<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBERS:
ACME INTERMEDIATE HOLDINGS, LLC 333-40277
ACME TELEVISION, LLC 333-40281
ACME INTERMEDIATE HOLDINGS, LLC
AND
ACME TELEVISION, LLC
(EXACT NAME OF REGISTRANTS AS SPECIFIED IN THEIR CHARTER)
DELAWARE ACME INTERMEDIATE HOLDINGS, LLC 52-2050589
DELAWARE ACME TELEVISION, LLC 52-2050588
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
2101 E. FOURTH STREET, SUITE 202A
SANTA ANA, CALIFORNIA, 92705
(714) 245-9499
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) have been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
100% of the membership units of ACME Intermediate Holdings, LLC are owned
directly or indirectly by ACME Communications, Inc. 100% of the membership units
of ACME Television, LLC are owned directly or indirectly by ACME Intermediate
Holdings, LLC. Such membership units are not publicly traded and, therefore,
have no separate, quantifiable market value.
As of May 12, 2000, ACME Intermediate Holdings, LLC and ACME Television, LLC had
910,986 and 200, respectively, common membership units outstanding; all such
units are owned, directly or indirectly, by ACME Communications, Inc.
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ACME INTERMEDIATE HOLDINGS, LLC
AND
ACME TELEVISION, LLC
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM
NUMBER PAGE
------ ----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ACME Intermediate Holdings, LLC and Subsidiaries and ACME
Television, LLC and Subsidiaries:
Consolidated Balance Sheets as of March 31, 2000 and December 31, 1999.................... 3
Consolidated Statements of Operations for the Three Months Ended
March 31, 2000 and March 31, 1999......................................................... 4
Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2000 and March 31, 1999......................................................... 5
Notes to Consolidated Financial Statements................................................ 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results Of Operations.......... 7
Item 3. Quantitative and Qualitative Disclosures About Market Risk..................................... 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.............................................................................. 11
Item 6. Exhibits and Reports on Form 8-K............................................................... 12
</TABLE>
2
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ACME INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES
ACME TELEVISION, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999 AS OF MARCH 31, 2000
------------------------------ ------------------------------
ACME ACME
INTERMEDIATE ACME INTERMEDIATE ACME
HOLDINGS, LLC TELEVISION, LLC HOLDINGS, LLC TELEVISION, LLC
------------------------------ ------------------------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,012 $ 4,012 $ 1,940 $ 1,940
Accounts receivable, net 13,978 13,978 12,005 12,005
Due from affiliates --- 128 --- 128
Current portion of programming rights 11,331 11,331 11,135 11,135
Prepaid expenses and other current assets 1,065 1,065 1,871 1,871
Deferred income taxes 2,448 2,448 2,575 1,963
------------------------------ ------------------------------
Total current assets 32,834 32,962 29,526 29,042
Property and equipment, net 25,116 25,116 24,969 24,969
Programming rights, net of current portion 14,704 14,704 12,537 12,537
Intangible assets, net 282,972 282,972 279,454 279,454
Other assets 11,295 9,760 11,198 9,683
------------------------------ ------------------------------
Total assets $ 366,921 $ 365,514 $ 357,684 $ 355,685
============================== ==============================
LIABILITIES AND MEMBERS' CAPITAL
Current liabilities:
Accounts payable $ 5,330 $ 5,330 $ 5,833 $ 5,833
Accrued liabilities 8,142 8,142 3,732 3,732
Due to affiliates 1,188 1,188 1,621 1,621
Current portion of programming rights
payable 10,727 10,727 10,854 10,854
Current portion of obligations under
lease 1,617 1,617 1,590 1,590
------------------------------ ------------------------------
Total current liabilities 27,004 27,004 23,630 23,630
Programming rights payable, net of
current portion 13,605 13,605 11,077 11,077
Obligations under lease, net of
current portion 5,796 5,796 5,434 5,434
Other liabilities 259 259 250 250
Deferred income taxes 25,187 25,799 22,519 23,130
10 7/8% senior discount notes 161,695 161,695 165,975 165,975
12% senior secured notes 47,970 --- 49,549 ---
------------------------------ ------------------------------
Total liabilities 281,516 234,158 278,434 229,496
------------------------------ ------------------------------
Members' capital 182,728 216,889 182,861 217,021
Accumulated deficit (97,323) (85,533) (103,611) (90,832)
------------------------------ ------------------------------
Total members' capital 85,405 131,356 79,250 126,189
------------------------------ ------------------------------
Total liabilities and members' capital $ 366,921 $ 365,514 $ 357,684 $ 355,685
============================== ==============================
</TABLE>
See the notes to the consolidated financial statements.
3
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ACME INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES
ACME TELEVISION, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,
----------------------------------- -------------------------------------
1999 2000
----------------------------------- -------------------------------------
ACME ACME
INTERMEDIATE ACME INTERMEDIATE ACME
HOLDINGS, LLC TELEVISION, LLC HOLDINGS, LLC TELEVISION, LLC
-------------- ---------------- --------------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Net revenues $ 11,123 $ 11,123 $ 16,218 $ 16,218
Operating expenses:
Station operating expenses 8,430 8,430 12,655 12,655
Depreciation and amortization 3,766 3,766 5,180 5,180
Corporate 721 721 888 888
Equity-based compensation 2,500 2,500 132 132
--------- --------- --------- ---------
Operating loss (4,294) (4,294) (2,637) (2,637)
Other income (expenses):
Interest income 8 8 17 17
Interest expense (5,830) (4,437) (6,356) (4,757)
Other -- -- (1) (1)
--------- --------- --------- ---------
Net loss before income taxes (10,116) (8,723) (8,977) (7,378)
Income tax (expense) benefit (2,255) (2,255) 2,690 2,079
--------- --------- --------- ---------
Net loss $ (12,371) $ (10,978) $ (6,287) $ (5,299)
Parent's contribution 2,500 2,500 132 132
Members' Capital at the
beginning of the period 30,712 71,295 85,405 131,356
--------- --------- --------- ---------
Members' Capital at the
end of the period $ 20,841 $ 62,817 $ 79,250 $ 126,189
========= ========= ========= =========
</TABLE>
See the notes to the consolidated financial statements.
4
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ACME INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES
ACME TELEVISION, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
------------------------------------------------------
MARCH 31, 1999 MARCH 31, 2000
-------------------------- --------------------------
ACME ACME ACME ACME
INTERMEDIATE TELEVISION, INTERMEDIATE TELEVISION,
HOLDINGS, LLC LLC HOLDINGS, LLC LLC
-------------------------- -------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $(12,371) $(10,978) $ (6,287) $ (5,299)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 3,766 3,766 5,180 5,180
Amortization of program rights 1,582 1,582 2,949 2,949
Amortization of debt issuance costs 128 119 280 260
Amortization of discount on 10 7/8% senior discount notes 3,850 3,850 4,280 4,280
Amortization of discount on 12% senior secured notes 1,384 -- 1,579 --
Equity-based compensation 2,500 2,500 132 132
Deferred taxes 2,255 2,255 (2,690) (2,079)
Changes in assets and liabilities:
Decrease in accounts receivables, net 1,600 1,600 1,973 1,973
(Increase) decrease in prepaid expenses (249) (249) 155 155
(Increase) decrease in due from affiliates (5) 31 -- --
Increase in other assets (2,508) (2,508) (1,143) (1,143)
Increase (decrease) in accounts payable (1,238) (1,238) 503 503
Increase (decrease) in accrued expenses 682 682 (4,410) (4,410)
Payments on programming rights payable (2,072) (2,072) (2,987) (2,987)
Increase in due to affiliates -- -- 433 433
Decrease in other liabilities (281) (317) (114) (114)
----------------------- -----------------------
Net cash used in operating activities (977) (977) (167) (167)
----------------------- -----------------------
Cash flows from investing activities:
Purchase of property and equipment (2,171) (2,171) (1,193) (1,193)
Purchase of and deposits for station interests (1,509) (1,509) (323) (323)
----------------------- -----------------------
Net cash used in investing activities (3,680) (3,680) (1,516) (1,516)
----------------------- -----------------------
Cash flows from financing activities:
Increase in revolving credit facility, net of repayments 4,900 4,900 -- --
Payments of capital lease obligations (258) (258) (389) (389)
----------------------- -----------------------
Net cash provided by (used in) financing activities 4,642 4,642 (389) (389)
----------------------- -----------------------
Net decrease in cash (15) (15) (2,072) (2,072)
Cash at beginning of period 953 953 4,012 4,012
----------------------- -----------------------
Cash at end of period $ 938 $ 938 $ 1,940 $ 1,940
======================= =======================
Cash Payments for:
Interest $ 372 $ 372 $ 212 $ 212
Taxes $ 25 $ 25 $ 181 $ 181
======================= =======================
Non-Cash Transactions:
Program rights in exchange for program rights payable $ 628 $ 628 $ 586 $ 586
======================= =======================
</TABLE>
See the notes to the consolidated financial statements.
5
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ACME INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES
ACME TELEVISION, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 1999
AND MARCH 31, 2000
(1) FORMATION AND DESCRIPTION OF THE BUSINESS
REORGANIZATION OF PARENT
ACME Communications, Inc. was formed on July 23, 1999, in preparation for
and in conjunction with an initial public offering of its stock.
On September 27, 1999, the Board of Advisors of ACME Television Holdings,
LLC the parent company of ACME Intermediate Holdings, LLC ("ACME Intermediate")
and its wholly-owned subsidiary ACME Television, LLC ("ACME Television") and its
members and the Board of Directors of ACME Communications, Inc. and its
stockholder approved a merger and reorganization (the "Reorganization"), whereby
ACME Communications, Inc., became the direct parent of ACME Television Holdings,
LLC. As a result of the Reorganization, ACME Communications, Inc. is the
ultimate parent of ACME Intermediate and its wholly-owned subsidiary ACME
Television. All transactions contemplated as part of the Reorganization closed
on October 5, 1999. References to "ACME Parent" herein refer to either ACME
Television Holdings, LLC, or, subsequent to the Reorganization, ACME
Communications, Inc.
FORMATION
ACME Intermediate was formed on August 8, 1997. Upon formation, ACME
Intermediate received a contribution from ACME Parent, of ACME Parent's
wholly-owned subsidiaries - ACME Television of Oregon, LLC ("ACME Oregon") and
ACME Television of Tennessee, LLC ("ACME Tennessee") and certain other net
assets. This Contribution of $25,455,000 (including cash of $2,380,000) was made
in exchange for membership units in ACME Intermediate and was treated as a
transaction between entities under common control, similar to a pooling of
interests. Accordingly, the transaction was recorded at historical cost and ACME
Intermediate has reflected the results of operations of the contributed entities
for the year ended December 31, 1997. In addition, on September 30, 1997, ACME
Parent made an additional contribution of $21,746,000 in exchange for membership
units in ACME Intermediate.
ACME Television was formed on August 8, 1997. Upon formation, ACME
Television received a contribution from ACME Parent through ACME Intermediate of
ACME Parent's wholly-owned subsidiaries - ACME Oregon and ACME Tennessee and
certain other net assets. This Contribution of $25,455,000 (including cash of
$2,380,000) was made in exchange for membership units in the Company and was
treated as a transaction between entities under common control, similar to a
pooling of interests. Accordingly, the transaction was recorded at historical
cost and ACME Television has reflected the results of operations of the
contributed entities for the year ended December 31, 1997. In addition, on
September 30, 1997, ACME Intermediate made an additional contribution of
$60,061,000 in exchange for membership units in ACME Television.
ACME Parent owns directly or indirectly, 100% of the outstanding member
units of ACME Intermediate. ACME Intermediate owns, directly or indirectly, 100%
of the outstanding member units of ACME Television.
DESCRIPTION OF THE BUSINESS
ACME Intermediate is a holding company with no independent operations other
than its indirect wholly-owned subsidiary, ACME Television. ACME Television,
through its wholly-owned subsidiaries, owns and operates the following ten
commercially licensed broadcast television stations located throughout the
United States:
<TABLE>
<CAPTION>
NETWORK
STATION MARKET AFFILIATION
------- ------ -----------
<S> <C> <C>
KPLR - 11 St. Louis, MO......................................... WB
KWBP - 32 Portland, OR.......................................... WB
KUWB - 30 Salt Lake City, UT.................................... WB
KWBQ - 19 Albuquerque-Santa Fe, NM.............................. WB
KASY - 50 Albuquerque-Santa Fe, NM.............................. UPN
</TABLE>
6
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<TABLE>
<CAPTION>
NETWORK
STATION MARKET AFFILIATION
------- ------ -----------
<S> <C> <C>
WBXX - 20 Knoxville, TN......................................... WB
WTVK - 46 Ft. Myers-Naples, FL.................................. WB
WBDT - 26 Dayton, OH............................................ WB
WIWB - 14 Green Bay-Appleton, WI................................ WB
WBUI - 23 Champaign-Springfield-Decatur, IL..................... WB
</TABLE>
(2) PRESENTATION OF INTERIM FINANCIAL STATEMENTS
Financial statements are presented for each of ACME Intermediate Holdings,
LLC and its wholly owned subsidiary, ACME Television, LLC. Unless the context
requires otherwise, references to the "Company" refers to both ACME Intermediate
and ACME Television. Segment information is not presented since all of the
Company's revenue is attributed to a single reportable segment - television
broadcasting. Certain amounts previously reported for 1999 have been
reclassified to conform to the 2000 financial statement presentation.
The accompanying consolidated financial statements for the three months
ended March 31, 2000 and 1999 are unaudited and have been prepared in accordance
with generally accepted accounting principles, the instructions to this Form
10-Q and Article 10 of Regulation S-X. In the opinion of management, such
financial statements include all adjustments (consisting of normal recurring
accruals) considered necessary for the fair presentation of the financial
position and the results of operations, and cash flows for these periods. As
permitted under the applicable rules and regulations of the Securities and
Exchange Commission, these financials statements do not include all disclosures
and footnotes normally included with annual consolidated financial statements,
and accordingly, should be read in conjunction with the consolidated financial
statements, and the notes thereto, included in the Company's Annual Report on
Form 10-K filed with the SEC on March 30, 2000. The results of operations
presented in the accompanying financial statements are not necessarily
indicative of the results that may be expected for the year ending December 31,
2000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the Company's
consolidated financial statements and related notes included elsewhere in this
report on Form 10-Q.
OVERVIEW
We derive our revenues primarily from the sale of advertising time to
local, regional and national advertisers. Our revenues depend on popular
programming that attracts audiences in the demographic groups targeted by
advertisers, allowing us to sell advertising time at satisfactory rates. Our
revenues also depend significantly on factors such as the national and local
economy and the level of local competition.
Our revenues are generally highest during the fourth quarter of each year,
primarily due to increased expenditures by advertisers in anticipation of
holiday season consumer spending and an increase in viewership during this
period. We generally pay commissions to advertising agencies on local, regional
and national advertising and to national sales representatives on national
advertising. Our revenues reflect deductions from gross revenues for commissions
payable to advertising agencies and national sales representatives.
Our primary operating expenses are programming costs, employee
compensation, advertising and promotion expenditures and depreciation and
amortization. Programming expense consists primarily of amortization of
broadcast rights relating to syndicated programs as well as news production and
sports rights fees. Changes in employee compensation expense result primarily
from increases in total staffing levels, from adjustments to fixed salaries
based on individual performance, inflation and from changes in sales commissions
paid to our sales staff based on levels of advertising revenues. Advertising and
promotion expenses consist primarily of media and related production costs
resulting from the promotion of our stations and programs. This amount is net of
any reimbursement received or due to us for such advertisement and promotion
from The WB Network or from other program suppliers.
7
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RESULTS OF OPERATIONS
The following tables set forth selected operating and cash flow data:
<TABLE>
<CAPTION>
OPERATING DATA: ACME INTERMEDIATE AND ACME TELEVISION
THREE MONTHS ENDED MARCH 31,
-------------------------------------
1999 2000
------- -------
(UNAUDITED)
<S> <C> <C>
Broadcast cash flow and adjusted EBITDA(1):
Operating loss $(4,294) $(2,637)
Add back:
Equity-based compensation 2,500 132
Depreciation and amortization 3,766 5,180
Time brokerage fees -- --
Amortization of program rights 1,582 2,949
Corporate expenses 721 888
Adjusted program payments (1) (1,642) (2,935)
------- -------
Broadcast cash flow 2,633 3,577
Less:
Corporate expenses 721 888
------- -------
Adjusted EBITDA $ 1,912 $ 2,689
Broadcast cash flow margin (1) 23.7% 22.1%
Adjusted EBITDA margin (1) 17.2% 16.6%
<CAPTION>
CASH FLOWS PROVIDED BY (USED IN): ACME INTERMEDIATE AND ACME TELEVISION
(UNAUDITED)
<S> <C> <C>
Operating activities $ (977) $ (167)
Investing activities $(3,680) $(1,516)
Financing activities $ 4,642 $ (389)
</TABLE>
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- ---------
(1) We define:
- broadcast cash flow as operating income, plus equity-based
compensation, depreciation and amortization, time brokerage 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;
- adjusted EBITDA as broadcast cash flow less corporate expenses;
- broadcast cash flow margin as broadcast cash flow as a percentage of
net revenues; and
- adjusted EBITDA margin as adjusted EBITDA as a percentage of net
revenues.
We have included broadcast cash flow, broadcast cash flow margin, adjusted
EBITDA and adjusted EBITDA margin data because management believes that
these measures are useful to an investor to evaluate our ability to service
debt and to assess the earning ability of our stations' operations. However,
you should not consider these items in isolation or as substitutes for net
income, cash flows from operating activities and other statement of
operations or cash flows data prepared in accordance with generally accepted
accounting principles. These measures are not necessarily comparable to
similarly titled measures employed by other companies.
QUARTER ENDED MARCH 31, 2000 VS MARCH 31, 1999
Net revenues increased 46% to $16.2 million for the first quarter of 2000
compared to $11.1 million for the same period a year ago. This increase reflects
significant growth at our developing stations, increased market share at our
flagship station KPLR, revenue from the four stations we have acquired since
March 1999 (WBDT - Dayton, WIWB - Green Bay/Appleton, WBUI - Champaign/Decatur/
Springfield and KASY - Albuquerque/Santa Fe, collectively the "Acquired
Stations") and increased revenues from KWBQ - Albuquerque/Santa Fe which we
launched in March 1999. On a "Same Station" basis (i.e. reflecting the results
of the five stations we owned and operated for both the full first quarters of
2000 and 1999) our first quarter 2000 net revenues rose 27% as compared to the
first quarter of 1999.
Station operating expenses increased 50% to $12.7 million for first three
months of 2000 compared to $8.4 million for the same period a year ago when
station operating expenses were $8.4 million. This increase primarily relates to
increased programming and staffing related costs at our developing stations and
to the station expenses at the Acquired Stations.
Depreciation and amortization increased 38% to $5.2 million in the first
quarter of 2000 compared to $3.8 million in the same period a year ago. The
first quarter increase relates primarily to the amortization of intangibles
related to the Acquired Stations. Additionally, depreciation expense increased
due to the additions of property, plant and equipment since March 1999.
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Corporate expenses increased 23% to $908,000 for the first quarter of 2000
as compared to $721,000 for the same period a year ago. This increase relates
primarily to increased staffing to support the growing operations of our station
group, which increased from 5 to 10 stations between March and November 1999.
Equity-based compensation of $132,000 in the first quarter of 2000 relates
to ACME Parent's stock options issued below market value in connection with the
conversion of our long-term incentive plan awards. The equity-based compensation
charge of $2.5 million in the first quarter of 1999 relates to management carry
units that were issued in June 1997 to our senior management and which were
accounted for as a variable compensation plan.
ACME Intermediate's interest expense for the first quarter of 2000 was $6.4
million and ACME Television's was $4.8 million, an increase of 9% and 7%,
respectively, over the 1999 first quarter expenses of $5.8 million and $4.4
million, respectively. These increases are the result of the continued
amortization of the discount on ACME Intermediate's 12% senior secured notes and
ACME Television's 10 7/8% senior discount notes, increased interest expense on
the capital equipment facility, offset by a decrease in the interest expense
associated with our revolving credit facility. We repaid all borrowings under
this facility in October 1999 at the closing of ACME Parents' IPO and have not
borrowed under the facility since that date.
ACME Intermediate and ACME Television's income tax benefits for the first
quarter of 2000 were $2.7 million and $2.1 million, respectively, compared to an
income tax expense of $2.2 million for each company in the corresponding quarter
of 1999. Prior to ACME Parent's Reorganization in September 1999, ACME Parent
was a limited liability company, therefore, no income taxes were provided for
our operations other than at our subsidiary ACME Television of Missouri, Inc.,
which is a C corporation subject to federal and state taxation. Any liability or
benefit from the Company's non-taxable entities' consolidated income or loss was
the responsibility of, or benefit to, the individual members. Effective with the
Reorganization, ACME Television and ACME Intermediate became part of a
consolidated taxable group and the tax benefit applicable to their respective
consolidated taxable losses is recognized by each of them. The first quarter
2000 tax benefit relates to taxable losses generated during the period. The
first quarter 1999 expense reflects a $3.0 million expense booked in connection
with an inadvertent merger of a C corporation subsidiary into it's LLC parent,
net of approximately $700,000 in tax benefit that was generated by the Missouri
subsidiary. During September 1999, the Company obtained court rescissions of the
merger transaction and reversed the $3.0 million provision.
Broadcast cash flow for the first quarter of 2000 increased 36% to $3.6
million over the prior year broadcast cash flow of $2.6 million. The increase
during the first quarter was the result of our stations' expanding revenue
shares in their respective markets, driven by continued improvements in ratings
and increased operating margins. On a Same Station basis, our broadcast cash
flow increase for the first quarter of 2000 compared to the first quarter of
1999 was 49%. This growth was moderated by losses at the Company's Acquired
Stations during the first quarter of 2000 and from start-up losses at KWBQ --
the Company's Albuquerque WB Network affiliate that was launched in March 1999.
Adjusted EBITDA was $2.7 million during the first quarter of 2000; a
$777,000, or a 40% increase from the $2.0 million adjusted EBITDA for the first
quarter of 1999. This increase reflects our increased broadcast cash flow, net
of corporate expenses. Corporate overheads represent approximately 5.5% of net
revenues in the first quarter of 2000, as compared to the first quarter of 1999,
when corporate overheads represented 6.5% of net revenues.
ACME Intermediate's net loss for the first quarter of 2000 was $6.3 million
and ACME Television's was $5.3 million as compared to a net loss for the first
quarter of 1999 of $12.4 million and $11.0 million, respectively. These
decreases in net losses are attributable to our increased adjusted EBITDA, the
significantly reduced equity-based compensation expense and an increase in the
tax benefit, offset by increased amortization and depreciation expense.
Significant expenses incurred in the first quarter of 1999 but not in the first
quarter of 2000 include $2.5 million in equity-based compensation expense and
the $3.0 million tax expense related to the inadvertent merger discussed above.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow used in operating activities was $167,000 for the three months
ended March 31, 2000 compared to cash flow used by operating activities of
$977,000 for the first three months of 1999. This decrease is related primarily
to payment of $2.7 million in IPO bonuses to the Company's founding executives
in the first quarter of 2000 offset by our growth in broadcast cash flow.
10
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Cash flow used in investing activities during the first three months of
2000 was $1.5 million compared to $3.7 million used during the first three
months of 1999. During the first quarter of 2000, investing activities included
purchases of broadcast and other equipment to improve capabilities at the
Acquired Stations and the purchase of a low-power broadcast license for KWBP -
Portland, OR to improve our coverage of the Portland market. Investing activity
in the first quarter of 1999 included the purchase of the remaining 51% interest
in station KUPX (which was subsequently swapped for KUWB - Salt Lake City) and
the purchase of corporate and studio facilities for KWBP - Portland, Oregon.
Cash flow used in financing activities of $389,000 for the first three
months of 2000 related to payments on our capital lease facilities. Cash flows
provided by financing activities for the first three months of 1999 were $4.6
million in borrowings against our revolving credit facility offset somewhat by
capital lease payments.
The Company's revolving credit facility allows for borrowings up to $40.0
million, dependent upon our meeting certain financial ratio tests. The revolving
credit facility can be used to fund future acquisitions of broadcast stations
and for general corporate purposes. At March 31, 2000 there were no borrowings
outstanding under the facility and approximately $35.1 million was available.
The Company also has capital lease facilities in the aggregate amount of
$20 million. Borrowings under these facilities are generally repaid over five
years. As of March 31, 2000, amounts due under the facilities were $7.0 million
bearing an implicit average interest rate of 9.24% per annum. At March 31, 1999,
amounts due under the facilities were $7.4 million and bore an implicit average
interest rate of 8.89%.
The Company believes that existing cash balances, funds generated from
operations and borrowings under its credit agreement and capital lease
facilities, if necessary, will be sufficient to satisfy the Company's cash
requirements for its existing operations for at least the next twelve months.
The Company expects that any future acquisitions of television stations would be
financed through these same sources and, if necessary, through additional debt
and/or equity financing. However, there is no guarantee that such additional
debt and/or equity will be available or available at terms acceptable to the
Company.
ADOPTION OF ACCOUNTING STANDARD
The FASB (Financial Accounting Standards Board) has issued FASB statement
No. 133 "Accounting for Derivative Instruments and Hedging Activities" which we
adopted for our quarter ended March 31, 2000. This pronouncement establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, (collectively referred to as
derivatives) and for hedging activities. It requires that entities recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. This pronouncement did not
impact the Company's financial statements since the Company currently has no
derivative instruments.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's revolving credit facility has a variable interest rate.
Accordingly, the Company's interest expense could be materially affected by
future fluctuations in the applicable interest rate. At March 31, 2000, the
Company had no borrowings under the revolving credit facility.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company currently and from time to time is involved in litigation
incidental to the conduct of its business. The Company maintains comprehensive
general liability and other insurance, which it believes to be adequate for the
purpose. The Company is not currently a party to any lawsuit or proceeding that
management believes would have a material adverse affect on its financial
condition or results of operations.
11
<PAGE> 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS.
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------ -------------------
27.1 Financial Data Schedule for ACME Television, LLC.
27.2 Financial Data Schedule for ACME Intermediate Holdings, LLC.
(b) REPORTS ON FORM 8-K
The Company has not filed a Current Report on Form 8-K within the
three-month period ended March 31, 2000.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ACME INTERMEDIATE HOLDINGS, LLC.
Date: May 12, 2000 By: /s/ THOMAS ALLEN
--------------------------------
Thomas Allen
Executive Vice President/CFO
(Principal accounting officer)
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ACME TELEVISION, LLC.
Date: May 12, 2000 By: /s/ THOMAS ALLEN
------------------------------------
Thomas Allen
Executive Vice President/CFO
(Principal accounting officer)
14
<PAGE> 15
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------ -------------------
27.1 Financial Data Schedule for ACME Television, LLC.
27.2 Financial Data Schedule for ACME Intermediate Holdings, LLC.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001049510
<NAME> ACME TELEVISION, LLC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,940
<SECURITIES> 0
<RECEIVABLES> 12,916
<ALLOWANCES> 790
<INVENTORY> 0
<CURRENT-ASSETS> 29,042
<PP&E> 31,973
<DEPRECIATION> 7,004
<TOTAL-ASSETS> 355,685
<CURRENT-LIABILITIES> 23,630
<BONDS> 165,975
0
0
<COMMON> 0
<OTHER-SE> 126,189
<TOTAL-LIABILITY-AND-EQUITY> 355,685
<SALES> 16,218
<TOTAL-REVENUES> 16,218
<CGS> 12,655
<TOTAL-COSTS> 18,855
<OTHER-EXPENSES> (16)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,757
<INCOME-PRETAX> (7,378)
<INCOME-TAX> 2,079
<INCOME-CONTINUING> (5,299)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,299)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001049530
<NAME> ACME INTERMEDIATE HOLDINGS, LLC
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,940
<SECURITIES> 0
<RECEIVABLES> 12,916
<ALLOWANCES> 790
<INVENTORY> 0
<CURRENT-ASSETS> 29,526
<PP&E> 31,973
<DEPRECIATION> 7,004
<TOTAL-ASSETS> 357,684
<CURRENT-LIABILITIES> 23,630
<BONDS> 215,524
0
0
<COMMON> 0
<OTHER-SE> 79,250
<TOTAL-LIABILITY-AND-EQUITY> 357,684
<SALES> 16,218
<TOTAL-REVENUES> 16,218
<CGS> 12,655
<TOTAL-COSTS> 18,855
<OTHER-EXPENSES> (16)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,356
<INCOME-PRETAX> (8,977)
<INCOME-TAX> 2,690
<INCOME-CONTINUING> (6,287)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,287)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
