast licenses, corporate expenses and
minority interests related to co-productions, 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 and
amortization of unearned compensation at corporate;
-- 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
Summary of Station Operating Expenses, before Depreciation &
Amortization
(unaudited)
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
----------------- ------------------
2004 2003 2004 2003
-------- -------- -------- --------
Programming costs $ 4,943 $ 4,655 $ 9,578 $ 8,793
Other costs of service 2,019 1,890 3,752 3,527
Selling, general and
administrative expenses 4,661 4,761 9,363 9,364
-------- -------- -------- --------
Station operating
expenses before
minority interest from
co-production 11,623 11,306 22,693 21,684
Minority interest from
co-production (218) -- (457) --
-------- -------- -------- --------
Total station operating
costs $ 11,405 $ 11,306 $ 22,236 $ 21,684
======== ======== ======== ========
Supplemental Table 3
ACME Communications Inc. and Subsidiaries
Selected Comparative Balance Sheet Data
(In Thousands)
As of
---------------------
June 30, December 31,
2004 2003
------- -------
(unaudited)
Cash (1) $ 1,640 $ 1,197
Total debt (2) $37,107 $30,006
Total debt, net of cash
and restricted cash $35,430 $26,825
(1) Cash excludes cash restricted as collateral under capital lease
facilities of $37,000 at June 30, 2004 and $2.0
million at December 31, 2003.
(2) Total debt includes notes payable under its revolving credit
facility and capital lease obligations.