##### Table of Contents



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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549



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FORM 10-Q
_______________

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

For the quarterly period ended September 30, 2001

OR

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

Commission File Numbers:

|                                |  |          
|------------------------------- |  | ---------
|ACME Intermediate Holdings, LLC |  | 333-40277
|                               
|                               
|                               
|                               
|ACME Television, LLC            |  | 333-40281

ACME INTERMEDIATE HOLDINGS, LLC
AND
ACME TELEVISION, LLC

(Exact Name of Registrants as specified in their Charters)


|                                |  |                                 |  |                     
|------------------------------- |  | ------------------------------- |  | --------------------
|Delaware                        |  | ACME INTERMEDIATE HOLDINGS, LLC |  | 52-2050589          
|                               
|                               
|                               
|                               
|Delaware                        |  | ACME TELEVISION, LLC            |  | 52-2050588          
|                               
|                               
|                               
|                               
|(State or other jurisdiction of |  |                                 |  | (I.R.S. Employer    
|                               
|                               
|                               
|                               
|incorporation or organization)  |  |                                 |  | Identifications No.)

2101 E. Fourth Street, Suite 202A
Sana 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 [   ]

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

As of November 14, 2001, ACME Intermediate Holdings, LLC and ACME Television,
LLC had 910,986 and 200, respectively, 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     
|                            |                                                                                               | Consolidated Statements of Operations     
|                            |                                                                                               | Consolidated Statements of Cash Flows     
|                            |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                            | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                            | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|PART II  OTHER INFORMATION
|                            | ITEM 1. LEGAL PROCEEDINGS                                                                    
|                            | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.                                                    
|EXHIBIT 10.1               
|EXHIBIT 10.2               



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##### Table of Contents



ACME INTERMEDIATE HOLDINGS, LLC
AND
ACME TELEVISION, LLC

FORM 10-Q

TABLE OF CONTENTS

|        |  |                                                                                                                                 |  |     
|------- |  | ------------------------------------------------------------------------------------------------------------------------------- |  | ----
|ITEM    |  |                                                                                                                                 |  |     
|NUMBER  |  |                                                                                                                                 |  | PAGE
|        |  |                                                                                                                                 |  |     
|        |  | PART I  FINANCIAL INFORMATION                                                                                                  |  |     
|       
|       
|       
|       
|        |  |                                                                                                                                 |  |     
|       
|       
|       
|       
|Item 1. |  | Financial Statements                                                                                                            |  |     
|       
|       
|       
|       
|        |  |                                                                                                                                 |  |     
|       
|       
|       
|       
|        |  | Consolidated Balance Sheets as of December 31, 2000 and September 30, 2001                                                      |  | 3   
|       
|       
|       
|       
|        |  |                                                                                                                                 |  |     
|       
|       
|       
|       
|        |  | Consolidated Statements of Operations and Members Capital for the Three Months Ended
September 30, 2000 and September 30, 2001 |  | 4   
|       
|       
|       
|       
|        |  |                                                                                                                                 |  |     
|       
|       
|       
|       
|        |  | Consolidated Statements of Operations and Members Capital for the Nine Months Ended
September 30, 2000 and September 30, 2001  |  | 5   
|       
|       
|       
|       
|        |  |                                                                                                                                 |  |     
|       
|       
|       
|       
|        |  | Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 2000 and September 30, 2001                       |  | 6   
|       
|       
|       
|       
|        |  |                                                                                                                                 |  |     
|       
|       
|       
|       
|        |  | Notes to Consolidated Financial Statements                                                                                      |  | 7   
|       
|       
|       
|       
|        |  |                                                                                                                                 |  |     
|       
|       
|       
|       
|Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results Of Operations                                           |  | 8   
|       
|       
|       
|       
|        |  |                                                                                                                                 |  |     
|       
|       
|       
|       
|Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk                                                                      |  | 13  
|       
|       
|       
|       
|        |  |                                                                                                                                 |  |     
|       
|       
|       
|       
|        |  | PART II  OTHER INFORMATION                                                                                                     |  |     
|       
|       
|       
|       
|        |  |                                                                                                                                 |  |     
|       
|       
|       
|       
|Item 1. |  | Legal Proceedings                                                                                                               |  | 14  
|       
|       
|       
|       
|        |  |                                                                                                                                 |  |     
|       
|       
|       
|       
|Item 6. |  | Exhibits and Reports on Form 8-K                                                                                                |  | 14  





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##### Table of Contents






ACME Intermediate Holdings, LLC and Subsidiaries
ACME Television, LLC and Subsidiaries
Consolidated Balance Sheets

|                                                   |        |                                               |                      |                                        |        |                         |                          |                 |        |               |          |                 |             |         |          |   |        |         |         | 
|-------------------------------------------------- | ------ | --------------------------------------------- | -------------------- | -------------------------------------- | ------ | ----------------------- | ------------------------ | --------------- | ------ | ------------- | -------- | --------------- | ----------- | ------- | -------- | - | ------ | ------- | ------- | 
|                                                   |        |                                               |                      |                                        |        | As of December 31, 2000 | As of September 30, 2001
|                                                   |        |                                               |                      |                                        |        |                         |                          |                
|                                                   |        |                                               |                      |                                        |        | ACME                    |                          |                 |        |               |          | ACME            |             |         |          |  
|                                                   |        |                                               |                      |                                        |        | Intermediate            |                          | ACME            |        | Intermediate  |          | ACME           
|                                                   |        |                                               |                      |                                        |        | Holdings, LLC           |                          | Television, LLC |        | Holdings, LLC |          | Television, LLC
|                                                   |        |                                               |                      |                                        |        |                         |                          |                 |        |               |          |                
|                                                   |        |                                               |                      |                                        |        |                         |                          |                 |        |               |          |                 | (Unaudited)
|                                                   |        |                                               |                      |                                        |        | (In thousands)         
|                                                   |        |                                               |                      |                                        |        |                        
|                                                   | ASSETS |                                               |                      |                                        |        |                         |                          |                 |        |               |          |                 |             |         |          |   |       
|                                                  
|                                                  
|                                                  
|                                                  
|Current assets:                                    |        |                                               |                      |                                        |        |                         |                          |                 |        |               |          |                 |             |         |          |  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |        | Cash and cash equivalents                     |                      | $                                      | 10,347 |                         |                          | $               | 10,347 |               |          | $               | 13,430      |         |          | $ | 13,430 |        
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |        | Accounts receivable, net                      |                      |                                        | 15,022 |                         |                          |                 | 15,022 |               |          |                 | 13,616      |         |          |   | 13,616 |        
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |        | Due from affiliates                           |                      |                                        |       |                         |                          |                 | 128    |               |          |                 |            |         |          |   |       |        
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |        | Current portion of programming rights         |                      |                                        | 12,477 |                         |                          |                 | 12,477 |               |          |                 | 15,966      |         |          |   | 15,966 |        
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |        | Prepaid expenses and other current assets     |                      |                                        | 2,444  |                         |                          |                 | 1,017  |               |          |                 | 2,828       |         |          |   | 1,520  |        
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |        | Deferred income taxes                         |                      |                                        | 1,139  |                         |                          |                 | 1,139  |               |          |                 | 1,139       |         |          |   | 1,139  |        
|                                                   |        |                                               |                      |                                        |        |                         |                          |                 |        |               |          |                 |             |         |          |   |        |        
|                                                   |        |                                               | Total current assets |                                        |        | 41,429                  |                          |                 |        | 40,130        |          |                 |             | 46,979  |          |   |        | 45,671  |        
|                                                  
|                                                  
|                                                  
|                                                  
|Property and equipment, net                        |        |                                               | 29,471               |                                        |        |                         | 29,471                   |                 |        |               | 30,584   |                 |             |         | 30,584   |  
|                                                  
|                                                  
|                                                  
|                                                  
|Programming rights, net of current portion         |        |                                               | 10,984               |                                        |        |                         | 10,984                   |                 |        |               | 20,164   |                 |             |         | 20,164   |  
|                                                  
|                                                  
|                                                  
|                                                  
|Intangible assets, net                             |        |                                               | 267,964              |                                        |        |                         | 267,964                  |                 |        |               | 256,460  |                 |             |         | 256,460  |  
|                                                  
|                                                  
|                                                  
|                                                  
|Other assets                                       |        |                                               | 9,140                |                                        |        |                         | 9,140                    |                 |        |               | 8,255    |                 |             |         | 8,255    |  
|                                                   |        |                                               |                      |                                        |        |                         |                          |                 |        |               |          |                 |             |         |          |   |        |        
|                                                   |        |                                               | Total assets         |                                        | $      | 358,988                 |                          |                 | $      | 357,689       |          |                 | $           | 362,442 |          |   | $      | 361,134 |        
|                                                   |        |                                               |                      |                                        |        |                         |                          |                 |        |               |          |                 |             |         |          |   |        |        
|LIABILITIES AND MEMBERS CAPITAL                   |        |                                               |                      |                                        |        |                         |                          |                 |        |               |          |                 |             |         |          |  
|                                                  
|                                                  
|                                                  
|                                                  
|Current liabilities:                               |        |                                               |                      |                                        |        |                         |                          |                 |        |               |          |                 |             |         |          |  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |        | Accounts payable                              |                      | $                                      | 7,214  |                         |                          | $               | 7,214  |               |          | $               | 7,354       |         |          | $ | 7,354  |        
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |        | Accrued liabilities                           |                      |                                        | 9,344  |                         |                          |                 | 9,344  |               |          |                 | 13,759      |         |          |   | 13,759 |        
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |        | Due to affiliates                             |                      |                                        | 1,042  |                         |                          |                 | 1,042  |               |          |                 | 1,146       |         |          |   | 1,018  |        
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |        | Current portion of programming rights
payable |                      |                                        | 12,108 |                         |                          |                 | 12,108 |               |          |                 | 15,338      |         |          |   | 15,338 |        
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |        | Current portion of obligations under
lease    |                      |                                        | 2,271  |                         |                          |                 | 2,271  |               |          |                 | 2,846       |         |          |   | 2,846  |        
|                                                   |        |                                               |                      |                                        |        |                         |                          |                 |        |               |          |                 |             |         |          |   |        |        
|                                                   |        |                                               |                      | Total current liabilities              |        |                         | 31,979                   |                 |        |               | 31,979   |                 |             |         | 40,443   |   |        |         | 40,315  | 
|                                                  
|                                                  
|                                                  
|                                                  
|Programming rights payable, net of
current portion |        |                                               | 10,205               |                                        |        |                         | 10,205                   |                 |        |               | 19,669   |                 |             |         | 19,669   |  
|                                                  
|                                                  
|                                                  
|                                                  
|Obligations under lease, net of
current portion    |        |                                               | 7,258                |                                        |        |                         | 7,258                    |                 |        |               | 7,906    |                 |             |         | 7,906    |  
|                                                  
|                                                  
|                                                  
|                                                  
|Other liabilities                                  |        |                                               | 250                  |                                        |        |                         | 250                      |                 |        |               | 254      |                 |             |         | 254      |  
|                                                  
|                                                  
|                                                  
|                                                  
|Deferred income taxes                              |        |                                               | 15,045               |                                        |        |                         | 18,279                   |                 |        |               | 5,529    |                 |             |         | 10,954   |  
|                                                  
|                                                  
|                                                  
|                                                  
|10 7/8% senior discount notes                      |        |                                               | 175,000              |                                        |        |                         | 175,000                  |                 |        |               | 175,000  |                 |             |         | 175,000  |  
|                                                  
|                                                  
|                                                  
|                                                  
|12% senior secured notes                           |        |                                               | 54,722               |                                        |        |                         |                         |                 |        |               | 60,370   |                 |             |         |         |  
|                                                   |        |                                               |                      |                                        |        |                         |                          |                 |        |               |          |                 |             |         |          |   |        |        
|                                                   |        |                                               |                      | Total liabilities                      |        |                         | 294,459                  |                 |        |               | 242,971  |                 |             |         | 309,171  |   |        |         | 254,098 | 
|                                                   |        |                                               |                      |                                        |        |                         |                          |                 |        |               |          |                 |             |         |          |   |        |        
|Members capital                                   |        |                                               | 183,257              |                                        |        |                         | 217,418                  |                 |        |               | 191,251  |                 |             |         | 225,412  |  
|                                                  
|                                                  
|                                                  
|                                                  
|Accumulated deficit                                |        |                                               | (118,728             | )                                      |        |                         | (102,700                 | )               |        |               | (137,980 | )               |             |         | (118,376 | )
|                                                   |        |                                               |                      |                                        |        |                         |                          |                 |        |               |          |                 |             |         |          |   |        |        
|                                                   |        |                                               |                      | Total members capital                 |        |                         | 64,529                   |                 |        |               | 114,718  |                 |             |         | 53,271   |   |        |         | 107,036 | 
|                                                   |        |                                               |                      |                                        |        |                         |                          |                 |        |               |          |                 |             |         |          |   |        |        
|                                                   |        |                                               |                      | Total liabilities and members capital |        | $                       | 358,988                  |                 |        | $             | 357,689  |                 |             | $       | 362,442  |   |        | $       | 361,134 | 
|                                                   |        |                                               |                      |                                        |        |                         |                          |                 |        |               |          |                 |             |         |          |   |        |        

See the notes to the consolidated financial statements

3



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##### Table of Contents






ACME Intermediate Holdings, LLC and Subsidiaries
ACME Television, LLC and Subsidiaries
Consolidated Statements of Operations and Member's Capital
(Unaudited)

|                                          |                                                 |                               |                |        |                                          |        |                 |         |               |        |                 |        |        |        |         |         |        |        |  
|----------------------------------------- | ----------------------------------------------- | ----------------------------- | -------------- | ------ | ---------------------------------------- | ------ | --------------- | ------- | ------------- | ------ | --------------- | ------ | ------ | ------ | ------- | ------- | ------ | ------ | -
|                                          |                                                 |                               |                |        | For the Three Months Ended September 30,
|                                          |                                                 |                               |                |        |                                         
|                                          |                                                 |                               |                |        | 2000                                     |        | 2001           
|                                          |                                                 |                               |                |        |                                          |        |                
|                                          |                                                 |                               |                |        | ACME                                     |        |                 |         |               |        | ACME            |        |        |        |        
|                                          |                                                 |                               |                |        | Intermediate                             |        | ACME            |         | Intermediate  |        | ACME           
|                                          |                                                 |                               |                |        | Holdings, LLC                            |        | Television, LLC |         | Holdings, LLC |        | Television, LLC
|                                          |                                                 |                               |                |        |                                          |        |                 |         |               |        |                
|                                          |                                                 |                               |                |        | (In thousands)                          
|Net revenues                              |                                                 | $                             | 18,045         |        |                                          | $      | 18,045          |         |               | $      | 16,693          |        |        | $      | 16,693  |        
|                                         
|                                         
|                                         
|                                         
|Operating expenses:                       |                                                 |                               |                |        |                                          |        |                 |         |               |        |                 |        |        |        |         |        
|                                         
|                                         
|                                         
|                                         
|                                          |                                                 | Station operating expenses    |                |        | 12,804                                   |        |                 |         | 12,804        |        |                 |        | 13,237 |        |         |         | 13,237 |       
|                                         
|                                         
|                                         
|                                         
|                                          |                                                 | Depreciation and amortization |                |        | 4,967                                    |        |                 |         | 4,967         |        |                 |        | 4,953  |        |         |         | 4,953  |       
|                                         
|                                         
|                                         
|                                         
|                                          |                                                 | Corporate expenses            |                |        | 758                                      |        |                 |         | 758           |        |                 |        | 787    |        |         |         | 787    |       
|                                         
|                                         
|                                         
|                                         
|                                          |                                                 | Equity-based compensation     |                |        | 132                                      |        |                 |         | 132           |        |                 |        | 132    |        |         |         | 132    |       
|                                          |                                                 |                               |                |        |                                          |        |                 |         |               |        |                 |        |        |        |         |        
|                                          |                                                 |                               | Operating loss |        |                                          | (616   | )               |         |               | (616   | )               |        |        | (2,416 | )       |         |        | (2,416 | )
|                                         
|                                         
|                                         
|                                         
|Other income (expenses):                  |                                                 |                               |                |        |                                          |        |                 |         |               |        |                 |        |        |        |         |        
|                                         
|                                         
|                                         
|                                         
|                                          |                                                 | Interest income               |                |        | 75                                       |        |                 |         | 75            |        |                 |        | 38     |        |         |         | 38     |       
|                                         
|                                         
|                                         
|                                         
|                                          |                                                 | Interest expense              |                |        | (6,724                                   | )      |                 |         | (5,011        | )      |                 |        | (7,315 | )      |         |         | (5,349 | )     
|                                         
|                                         
|                                         
|                                         
|                                          |                                                 | Other expense                 |                |        | 1                                        |        |                 |         |              |        |                 |        | (49    | )      |         |         | (49    | )     
|                                          |                                                 |                               |                |        |                                          |        |                 |         |               |        |                 |        |        |        |         |        
|Net loss before income taxes              |                                                 |                               | (7,264         | )      |                                          |        | (5,552          | )       |               |        | (9,742          | )      |        |        | (7,776  | )      
|                                         
|                                         
|                                         
|                                         
|Income tax benefit                        |                                                 |                               | 1,050          |        |                                          |        | 396             |         |               |        | 3,208           |        |        |        | 2,461   |        
|                                          |                                                 |                               |                |        |                                          |        |                 |         |               |        |                 |        |        |        |         |        
|                                          |                                                 |                               | Net loss       |        | $                                        | (6,214 | )               |         | $             | (5,156 | )               |        | $      | (6,534 | )       |         | $      | (5,315 | )
|                                         
|                                         
|                                         
|                                         
|Parents contribution                     |                                                 |                               | 132            |        |                                          |        | 132             |         |               |        | 7,732           |        |        |        | 7,732   |        
|                                         
|                                         
|                                         
|                                         
|                                          | Members Capital at the
beginning of the period |                               |                | 75,566 |                                          |        |                 | 123,564 |               |        |                 | 52,073 |        |        |         | 104,619 |       
|                                          |                                                 |                               |                |        |                                          |        |                 |         |               |        |                 |        |        |        |         |        
|Members Capital at the
end of the period |                                                 | $                             | 69,484         |        |                                          | $      | 118,540         |         |               | $      | 53,271          |        |        | $      | 107,036 |        
|                                          |                                                 |                               |                |        |                                          |        |                 |         |               |        |                 |        |        |        |         |        

See the notes to the consolidated financial statements.

4



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##### Table of Contents






ACME Intermediate Holdings, LLC and Subsidiaries
ACME Television, LLC and Subsidiaries
Consolidated Statements of Operations and Member's Capital
(Unaudited)

|                                          |                                                 |                                    |                |        |                                         |         |                 |         |               |         |                 |        |         |         |         |         |         |         |  
|----------------------------------------- | ----------------------------------------------- | ---------------------------------- | -------------- | ------ | --------------------------------------- | ------- | --------------- | ------- | ------------- | ------- | --------------- | ------ | ------- | ------- | ------- | ------- | ------- | ------- | -
|                                          |                                                 |                                    |                |        | For the Nine Months Ended September 30,
|                                          |                                                 |                                    |                |        |                                        
|                                          |                                                 |                                    |                |        | 2000                                    |         | 2001           
|                                          |                                                 |                                    |                |        |                                         |         |                
|                                          |                                                 |                                    |                |        | ACME                                    |         |                 |         |               |         | ACME            |        |         |         |        
|                                          |                                                 |                                    |                |        | Intermediate                            |         | ACME            |         | Intermediate  |         | ACME           
|                                          |                                                 |                                    |                |        | Holdings, LLC                           |         | Television, LLC |         | Holdings, LLC |         | Television, LLC
|                                          |                                                 |                                    |                |        |                                         |         |                 |         |               |         |                
|                                          |                                                 |                                    |                |        | (In thousands)                         
|Net revenues                              |                                                 | $                                  | 53,432         |        |                                         | $       | 53,432          |         |               | $       | 52,069          |        |         | $       | 52,069  |        
|                                         
|                                         
|                                         
|                                         
|Operating expenses:                       |                                                 |                                    |                |        |                                         |         |                 |         |               |         |                 |        |         |         |         |        
|                                         
|                                         
|                                         
|                                         
|                                          |                                                 | Station operating expenses         |                |        | 39,381                                  |         |                 |         | 39,381        |         |                 |        | 41,253  |         |         |         | 41,253  |        
|                                         
|                                         
|                                         
|                                         
|                                          |                                                 | Depreciation and amortization      |                |        | 14,859                                  |         |                 |         | 14,859        |         |                 |        | 14,822  |         |         |         | 14,822  |        
|                                         
|                                         
|                                         
|                                         
|                                          |                                                 | Corporate expenses                 |                |        | 2,578                                   |         |                 |         | 2,578         |         |                 |        | 2,607   |         |         |         | 2,607   |        
|                                         
|                                         
|                                         
|                                         
|                                          |                                                 | Equity-based compensation          |                |        | 397                                     |         |                 |         | 397           |         |                 |        | 397     |         |         |         | 397     |        
|                                          |                                                 |                                    |                |        |                                         |         |                 |         |               |         |                 |        |         |         |         |        
|                                          |                                                 |                                    | Operating loss |        |                                         | (3,783  | )               |         |               | (3,783  | )               |        |         | (7,010  | )       |         |         | (7,010  | )
|                                         
|                                         
|                                         
|                                         
|Other income (expenses):                  |                                                 |                                    |                |        |                                         |         |                 |         |               |         |                 |        |         |         |         |        
|                                         
|                                         
|                                         
|                                         
|                                          |                                                 | Interest income                    |                |        | 118                                     |         |                 |         | 118           |         |                 |        | 211     |         |         |         | 211     |        
|                                         
|                                         
|                                         
|                                         
|                                          |                                                 | Interest expense                   |                |        | (19,796                                 | )       |                 |         | (14,771       | )       |                 |        | (21,773 | )       |         |         | (16,006 | )      
|                                         
|                                         
|                                         
|                                         
|                                          |                                                 | Gain (loss) on sale of assets, net |                |        | 1,511                                   |         |                 |         | 1,511         |         |                 |        | (10     | )       |         |         | (10     | )      
|                                         
|                                         
|                                         
|                                         
|                                          |                                                 | Other expense                      |                |        | (4                                      | )       |                 |         | (4            | )       |                 |        | (144    | )       |         |         | (144    | )      
|                                          |                                                 |                                    |                |        |                                         |         |                 |         |               |         |                 |        |         |         |         |        
|Net loss before income taxes              |                                                 |                                    | (21,954        | )      |                                         |         | (16,929         | )       |               |         | (28,726         | )      |         |         | (22,959 | )      
|                                         
|                                         
|                                         
|                                         
|Income tax benefit                        |                                                 |                                    | 5,636          |        |                                         |         | 3,716           |         |               |         | 9,471           |        |         |         | 7,280   |        
|                                          |                                                 |                                    |                |        |                                         |         |                 |         |               |         |                 |        |         |         |         |        
|                                          |                                                 |                                    | Net loss       |        | $                                       | (16,318 | )               |         | $             | (13,213 | )               |        | $       | (19,255 | )       |         | $       | (15,679 | )
|                                         
|                                         
|                                         
|                                         
|Parents contribution                     |                                                 |                                    | 397            |        |                                         |         | 397             |         |               |         | 7,997           |        |         |         | 7,997   |        
|                                         
|                                         
|                                         
|                                         
|                                          | Members Capital at the
beginning of the period |                                    |                | 85,405 |                                         |         |                 | 131,356 |               |         |                 | 64,529 |         |         |         | 114,718 |        
|                                          |                                                 |                                    |                |        |                                         |         |                 |         |               |         |                 |        |         |         |         |        
|Members Capital at the
end of the period |                                                 | $                                  | 69,484         |        |                                         | $       | 118,540         |         |               | $       | 53,271          |        |         | $       | 107,036 |        
|                                          |                                                 |                                    |                |        |                                         |         |                 |         |               |         |                 |        |         |         |         |        

See the notes to the consolidated financial statements.

5



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##### Table of Contents






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

|                                                                                          |                        |                                                           |                                                       |   |                           |        |                    |   |               |        |             |   |         |        |   |   |         |        |  
|----------------------------------------------------------------------------------------- | ---------------------- | --------------------------------------------------------- | ----------------------------------------------------- | - | ------------------------- | ------ | ------------------ | - | ------------- | ------ | ----------- | - | ------- | ------ | - | - | ------- | ------ | -
|                                                                                          |                        |                                                           |                                                       |   | For the Nine Months Ended
|                                                                                          |                        |                                                           |                                                       |   |                          
|                                                                                          |                        |                                                           |                                                       |   | September 30, 2000        |        | September 30, 2001
|                                                                                          |                        |                                                           |                                                       |   |                           |        |                   
|                                                                                          |                        |                                                           |                                                       |   | ACME                      |        | ACME               |   | ACME          |        | ACME       
|                                                                                          |                        |                                                           |                                                       |   | Intermediate              |        | Television,        |   | Intermediate  |        | Television,
|                                                                                          |                        |                                                           |                                                       |   | Holdings, LLC             |        | LLC                |   | Holdings, LLC |        | LLC        
|                                                                                          |                        |                                                           |                                                       |   |                           |        |                    |   |               |        |            
|Cash flows from operating activities:                                                     |                        |                                                           |                                                       |   |                           |        |                    |   |               |        |             |   |         |        |   |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | Net loss                                                  |                                                       | $ | (16,318                   | )      |                    | $ | (13,213       | )      |             | $ | (19,255 | )      |   | $ | (15,679 | )     
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Adjustments to reconcile net loss to net cash
provided by (used in) operating activities: |                        |                                                           |                                                       |   |                           |        |                    |   |               |        |             |   |         |        |   |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | Depreciation and amortization                             |                                                       |   | 14,859                    |        |                    |   | 14,859        |        |             |   | 14,822  |        |   |   | 14,822  |       
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | Amortization of program rights                            |                                                       |   | 9,890                     |        |                    |   | 9,890         |        |             |   | 10,487  |        |   |   | 10,487  |       
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | Amortization of debt issuance costs                       |                                                       |   | 911                       |        |                    |   | 911           |        |             |   | 940     |        |   |   | 940     |       
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | Amortization of discount on 10 7/8% senior discount notes |                                                       |   | 13,305                    |        |                    |   | 13,305        |        |             |   |        |        |   |   |        |       
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | Amortization of discount on 12% senior secured notes      |                                                       |   | 4,951                     |        |                    |   |              |        |             |   | 5,648   |        |   |   |        |       
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | (Gain) loss on sale of assets, net                        |                                                       |   | (1,511                    | )      |                    |   | (1,511        | )      |             |   | 10      |        |   |   | 10      |       
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | Equity-based compensation                                 |                                                       |   | 397                       |        |                    |   | 397           |        |             |   | 397     |        |   |   | 397     |       
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | Deferred taxes                                            |                                                       |   | (5,636                    | )      |                    |   | (3,716        | )      |             |   | (9,516  | )      |   |   | (7,325  | )     
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Changes in assets and liabilities:                                                        |                        |                                                           |                                                       |   |                           |        |                    |   |               |        |             |   |         |        |   |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | Decrease in accounts receivables, net                     |                                                       |   | 1,033                     |        |                    |   | 1,033         |        |             |   | 1,406   |        |   |   | 1,406   |       
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | (Increase) decrease in prepaid expenses                   |                                                       |   | 13                        |        |                    |   | 13            |        |             |   | (384    | )      |   |   | (384    | )     
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | (Increase) decrease in other assets                       |                                                       |   | (382                      | )      |                    |   | (456          | )      |             |   | 16      |        |   |   | 16      |       
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | Increase (decrease) in accounts payable                   |                                                       |   | (172                      | )      |                    |   | (172          | )      |             |   | 140     |        |   |   | 140     |       
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | Increase (decrease) in accrued liabilities                |                                                       |   | (3,906                    | )      |                    |   | (3,906        | )      |             |   | 4,416   |        |   |   | 4,416   |       
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | Payments on programming rights payable                    |                                                       |   | (9,328                    | )      |                    |   | (9,328        | )      |             |   | (10,486 | )      |   |   | (10,486 | )     
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | Increase (decrease) in due to affiliates                  |                                                       |   | (18                       | )      |                    |   | (18           | )      |             |   | 104     |        |   |   | (15     | )     
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | Increase (decrease) in other liabilities                  |                                                       |   | (126                      | )      |                    |   | (126          | )      |             |   | 27      |        |   |   | 27      |       
|                                                                                          |                        |                                                           |                                                       |   |                           |        |                    |   |               |        |             |   |         |        |   |   |         |       
|                                                                                          |                        |                                                           | Net cash provided by (used in) operating activities   |   |                           | 7,962  |                    |   |               | 7,962  |             |   |         | (1,228 | ) |   |         | (1,228 | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Cash flows from investing activities:                                                     |                        |                                                           |                                                       |   |                           |        |                    |   |               |        |             |   |         |        |   |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | Purchase of property and equipment                        |                                                       |   | (6,457                    | )      |                    |   | (6,457        | )      |             |   | (4,653  | )      |   |   | (4,653  | )     
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | Proceeds from the sale of assets                          |                                                       |   | 2,634                     |        |                    |   | 2,634         |        |             |   | 230     |        |   |   | 230     |       
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | Purchase of and deposits for station interests            |                                                       |   | (826                      | )      |                    |   | (826          | )      |             |   | (89     | )      |   |   | (89     | )     
|                                                                                          |                        |                                                           |                                                       |   |                           |        |                    |   |               |        |             |   |         |        |   |   |         |       
|                                                                                          |                        |                                                           | Net cash used in investing activities                 |   |                           | (4,649 | )                  |   |               | (4,649 | )           |   |         | (4,512 | ) |   |         | (4,512 | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Cash flows from financing activities:                                                     |                        |                                                           |                                                       |   |                           |        |                    |   |               |        |             |   |         |        |   |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | Capital lease obligations                                 |                                                       |   | 771                       |        |                    |   | 771           |        |             |   | 2,966   |        |   |   | 2,966   |       
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | Payments of capital lease obligations                     |                                                       |   | (1,110                    | )      |                    |   | (1,110        | )      |             |   | (1,743  | )      |   |   | (1,743  | )     
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | Capital contribution from parent                          |                                                       |   |                          |        |                    |   |              |        |             |   | 7,600   |        |   |   | 7,600   |       
|                                                                                          |                        |                                                           |                                                       |   |                           |        |                    |   |               |        |             |   |         |        |   |   |         |       
|                                                                                          |                        |                                                           | Net cash provided by (used in) financing activities   |   |                           | (339   | )                  |   |               | (339   | )           |   |         | 8,823  |   |   |         | 8,823  |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | Net increase in cash                                      |                                                       |   | 2,974                     |        |                    |   | 2,974         |        |             |   | 3,083   |        |   |   | 3,083   |       
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        | Cash at beginning of period                               |                                                       |   | 4,012                     |        |                    |   | 4,012         |        |             |   | 10,347  |        |   |   | 10,347  |       
|                                                                                          |                        |                                                           |                                                       |   |                           |        |                    |   |               |        |             |   |         |        |   |   |         |       
|                                                                                          |                        | Cash at end of period                                     |                                                       | $ | 6,986                     |        |                    | $ | 6,986         |        |             | $ | 13,430  |        |   | $ | 13,430  |       
|                                                                                          |                        |                                                           |                                                       |   |                           |        |                    |   |               |        |             |   |         |        |   |   |         |       
|Cash Payments for:                                                                        |                        |                                                           |                                                       |   |                           |        |                    |   |               |        |             |   |         |        |   |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        |                                                           | Interest                                              |   | $                         | 209    |                    |   | $             | 209    |             |   | $       | 10,252 |   |   | $       | 10,252 |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        |                                                           | Taxes                                                 |   | $                         | 176    |                    |   | $             | 176    |             |   | $       | 45     |   |   | $       | 45     |  
|                                                                                          |                        |                                                           |                                                       |   |                           |        |                    |   |               |        |             |   |         |        |   |   |         |       
|                                                                                          | Non-Cash Transactions: |                                                           |                                                       |   |                           |        |                    |   |               |        |             |   |         |        |   |   |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                        |                                                           | Program rights in exchange for program rights payable |   | $                         | 6,006  |                    |   | $             | 6,006  |             |   | $       | 23,155 |   |   | $       | 23,155 |  
|                                                                                          |                        |                                                           |                                                       |   |                           |        |                    |   |               |        |             |   |         |        |   |   |         |       

See the notes to the consolidated financial statements.

6



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##### Table of Contents






ACME INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES
ACME TELEVISION, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 2001

(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 wholly-owned subsidiary ACME Television, LLC (ACME Television) 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 and its wholly owned subsidiary ACME
Television. 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 Television was formed on August 8, 1997. Upon formation, ACME
Television received a contribution from ACME Parent through ACME Intermediate
of ACME Parents wholly owned subsidiaries  ACME Oregon and 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 the Company 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 Television has reflected the results of operations of the
contributed entities for the year ended December 31, 1997. In addition, on
September 30, 1997, ACME Intermediate made an additional contribution of
$60,061,000 in exchange for membership units in ACME Television.

ACME Parent owns directly or indirectly, 100% of the outstanding member
units of ACME Intermediate. ACME Intermediate owns, directly or indirectly,
100% of the outstanding member units of ACME Television.

Description of the Business

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

7



---



##### Table of Contents



|        |  |         |    |        |  |                                   |  |             |    |         |  |    
|------- |  | ------- | -- | ------ |  | --------------------------------- |  | ----------- | -- | ------- |  | ---
|        |  |         |    |        |  |                                   |  | U.S.        |    |        
|        |  |         |    |        |  |                                   |  | Market      |    | Network
|Station |  | Channel |    | Market |  | Rank*                             |  | Affiliation
|        |  |         |    |        |  |                                   |  |            
|KPLR    |  |         | 11 |        |  | St. Louis, MO                     |  |             | 22 |         |  | WB 
|       
|       
|       
|       
|KWBP    |  |         | 32 |        |  | Portland, OR                      |  |             | 23 |         |  | WB 
|       
|       
|       
|       
|KUWB    |  |         | 30 |        |  | Salt Lake City, UT                |  |             | 35 |         |  | WB 
|       
|       
|       
|       
|KWBQ    |  |         | 19 |        |  | Albuquerque-Santa Fe, NM          |  |             | 48 |         |  | WB 
|       
|       
|       
|       
|KASY    |  |         | 50 |        |  | Albuquerque-Santa Fe, NM          |  |             | 48 |         |  | UPN
|       
|       
|       
|       
|WBDT    |  |         | 26 |        |  | Dayton, OH                        |  |             | 60 |         |  | WB 
|       
|       
|       
|       
|WBXX    |  |         | 20 |        |  | Knoxville, TN                     |  |             | 62 |         |  | WB 
|       
|       
|       
|       
|WIWB    |  |         | 14 |        |  | Green Bay-Appleton, WI            |  |             | 69 |         |  | WB 
|       
|       
|       
|       
|WTVK    |  |         | 46 |        |  | Ft. Myers-Naples, FL              |  |             | 76 |         |  | WB 
|       
|       
|       
|       
|WBUI    |  |         | 23 |        |  | Champaign-Springfield-Decatur, IL |  |             | 82 |         |  | WB 



---

|* |  | Based on television households
|- |  | ------------------------------

(2) PRESENTATION OF INTERIM FINANCIAL STATEMENTS

Financial statements are presented for each of ACME Intermediate Holdings,
LLC and its wholly owned subsidiary, ACME Television, LLC. Unless the context
requires otherwise, references to the Company refers to both ACME
Intermediate and ACME Television. Segment information is not presented since
all of the Companys revenue is attributed to a single reportable segment -
television broadcasting.

The accompanying consolidated financial statements for the three and
nine-month periods ended September 30, 2000 and 2001 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
(SEC), 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 for the year ended December 31, 2000, filed with the SEC on April 2,
2001. 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, 2001.




ITEM 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Companys
unaudited consolidated financial statements and related notes included
elsewhere in this report on Form 10-Q and with the audited financial statements
and Managements Discussion and Analysis contained in the Companys Form 10-K
for the year ended December 31, 2000.

Forward-Looking Statements:

This report includes forward-looking statements. In addition, when used
in this report, the words believe, expects, anticipates, will and any
similar expressions are intended to identify forward-looking statements. Such
statements are subject to a number of risks and uncertainties. Actual results
in the future could differ materially and adversely from those described in the
forward-looking statements as a result of various important factors, including
(but not limited to) the impact of changes in national and regional
economies, including advertising demand, pricing fluctuations in local
and national advertising, potential preemptions of regular
programming for national news events, the inability to secure Federal
Communications Commission approval for construction permits, the
possibility of borrowing limitations under our advertising facilities
and the other
risk factors set forth in the Companys Annual Report on Form 10-K filed with
the Securities and Exchange Commission on April 2, 2001. The Company
undertakes no obligation to publicly release the result of any revisions to
these forward-looking statements that may be made to reflect any future events
or circumstances.

8



---



##### Table of Contents



OVERVIEW

We derive our 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 station operating expenses are programming costs, employee
compensation, advertising and promotion expenditures, sales related costs and
depreciation and amortization. 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, 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 or from other program
suppliers.

RESULTS OF OPERATIONS

The following table sets forth our calculation of broadcast cash flow and
adjusted EBITDA along with a summary of our statement of cash flow data for the
periods indicated:

|                                            |                |                                       |                                |                     |   |                                  |       |                                 |   |        |       |        |        |        |        |        |        |         |        | 
|------------------------------------------- | -------------- | ------------------------------------- | ------------------------------ | ------------------- | - | -------------------------------- | ----- | ------------------------------- | - | ------ | ----- | ------ | ------ | ------ | ------ | ------ | ------ | ------- | ------ | 
|Other Operating Data:                       |                | ACME Intermediate and ACME Television
|                                            |                |                                      
|                                            |                |                                       |                                |                     |   | Three Months ended September 30, |       | Nine Months ended September 30,
|                                            |                |                                       |                                |                     |   |                                  |       |                                
|Broadcast cash flow and adjusted EBITDA(1): |                | 2000                                  |                                | 2001                |   | 2000                             |       | 2001                           
|                                            |                |                                       |                                |                     |   |                                  |       |                                
|                                            | Operating loss |                                       | $                              | (616                | ) |                                  | $     | (2,416                          | ) |        | $     | (3,783 | )      |        | $      | (7,010 | )     
|                                           
|                                           
|                                           
|                                           
|                                            | Add back:      |                                       |                                |                     |   |                                  |       |                                 |   |        |       |        |        |        |        |        |       
|                                           
|                                           
|                                           
|                                           
|                                            |                |                                       | Equity-based compensation      |                     |   | 132                              |       |                                 |   | 132    |       |        |        | 397    |        |        |        | 397     |       
|                                           
|                                           
|                                           
|                                           
|                                            |                |                                       | Depreciation and amortization  |                     |   | 4,967                            |       |                                 |   | 4,953  |       |        |        | 14,859 |        |        |        | 14,822  |       
|                                           
|                                           
|                                           
|                                           
|                                            |                |                                       | Amortization of program rights |                     |   | 3,543                            |       |                                 |   | 3,411  |       |        |        | 9,890  |        |        |        | 10,487  |       
|                                           
|                                           
|                                           
|                                           
|                                            |                |                                       | Corporate expenses             |                     |   | 758                              |       |                                 |   | 787    |       |        |        | 2,578  |        |        |        | 2,607   |       
|                                           
|                                           
|                                           
|                                           
|                                            |                |                                       | Adjusted program payments (1)  |                     |   | (3,198                           | )     |                                 |   | (3,426 | )     |        |        | (9,328 | )      |        |        | (10,486 | )     
|                                            |                |                                       |                                |                     |   |                                  |       |                                 |   |        |       |        |        |        |        |        |       
|                                            |                |                                       |                                | Broadcast cash flow |   |                                  | 5,586 |                                 |   |        | 3,441 |        |        |        | 14,613 |        |        |         | 10,817 | 
|                                           
|                                           
|                                           
|                                           
|                                            | Less:          |                                       |                                |                     |   |                                  |       |                                 |   |        |       |        |        |        |        |        |       
|                                           
|                                           
|                                           
|                                           
|                                            |                |                                       | Corporate expenses             |                     |   | 758                              |       |                                 |   | 787    |       |        |        | 2,578  |        |        |        | 2,607   |       
|                                            |                |                                       |                                |                     |   |                                  |       |                                 |   |        |       |        |        |        |        |        |       
|                                            |                |                                       |                                | Adjusted EBITDA     |   | $                                | 4,828 |                                 |   | $      | 2,654 |        |        | $      | 12,035 |        |        | $       | 8,210  | 
|                                           
|                                           
|                                           
|                                           
|Broadcast cash flow margin (1)              |                |                                       | 31.0                           | %                   |   |                                  | 20.6  | %                               |   |        | 27.3  | %      |        |        | 20.8   | %     
|                                           
|                                           
|                                           
|                                           
|Adjusted EBITDA margin (1)                  |                |                                       | 26.8                           | %                   |   |                                  | 15.9  | %                               |   |        | 22.5  | %      |        |        | 15.8   | %     
|                                           
|                                           
|                                           
|                                           
|Cash flows provided by (used in):           |                |                                       |                                |                     |   |                                  |       |                                 |   |        |       |        |        |        |        |       
|                                           
|                                           
|                                           
|                                           
|                                            |                | Operating activities                  |                                |                     |   |                                  |       |                                 |   |        |       | $      | 7,962  |        |        | $      | (1,228 | )      
|                                           
|                                           
|                                           
|                                           
|                                            |                | Investing activities                  |                                |                     |   |                                  |       |                                 |   |        |       | $      | (4,649 | )      |        | $      | (4,512 | )      
|                                           
|                                           
|                                           
|                                           
|                                            |                | Financing activities                  |                                |                     |   |                                  |       |                                 |   |        |       | $      | (339   | )      |        | $      | 8,823  |        



---

|    |  |           
|--- |  | ----------
|   
|   
|   
|   
|(1) |  | We define:

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| |  |  | broadcast cash flow as operating income, plus equity-based
compensation, depreciation and amortization, time brokerage fees,
amortization of program rights, and corporate expenses, less program
payments  the latter as adjusted to reflect reductions for liabilities
relating to expired rights or rights which have been written-off in
connection with acquisitions and adjusted to allocate evenly over the
payment term any advance deposits;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | adjusted EBITDA as broadcast cash flow less corporate expenses;                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  |  | broadcast cash flow margin as broadcast cash flow as a percentage of net revenues; and                                                                                                                                                                                                                                                                                                                                                                
|
| |  |  | adjusted EBITDA margin as adjusted EBITDA as a percentage of net revenues.                                                                                                                                                                                                                                                                                                                                                                            



| |  | We have included broadcast cash flow, broadcast cash flow margin, adjusted
EBITDA and adjusted EBITDA margin data because management believes that these
measures are useful to an investor to evaluate our ability to service debt
and to assess the earning ability of our stations operations. However, you
should not consider these items in isolation or as substitutes for net
income, cash flows from operating activities and other statement of
operations or cash flows data prepared in accordance with accounting
principles generally accepted in the United States of America. These measures
are not necessarily comparable to similarly titled measures employed by other
companies.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

QUARTER and NINE MONTHS ENDED SEPTEMBER 30, 2001 and SEPTEMBER 30, 2000

Net revenues for the third quarter of 2001 decreased 7% to $16.7 million
compared to $ 18.0 million for the same period a year ago while
nine month
net revenues decreased 3% to $52.1 million in 2001 from $53.4 million in 2000.
These decreases reflect the adverse economic conditions that began affecting
the advertising marketplace in the fall of 2000 as well as the adverse impact
that the September 11th terrorist attacks had on the overall economy and
advertising markets.

Station operating expenses increased 3% to $13.2 million for the third
quarter of 2001 compared to $12.8 million for the same period a year ago and
increased 5% to $41.3 million for the nine months ended September 30, 2001
compared with $39.4 million for September 30, 2000. These increases reflect
our increased programming and sales related costs at most of our developing
stations (all stations except KPLR in St. Louis).

Depreciation and amortization was $5.0 million for both the third quarter
of 2001 and the same period a year ago. Depreciation and amortization expense
also remained level at $14.8 million for both the nine month periods of 2001
and 2000 reflecting the sale of two buildings in June 2000 offset by the
increased capital expenditures in the fourth quarter of 2000 and the
first nine months of 2001.

Third
quarter corporate expenses increased $29,000, or 4%, to $787,000 for
2001 as compared to $758,000 for the same period a year ago. Year-to-date
expenses remained level from year to year at $2.6 million, increasing $29,000,
or 1%. The increased expenses are due primarily to increased salary costs and
professional fees.

Equity-based compensation of $132,000 in the third quarter and $397,000 in
the nine months of both 2001 and 2000 relate to stock options issued upon the
conversion of our long-term incentive plan awards during ACME Parents IPO in
September of 1999. These options were issued at a price below market value at
the date of grant and therefore generate compensation expense over the life of
the option.

ACME Televisions interest expense for the third quarter of 2001 was $5.3
million and was $5.0 million in the third quarter of 2000. On a year-to-date
basis, interest expense was $16.0 million in 2001 as compared to $14.8 million
in the previous year. The quarter and year-to-date increases reflect the
increased interest expense relating to the higher accreted principal balance of
its 10 7/8% senior discount notes, along with increased interest
expense related to
higher capital lease obligations compared to a year ago.

ACME Intermediates interest expense for the third quarter of 2001 was
$7.3 million and was $6.7 million for the previous year. On a year-to-date
basis, interest expense was $21.8 million in 2001 as compared to $19.8 million
in the previous year. In addition to the higher interest expense at ACME
Television, interest expense also increased relating to higher accreted
principal balance for ACME Intermediates 12% senior secured
notes compared to a year ago.

ACME Intermediate and ACME Televisions income tax benefits for the third
quarter of 2001 were $3.2 million and $2.5 million, respectively, compared to
income tax benefits of $1.1 million and $396,000, respectively, in the
corresponding quarter of 2000. For the nine-month period, ACME Intermediates
income

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tax benefit was $9.5 million for 2001 and $5.6 million for 2000. ACME
Televisions income tax benefit was $7.3 million and $3.7 million for the
nine-month periods ended September 30, 2001 and 2000, respectively. The
increased tax benefits relate to increased losses during both periods as
compared to the same periods of 2000. Goodwill amortization that is not
deductible for tax purposes was approximately $1.4 million for
the third quarter and
$4.2 for the nine-month period for both years.

Broadcast cash flow (as defined) decreased 38% for the third quarter and
26% for the nine-month period ended September 2001 as compared to the same
periods a year ago. The decline in both the third quarter and nine-month
periods reflect the Companys continued investment in programming and sales
related costs during a period of weak advertising demand and resulting lower
revenues.

Adjusted EBITDA (as defined) decreased 45% to $2.6 million for the third
quarter of 2001 compared to $4.8 million for the third quarter of 2000 and
decreased 32% to $8.2 million from $12.0 million for the nine-month periods
ended September 30, 2001 and 2000, respectively. These decreases were a result
of lower broadcast cash flow and higher corporate expenses for both the third
quarter and the nine-month period compared to the year earlier periods.

ACME Televisions net loss for the third quarter of 2001 was $5.3 million
compared to a net loss for the third quarter of 2000 of $5.2 million. For the
nine-month period, ACME Televisions net loss was $15.7 million and $13.2
million in 2001 and 2000, respectively. The increase in both the Companys
third quarter and nine-month net losses is attributable to reduced adjusted
EBITDA and increased interest expense. In addition, the Companys 2000 nine-month net
loss also included a gain of $1.5 million related to the sale of our studio
building in St. Louis. ACME Intermediates higher net loss for the three and
nine month periods ended September 30, 2001, compared to ACME Televisions,
reflects the interest expense related to ACME Intermediates 12% senior secured
notes, net of the related income tax benefit.

LIQUIDITY AND CAPITAL RESOURCES

Cash flow used in operating activities was $1.2 million for the nine
months ended September 30, 2001 compared to cash flow provided by operating
activities of $8.0 million for the nine months of 2000. This $9.2 million
decrease in cash flow relates primarily to the second quarter 2001
semi-annual payment of
$9.5 million in interest on our 10 7/8% senior discount notes and decreased
adjusted EBITDA in 2001, partially offset by $3.0 million in non-recurring IPO
bonuses paid to the founding executives in the first nine months of 2000.

Cash flow used in investing activities during the first nine months of
2001 was $4.5 million compared to $4.6 million used during the first nine
months of 2000. The decrease in purchases of property, equipment and station
interests in the nine months ended September 30, 2001 compared to the prior
year nine-month period was offset by higher net proceeds from the sale of
assets of approximately $2.4 million in the nine month period ended September
30, 2000.

Cash flow provided by financing activities was $8.8 million for the first
nine months of 2001, as compared to cash flow used in financing activities of
$339,000 in 2000. This increase reflects the contribution of $7.6 million from
ACME Parent and $2.2 million in increased borrowings under our capital lease
facility net of $633,000 greater repayments compared to the same nine-month
period of 2000.

ACME
Televisions revolving credit facility allows for borrowings of up to
$29.0 million, dependent upon our meeting certain financial tests. A
prerequisite for borrowing on the facility is that ACME Parent contribute up to
$13.7 million in cash or other assets to ACME Television. All $29.0 million
was available as of September 30, 2001. The revolving credit facility allows
borrowings to be used to fund future acquisitions of broadcast stations and for
general corporate purposes. At September 30, 2001 there were no borrowings
outstanding under the facility. Due to continuing weak economic conditions, we
will not meet certain of the financial tests for the fourth quarter 2001. We
intend to request an amendment or a waiver to these financial tests. Without
such an amendment or a waiver, we may not be able to borrow under this
facility. In such case, the Company anticipates that it would be able to
establish a replacement credit facility. Any such replacement may have terms
less favorable than the terms of our current facility.

Borrowings under lease obligations are generally repaid over five years.
As of September 30, 2001, amounts due under these facilities were $10.7 million
bearing an implicit average interest rate of 8.48% per

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annum. At September 30, 2000, amounts due under the facilities were $7.1
million and bore the implicit average interest rate of 8.95%.

Effective October 1, 2000, ACME Televisions $175 million 10 7/8% Senior
Discount Notes due September 30, 2004 began accruing cash interest. The
interest payment on these notes amounts to approximately $9.5 million every six
months. Since the September payment date fell on a Sunday, the payment was
made on Monday, October 1, 2001. Our next payment will be due on
April 1,
2002.

At September 30, 2001, the Company had $13.4 million of cash and working
capital of $6.5 million at ACME Intermediate and $5.4 million at ACME
Television.

The Company believes that existing cash balances, funds generated from
operations and contributions from ACME Parent will be sufficient to satisfy the
Companys cash requirements for its existing operations for at least the next
twelve months. The Company expects that additional liquidity will be provided
by amounts available under its existing credit facility or replacement credit
facility or amounts available under contemplated capital lease
facilities. The Company expects that any future acquisitions of television
stations would be financed through these same sources and, if necessary,
through additional debt and/or equity financing. However, there is no guarantee
that such additional debt and/or equity will be available or available at terms
acceptable to the Company.

IMPACT OF RECENT ACCOUNTING STANDARDS

In
July 2001, the Financial Accounting Standards Board issued Statement
No. 141 (Statement 141), Business Combinations,
and Statement No. 142 (Statement 142), Goodwill and Other Intangible Assets. Statement 141
requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001 as well as all purchase method
business combinations completed after June 30, 2001. Statement 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. Statement 142 will require 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 Statement 142. Statement 142 will also require 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 Financial Accounting Standards Board Statement No. 121 (Statement 121), Accounting for the Impairment of Long Lived
Assets and for Long Lived Assets to Be Disposed Of.

The Company is required to adopt the provisions of Statement 141
immediately and Statement 142 effective January 1, 2002. Goodwill and
intangible assets acquired in business combinations completed before July 1,
2001 will continue to be amortized prior to the adoption of Statement 142.

Statement 141 will require, upon adoption of Statement 142, that the
Company evaluate its existing intangible assets and goodwill that were acquired
in a prior purchase business combination, and to make any necessary
reclassifications in order to conform with the new criteria in Statement 141
for recognition apart from goodwill. Upon adoption of Statement 142, the
Company will be required to reassess the useful lives and residual values of
all intangible assets acquired in purchase business combinations, and make any
necessary amortization period adjustments by the end of the first interim
period after adoption. In addition, to the extent an intangible asset is
identified as having an indefinite useful life, the Company will be required to
test the intangible asset for impairment in accordance with the provisions of
Statement 142 within the first interim period. Any impairment loss will be
measured as of the date of adoption and recognized as the cumulative effect of
a change in accounting principle in the first interim period.

In connection with the transitional goodwill impairment evaluation,
Statement 142 will require the Company to perform an assessment of whether
there is an indication that goodwill is impaired as of the date of adoption.
To accomplish this the Company must identify its reporting units and determine
the carrying value of each reporting unit by assigning the assets and
liabilities, including the existing goodwill and intangible assets, to those
reporting units as of the date of adoption. The Company will then have up to
six months from the date of adoption to determine the fair value of each
reporting unit and compare it to the reporting units carrying amount. To the
extent a reporting units carrying amount exceeds its fair value, an indication
exists that the reporting units goodwill may be impaired and the Company must
perform the second step of the transitional

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##### Table of Contents



impairment test. In the second step, the Company must compare the implied
fair value of the reporting units goodwill, determined by allocating the
reporting units fair value to all of it assets (recognized and unrecognized)
and liabilities in a manner similar to a purchase price allocation in
accordance with Statement 141, to its carrying amount, both of which would be
measured as of the date of adoption. This second step is required to be
completed as soon as possible, but no later than the end of the year of
adoption. Any transitional impairment loss will be recognized as the
cumulative effect of a change in accounting principle in the Companys
statement of earnings.

As of the date of adoption, the Company expects to have unamortized
goodwill in the amount of $88.3 million and unamortized identifiable intangible
assets in the amount of $164.3 million, all of which will be subject to the
transition provisions of Statements 141 and 142. Amortization expense related
to goodwill and intangible assets was $15.4 million and $11.5 for the year
ended December 31, 2000 and the nine months ended September 30, 2001,
respectively. It is expected that the majority of the Companys intangible
assets will qualify for an indefinite life and accordingly, there will be no
amortization under Statement 142. Because of the extensive effort needed to
comply with adopting Statements 141 and 142, it is not practicable to
reasonably estimate the impact of adopting these Statements on the Companys
financial statements at the date of this report, including whether any
transitional impairment losses will be required to be recognized as the
cumulative effect of a change in accounting principle.

In August 2001, the Financial Accounting Standards Board issued
Statement No. 144 (Statement 144), Accounting for the Impairment or Disposal of Long-Lived
Assets, which supersedes both Statement 121,
and the accounting and reporting provisions
of Accounting Principles Board Opinion No. 30 (Opinion 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, for the disposal
of a segment of a business (as previously defined in that Opinion). Statement
144 retains the fundamental provisions in Statement 121 for recognizing and
measuring impairment losses on long-lived assets held for use and long-lived
assets to be disposed of by sale, while also resolving significant
implementation issues associated with Statement 121. For example, Statement
144 provides guidance on how a long-lived asset that is used as part of a group
should be evaluated for impairment, establishes criteria for when a long-lived
asset is held for sale, and prescribes the accounting for a long-lived asset
that will be disposed of other than by sale. Statement 144 retains the basic
provisions of Opinion 30 on how to present discontinued operations in the
income statement but broadens that presentation to include a component of an
entity (rather than a segment of a business). Unlike Statement 121, an
impairment assessment under Statement 144 will never result in a write-down of
goodwill. Rather, goodwill is evaluated for impairment under
Statement 142, Goodwill and Other Intangible Assets. The Company is required to adopt
Statement 144 no later than the year beginning after December 15, 2001, and
plans to adopt its provisions for the quarter ending March 31, 2002.
Management does not expect the adoption of Statement 144 for long-lived assets
held for use to have a material impact on the Companys financial statements
because the impairment assessment under Statement 144 is largely unchanged from
Statement 121. The provisions of the Statement for assets held for sale or
other disposal generally are required to be applied prospectively after the
adoption date to newly initiated disposal activities. Therefore, management
cannot determine the potential effects that adoption of Statement 144 will have
on the Companys financial statements.




ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Companys revolving 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 September 30, 2001, the
Company had no borrowings under the revolving 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. As
of September 30, 2001, we have senior discount notes totaling
$175.0 million and
senior secured notes totaling $71.6 million expiring in the years 2004 and
2005, respectively. Effective October 1, 2000, the senior
discount notes began accruing cash interest. The interest payment on
these notes amounts to approximately $9.5 million every six
months. Cash interest on the senior secured notes is payable
semi-annually, in arrears, commencing on March 31, 2003. Based upon the quoted market price, the fair value of the
senior discount notes and senior secured notes was $154.0 and $47.0 million,
respectively, as of September 30, 2001.

13



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##### Table of Contents






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.

EXHIBITS

|        |  |                                                                             
|------- |  | ----------------------------------------------------------------------------
|Exhibit |  |                                                                             
|Number  |  | Exhibit Description                                                         
|        |  |                                                                             
|10.1    |  | Tenth Amendment to Credit Agreement, dated September 28, 2001               
|       
|       
|       
|       
|10.2    |  | Second Restated and Amended Contribution Agreement dated September 28, 2001.



---

REPORTS ON FORM 8-K



| |  | The Company has not filed a Current Report on Form 8-K within the
three-month period ended September 30, 2001.
| |  | --------------------------------------------------------------------------------------------------------------

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.

|                        |  |                                                                                                       
|----------------------- |  | ------------------------------------------------------------------------------------------------------
|                        |  | ACME INTERMEDIATE HOLDINGS, LLC.                                                                      
|                       
|                       
|                       
|                       
|                        |  |                                                                                                       
|                       
|                       
|                       
|                       
|Date: November 14, 2001 |  | By:     /s/ THOMAS ALLEN                                                                              
|                        |  |                                                                                                       
|                        |  | Thomas Allen          Executive
Vice President / CFO          (Principal
accounting officer)          
|                       
|                       
|                       
|                       
|                        |  |                                                                                                       
|                       
|                       
|                       
|                       
|                        |  | ACME TELEVISION, LLC.                                                                                 
|                       
|                       
|                       
|                       
|                        |  |                                                                                                       
|                       
|                       
|                       
|                       
|Date: November 14, 2001 |  | By:     /s/ THOMAS ALLEN                                                                              
|                        |  |                                                                                                       
|                        |  | Thomas Allen Executive          Executive
Vice President / CFO          (Principal
accounting officer)

15



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EXHIBIT INDEX

|        |  |                                                                             
|------- |  | ----------------------------------------------------------------------------
|Exhibit |  |                                                                             
|Number  |  | Exhibit Description                                                         
|        |  |                                                                             
|10.1    |  | Tenth Amendment to Credit Agreement, dated September 28, 2001               
|       
|       
|       
|       
|10.2    |  | Second Restated and Amended Contribution Agreement dated September 28, 2001.

16