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

DALLAS, March 11  /PRNewswire-FirstCall/ -- 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.


  Conference Call & Webcast


ACN will host a conference call at 4:30 p.m. ET today to discuss 2007 fourth quarter and full year financial results. Investors can access the conference call via a live webcast on the company's website, http://www.acnpapers.com/, or by dialing 866-507-1212 (U.S.) or 416-695-9761 (International) and referencing American Community Newspapers.

A webcast replay will be archived on the company's Web site. Additionally, a replay of the call will be available by dialing 800-408-3053 (U.S.) or 416- 695-5800 (International), pass code 3253968, through March 18, 2007.

About American Community Newspapers Inc.

ACN is a community newspaper publisher in the United States, operating within four major U.S. markets: Minneapolis - St. Paul, Dallas, Northern Virginia (suburban Washington, D.C.) and Columbus, Ohio.  These markets are some of the most affluent, high growth markets in the United States, with ACN strategically positioned in many of the wealthiest counties within each market. ACN's goal is to be the preeminent provider of local content and advertising in any market its serves.  In these markets, ACN publishes three daily and 83 weekly newspapers, each serving a specific community, and 14 niche publications, with a combined circulation of approximately 1.4 million households.  In addition, ACN's locally focused Web sites have average monthly page views and visitors of approximately 5.1 million and 1.3 million, respectively, extending the reach and frequency of its products beyond their geographic print distribution area.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to ACN's future financial or business performance, strategies and expectations. Forward- looking statements are typically identified by words or phrases such as "trend," "potential," "opportunity," "pipeline," "believe," "comfortable," "expect," "anticipate," "current," "intention," "estimate," "position," "assume," "outlook," "continue," "remain," "maintain," "sustain," " seek, " "achieve," and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "may" and similar expressions.

Pro Forma

We have presented our operating results on a pro forma basis for the three months ended December 30, 2007 and December 31, 2006 and the twelve months ended December 30, 2007 and December 31, 2006. This pro forma presentation for the three and twelve months ended December 30, 2007 and December 31, 2006 assumes that the July 2, 2007 acquisition of our operating business and related financings occurred at the beginning of the pro forma period. This pro forma presentation is not necessarily indicative of what our operating results would have actually been had the acquisition and related financings occurred at the beginning of the pro forma period. This pro forma presentation is required for comparison purposes as the Company had no operations in the corresponding three and twelve month periods ended December 31, 2006.

Non-GAAP Financial Measures

This press release includes the following financial information defined as non-GAAP financial measures by the Securities and Exchange Commission: EBITDA and Newspaper Cash Flow.  These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for financial information prepared and presented in accordance with generally accepted accounting principles. ACN believes that the presentation of these non-GAAP measures provides information that is useful to investors as it indicates more clearly the ability of ACN to meet capital expenditures and working capital requirements and otherwise meet its obligations as they become due.  ACN's pro forma adjusted EBITDA was derived by taking earnings before interest, taxes, depreciation and amortization as adjusted for discontinued operations, acquisitions and certain one-time non-recurring items, non-cash items and exclusions. ACN's Newspaper Cash Flow was derived by taking earnings before interest, taxes, depreciation and amortization as adjusted for corporate expenses, discontinued operations, acquisitions and certain one-time non-recurring items, non-cash items and exclusions.  See the following "Reconciliation of net income (loss) to pro forma adjusted EBITDA" and "Reconciliation of net income (loss) to Newspaper Cash Flow" tables for further information regarding these non-GAAP financial measures.

                    AMERICAN COMMUNITY NEWSPAPERS INC.
             Unaudited Consolidated Statements of Operations
                      ($000s, except per share data)

                         Three Months Ended              Year Ended
                      December 30,   December 31,  December 30, December 31,
                         2007           2006          2007         2006
  Revenues:
   Advertising           $16,178      $        -       $33,338    $      -
   Circulation               728               -         1,408           -
   Commercial
    printing and
    other                    727               -         1,423           -
       Total revenues     17,633               -        36,169           -

  Operating costs
    and expenses:
   Operating costs         7,892               -        15,972           -
   Selling, general
    and administrative     6,129             300        12,597         563
   Depreciation and
    amortization           3,183               -         6,384           -
                          17,204             300        34,953         563

  Operating income
   (loss)                    429            (300)        1,216        (563)

  Interest expense        (3,649)              -        (7,325)          -
  Interest income              -             532         1,211       1,997

  (Loss) income from
   operations before
   income taxes           (3,220)            232        (4,898)      1,434
  Income tax benefit
   (expense)                 448             (85)          310        (388)

     Net (loss) income   $(2,772)           $147       $(4,588)     $1,046

  (Loss) earnings
   per share:
     Basic and diluted:   $(0.19)          $0.01        $(0.29)      $0.06

  Weighted average
   shares
   outstanding        14,623,445      16,800,000    15,702,778  16,800,000




                    AMERICAN COMMUNITY NEWSPAPERS INC.
       Unaudited Consolidated Statements of Operations (Pro Forma)
                      ($000s, except per share data)

                           Three Months Ended            Year Ended
                    December 30,   December 31,  December 30,   December 31,
                       2007          2006           2007           2006
  Revenues:
   Advertising           $16,178       $17,284       $68,489        $71,007
   Circulation               728           575         3,106          2,950
   Commercial
    printing and
    other                    727           608         2,708          2,800
       Total revenues     17,633        18,467        74,303         76,757

  Operating costs
    and expenses:
   Operating costs         7,892         8,534        33,037         34,851
   Selling, general
    and administrative     6,129         6,739        25,244         26,303
   Depreciation and
    amortization           3,258         3,208        13,068         12,831
                          17,279        18,481        71,349         73,985

     Operating income
       (loss)                354           (14)        2,954          2,772

  Interest expense        (3,400)       (3,529)      (13,649)       (14,307)

  Loss from
   operations before
   income taxes           (3,046)       (3,543)      (10,695)       (11,535)
  Income tax benefit         155           180           544            587

     Net loss            $(2,891)      $(3,363)     $(10,151)      $(10,948)

  Loss per share:
     Basic and diluted:   $(0.20)       $(0.23)       $(0.69)        $(0.75)

  Weighted average
   shares
   outstanding        14,623,445    14,623,445    14,623,445      14,623,445



                    American Community Newspapers Inc.
                  Unaudited Consolidated Balance Sheets
                                 ($000s)

                                             December 30,       December 31,
                                                2007               2006
                Assets

  Current assets:
   Cash and cash equivalents                       $1,521           $1,193
   Cash equivalents held in Trust Fund                  -           77,036
   Accounts receivable, net of allowance
    for doubtful accounts of
    $88 at December 30, 2007                        7,010                -
   Inventories                                        619                -
   Other current assets                               754              125
     Total current assets                           9,904           78,354

   Property, plant, and equipment, net
    of accumulated depreciation of                  9,324                -
    $897 at December 30, 2007
   Goodwill                                        90,110                -
   Intangible assets, net of accumulated
    amortization of                               105,111                -
    $5,487 at December 30, 2007
   Other assets                                       100                -
     Total assets                                $214,549          $78,354

       Liabilities and Stockholders' Equity

  Current liabilities:
   Accounts payable                                $1,401             $278
   Accrued expenses                                 2,232                -
   Accrued interest                                 2,018                -
   Deferred revenue                                 1,314                -
   Current portion of long-term
    liabilities                                     2,100                -
   Taxes payable                                        -              249
   Deferred dividends                                   -              654
     Total current liabilities                      9,065            1,181

  Long-term liabilities:
   Long-term debt                                 137,866                -
   Deferred income taxes                            1,862                -
   Redeemable preferred stock, $.0001
    par value, Authorized 1,000,000
    shares; 42,193 issued and outstanding
    shares at December 30, 2007                     4,557                -
     Total liabilities                            153,350            1,181

  Common Stock, subject to conversion
   2,758,620 shares at conversion value                 -           14,745

  Stockholders' equity
  Common stock, $.0001 par value,
   Authorized 50,000,000 shares
    Issued and outstanding 14,623,445
     and 16,800,000 shares,
     respectively                                       1                2
   Additional paid-in capital                      64,329           60,969
   Retained (deficit) earnings                     (3,131)           1,457
    Total stockholders' equity                     61,199           62,428
    Total liabilities and stockholders'
     equity                                      $214,549          $78,354



     Reconciliation of Net Income (Loss) to Pro Forma Adjusted EBITDA
                                 ($000s)

                            Three Months Ended           Year Ended
                        December 30, December 31,  December 30, December 31,
                           2007         2006          2007         2006

  Net Income (loss)        $(2,772)        $147       $(4,588)      $1,046
  Income tax (benefit)
   expense                    (448)          85          (310)         388
  Non-cash stock based
   compensation expense        101            -           249            -
  Interest income                -          532        (1,211)      (1,997)
  Interest expense           3,649            -         7,325            -
  Depreciation and
   amortization              3,183            -         6,384            -
  Other non-recurring
   items                         -         (764)          259          563
  Adjustments for
   acquisitions                  -        3,690         8,830       16,948
  Pro Forma Adjusted
   EBITDA                   $3,713       $3,690       $16,938      $16,948



        Reconciliation of Net Income (Loss) to Newspaper Cash Flow
                                 ($000s)

                            Three Months Ended           Year Ended
                        December 30, December 31,  December 30, December 31,
                           2007         2006          2007          2006

  Net Income (loss)        $(2,772)        $147       $(4,588)       $1,046
  Income tax (benefit)
   expense                    (448)          85          (310)          388
  Non-cash stock based
   compensation expense        101            -           249             -
  Interest income                -          532        (1,211)       (1,997)
  Interest expense           3,649            -         7,325             -
  Depreciation and
   amortization              3,183            -         6,384             -
  Other non-recurring
   items                         -         (764)          259           563
  Corporate expense            570          361         1,902         1,482
  Adjustments for
   acquisitions                  -        3,690         8,831        16,948
  Newspaper Cash Flow       $4,283       $4,051       $18,841       $18,430


DATASOURCE: American Community Newspapers Inc.



CONTACT:  Dan Wilson of American Community Newspapers, [phone],

; or Investors: Corey Kinger, [phone],

, or Media: Joe LoBello, [phone],

, both of Brainerd Communicators



Web site:  http://www.acnpapers.com/ 

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