##### Table of Contents



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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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FORM 10-Q



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|  |  |                                                                                        
|- |  | ---------------------------------------------------------------------------------------
|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2003

OR

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

Commission File Number: 333-40277



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ACME Intermediate Holdings, LLC

(Exact name of registrant as specified in its charter)


|                                |  |                    
|------------------------------- |  | -------------------
|Delaware                        |  | 52-2050589         
|(State or other jurisdiction of |  | (I.R.S. employer   
|incorporation or organization)  |  | identification no.)

2101 E. Fourth Street, Suite 202 A
Santa Ana, California, 92705
(714) 245-9499
(Address and telephone number of principal executive offices)



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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 o

100% of the membership units of ACME Intermediate Holdings, LLC are owned
directly or indirectly by ACME Communications, Inc. Such membership units are
not publicly traded and, therefore, have no separate, quantifiable market
value.

As of August 14, 2003, ACME Intermediate Holdings, LLC had 910,986 common
membership units outstanding; all such units are owned, directly or indirectly,
by ACME Communications, Inc.



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TABLE OF CONTENTS



|                            |                                                                                               |                                                            |  |  |  |  |  | 
|--------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------- |  |  |  |  |  | 
|                            |                                                                                               | Consolidated Balance Sheets                               
|                            |                                                                                               | Consolidated Statements of Operations and Members Capital
|                            |                                                                                               | Consolidated Statements of Cash Flows                     
|                            |                                                                                               | Notes to Consolidated Financial Statements (Unaudited)    
|                            | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                            | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                            | Item 4. Controls and Procedures.                                                             
|PART II  OTHER INFORMATION
|                            | Item 1. Legal Proceedings                                                                    
|                            | Item 6. Exhibits and Reports on Form 8-K.                                                    
|SIGNATURES                 
|EXHIBIT INDEX              
|EXHIBIT 31.1               
|EXHIBIT 31.2               
|EXHIBIT 32                 



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##### Table of Contents



ACME INTERMEDIATE HOLDINGS, LLC

FORM 10-Q

TABLE OF CONTENTS

|          |    |                                                                                       |  |                                                                                                                               |                                |                             |   |  |  | 
|--------- | -- | ------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------- | ------------------------------ | --------------------------- | - |  |  | 
|Item      |    |                                                                                       |  |                                                                                                                               |                                |                             |   | 
|Number    |    |                                                                                       |  |                                                                                                                               |                                | Page                       
|          |    |                                                                                       |  |                                                                                                                               |                                |                            
|          |    |                                                                                       |  |                                                                                                                               | Part I  Financial Information |                             |   |  | 
|Item 1.   |    | Financial Statements                                                                  |  |                                                                                                                               |                                |                            
|          |    |                                                                                       |  | Consolidated Balance Sheets as of June 30, 2003 and December 31, 2002                                                         |                                |                             | 3 | 
|          |    |                                                                                       |  | Consolidated Statements of Operations and Members Capital for the Three and Six Months
Ended June 30, 2003 and June 30, 2002 |                                |                             | 4 | 
|          |    |                                                                                       |  | Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 2003 and June 30, 2002                                |                                |                             | 5 | 
|          |    |                                                                                       |  | Notes to Consolidated Financial Statements                                                                                    |                                |                             | 7 | 
|Item 2.   |    | Managements Discussion and Analysis of Financial Condition
and Results Of Operations |  |                                                                                                                               | 10                             |                            
|Item 3.   |    | Quantitative and Qualitative Disclosures About Market Risk                            |  |                                                                                                                               | 15                             |                            
|Item 4.   |    | Controls and Procedures                                                               |  |                                                                                                                               | 16                             |                            
|          |    |                                                                                       |  |                                                                                                                               |                                | Part II  Other Information |   |  |  | 
|Item 1.   |    | Legal Proceedings                                                                     |  |                                                                                                                               | 16                             |                            
|Item 6.   |    | Exhibits and Reports on Form 8-K                                                      |  |                                                                                                                               | 16                             |                            
|Signature | 17 |                                                                                      





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##### Table of Contents






ACME Intermediate Holdings, LLC and Subsidiaries
Consolidated Balance Sheets
(In thousands)

|                                                   |                                               |                                        |                   |        |             |         |              |         |         |         | 
|-------------------------------------------------- | --------------------------------------------- | -------------------------------------- | ----------------- | ------ | ----------- | ------- | ------------ | ------- | ------- | ------- | 
|                                                   |                                               |                                        |                   |        | As of      
|                                                   |                                               |                                        |                   |        |            
|                                                   |                                               |                                        |                   |        | June 30,    |         | December 31,
|                                                   |                                               |                                        |                   |        | 2003        |         | 2002        
|                                                   |                                               |                                        |                   |        |             |         |             
|                                                   |                                               |                                        |                   |        | (Unaudited) |         |              |         |        
|ASSETS                                             |                                               |                                        |                   |       
|Current assets:                                    |                                               |                                        |                   |        |             |         |              |        
|                                                   | Cash and cash equivalents                     |                                        | $                 | 11,097 |             |         | $            | 1,808   |        
|                                                   | Restricted cash                               |                                        |                   | 7,218  |             |         |              | 1,233   |        
|                                                   | Accounts receivable, net                      |                                        |                   | 8,643  |             |         |              | 10,458  |        
|                                                   | Current portion of programming rights         |                                        |                   | 9,269  |             |         |              | 9,894   |        
|                                                   | Prepaid expenses and other current assets     |                                        |                   | 1,660  |             |         |              | 1,084   |        
|                                                   | Assets held for sale                          |                                        |                   |       |             |         |              | 199,478 |        
|                                                   |                                               |                                        |                   |        |             |         |              |        
|                                                   |                                               | Total current assets                   |                   |        | 37,887      |         |              |         | 223,955 |        
|Restricted cash, net of current portion            |                                               |                                        | 1,171             |        |             |         | 1,677        |        
|Property and equipment, net                        |                                               |                                        | 29,417            |        |             |         | 30,165       |        
|Programming rights, net of current portion         |                                               |                                        | 11,007            |        |             |         | 15,102       |        
|Goodwill, net                                      |                                               |                                        | 12,233            |        |             |         | 12,233       |        
|Broadcast licenses, net                            |                                               |                                        | 84,442            |        |             |         | 84,394       |        
|Other assets                                       |                                               |                                        | 4,442             |        |             |         | 6,969        |        
|                                                   |                                               |                                        |                   |        |             |         |              |        
|                                                   |                                               |                                        | Total assets      |        | $           | 180,599 |              |         | $       | 374,495 | 
|                                                   |                                               |                                        |                   |        |             |         |              |        
|LIABILITIES AND MEMBERS EQUITY                    |                                               |                                        |                   |       
|Current liabilities:                               |                                               |                                        |                   |        |             |         |              |        
|                                                   | Accounts payable                              |                                        | $                 | 6,504  |             |         | $            | 8,154   |        
|                                                   | Accrued liabilities                           |                                        |                   | 5,052  |             |         |              | 11,583  |        
|                                                   | Due to affiliates                             |                                        |                   | 1,892  |             |         |              | 1,892   |        
|                                                   | Current portion of programming rights payable |                                        |                   | 8,772  |             |         |              | 9,627   |        
|                                                   | Current portion of obligations under lease    |                                        |                   | 2,774  |             |         |              | 3,710   |        
|                                                   | Income taxes payable                          |                                        |                   | 1,662  |             |         |              |        |        
|                                                   | Liabilities held for sale                     |                                        |                   |       |             |         |              | 45,810  |        
|                                                   |                                               |                                        |                   |        |             |         |              |        
|                                                   |                                               | Total current liabilities              |                   |        | 26,656      |         |              |         | 80,776  |        
|Programming rights payable, net of current portion |                                               |                                        | 11,002            |        |             |         | 14,814       |        
|Obligations under lease, net of current portion    |                                               |                                        | 6,179             |        |             |         | 8,441        |        
|Other liabilities                                  |                                               |                                        | 49                |        |             |         | 55           |        
|Deferred income taxes                              |                                               |                                        | 7,203             |        |             |         | 5,698        |        
|Notes payable under revolving credit facility      |                                               |                                        |                  |        |             |         | 18,789       |        
|10 7/8% senior discount notes                      |                                               |                                        |                  |        |             |         | 175,000      |        
|12% senior secured discount notes                  |                                               |                                        | 29,107            |        |             |         | 69,061       |        
|                                                   |                                               |                                        |                   |        |             |         |              |        
|                                                   |                                               |                                        | Total liabilities |        |             | 80,196  |              |         |         | 372,634 | 
|                                                   |                                               |                                        |                   |        |             |         |              |        
|Members capital                                   |                                               |                                        | 204,120           |        |             |         | 204,096      |        
|Accumulated deficit                                |                                               |                                        | (103,717          | )      |             |         | (202,235     | )      
|                                                   |                                               |                                        |                   |        |             |         |              |        
|                                                   |                                               | Total members capital                 |                   |        | 100,403     |         |              |         | 1,861   |        
|                                                   |                                               |                                        |                   |        |             |         |              |        
|                                                   |                                               | Total liabilities and members capital |                   | $      | 180,599     |         |              | $       | 374,495 |        
|                                                   |                                               |                                        |                   |        |             |         |              |        

See the notes to the consolidated financial statements.

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ACME Intermediate Holdings, LLC and Subsidiaries
Consolidated Statements of Operations and Members Capital
(Unaudited)

|                                                                                    |                                           |                   |         |                            |         |                          |        |        |        |      |         |         |        |   |         |         |         |  
|----------------------------------------------------------------------------------- | ----------------------------------------- | ----------------- | ------- | -------------------------- | ------- | ------------------------ | ------ | ------ | ------ | ---- | ------- | ------- | ------ | - | ------- | ------- | ------- | -
|                                                                                    |                                           |                   |         | For the Three Months Ended |         | For the Six Months Ended
|                                                                                    |                                           |                   |         | June 30,                   |         | June 30,                
|                                                                                    |                                           |                   |         |                            |         |                         
|                                                                                    |                                           |                   |         | 2003                       |         | 2002                     |        | 2003   |        | 2002
|                                                                                    |                                           |                   |         |                            |         |                          |        |        |        |     
|Net revenues                                                                        |                                           | $                 | 11,532  |                            |         | $                        | 9,240  |        |        | $    | 21,524  |         |        | $ | 16,727  |        
|Operating expenses:                                                                 |                                           |                   |         |                            |         |                          |        |        |        |      |         |         |        |   |         |        
|                                                                                    | Station operating expenses                |                   |         | 11,297                     |         |                          |        | 9,222  |        |      |         | 21,660  |        |   |         | 17,595  |        
|                                                                                    | Depreciation and amortization             |                   |         | 1,131                      |         |                          |        | 1,002  |        |      |         | 2,192   |        |   |         | 1,965   |        
|                                                                                    | Corporate expenses                        |                   |         | 969                        |         |                          |        | 1,028  |        |      |         | 1,939   |        |   |         | 1,926   |        
|                                                                                    | Equity-based compensation                 |                   |         | 12                         |         |                          |        | 67     |        |      |         | 24      |        |   |         | 133     |        
|                                                                                    |                                           |                   |         |                            |         |                          |        |        |        |      |         |         |        |   |         |        
|                                                                                    |                                           | Operating loss    |         |                            | (1,877  | )                        |        |        | (2,079 | )    |         |         | (4,291 | ) |         |         | (4,892  | )
|Other income (expenses):                                                            |                                           |                   |         |                            |         |                          |        |        |        |      |         |         |        |   |         |        
|                                                                                    | Interest income                           |                   |         | 198                        |         |                          |        | 8      |        |      |         | 294     |        |   |         | 16      |        
|                                                                                    | Interest expense                          |                   |         | (2,496                     | )       |                          |        | (7,578 | )      |      |         | (10,880 | )      |   |         | (15,164 | )      
|                                                                                    | Loss on extinguishment of debt            |                   |         | (9,926                     | )       |                          |        |       |        |      |         | (9,926  | )      |   |         |        |        
|                                                                                    | Other expense, net                        |                   |         | (3                         | )       |                          |        | (72    | )      |      |         | (40     | )      |   |         | (88     | )      
|                                                                                    |                                           |                   |         |                            |         |                          |        |        |        |      |         |         |        |   |         |        
|Loss from continuing operations before income taxes                                 |                                           |                   | (14,104 | )                          |         |                          | (9,721 | )      |        |      | (24,843 | )       |        |   | (20,128 | )      
|Income tax benefit (expense), continuing operations                                 |                                           |                   | (300    | )                          |         |                          | 906    |        |        |      | (783    | )       |        |   | (27,896 | )      
|                                                                                    |                                           |                   |         |                            |         |                          |        |        |        |      |         |         |        |   |         |        
|Loss from continuing operations                                                     |                                           |                   | (14,404 | )                          |         |                          | (8,815 | )      |        |      | (25,626 | )       |        |   | (48,024 | )      
|Income (loss) from discontinued operations
(including gain on disposal), net of tax |                                           |                   | (33     | )                          |         |                          | 2,450  |        |        |      | 124,144 |         |        |   | 4,024   |        
|                                                                                    |                                           |                   |         |                            |         |                          |        |        |        |      |         |         |        |   |         |        
|                                                                                    |                                           | Net income (loss) |         | $                          | (14,437 | )                        |        | $      | (6,365 | )    |         | $       | 98,518 |   |         | $       | (44,000 | )
|                                                                                    |                                           |                   |         |                            |         |                          |        |        |        |      |         |         |        |   |         |        
|Parents contribution                                                               |                                           |                   | 12      |                            |         |                          | 379    |        |        |      | 24      |         |        |   | 12,480  |        
|Members capital at the beginning of the period                                     |                                           |                   | 114,828 |                            |         |                          | 20,201 |        |        |      | 1,861   |         |        |   | 45,735  |        
|                                                                                    |                                           |                   |         |                            |         |                          |        |        |        |      |         |         |        |   |         |        
|                                                                                    | Members capital at the end of the period |                   | $       | 100,403                    |         |                          | $      | 14,215 |        |      | $       | 100,403 |        |   | $       | 14,215  |        
|                                                                                    |                                           |                   |         |                            |         |                          |        |        |        |      |         |         |        |   |         |        

See the notes to the consolidated financial statements.

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ACME Intermediate Holdings, LLC and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)

|                                                                            |                                                              |                                                     |   |                                   |          |      |   |         |         |  
|--------------------------------------------------------------------------- | ------------------------------------------------------------ | --------------------------------------------------- | - | --------------------------------- | -------- | ---- | - | ------- | ------- | -
|                                                                            |                                                              |                                                     |   | For the Six Months Ended June 30,
|                                                                            |                                                              |                                                     |   |                                  
|                                                                            |                                                              |                                                     |   | 2003                              |          | 2002
|                                                                            |                                                              |                                                     |   |                                   |          |     
|                                                                            |                                                              |                                                     |   | (In thousands)                   
|Cash flows from operating activities:                                       |                                                              |                                                     |   |                                   |          |      |   |        
|                                                                            | Net loss from continuing operations                          |                                                     | $ | (25,626                           | )        |      | $ | (48,024 | )      
|Adjustments to reconcile net loss to net cash
used in operating activities: |                                                              |                                                     |   |                                   |          |      |   |        
|                                                                            | Depreciation and amortization                                |                                                     |   | 2,192                             |          |      |   | 1,965   |        
|                                                                            | Amortization of program rights                               |                                                     |   | 5,403                             |          |      |   | 4,298   |        
|                                                                            | Amortization of debt issuance costs                          |                                                     |   | 853                               |          |      |   | 1,069   |        
|                                                                            | Amortization of discount on 12% senior secured notes         |                                                     |   | 298                               |          |      |   | 4,248   |        
|                                                                            | Loss on extinguishment of debt                               |                                                     |   | 9,926                             |          |      |   |        |        
|                                                                            | Equity-based compensation                                    |                                                     |   | 24                                |          |      |   | 133     |        
|                                                                            | Deferred taxes                                               |                                                     |   | 668                               |          |      |   | 27,820  |        
|                                                                            | (Gain) loss on disposal of assets                            |                                                     |   | (33                               | )        |      |   | 16      |        
|Changes in assets and liabilities:                                          |                                                              |                                                     |   |                                   |          |      |   |        
|                                                                            | Increase in accounts receivables, net                        |                                                     |   | (412                              | )        |      |   | (1,424  | )      
|                                                                            | Increase in prepaid expenses and other current assets        |                                                     |   | (576                              | )        |      |   | (338    | )      
|                                                                            | Increase in other assets                                     |                                                     |   | (126                              | )        |      |   | (129    | )      
|                                                                            | Decrease in accounts payable                                 |                                                     |   | (58                               | )        |      |   | (333    | )      
|                                                                            | Increase
(decrease) in accrued liabilities                   |                                                     |   | (6,300                            | )        |      |   | 560     |        
|                                                                            | Payments for programming rights                              |                                                     |   | (5,313                            | )        |      |   | (4,495  | )      
|                                                                            | Decrease in other liabilities                                |                                                     |   | (42                               | )        |      |   | (65     | )      
|                                                                            |                                                              |                                                     |   |                                   |          |      |   |         |        
|                                                                            |                                                              | Net cash used in operating activities               |   |                                   | (19,122  | )    |   |         | (14,699 | )
|                                                                            |                                                              |                                                     |   |                                   |          |      |   |         |        
|Cash flows from investing activities:                                       |                                                              |                                                     |   |                                   |          |      |   |        
|                                                                            | Purchase of property and equipment                           |                                                     |   | (1,641                            | )        |      |   | (5,310  | )      
|                                                                            | Purchases of and deposits for station interests              |                                                     |   | (48                               | )        |      |   | (278    | )      
|                                                                            | Purchase of minority interest in automobile website          |                                                     |   |                                  |          |      |   | (871    | )      
|                                                                            |                                                              |                                                     |   |                                   |          |      |   |         |        
|                                                                            |                                                              | Net cash used in investing activities               |   |                                   | (1,689   | )    |   |         | (6,459  | )
|                                                                            |                                                              |                                                     |   |                                   |          |      |   |         |        
|Cash flows from financing activities:                                       |                                                              |                                                     |   |                                   |          |      |   |        
|                                                                            | Increase in revolving credit facility                        |                                                     |   | 1,429                             |          |      |   | 5,446   |        
|                                                                            | Payments on revolving credit facility                        |                                                     |   | (20,218                           | )        |      |   |        |        
|                                                                            | Payment of financing costs on credit facility                |                                                     |   | (504                              | )        |      |   | (1,162  | )      
|                                                                            | Redemption of 10 7/8% and 12% notes                          |                                                     |   | (216,635                          | )        |      |   |        |        
|                                                                            | Cash expenses associated with the redemption of notes        |                                                     |   | (6,240                            | )        |      |   |        |        
|                                                                            | Cash restricted as collateral under capital lease facilities |                                                     |   | (5,479                            | )        |      |   | (1,128  | )      
|                                                                            | Proceeds from capital lease facilities                       |                                                     |   |                                  |          |      |   | 2,327   |        
|                                                                            | Payments on capital lease obligations                        |                                                     |   | (2,962                            | )        |      |   | (1,915  | )      
|                                                                            | Contribution
of parent                                       |                                                     |   |                                  |          |      |   | 12,480  |        
|                                                                            |                                                              |                                                     |   |                                   |          |      |   |         |        
|                                                                            |                                                              | Net cash provided by (used in) financing activities |   |                                   | (250,609 | )    |   |         | 16,048  |  
|                                                                            |                                                              |                                                     |   |                                   |          |      |   |         |        

See the notes to the consolidated financial statements.

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##### Table of Contents



ACME Intermediate Holdings, LLC and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)

|                       |                                   |                                                       |          |                                   |        |      |        |        |       | 
|---------------------- | --------------------------------- | ----------------------------------------------------- | -------- | --------------------------------- | ------ | ---- | ------ | ------ | ----- | 
|                       |                                   |                                                       |          | For the Six Months Ended June 30,
|                       |                                   |                                                       |          |                                  
|                       |                                   |                                                       |          | 2003                              |        | 2002
|                       |                                   |                                                       |          |                                   |        |     
|                       |                                   |                                                       |          | (In thousands)                   
|Decrease in cash       |                                   |                                                       | (271,420 | )                                 |        |      | (5,110 | )     
|                       | Cash from discontinued operations |                                                       |          | 280,709                           |        |      |        | 2,797  |      
|                       |                                   |                                                       |          |                                   |        |      |        |       
|                       | Net increase (decrease) in cash   |                                                       |          | 9,289                             |        |      |        | (2,313 | )    
|                       | Cash at beginning of period       |                                                       |          | 1,808                             |        |      |        | 4,280  |      
|                       |                                   |                                                       |          |                                   |        |      |        |       
|                       | Cash at end of period             |                                                       | $        | 11,097                            |        |      | $      | 1,967  |      
|                       |                                   |                                                       |          |                                   |        |      |        |       
|Cash payments for:     |                                   |                                                       |          |                                   |        |      |        |       
|                       |                                   | Interest                                              |          | $                                 | 16,015 |      |        | $      | 9,991 | 
|                       |                                   | Taxes                                                 |          | $                                 | 115    |      |        | $      | 86    | 
|                       |                                   |                                                       |          |                                   |        |      |        |       
|Non-cash transactions: |                                   |                                                       |          |                                   |        |      |        |       
|                       |                                   | Program rights in exchange for program rights payable |          | $                                 | 579    |      |        | $      | 5,901 | 
|                       |                                   |                                                       |          |                                   |        |      |        |       

See the notes to the consolidated financial statements.

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ACME Intermediate Holdings, LLC and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
For the three and six months ended June 30, 2003 and June 30, 2002

(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 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. All transactions contemplated as part
of the Reorganization closed on October 5, 1999. References to ACME Parent
herein refer to 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 Parent owns directly or indirectly, 100% of the outstanding member
units of ACME Intermediate.

In March 2003, we completed the sale of our stations in St. Louis
(KPLR-TV) and Portland, OR (KWBP-TV) to subsidiaries of Tribune Company (the
Tribune Transaction). The results of these stations are included in
discontinued operations for all periods presented.

Description of the Business

ACME Intermediate is a holding company with no independent operations
other than through its wholly-owned subsidiary, ACME Television, LLC (ACME
Television). ACME Television, through its wholly-owned subsidiaries, owns and
operates the following nine commercially licensed broadcast television stations
located throughout the United States:

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|        |  |         |    |             |  |                                         |  |             |    |  |  |        
|------- |  | ------- | -- | ----------- |  | --------------------------------------- |  | ----------- | -- |  |  | -------
|        |  |         |    |             |  |                                         |  |             |    |  |  | Network
|Station |  | Channel |    | Marketplace |  | Rank                                    |  | Affiliation
|        |  |         |    |             |  |                                         |  |            
|KUWB    |  |         | 30 |             |  | Salt Lake City, Utah                    |  |             | 36 |  |  | WB     
|KWBQ    |  |         | 19 |             |  | Albuquerque-Santa Fe, New Mexico        |  |             | 49 |  |  | WB     
|KASY    |  |         | 50 |             |  | Albuquerque-Santa Fe, New Mexico        |  |             | 49 |  |  | UPN    
|WBDT    |  |         | 26 |             |  | Dayton, Ohio                            |  |             | 58 |  |  | WB     
|WBXX    |  |         | 20 |             |  | Knoxville, Tennessee                    |  |             | 63 |  |  | WB     
|WIWB    |  |         | 14 |             |  | Green Bay-Appleton, Wisconsin           |  |             | 69 |  |  | WB     
|WTVK    |  |         | 46 |             |  | Ft. Myers-Naples, Florida               |  |             | 70 |  |  | WB     
|WBUI    |  |         | 23 |             |  | Champaign-Springfield-Decatur, Illinois |  |             | 82 |  |  | WB     
|WBUW    |  |         | 57 |             |  | Madison, Wisconsin                      |  |             | 86 |  |  | WB     

The Company also owns the rights to acquire construction permits to build
three new WB Network affiliates in Lexington, KY, Richmond, VA and
Flint-Saginaw-Bay Cities, MI. The Company also has the right to acquire a
construction permit in Portland, OR. The acquisition of these construction
permits is dependent on the Federal Communications Commission approving the
underlying applications. If the Portland, OR application is granted, the
Company will sell it due to a non-compete arrangement contained in our Tribune
Transaction agreements. The aggregate purchase price for these four
construction permits is approximately $18.4 million.

(2)  Presentation of Interim Financial Statements

Unless the context requires otherwise, references to the Company refer to
ACME Intermediate Holdings, LLC and its wholly-owned subsidiaries. Segment
information is not presented because all of the Companys revenues are
attributed to a single reportable segment  television broadcasting.

The accompanying consolidated financial statements for the three and six
months ended June 30, 2003 and 2002 are unaudited and have been prepared in
accordance with accounting principles generally accepted in the United States
of America, 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
April 15, 2003. The results of operations presented in the accompanying
consolidated financial statements are not necessarily indicative of the results
that may be expected for the year ending December 31, 2003.

Certain amounts previously reported in 2002 have been reclassified to
conform to the 2003 financial statement presentation.

(3)  Accounting for Stock Options

The Company has adopted Statement of Financial Accounting Standards No.
123 (SFAS No. 123), Accounting for Stock-Based Compensation, which
establishes a fair value based method of accounting for stock-based
compensation. SFAS No. 123 encourages but does not require entities to adopt
its provisions in place of the provisions of Accounting Principles Board
Opinion No. 25 (APB No. 25), Accounting for Stock Issued to Employees. SFAS
No. 123 permits entities to recognize the expense of all stock-based awards
over the vesting period of the awards. The expense is calculated based on the
fair value at the date of grant. Alternatively, APB No. 25 requires that the
expense of stock-based employee compensation be recognized based on the
difference, if any, between the quoted market price of the stock and the amount
the employee must pay to acquire the stock. APB No. 25 specifies various dates
to be used to determine the quoted market price, depending on whether the terms
of the

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stock-based compensation award are fixed or variable. Under SFAS No. 123
if an entity elects to follow APB No. 25 it must provide pro forma net income
disclosure for employee stock option grants made, as if the fair-value-based
method defined in SFAS No. 123 had been applied. The Company has elected to
apply the provisions of APB No. 25. Had the Company chosen to adopt the
provisions of Statement of Financial Accounting Standards No. 123, as amended
by SFAS No. 148  Accounting for Stock-Based Compensation  Transition and
Disclosure, and recognized compensation cost based upon the fair value of all
options granted (including those granted at or above fair market value) at the
date of grant, the Companys net loss (in thousands) and net loss per share for
the three and six months ended June 30, 2003 and 2002 would have been:

|                                                                                                       |  |                            |         |                          |  |      |        |      |  |   |        |   |  |   |         |  
|------------------------------------------------------------------------------------------------------ |  | -------------------------- | ------- | ------------------------ |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------- | -
|Amounts in thousands, except per share data                                                            |  | For the Three Months Ended |         | For the Six Months Ended
|                                                                                                       |  | June 30,                   |         | June 30,                
|                                                                                                       |  |                            |         |                         
|                                                                                                       |  | 2003                       |         | 2002                     |  | 2003 |        | 2002
|                                                                                                       |  |                            |         |                          |  |      |        |     
|                                                                                                       |  | (unaudited)                |         | (unaudited)             
|Net income (loss), as reported                                                                         |  | $                          | (14,437 | )                        |  | $    | (6,365 | )    |  | $ | 98,518 |   |  | $ | (44,000 | )
|Add: Stock-based employee compensation expense
included in reported net income (loss)                  |  |                            | 12      |                          |  |      | 67     |      |  |   | 24     |   |  |   | 133     |  
|Deduct: Total stock-based compensation expense determined
under fair-value based method for all awards |  |                            | (1,363  | )                        |  |      | (1,507 | )    |  |   | (2,726 | ) |  |   | (3,015  | )
|                                                                                                       |  |                            |         |                          |  |      |        |      |  |   |        |   |  |   |         |  
|Pro forma net income (loss)                                                                            |  | $                          | (15,788 | )                        |  | $    | (7,805 | )    |  | $ | 95,816 |   |  | $ | (46,882 | )
|                                                                                                       |  |                            |         |                          |  |      |        |      |  |   |        |   |  |   |         |  

(4)  Intangible Assets  Adoption of Statements 142 and 144

The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 142, Goodwill and Other Intangible Assets effective
January 1, 2002. Under SFAS No. 142, the Company no longer amortizes goodwill
or intangible assets.

Prior to January 1, 2002, the Company recorded deferred tax liabilities
relating to the difference in the book basis and tax basis of goodwill and
intangibles. The future reversals of those deferred tax liabilities were
utilized to support the realization of deferred tax assets (primarily
consisting of net operating loss carryforwards) and the corresponding deferred
tax benefits recorded by the Company. As a result of the adoption of SFAS No.
142, those deferred tax liabilities will no longer reverse on a scheduled basis
and can no longer be utilized to support the realization of deferred tax
assets. Accordingly, the Company recorded a one-time, non-cash charge totaling
$28.4 million to deferred income tax expense in the quarter ended March 31,
2002 to establish a valuation allowance against its deferred tax assets.

(5)  Revolving Credit Facility

On March 21, 2003 the Company completed the Tribune Transaction and
concurrently repaid all borrowings under its revolving credit agreement. The
Company amended this facility on August 8, 2003 and is compliance with the
covenants of this amended facility. The amendment resulted in extending the
term of the agreement until July 31, 2006 and included other changes including
revised collateral, interest rates and financial covenants. The maximum amount
of borrowings, which is determined by a fixed percentage of appraised station
values, remained at $40 million. The amended agreement continues to contain
negative covenants, which, among other restrictions, will require the lenders
approval for certain station acquisitions and dispositions. At June 30, 2003
there were no borrowings under the facility.

Costs associated with amending the credit facility, including loan fees
and related professional fees, will be, and unamortized costs relating to the
facility are, included in long-term other assets and are amortized over the
term of the facilities.

(6)  Senior Discount and Senior Secured Discount Notes

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On April 21, 2003, the Company redeemed all of its 10 7/8% $175 million
Senior Discount Notes and $41.6 million of its 12% $71.634 million Senior
Secured Discount Notes. The notes were redeemed at a total cost $217.3
million, including redemption premiums and accrued interest from March 31, 2003
to the redemption date. Separately, the Company acquired prior to the
redemption approximately $6.8 million of Senior Discount Notes purchased in the
open market. The Company recorded a loss of $9.9 million on the extinguishment
based on the difference between the reacquisition price and the net carrying
amount of the debt (both terms as defined by SFAS No. 26).

On August 13, 2003, the Company issued redemption notices to the holders
of the remaining $30 million Senior Secured Discount Notes that it was
redeeming 100% of those notes on September 30, 2003. Under the provisions of
the indentures, the notes will be called at par and the proceeds to fund the
redemption will be provided from a combination of cash on hand and borrowings
under the amended revolving credit facility.

(7)  Discontinued Operations

Income (loss) from discontinued operations is comprised of the following:

|                                                   |  |                            |      |                          |      |        |   |  |   |         |   |   |        |  
|-------------------------------------------------- |  | -------------------------- | ---- | ------------------------ | ---- | ------ | - |  | - | ------- | - | - | ------ | -
|                                                   |  | For the Three Months Ended |      | For the Six Months Ended
|                                                   |  | June 30,                   |      | June 30,                
|                                                   |  |                            |      |                         
|Amounts in thousands                               |  | 2003                       | 2002 |                          | 2003 | 2002  
|                                                   |  |                            |      |                          |      |       
|                                                   |  | (Unaudited)               
|Income
from operations of
discontinued operations  |  | $                          |     |                          | $    | 4,084  |   |  | $ | 1,466   |   | $ | 6,708  |  
|Gain (loss) on disposal of
discontinued operations |  |                            | (34  | )                        |      |       |   |  |   | 126,484 |   |   |       |  
|Income tax benefit (expense)                       |  |                            | 1    |                          |      | (1,634 | ) |  |   | (2,340  | ) |   | (2,684 | )
|                                                   |  |                            |      |                          |      |        |   |  |   |         |   |   |        |  
|Income (loss) from discontinued operations         |  | $                          | (33  | )                        | $    | 2,450  |   |  | $ | 125,610 |   | $ | 4,024  |  
|                                                   |  |                            |      |                          |      |        |   |  |   |         |   |   |        |  




Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations

Forward-looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements. We
have based these forward-looking statements on our current expectations and
projections about future events. In some cases, you can identify
forward-looking statements by terminology such as may, will, could,
expect, believe, or might or the negative of such terms or other
comparable terminology. Forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause our and the television
broadcast industrys actual results, levels of activity, performance,
achievements and prospects to be materially different from those expressed or
implied by such forward-looking statements. These risks, uncertainties and
other factors include those identified in our Annual Report on Form 10-K filed
with the Securities and Exchange Commission on April 15, 2003.

We are under no duty to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
after the date of this Quarterly Report on Form 10-Q. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed in this
Quarterly Report on Form 10-Q might not occur.

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

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Our nine continuing television stations are regionally diverse and range
in size (based on television households) from the 36th through the 83rd largest
markets in the nation. All but one of our stations are affiliates of The WB
Television Network. Our second station in the Albuquerque  Santa Fe
marketplace is a UPN affiliate.

We derive 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 ongoing operating expenses are programming costs, employee
compensation, advertising and promotion expenditures and depreciation.
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 and 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, UPN or from other program suppliers.

Results of Operations

The Three and Six Months ended June 30, 2003 vs. June 30, 2002

Net revenues increased 25% to $11.5 million for the second quarter of 2003
compared to $9.2 million for the same period a year ago. For the six-month
period ended June 30, 2003, our net revenues increased 29% to $21.5 million
compared to $16.7 million during the same six month period of 2002. These
increases reflect our increased share of market revenues driven by ratings
increases over the past year. On a same station basis, i.e. excluding the
results of our Madison station which was acquired in the fourth quarter for
2002, our second quarter and six-month 2003 net revenues increased 21% and 25%,
respectively, over comparable periods of 2002.

Station operating expenses increased 23% to $11.3 million for second three
months of 2003 compared to $9.2 million for the same period a year ago. For
the six-months, station operating costs grew by 23% to $21.7 million compared
to $17.6 million for the first six-months of 2002. On a same-station basis,
our station operating expenses increased 17% and 18% during the second quarter
and first six months of 2003, respectively, compared to the same periods of
2002. These increases reflect our continued investment in programming,
staffing and sales related costs.

Depreciation and amortization for the second quarter and six-months
increased 13% and 12% to $1.1 million and $2.2 million, respectively, compared
to $1.0 million and $2.0 million in the second quarter and first six months of
2002, respectively. These increases reflect greater depreciation expense on
additions to property and equipment placed into service during 2002.

Corporate expenses decreased 6% to $969,000 for the second quarter of 2003
as compared to $1.0 million for the first quarter of 2002 reflecting a
combination of staffing cuts and lower professional fees as the Company
continues to reduce expense levels in light of the Tribune Transaction.
Corporate expenses for the six-month periods of 2003 and 2002 were essentially
unchanged at $1.9 million.

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Equity-based compensation was $12,000 in the second quarter of 2003
compared to $67,000 for the second quarter of 2002 and was $24,000 for the
six-months ended June 30, 2003 compared to $133,000 for the comparable
year-earlier period. This expense relates to stock options issued upon the
conversion of our long-term incentive plan awards during our IPO in September
1999. These options were issued at a price below market value at the date of
grant and therefore generate compensation expense over the vesting period of
the option. The decreases in expense in the second quarter and six-month
periods of 2003 were due to several optionees having fully vested their options
in the second half of 2002.

Interest expense, net of interest income, decreased to $2.3 million in the
second quarter of 2003 compared to $7.6 million in the second quarter of 2002.
This decrease reflects the eliminated interest on all of our $175 million 10
7/8% Notes and $41.7 million of our 12% Notes that were redeemed on April 21,
2003 along with the repayment of all balances outstanding under the Companys
credit facility on March 21, 2003. We incurred a loss on extinguishment of
debt of $9.9 million in the second quarter in connection with the redemption of
our Notes in April. For the six-month period, net interest expense was down
30% from $15.1 million to $10.6 million as a result of our reduction in debt
with proceeds received in the Tribune Transaction.

The Company recorded a tax expense of $300,000 during the second quarter
of 2003, including a deferred tax expense of $250,000, compared to a deferred
tax benefit of $909,000 million in the corresponding quarter of 2002. The tax
expense for the six months ended June 30, 2003 was $783,000 compared to a tax
expense of $27.3 million for the same period in 2002. The second quarter and
six-month 2003 tax expenses relate to the valuation allowance against deferred
tax assets created by tax deductible amortization of intangibles, which are not
being amortized on a book basis. The benefit recorded in the second quarter of
2002 relates to losses at the continuing operations being utilized against
income from discontinued operations for the same period. The six-month 2002
tax expense relates to the implementation of SFAS No. 142 on January 1, 2002.
Prior to January 1, 2002, the Company recorded deferred tax liabilities
relating to the difference in the book basis and tax basis of goodwill and
intangibles. The reversals of those deferred tax liabilities were utilized to
support the realization of deferred tax assets (primarily consisting of net
operating loss carryforwards) and the corresponding deferred tax benefits
recorded by the Company. As a result of the adoption of SFAS 142, those
deferred tax liabilities will no longer reverse on a scheduled basis and can no
longer be utilized to support the realization of deferred tax assets.
Accordingly, the Company recorded a charge totaling $28.4 million to deferred
income tax expense on March 31, 2002 to establish a valuation allowance against
its deferred tax assets.

Income from discontinued operations, net of tax, during the second quarter
was $33,000, representing minor adjustments to transaction costs relating to
the station sales during the quarter. Net income from discontinued operations
for the second quarter of 2002 and the six months ended June 30, 2002 reflect
the profitable operations of our station KPLR in St. Louis, which was sold in
connection with the Tribune Transaction during that period. For the six-month
period ended June 30, 2003, net income from discontinued
operations represents
the profitable results of the stations sold and the gain on the sale of $124.1
million net of tax expense of $2.3 million.

The Companys net losses for the second quarters of 2003 and 2002 were
$14.4 million and $6.4 million, respectively. This increase in the net loss is
primarily attributable to the loss on extinguishment on debt and prior year
income from discontinued operations net of lower interest expense and an
improvement in station revenues in excess of station operating expenses. Net
income for the six-months ended June 30, 2003 was $98.5 million compared to a
net loss of $44.0 million for the comparable period in 2002. This increase is
attributable to the gain on sale of discontinued operations, lower net interest
expense and improved station operating results, net of the loss on
extinguishment of debt and the deferred tax expense relating to the adoption of
SFAS 142.

Liquidity and Capital Resources

Cash
flow used by operating activities was $19.2 million for the six
months ended June 30, 2003 compared to cash flow used by operating activities
of $14.7 million for the first six months of 2002. This increase in cash flow
usage of $4.5 million relates primarily to increased cash interest payments of $6.0
million (including the first-time semi-annual interest payment of $4.3 million
on our Senior Secured Discount Notes paid on March 31, 2003), net of improved
operating results and working capital changes.

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Cash flow used in investing activities during the six months of 2003 was
$1.7 million compared to $6.5 million used during the first six months of 2002
as the Company completed substantially all of its digital upgrades in 2002 and
spent considerably less on capital expenditures in the 2003 period.

Cash flow used in financing activities was $250.5 million for the first
six months of 2003 compared to cash flow provided by financing activities of
$16.0 million during the first six months of 2002. In connection with the
Tribune Transaction in March 2003, the Company repaid all of its revolving
credit facility and also repurchased and redeemed approximately $216.6 million,
excluding premium and accrued interest, of its 10 7/8% Senior Discount Notes
and 12% Senior Secured Discount Notes. Cash payments, including the call
premium, related to the extinguishment of debt were approximately $6.2
million during the first six months of 2003. In addition, also as a result of
the Tribune Transaction, the Company pledged approximately $5.5 million in cash
deposits to a lessor as additional collateral for certain existing capital
lease obligations.

Cash provided by discontinued operations during the first six months of
2003 was $280.7 million, representing the operating results of, and the sales
proceeds from, our two stations sold in connection with the Tribune
Transaction. Cash provided by these discontinued operations during the six
months ended June 30, 2002 was $2.8 million.

On August 8, 2003, the Company amended its revolving credit agreement.
The amendment included the extension of the term of the agreement through July
31, 2006, the revision of certain collateral, the revision of the financial
covenants, and the revision of the interest rates to be charged under the
agreement. The maximum borrowings under the facility remain at $40 million,
approximately $38 million of which was available as of August 8, 2003  the
date of the amendment. The agreement also requires that the Company redeem the
remaining $30 million of its outstanding 12% Senior Secured Discount Notes by
October 1, 2003 and the Company has notified the holders of redemption on
September 30, 2003. There were no outstanding balances under the agreement at
either June 30, 2003 or the date of the amendment. The Company expects to fund
the redemption of the 12% Senior Secured Discount Notes and an interest payment
of $1.8 million from a combination of cash on hand and initial borrowings under
the amended facility.

The Company expects that any future acquisitions and (related capital
expenditures) of television stations, including any of the four construction
permits, would be financed through its amended revolving credit facility and
expected new capital lease facilities or, if necessary, through additional debt
and equity financings. Although we believe it would be a secondary
alternative, we also have the ability to sell select stations in the event of
unforeseen credit difficulties, such as might be experienced if there were
further declines in the U.S. economy or in advertising demand. There is no
guarantee that such other means of raising capital will be at terms acceptable
to the Company, and accordingly current stockholders could be adversely
affected by such financings. Funding for operating losses, existing lease
repayments and current projected capital expenditures is expected to be made
from current cash on hand.

Critical Accounting Policies and Estimates

The Companys discussion and analysis of its financial condition and
results of operations are based upon its consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these financial statements
requires us to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. On an on-going basis, we evaluate our
estimates, including those related to broadcast rights, bad debts, intangible
assets, income taxes, and contingencies and litigation. The Company bases its
estimates on historical experience and on various other assumptions that we
believe to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ
from these estimates under different assumptions or conditions. The Company
believes the following critical accounting policies affect its more significant
judgments and estimates used in the preparation of its consolidated financial
statements.

Programming Rights

The Companys programming rights are stated, on a gross basis, at the
lower of amortized cost or estimated realizable value. The Company evaluates
estimated realizable value of programming rights based on current usage

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and revenue performance and projected future revenue and usage of such
programs. Changes in the Companys programming schedule could impact the
estimated realizable value of programming. In addition, estimates of future
revenue performance relate to the number of advertising spots which will be
sold by the Company and the amount generated from such sales. A decrease in the
number of spots sold or the amount for such sales could also impact the
Companys estimated realizable value. There were no write downs recorded by the
Company for either of the six month periods ended June 30, 2003 or June 30,
2002.

Impairment of Long-Lived Asset Values

The carrying values of our long-lived assets are reviewed for impairment
based upon estimated future undiscounted cash flows of the stations. During the
year ended December 31, 2002 and the six months ended June 30, 2003, the
Company has not recorded any impairment related to long-lived assets. Future
adverse changes in market conditions, changes in technology and other factors
could reduce the expected future cash flows and result in an impairment charge.

Revenue Recognition

The Company records revenue from the sale of airtime related to
advertising and contracted time at the time of broadcast. The Company maintains
allowances for doubtful accounts for estimated losses resulting from the
inability of its customers to make required payments. The Company utilizes
information available to it, including the timing of payments and the financial
condition of our customers, to estimate the allowance for doubtful accounts. If
the financial condition of our customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional allowances may be
required. The Company does not have a significant concentration of accounts
receivable from any single customer or industry segment.

Accounting for Goodwill and Other Intangible Assets

In June 2001, the Financial Accounting Standards Board (the FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 141, Business
Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No.
141 requires that the purchase method of accounting be used for all business
combinations completed or initiated after June 30, 2001 SFAS No. 141 also
specifies criteria that must be met before intangible assets acquired in a
purchase method business combination can be recognized and reported apart from
goodwill, noting that any purchase price allocable to an assembled workforce
may not be accounted for separately. SFAS No. 142 requires that goodwill and
intangible assets with indefinite useful lives no longer be amortized, but
instead, tested for impairment (at least annually) in accordance with the
provisions of SFAS No. 142. SFAS No. 142 also requires that intangible assets
with definite useful lives be amortized over their respective estimated useful
lives to their estimated residual values, and reviewed for impairment in
accordance with SFAS No. 121, Accounting for the Impairment of Long Lived
Assets and for Long Lived Assets to Be Disposed Of.

The Company determined that its fair value exceeded its carrying value as
of January 1, 2002, December 31, 2002 (its annual impairment testing date) and
June 30, 2003, and, accordingly, no impairment was recorded during 2002 or
during the six months ended June 30, 2003. In addition, as prescribed by SFAS
No. 142, the Company is no longer amortizing goodwill effective January 1,
2002.

In the connection with the adoption with Statement 142, the Company
determined that its intangible assets have an indefinite life. Accordingly, the
Company tested these intangible assets in accordance with the provisions of
Statement 142 and no longer amortizes these intangibles effective January 1,
2002. The Company also determined that the fair value of its intangible assets
exceeded their carrying values as of January 1, 2002, December 31, 2002 and
June 30, 2003, accordingly there was no impairment recorded.

The Companys discussion and analysis of its financial condition and
results of operations are based upon our consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these financial statements
requires us to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. On an on-going basis, we evaluate our
estimates, including those related to

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broadcast rights, bad debts, intangible assets, income taxes, and contingencies
and litigation. The Company bases its estimates on historical experience and
on various other assumptions that we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates under
different assumptions or conditions. The Company believes the following
critical accounting policies affect its more significant judgments and
estimates used in the preparation of its consolidated financial statements.

Impact of Recent Accounting Pronouncements

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections(SFAS 145). SFAS 145 rescinds SFAS 4, which required all gains
and losses from extinguishment of debt to be aggregated and, if material,
classified as an extraordinary item, net of related income tax effect. Upon
adoption of SFAS 145, we are required to apply the criteria in APB Opinion No.
30, Reporting the Results of Operations  Reporting the Effects of Disposal of
a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions(Opinion No. 30), in determining the classification of
gains and losses resulting from the extinguishment of debt. Additionally, SFAS
145 amends SFAS 13 to require that certain lease modifications that have
economic effects similar to sale-leaseback transactions be accounted for in the
same manner as sale-leaseback transactions. SFAS 145 is effective for fiscal
years beginning after May 15, 2002 with early adoption of the provisions
related to the rescission of SFAS 4 encouraged. Upon adoption, companies must
reclassify prior period items that do not meet the extraordinary item
classification criteria in Opinion No. 30. This impacted the Companys
accounting for extinguishment of debt which occurred during the six months
ended June 30, 2003. The Company did not account for such extinguishment as
extraordinary.

In February 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities(FIN 46), which addresses the consolidation by
business enterprises of variable interest entities, which have one or both of
the following characteristics: (1) the equity investment at risk is not
sufficient to permit the entity to finance its activities without additional
financial support from other parties, or (2) the equity investors lack one or
more of the following essential characteristics of a controlling financial
interest: (a) the direct or indirect ability to make decisions about the
entitys activities through voting or similar rights, (b) the obligation to
absorb the expected losses of the entity if they occur, or (c) the right to
receive the expected residual returns of the entity if they occur. FIN 46 will
have a significant effect on existing practice because it requires existing
variable interest entities to be consolidated if those entities do not
effectively disburse risks among parties involved. In addition, FIN 46 contains
detailed disclosure requirements. FIN 46 applies immediately to variable
interest entities created after January 31, 2003, and to variable interest
entities in which an enterprise obtains an interest after that date. It applies
in the second fiscal year or interim period beginning after June 15, 2003, to
variable interest entities in which an enterprise holds a variable interest
that it acquired before February 1, 2003. This Interpretation may be applied
prospectively with a cumulative-effect adjustment as of the date on which it is
second applied or by restating previously issued financial statements for one
or more years with a cumulative-effect adjustment as of the beginning of the
second year restated. The Company expects that the adoption of FIN 46 will not
have an impact on the Companys consolidated financial statements.




Item 3.Quantitative and Qualitative Disclosures About Market Risk

The Companys 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, 2003, the Company
had no borrowings under the credit facility.

We are also exposed to risk from a change in interest rates to the extent
we are required to refinance existing fixed rate indebtedness at rates higher
than those prevailing at the time the existing indebtedness was incurred. On
April 21, 2003, the Company redeemed all of its Senior Discount Notes and $41.6
million of its Senior Secured Discount Notes. The fair value of the $30
million in Senior Secured Discount Notes uncalled as of June 30, 2003 was $30.5
million. The book value of such notes at March 31, 2003 was $29.1 million.

15



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Item 4.Controls and Procedures.

Disclosure controls and procedures are designed to ensure that information
required to be disclosed in our periodic reports filed or submitted under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the required time periods. As of June 30, 2003, the end of the period
covered by this report, the Company carried out an evaluation under the
supervision and with the participation of our Chief Executive Officer and Chief
Financial Officer of the effectiveness of our disclosure controls and
procedures. Based on that evaluation, our Chief Executive Officer and Chief
Financial Officer have concluded that such controls and procedures were
effective. The Company reviews its disclosure controls and procedures on an
ongoing basis and may from time to time make changes aimed at enhancing their
effectiveness and to ensure that they evolve with the Companys business.




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.




Item 6.Exhibits and Reports on Form 8-K.



| | (a)   |  | Exhibits.                                                                                                                                                                                                        
| | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 10.1* |  | Amended and Restated Loan and Security Agreement between ACME
Television, LLC, as borrower, ACME Communications,
Inc., Wells Fargo Foothill, Inc. and General Electric Capital
Corporation, dated August 8, 2003.
|
| | 31.1  |  | Certification of Chief Executive Officer pursuant to Rules 13a-14(a)
under the Securities and Exchange Act of 1934, as amended                                                                                   
|
| | 31.2  |  | Certification of Chief Financial Officer pursuant to Rules 13a-14(a)
under the Securities and Exchange Act of 1934, as amended                                                                                   
|
| | 32    |  | Certification of Chief Executive Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002                                    
|
| | *     |  | Incorporated by reference to ACME
Communications, Inc.'s Quarterly Report on Form 10-Q for the
period ended June 30, 2003 filed on August 14, 2003.                                                              
|
| | (b)   |  | Reports on Form 8-K                                                                                                                                                                                              

The Company did not file reports on Form 8-K with the Securities and
Exchange Commission during the three months ended June 30, 2003.

16



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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: August 15, 2003 | By:                             |  | /s/ Thomas D. Allen
|                      |                                 |  |                     | 
|                      | Thomas D. Allen                
|                      | Executive Vice President / CFO 
|                      | (Principal accounting officer) 





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EXHIBIT INDEX

|        |  |                                                                                                                                                                                                                  
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                  
|Number  |  | Description                                                                                                                                                                                                      
|        |  |                                                                                                                                                                                                                  
|10.1*   |  | Amended and Restated Loan and Security Agreement between ACME
Television, LLC, as borrower, ACME Communications, Inc., Wells
Fargo Foothill, Inc. and General Electric Capital Corporation,
dated August 8, 2003.
|31.1    |  | Certification of Chief Executive Officer pursuant to Rules
13a-14(a) under the Securities and Exchange Act of 1934, as
amended                                                                                   
|31.2    |  | Certification of Chief Financial Officer pursuant to Rules
13a-14(a) under the Securities and Exchange Act of 1934, as
amended                                                                                   
|32      |  | Certification of Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002                                    



|* |  | Incorporated by reference to ACME
Communications, Inc.'s Quarterly Report on Form 10-Q for the
period ended June 30, 2003 filed on August 14, 2003.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------