Business News

American Community Newspapers Inc. Reports 2007 Fourth Quarter and Year Earnings Results

Wednesday 12. March 2008 - American Community Newspapers Inc. (AMEX:ANE) ("ACN") today reported financial results for the fourth quarter and year ended December 30, 2007.

Comparisons are made on a pro forma basis to the 2006 fourth quarter and full year results as ACN (formerly Courtside Acquisition Corp.) had no prior year reported operating results due to its acquisition of an operating company on July 2, 2007.

2007 Fourth Quarter Pro Forma Performance:
— Total revenue was $17.6 million, down 4.5% from pro forma total revenue
of $18.5 million in the prior year quarter. The decline was primarily
due to the soft advertising environment, specifically at ACN’s
Minneapolis-St. Paul cluster. Excluding the Minneapolis-St. Paul
cluster, total revenue was up 0.8%. In addition, ACN faced difficult
year-over-year comparisons. In the fourth quarter of 2006, ACN
delivered organic revenue growth of 6.4% in its then owned
publications, while the newspaper industry experienced a revenue
decline of 2.2%, according to the Newspaper Association of America
during this same period.
— Advertising revenue decreased 6.4% to $16.2 million from the fourth
quarter of 2006.
— Pro forma adjusted EBITDA was $3.7 million, up 0.6% from the prior year
quarter and up 7.4% to the prior year quarter when adjusted for the
corporate expense increase due to public company costs incurred in the
2007 fourth quarter. Excluding the Minneapolis-St. Paul cluster, pro
forma adjusted EBITDA was up 27.7%.
— Newspaper cash flow, which is defined as pro forma adjusted EBITDA
prior to corporate expenses, was $4.3 million, up 5.7% year-over-year.
Excluding the Minneapolis-St. Paul cluster, newspaper cash flow was up
33.2%.
— Net loss was $2.9 million, or $0.20 per diluted share, compared to a
net loss of $0.23 per diluted share in the prior year quarter on a pro
forma basis.
— Internet advertising revenues increased 58.4% year-over-year in the
2007 fourth quarter and represented 3.0% of total revenue in the fourth
quarter of 2007. ACN newspaper Web sites generated 4.8 million page
views and had 1.2 million unique users during the month of December
2007.
— ACN’s 100 print products had a total circulation of 1.4 million in the
2007 fourth quarter. ACN has a free, controlled-distribution model for
most of its print products, with circulation accounting for only 4.1%
of total Company revenues in the period.




“2007 was an eventful year for ACN as we became a public company, successfully executed on our Columbus acquisition and delivered financial results that place us among the leading performers in our industry,” said Gene Carr, Chairman and Chief Executive Officer of ACN. “Our performance was highlighted by growth at three of our four clusters, with Minneapolis-St. Paul being impacted by weakness in housing related advertising, primarily in the second half of the year. Excluding Minneapolis-St Paul, revenue for the quarter and full year was up slightly, while we delivered strong double digit increases in Newspaper Cash Flow and EBITDA in both reporting periods in our other three clusters. This improvement was driven by our ability to successfully capitalize on our Columbus acquisition and our continuing focus on cost controls.”

Mr. Carr concluded, “While we continue to execute on our revenue initiatives we are facing increasing headwinds from the challenging macro- economic environment and difficult performance comparisons in the first quarter of 2008, as we delivered total revenue growth of 4.6% and advertising revenue growth of 5.0% in the first quarter of 2007 in our then owned publications. The overall advertising landscape across our markets has become increasingly challenging as advertising budgets tighten. However, we believe we are maintaining our overall advertising share and ACN’s community newspapers remain the medium of choice both for local readers and advertisers, giving us the confidence that we have the platform and brands in place for long-term growth. We remain focused on managing expenses and continue to explore opportunities to strengthen our existing clusters and enter new markets that meet our growth characteristics.”

Twelve Months Ended December 30, 2007 (Pro Forma):
— Total revenue was $74.3 million, down 3.2% from total revenue of $76.8
million in the prior year period. Excluding the Minneapolis-St. Paul
cluster, total revenue was up 0.2%. In the full year 2006, ACN
delivered organic revenue growth of 7.4% in its then owned
publications, while the newspaper industry experienced a revenue
decline of 0.3% according to the Newspaper Association of America
during this same period.
— Advertising revenue decreased 3.5% to $68.5 million from 2006.
— Pro forma adjusted EBITDA was $16.9 million, down $10,000 or roughly
flat with the prior year, and pro forma adjusted EBITDA margin
increased from 22.1% to 22.8% in this period. Excluding the
Minneapolis-St. Paul cluster, pro forma adjusted EBITDA was up 24.7% in
2007.
— Newspaper cash flow, which is defined as pro forma adjusted EBITDA
prior to corporate expenses, was $18.8 million, up 2.2% year-over-year,
and newspaper cash margin increased from 24.0% to 25.4% in this period.
Excluding the Minneapolis-St. Paul cluster, newspaper cash flow was up
25.4%.
— Net loss was $10.2 million, or $0.69 per diluted share, compared to a
net loss of $10.9 million or $0.75 per diluted share in 2006.