Ziff Davis likely to use net cash in second quarter

By Jennifer Lanning Drey

Portland, Ore., May 14 - Ziff Davis Media, Inc.'s chief financial officer Mark D. Moyer said the company expects to use net cash in the second quarter due to costs that will likely offset projected EBITDA earnings.

Those costs include debt service obligations of $6.4 million, earn-out payments of $2.7 million, capital expenditures of $1.0 million and restructuring costs of $1.0 million, Moyer said during the company's first-quarter earnings conference call held Monday.

Ziff Davis increased its cash position by $6.8 million in the first quarter and had cash and cash equivalents of $22.2 million at March 31.

During the first quarter, the company raised $20.0 million in new senior secured notes, which, combined with EBITDA earnings and a reduction in working capital, funded $15.7 million of scheduled interest payments, $600,000 of capital expenditures and $1.7 million of restructuring costs, Moyer said.

At March 31, Ziff Davis' long-term debt totaled $390 million and was comprised of $225 million of floating-rate debt, $153 million of compounding notes and $12 million of carry over notes, according to Moyer.

Also during Monday's call, Ziff Davis' chief executive officer Robert F. Callahan said the company's strategic options evaluation process is ongoing, but it will only report on developments within that process once its board of directors has approved a transaction.

'Solid results' for Q1

Ziff Davis reported consolidated EBITDA of $3.1 million during the first quarter, up from $2.7 million in the prior-year first quarter, according to a company news release.

The increase was primarily due to growth in the company's digital business, company executives said.

"We posted solid results for a seasonally low quarter," said Callahan.

The company projects consolidated EBITDA for the second quarter in the range of $5.5 million to $6.5 million, according to the news release.

"Our assets are healthy and primed for continued growth this year," said Callahan.

Ziff Davis is a New York-based integrated media company focused on the technology and video game markets.

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