AP News

Digital Generation moves to 4Q loss, sees charge


DALLAS (AP) — Digital Generation shares plunged in afternoon trading Tuesday after the company said a strategic review of options failed to produce a buyer, and it will remain independent.

The company also reported it lost money in its fiscal fourth quarter, pulled down by an impairment charge.

The Dallas-based company said a special committee of its board and its financial adviser, Goldman Sachs, contacted more than 45 potential financial and strategic partners. No definitive agreements were reached, and Digital Generation said it has concluded its review.

The ad management and distribution company said Tuesday that it lost $20.8 million, or 75 cents per share, in the period. That compares with a profit of $4.4 million, or 16 cents per share, a year ago.

The current quarter included an $11.4 million goodwill impairment charge.

Analysts polled by FactSet forecast a profit of 20 cents per share.

Revenue for the three months ended Dec. 31 fell 4 percent to $103.6 million from $108.3 million. The results missed Wall Street's expectations for $107.1million in revenue.

Digital Generation Inc.'s full-year loss was $239.8 million, or $8.73 per share. In 2011 the company earned $24.5 million, or 88 cents per share. Annual revenue climbed 19 percent to $386.6 million from $324.3 million.

Digital Generation said that it is looking to amend a credit facility in order to change the consolidated leverage ratio. If the ratio is reduced to 3.0 to 1 on June 30 from the current 3.38 to 1, the company believes that it will exceed the new ratio limit.

Digital Generation said that if it is unable to amend the facility before filing its full-year financials in the middle of March that it will be required to report the debt balance of $453.9 million as a current liability in its financial statements.

The company's stock slid $2.32, or 25.8 percent, to $6.66 in afternoon trading. The shares fell to $6.45 earlier in the session, their lowest point since 2005.


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