SANTA ANA, Calif., May 14, 2007 (PRIME NEWSWIRE) -- ACME Communications, Inc. (Nasdaq:ACME) today announced financial results for the first quarter ended March 31, 2007.
ACME's net revenues from continuing operations for the first quarter decreased 9% to $7.8 million compared to net revenues of $8.6 million in the first quarter of 2006. Our net revenues from our continuing seven stations decreased 4% as we estimate we held our share of non-political market revenues which decreased approximately 4% during the first quarter of 2007 compared to the first quarter of 2006. The Daily Buzz, LLC was included in our consolidated results for the first quarter of 2006 but deconsolidated effective July 1, 2006 and therefore not in our first quarter 2007 revenues, as it was accounted for using the equity method. However, in March 2007 we acquired our joint venture partner's 50% interest and effective April 1, 2007, we will begin consolidating the show's operating results and cash flows again.
Broadcast cash flow (as defined in Supplemental Table 1) for the quarter decreased 13% to $488,000 compared to broadcast cash flow of $562,000 for the first quarter of 2006 and adjusted EBITDA (as defined in Supplemental Table 1) was negative $307,000 compared to negative $281,000 in the first quarter of 2006. The Company also incurred an $850,000 expense during the first quarter of 2007 for an impairment on long-lived assets at one of our stations due to continued performance and market issues. The results of our Salt Lake City station (KUWB, sold in April 2006) and Ft. Myers -- Naples station (WTVK, sold in February 2007) have been included in discontinued operations, along with all interest expense through the completion date of the WTVK sale. The Company's income from discontinued operations, after tax, for the first quarter of 2007 was $26.5 million, which includes a $27.8 million gain on the sale of WTVK, compared to a net loss of $1.7 million for the first quarter of 2006. The Company's net income for the first quarter of 2007 was $24.3 million, principally on the gain on the sale of WTVK, compared to a $3.8 million net loss in the first quarter of 2006.
The decrease in our continuing group's broadcast cash flow was moderated by a decrease in cash-based station operating expenses of 2% relating to lower program payments and lower advertising and promotion expenses compared to the first quarter of 2006.
Commenting on the quarter's results, Jamie Kellner, ACME's Chairman and CEO, said, "Advertising demand was noticeably softer than we expected during the first quarter of 2007, but we were able to moderate the resulting impact on our bottom line through our continued efforts to control our costs. As a result, our broadcast cash flow exceeded the guidance we provided on our last earnings call. In the current quarter, non-political demand remains soft, but we enjoyed some ratings gains in the February 2007 sweeps period and we are already seeing some early positive pacing for the third quarter of 2007. The completion of the sale of our Ft. Myers -- Naples station during the first quarter allowed us to virtually eliminate our debt, enhancing our flexibility as we continue to seek avenues to monetize our station assets for the benefit of our shareholders."
Use of Broadcast Cash Flow, Adjusted EBITDA and Station Cash-Based Operating Expenses
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, impairment of intangibles and equity-based compensation, are an important metric in determining our cash expense growth. Adjusted 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 historically contained certain financial covenants relating to the Company's 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. The Company considers 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.
Second Quarter 2007 Outlook
Based on current second quarter sales pacings, we expect second quarter 2007 net revenues to be 3-5% lower than the $9.5 million in net revenues for the second quarter of 2006. We expect cash-based station expenses to be relatively unchanged from the prior year. We expect our broadcast cash flow for the second quarter of 2007 to be in the range of $700-800,000 compared to $1.3 million in broadcast cash flow for the second quarter of 2006.
First Quarter Conference Call
Senior management of ACME will hold a conference call to discuss the Company's first quarter results on Monday, May 14, 2007, at 4:30 p.m. EDT. To access the conference call, please dial 973-582-2855. A replay of the conference call will be available through Monday, May 28, 2007 by dialing (877) 519-4471 (U.S.), or (973) 341-3080 (International), reservation code 8723006. 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 until May 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; WBDT-TV, Dayton, OH; WBXX-TV, Knoxville, TN; 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, are affiliates of The CW Network. KASY is an affiliate of MyNetworkTV. 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", "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 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
March 31,
--------------------
2007 2006
-------- --------
Net revenues $ 7,805 $ 8,594
-------- --------
Operating expenses:
Cost of service:
Programming, including program
amortization 2,466 3,634
Other costs of service (excluding
depreciation and amortization
of $903 and $1,040 for the
three months ended March 31,
2007 and 2006, respectively) 1,378 1,334
Selling, general and
administrative expenses 3,272 3,370
Depreciation and amortization 910 1,053
Impairment of long-lived assets 850 --
Corporate expenses 837 881
-------- --------
Operating expenses 9,713 10,272
-------- --------
Operating loss (1,908) (1,678)
Other income (expenses):
Interest income 28 5
Interest expense (126) --
Equity in loss of unconsolidated
affiliates (251) (8)
-------- --------
Loss from continuing operations
before income taxes and
minority interest (2,257) (1,681)
Income tax expense (36) (640)
-------- --------
Loss from continuing operations
before minority interest (2,293) (2,321)
Minority interest income -- 230
-------- --------
Loss from continuing operations (2,293) (2,091)
-------- --------
Discontinued operations:
Income (loss) from discontinued
operations 26,795 (1,564)
Income tax expense (249) (99)
-------- --------
Income (loss) from discontinued
operations 26,546 (1,663)
-------- --------
Net income (loss) $ 24,253 $ (3,754)
======== ========
Net income (loss) per share,
basic and diluted
Continuing operations $ (0.14) $ (0.13)
Discontinued operations 1.65 (0.10)
-------- --------
Net income (loss) per share $ 1.51 $ (0.23)
======== ========
Weighted average basic and diluted
common shares outstanding 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
March 31,
------------------
2007 2006
------- -------
Operating loss $(1,908) $(1,678)
Add:
Stock-based compensation
at stations 41 48
Depreciation and amortization 910 1,053
Amortization of program rights 1,536 1,734
Corporate expenses 837 881
Minority interest relating
to The Daily Buzz, before
depreciation -- 182
Equity in losses of The Daily
Buzz, before depreciation (161) --
Impairment of long-lived assets 850 --
Program payments (1,617) (1,658)
------- -------
Broadcast cash flow (1) 488 562
Less:
Corporate expenses 837 881
Stock-based compensation
at corporate (42) (38)
------- -------
Adjusted EBITDA $ (307) $ (281)
======= =======
Broadcast cash flow margin (1) 6.3% 6.5%
Adjusted EBITDA margin (1) -3.9% -3.3%
======= =======
(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
March 31,
--------------------
2007 2006
-------- --------
Operating expenses $ 9,713 $ 10,272
Add:
Program payments 1,617 1,658
Less:
Depreciation (910) (1,053)
Corporate expense (837) (881)
Barter program costs (746) (850)
Program amortization (1,536) (1,734)
Daily Buzz production costs -- (804)
Impairment of long-lived
assets (850) --
Stock-based compensation
at stations (41) (48)
-------- --------
Total cash-based station
operating expenses $ 6,410 $ 6,560
======== ========
Supplemental Table 3
--------------------
ACME Communications Inc. and Subsidiaries
Reconciliation of Net Revenues to Station Net Revenues
(Unaudited)
(In Thousands)
Three Months Ended
March 31,
--------------------
2007 2006
-------- --------
Net revenues $ 7,805 $ 8,594
Less: Daily Buzz net revenues -- (471
-------- --------
Station net revenues $ 7,805 $ 8,123
======== ========