SANTA ANA, Calif., Aug. 14, 2007 (PRIME NEWSWIRE) -- ACME Communications, Inc. (Nasdaq:ACME) today announced financial results for the second quarter ended June 30, 2007.
ACME's net revenues from continuing operations, which exclude the results of our Decatur station which is subject to sale, decreased 4% to $8.3 million for the second quarter compared to net revenues of $8.7 million in the second quarter of 2006. The decrease in net revenues for the quarter reflects a 6% decline in station revenues on lower market revenues and station shares, partially offset by a 27% increase in net revenues at The Daily Buzz. Broadcast cash flow (as defined in Supplemental Table 1) for the quarter decreased 40% to $761,000 compared to broadcast cash flow of $1.3 million for the second quarter of 2006. Adjusted EBITDA (as defined in Supplemental Table 1 attached hereto) for the quarter was negative $196,000 compared to positive $380,000 in the second quarter of 2006. Our loss from discontinued operations for the second quarter of 2007 was $838,000 compared to income from discontinued operations of $4.5 million for the second quarter of 2006, which included the gain on the sale of our Salt Lake City station. Since the proceeds received or to be received from the sale of our discontinued operations exceeds all of our outstanding debt for the periods reported and our loan agreements require all sale proceeds to be used to repay outstanding debt, all interest expense for such periods has been allocated to and is included in the results of our discontinued operations. Our net loss for the second quarter of 2007 was $1.8 million compared to net income of $3.8 million for the second quarter of 2006.
In March 2007, we reacquired the 50% interest in The Daily Buzz, LLC that we did not own from our former venture partner. The first quarter 2007 results of our Daily Buzz operations were accounted for using the equity method. We reconsolidated the operating results of the Daily Buzz effective April 1, 2007. Accordingly, our first six months' consolidated results for 2007 only include revenue and operating costs for the venture for the second quarter. In the six month period ending June 30, 2006, the venture was deemed a variable interest entity and consolidated in our results of operations. Net revenues for continuing stations and The Daily Buzz operations for the six months ended June 30, 2007 were $15.6 million, down 7% as compared to $16.7 million in net revenues for the six months ended June 30, 2006. Net revenues at our stations in 2007 declined 5% for the six-month period and net revenues for the Daily Buzz, which included just the second quarter in 2007, were $624,000 compared to $931,000 for the six months ended June 30, 2006. Our broadcast cash flow for the six months ended June 30, 2007 was $1.4 million compared to broadcast cash flow of $1.9 million for the prior year six-month period -- a decrease of 28%. Adjusted EBITDA was negative $380,000 for the six months ended June 30, 2007 compared to positive $173,000 for the same period a year earlier. Net income for the six months ended June 30, 2007 was $22.4 million, which includes income from discontinued operations of $24.5 million. Our net income for the six months ended June 30, 2006 was $6,000, which included net income of $2.7 million from discontinued operations.
Commenting on the quarter's results, Jamie Kellner, ACME's Chairman and CEO, said, "We are disappointed that the non-political advertising revenues in our markets declined during the second quarter, as did our aggregate market share. We are, however, encouraged by current third and fourth quarter sales pacings and believe that both our market revenues and our shares are rebounding. While we ended the quarter at the upper end of our previously provided broadcast cash flow guidance, we remain focused on controlling costs and regaining earnings momentum at our continuing stations. We are continuing to closely monitor the progress of our Daily Buzz venture, and we are cautiously optimistic that the show is gaining sufficient advertiser support to achieve a break-even run rate in the fourth quarter. We also believe that the previously announced sale of our Decatur station, which is our only station not generating positive broadcast cash flow, is on track to close by the end of this year."
"We are also continuing to explore ways to monetize our station assets for our shareholders," Kellner continued. "In the Fall of 2005, we engaged The Blackstone Group to assist us in marketing our stations. They assisted us with the sale of our Ft. Myers station, which was completed in February of this year. Due to management changes at Blackstone, we mutually agreed to terminate their services in May and in June we engaged CobbCorp, LLC, a media brokerage firm, whom we hope will be better positioned to help us market our middle sized new-network affiliates. Assisted by CobbCorp, we will continue to seek to unlock the value of our station assets through a disciplined approach with the goal of yielding the maximum value of our station portfolio over the long-term."
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.
Third Quarter 2007 Outlook
Based on current third quarter sales pacings, we expect third quarter 2007 net revenues at our continuing stations to increase 4-6% over our third quarter 2006 station net revenues of $7.6 million. We expect cash-based station expenses to be relatively unchanged from the prior year, resulting in broadcast cash flow in a range of $700,000 to $800,000 compared to broadcast cash flow of $576,000 for the third quarter of 2006.
Second Quarter Conference Call
Senior management of ACME will host a conference call to discuss our second quarter 2007 results on Tuesday, August 14th at 4:30 p.m. Eastern Time. To access the conference call, please dial 973-935-8510 ten minutes prior to the start time. A replay of the conference call will be available through Tuesday, August 21, 2007 by dialing 877-519-4471 (U.S.) or (973) 341-3080 (International), reservation code 8992664. In addition, we will provide a live webcast of the conference call on our website, located at http://www.acmecommunications.com. The webcast will also be archived on our website until August 28, 2007.
About ACME Communications
ACME Communications, Inc. owns and operates seven television stations serving markets covering 2.6% 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; WBUI-TV, Champaign-Springfield-Decatur, IL and WBUW-TV, Madison, WI. All of the Company's stations, except KASY-TV, a MyNetworkTV affiliate, are affiliates of The CW Network. Our 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", "expects", "intends" 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 ratings growth or decline of our programming, including The CW Network and, to a lesser extent, MyNetworkTV, the impact of changes in national and regional economies, including advertising demand, pricing fluctuations in local and national advertising, volatility in programming costs, the failure to complete the sale of our Decatur station to GoCom Media of Illinois, LLC (which is subject to FCC approval and other customary closing conditions), and the other risk factors set forth in the Company's 2006 Form 10-K/A filed with the Securities and Exchange Commission on April 10th, 2007. 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 Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2007 2006 2007 2006
------- ------- ------- -------
Net revenues $ 8,349 $ 8,707 $15,571 $16,664
------- ------- ------- -------
Operating expenses:
Cost of service:
Programming, including
program amortization 3,203 3,346 5,481 6,765
Other costs of service
(excluding depreciation
and amortization of
$800 and $917 for the
three months ended
June 30, 2007 and
2006, respectively,
and $1,584 and $1,840
for the six months
ended June 30, 2007
and 2006,
respectively) 1,313 1,340 2,537 2,528
Selling, general and
administrative expenses 2,910 2,959 5,844 5,979
Depreciation and
amortization 807 924 1,598 1,860
Corporate expenses 1,049 920 1,886 1,801
------- ------- ------- -------
Operating expenses 9,282 9,489 17,346 18,933
------- ------- ------- -------
Operating loss (933) (782) (1,775) (2,269)
Other income (expenses):
Interest income 6 28 34 33
Gain on sale of assets -- 69 -- 69
Equity in losses of
unconsolidated affiliates -- (60) (251) (68)
------- ------- ------- -------
Loss from continuing
operations before income
taxes and minority interest (927) (745) (1,992) (2,235)
Income tax expense (43) (258) (79) (898)
------- ------- ------- -------
Loss from continuing
operations before
minority interest (970) (1,003) (2,071) (3,133)
Minority interest income -- 233 -- 463
------- ------- ------- -------
Loss from continuing
operations (970) (770) (2,071) (2,670)
------- ------- ------- -------
Discontinued operations:
Income (loss) from
discontinued operations,
before income taxes (880) 4,628 24,723 2,873
Income tax benefit
(expense) 42 (98) (207) (197)
------- ------- ------- -------
Income (loss) from
discontinued
operations (838) 4,530 24,516 2,676
------- ------- ------- -------
Net income (loss) $(1,808) $ 3,760 $22,445 $ 6
======= ======= ======= =======
Net income (loss) per
share, basic and diluted:
Continuing operations $ (0.06) $ (0.05) $ (0.13) $ (0.17)
Discontinued operations (0.05) 0.28 1.53 0.17
------- ------- ------- -------
Net income (loss) per
share $ (0.11) $ 0.23 $ 1.40 $ 0.00
======= ======= ======= =======
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 Six Months Ended
June 30, June 30,
------------------ ------------------
2007 2006 2007 2006
------- ------- ------- -------
Operating loss $ (933) $ (782) $(1,775) $(2,269)
Add:
Stock-based compensation
at stations 38 37 75 82
Depreciation and
amortization 807 924 1,598 1,860
Amortization of program
rights 1,410 1,485 2,827 3,086
Corporate expenses 1,049 920 1,886 1,801
Minority interest
related to The Daily
Buzz, before depreciation -- 184 -- 366
Equity in losses of The
Daily Buzz, before
depreciation -- -- (161) --
Implied Contribution from
former Daily Buzz
venture partner (150) -- (150) --
Program payments (1,460) (1,508) (2,928) (3,030)
------- ------- ------- -------
Broadcast cash flow (1) 761 1,260 1,372 1,896
Less:
Corporate expenses 1,049 920 1,886 1,801
Stock-based compensation
at corporate (92) (40) (134) (78)
------- ------- ------- -------
Adjusted EBITDA $ (196) $ 380 $ (380) $ 173
======= ======= ======= =======
Broadcast cash flow
margin (1) 9.1% 14.5% 8.8% 11.4%
Adjusted EBITDA margin (1) -2.3% 4.4% -2.4% 1.0%
======= ======= ======= =======
(1) We define:
* Broadcast cash flow as operating income (loss), plus stock-based
compensation, depreciation and amortization (including impairment
of intangibles), LMA fees, amortization of program rights,
impairment of broadcast licenses 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 Six Months Ended
June 30, June 30,
------------------ ------------------
2007 2006 2007 2006
------- ------- ------- -------
Operating expenses $ 9,282 $ 9,489 $17,346 $18,933
Add:
Program payments 1,460 1,508 2,928 3,030
Less:
Depreciation (807) (924) (1,598) (1,860)
Corporate expense (1,049) (920) (1,886) (1,801)
Barter program costs (782) (805) (1,478) (1,598)
Program amortization (1,410) (1,485) (2,827) (3,086)
Daily Buzz production
costs (850) (858) (850) (804)
Stock-based compensation
at stations (38) (37) (75) (82)
------- ------- ------- -------
Total cash-based
station operating
expenses $ 5,806 $ 5,968 $11,560 $12,732
======= ======= ======= =======
Supplemental Table 3
--------------------
ACME Communications Inc. and Subsidiaries
Reconciliation of Net Revenues to Station Net Revenues
(Unaudited)
(In Thousands)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2007 2006 2007 2006
------- ------- ------- -------
Net revenues $ 8,349 $ 8,707 $15,571 $16,664
Less: Daily Buzz net
revenues (624) (491) (624) (931)
------- ------- ------- -------
Station net revenues $ 7,725 $ 8,216 $14,947 $15,733
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