American Community Newspapers Inc. Reports Third Quarter Earnings Results

DALLAS, Nov. 14  /PRNewswire-FirstCall/ -- American Community Newspapers Inc. (AMEX:ANE) ("ACN") today reported financial results for the third quarter ended September 30, 2007.  Comparisons are made on a pro forma basis to the 2006 third quarter 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 Third Quarter Pro Forma Performance:
   -- Total revenue was $18.5 million, down 6.3% from pro forma total
      revenue of $19.8 million in the prior year quarter. The decline was
      primarily due to the soft advertising environment, specifically at
      ACN's Minneapolis-St. Paul cluster.  In addition, ACN faced difficult
      year-over-year comparisons. In the third quarter of 2006, the
      newspaper industry experienced a revenue decline of 1.5% according to
      the Newspaper Association of America while ACN delivered organic
      revenue growth of 5.6% during this same period.
   -- Advertising revenue decreased 6.3% to $17.2 million from the third
      quarter of 2006. Excluding the Minneapolis-St. Paul cluster,
      advertising revenue was down 1.9%.
   -- Pro forma adjusted EBITDA was $4.4 million, down 8.1% from the prior
      year quarter and flat to the prior year quarter when adjusted for the
      corporate expense increase due to public company costs incurred in the
      2007 third quarter.
   -- Newspaper cash flow, which is defined as pro forma adjusted EBITDA
      prior to corporate expenses, was $5.0 million, down 3.6% year-over-
      year. Excluding the Minneapolis-St. Paul cluster, newspaper cash flow
      was up 17.7%.
   -- Net loss was $2.5 million, or $0.17 per diluted share, relatively flat
      with the prior year quarter on a pro forma basis.
   -- Internet advertising revenues increased 40.3% year-over-year in the
      2007 third quarter. ACN newspaper Web sites generated 5.1 million page
      views and had 1.3 million unique users during the month of September
      2007.
   -- ACN's 100 print products had a total circulation of 1.4 million in the
      2007 third quarter. ACN has a free, controlled-distribution model for
      most of its print products, with circulation accounting for only 3.7%
      of total Company revenues in the period.



"While revenue trends in the third quarter were disappointing, the majority of the decline was isolated in the Minneapolis-St. Paul market and we have already taken a number of steps to address the performance of this cluster," said Gene Carr, Chairman and Chief Executive Officer of ACN. "Importantly, our other markets have held up nicely in a difficult advertising environment, and all of the remaining clusters individually delivered double digit newspaper cash flow growth and a revenue decline in the low single digits."

Mr. Carr concluded, "Overall we continue to execute on our operating plan and are taking the right steps to build shareholder value for the long-term. We remain well-positioned to improve margins and profitability as we continue to focus on cost controls and fully realize the opportunities in our Columbus cluster acquisition.  In addition, as shown by our recent relaunch of the Columbus Web site, we are continually enhancing our digital platform and adding value for readers and advertisers. We are energized by our progress and look forward to seeing our recent growth initiatives take hold."

  Nine Months Ended September 30, 2007 (Pro Forma):
   -- Total revenue was $56.7 million, down 2.8% from total revenue of $58.3
      million in the prior year period.
   -- Advertising revenue decreased 2.6% to $52.3 million from the first
      nine months of 2006.
   -- Pro forma adjusted EBITDA was $13.2 million, down $33,000 or 0.2% from
      the prior year period, and pro forma adjusted EBITDA margin increased
      from 22.7% to 23.3% in this period.
   -- Newspaper cash flow, which is defined as pro forma adjusted EBITDA
      prior to corporate expenses, was $14.6 million, up 1.2% year-over-
      year, and newspaper cash margin increased from 24.7% to 25.7% in this
      period.
   -- Net loss was $7.8 million, or $0.54 per diluted share, compared to a
      net loss of $8.2 million or $0.56 per diluted share in the prior year
      period.

  Conference Call & Webcast


ACN will host a conference call at 4:30 p.m. ET today to discuss 2007 third quarter financial results. Investors can access the conference call via a live webcast on the company's website, http://www.acnpapers.com/, or by dialing 888-823-3991 (U.S.) or 706-643-3947 (International), passcode 21396371.

A webcast replay will be archived on the company's Web site. Additionally, a replay of the call will be available by dialing 800-642-1687 (U.S.) or 706-645-9291 (International), passcode 21396371, through November 21, 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 September 30, 2007 and 2006 and the nine months ended September 30, 2007 and 2006. This pro forma presentation for the three and nine months ended September 30, 2007 and 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 nine month periods ended September 30, 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 Condensed Consolidated Statements of Operations

                          Three Months Ended          Nine Months Ended
                             September 30,               September 30,
                           2007         2006          2007         2006
  Revenues:
    Advertising      $  17,160,633 $          -  $ 17,160,633  $         -
    Circulation            679,843            -       679,843            -
    Commercial printing
     and other             695,609            -       695,609            -
       Total revenues   18,536,085            -    18,536,085            -

  Operating costs and
   expenses:
    Operating costs      8,080,168            -     8,080,168            -
    Selling, general
     and administrative  6,209,330       87,696     6,468,189      262,688
    Depreciation and
     amortization        3,201,036            -     3,201,036            -
                        17,490,534       87,696    17,749,393      262,688

      Operating income
       (loss)            1,045,551      (87,696)      786,692     (262,688)

  Interest expense      (3,671,609)           -    (3,675,863)           -
  Other income             187,747      524,397     1,211,138    1,464,757

  Income (loss) from
   operations before
   income taxes         (2,438,311)      436,701    (1,678,033)   1,202,069
  Income tax benefit
   (expense)               106,084      (106,000)     (137,916)    (303,000)

      Net income
       (loss)        $  (2,332,227)$    330,701   $ (1,815,949) $   899,069

  Earnings (loss)
   per share:
      Basic and
       diluted:       $      (0.16) $       0.02  $      (0.11) $      0.05

  Weighted average
   shares outstanding   14,623,445    16,800,000    16,066,509   16,800,000



                    American Community Newspapers Inc.
            Consolidated Statements of Operations (Pro Forma)

                                          Pro Forma
                        Three Months Ended          Nine Months Ended
                           September 30,              September 30,
                       2007           2006           2007          2006
  Revenues:
    Advertising     $17,160,633   $18,309,088    $52,317,416   $53,701,956
    Circulation         679,843       641,816      2,377,489     2,375,794
    Commercial
     printing and
     other              695,609       821,176      1,974,759     2,212,617
       Total
        revenues     18,536,085    19,772,080     56,669,664    58,290,367

  Operating costs
   and expenses:
    Operating costs   8,080,166     8,887,040     25,144,142    26,294,215
    Selling, general
     and
     administrative   6,209,330     6,408,517     19,161,846    19,656,554
    Depreciation and
     amortization     3,276,038     3,226,038      9,828,114     9,678,114
                     17,565,534    18,521,595     54,134,102    55,628,883

       Operating
        income          970,551     1,250,485      2,535,562     2,661,484

  Interest expense   (3,453,756)   (3,619,756)   (10,361,268)  (10,859,268)

  Other income                -             -              -             -

  Loss from
   operations
   before
   income taxes      (2,483,205)   (2,369,271)    (7,825,706)   (8,197,784)
  Income tax
   benefit
   (expense)                  -             -              -             -

       Net loss     $(2,483,205)  $(2,369,271)   $(7,825,706)  $(8,197,784)

  Earnings (loss)
   per share:
       Basic and
        diluted:    $     (0.17)  $     (0.16)   $     (0.54)  $     (0.56)

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



                    American Community Newspapers Inc.
                  Condensed Consolidated Balance Sheets

                                        September 30,         December 31,
                                            2007                  2006
               Assets                    (unaudited)

  Current assets:
   Cash and cash equivalents             $  2,429,484         $  1,192,704
   Cash equivalents held in Trust Fund              -           77,036,463
   Accounts receivable, net of allowance
    for doubtful accounts of $13,368
    at September 30, 2007                   7,914,262                    -
   Inventory                                  673,895                    -
   Prepaid expenses and other                 764,006              125,066

     Total current assets                  11,781,647           78,354,233

   Property, plant, and equipment,
    net of accumulated depreciation
    of $457,586 at September 30, 2007       9,673,935                    -
   Goodwill                                90,285,205                    -
   Intangible assets, net of accumulated
    amortization of $2,743,450 at
    September 30, 2007                    107,853,493                    -
   Other assets                               100,000                    -
                                                                         -
     Total assets                        $219,694,280         $ 78,354,233

        Liabilities and Stockholders' Equity

  Current liabilities:
   Current portion of long-term debt     $  1,050,000         $          -
   Accounts payable                         1,433,232              278,348
   Accrued expenses                         2,531,090                    -
   Accrued interest                         2,181,693                    -
   Deferred revenue                         1,360,996                    -
   Income taxes payable                         7,146              248,828
   Deferred dividends                               -              654,165

     Total current liabilities              8,564,157            1,181,341

   Long-term liabilities:
   Long-term debt                         140,559,589                    -
   Deferred income taxes                    2,323,005                    -
   Redeemable preferred stock,
    $.0001 par value; 1,000,000 authorized
    shares; 42,193 issued and outstanding
    shares at September 30, 2007            4,377,610                    -

     Total liabilities                    155,824,361            1,181,341

  Common Stock, subject to conversion
   2,758,620 shares at conversion value             -           14,745,424

  Stockholders' equity
   Common stock, $.0001 par value;
    50,000,000 authorized shares;
    14,623,445 and 16,800,000 issued
    and outstanding shares at September
    30, 2007 and December 31, 2006,
     respectively                               1,462                1,680
   Additional paid-in capital              64,227,696           60,969,078
   Retained earnings (deficit)               (359,239)           1,456,710

   Total stockholders' equity              63,869,919           62,427,468

   Total liabilities and
    stockholders' equity                 $219,694,280         $ 78,354,233



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

                       Three months ended            Nine months ended
                          September 30,                 September 30,
                        2007         2006           2007             2006
  Net income
   (loss)          $(2,332,227) $   330,701    $(1,815,949)    $   899,069
  Income tax
   expense
   (benefit)          (106,084)     106,000        137,916         303,000
  Non-cash stock
   based
   compensation
   expense             147,493            -        147,493               -
  Interest
   expense, net      3,483,862     (524,397)     2,464,722      (1,464,757)
  Depreciation and
   amortization      3,201,036            -      3,201,036               -
  Other non-
   recurring
   items                     -       87,696        258,859         262,688
  Adjustment for
   acquisitions              -    4,782,716      8,831,108      13,257,772

  Pro Forma
   Adjusted EBITDA $ 4,394,080  $ 4,782,716    $13,225,185     $13,257,772



        Reconciliation of Net Income (Loss) to Newspaper Cash Flow

                     Three months ended             Nine months ended
                        September 30,                  September 30,
                      2007         2006            2007             2006
  Net income
   (loss)        $(2,332,227)  $  330,701     $(1,815,949)     $   899,069
  Income tax
   expense
   (benefit)        (106,084)     106,000         137,916          303,000
  Non-cash stock
   based
   compensation
   expense           147,493            -         147,493                -
  Interest
   expense, net    3,483,862     (524,397)      2,464,722       (1,464,757)
  Depreciation
   and
   amortization    3,201,036            -       3,201,036                -
  Other non-
   recurring items         -       87,696         258,859          262,688
  Corporate expense  563,930      361,272       1,332,574        1,121,557
  Adjustment for
   acquisitions            -    4,782,716       8,831,108       13,257,772

  Newspaper Cash
   Flow           $4,958,010   $5,143,988     $14,557,759      $14,379,329


DATASOURCE: American Community Newspapers Inc.



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

; or Investors, Corey Kinger, , or

Media, Joe LoBello, , both of Brainerd Communicators,

[phone], for American Community Newspapers Inc.



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

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