MIDDLETOWN, N.Y.--(BUSINESS WIRE)--Aug. 7, 2007--MEDIACOM
COMMUNICATIONS CORPORATION (Nasdaq: MCCC) today reported financial
results for the three months ended June 30, 2007. The Company will
hold a teleconference to discuss its financial results today at 10:30
a.m. Eastern Time. A live broadcast of the Company's teleconference
can be accessed through the Company web site at www.mediacomcc.com.
Second Quarter 2007 Financial Highlights
- Revenues increased 7.4% to $324.7 million from $302.4 million
in Q2 2006
- Adjusted operating income before depreciation and amortization
("Adjusted OIBDA") rose 3.8% to $119.3 million(1)
- Operating income grew 1.9% to $61.0 million
- Net loss of $6.6 million, versus net income in Q2 2006 of $5.7
million
- Average monthly revenue per basic subscriber increased 12.0%
to $80.00
- Total revenue generating units ("RGUs") rose 6.3% to
2,633,000, with a gain of 18,000 during the quarter
"Our results for the second quarter exceeded the sequential
revenue and Adjusted OIBDA growth targets we established on our last
quarter earnings conference call," said Rocco B. Commisso, Mediacom's
Chairman and CEO. "Given the recent turbulence in the credit markets,
we are pleased to report that in this quarter we attained our lowest
level of financial leverage since early 2001, and we maintain a strong
financial position with $800 million of unused and available long-term
credit commitments," concluded Mr. Commisso.
Three Months Ended June 30, 2007 Compared to Three Months Ended
June 30, 2006
Revenues rose 7.4% to $324.7 million for the second quarter of
2007, reflecting strong contributions from Mediacom's data and phone
businesses.
- Video revenues increased 1.6% from the second quarter of 2006,
with higher service fees from our advanced video products and
services, such as DVRs and HDTV, and basic video rate
increases, offset by a reduction in basic subscribers. During
the quarter, the Company lost 18,000 basic subscribers,
compared to a loss of 22,000 in the prior year period in what
is a seasonally weak quarter. Average monthly video revenue
per basic subscriber grew 5.9% from the second quarter of 2006
to $55.69.
Digital customers grew by 2,000 during the second quarter of 2007,
as compared to a loss of 1,000 in the same period last year.
- Data revenues rose 19.6% due to an 18.8% year-over-year
increase in data customers. Data customers grew by 13,000
during the second quarter of 2007, as compared to a gain of
12,000 in the same period last year.
- Telephone revenues rose 126.0% due to 118.2% year-over-year
increase in phone customers. The Company's phone customers
grew by 21,000 during the second quarter of 2007, as compared
to a gain of 20,000 in the same period last year. Mediacom
Phone was marketed to 2.45 million homes as of June 30, 2007,
and this footprint is expected to reach 2.5 million homes, or
approximately 88% of the Company's estimated homes passed by
the end of 2007.
- Advertising revenues were essentially flat year-over-year,
with continued weakness in national and local advertising
sales.
Total operating costs grew 9.6% primarily due to (i) increases in
delivery and customer support expenses related to unit growth in the
Company's phone and data services, (ii) increases in programming unit
costs, and (iii) increases in marketing expense, bad debt expense and
telecommunications charges in the Company's customer call centers.
As a result, Adjusted OIBDA increased by 3.8%. Operating income
increased 1.9%, due to the increase in Adjusted OIBDA, offset in part
by higher depreciation and amortization expense compared to the second
quarter of 2006.
Liquidity and Capital Resources
The Company has included the Condensed Statements of Cash Flows
for the six months ended June 30, 2007 and 2006 in Table 4 to provide
more details regarding liquidity and capital resources.
Significant sources of cash for the six months ended June 30, 2007
were:
- Net cash flows from operating activities of $75.2 million; and
- Sale of cable systems for $22.9 million.
Significant uses of cash for the six months ended June 30, 2007
were:
- Capital expenditures of approximately $111.8 million;
- Purchase of a cable system for $7.3 million; and
- Repurchases of common stock totaling $4.3 million.
Free cash flow, as defined by the Company below, was negative $4.2
million for the six months ended June 30, 2007, as compared to
positive $5.1 million in the prior year period. See Table 7 for
further detail.
Financial Position
At June 30, 2007, the Company had total debt outstanding of
$3,138.4 million, an increase of $4.0 million since March 31, 2007. As
of the same date, the Company had unused credit facilities of about
$802.3 million, all of which could be borrowed and used for general
corporate purposes based on the terms and conditions of the Company's
debt arrangements. As of the date of this press release, about 64.1%
of the Company's total debt is at fixed interest rates or subject to
interest rate protection.
Stock Repurchase Program and Activity
During the three months ended June 30, 2007, the Company
repurchased approximately 500,000 shares of its Class A Common Stock
for an aggregate cost of $4.3 million. As of June 30, 2007,
approximately $34.7 million remains available under the Company's
stock repurchase program.
Updated 2007 Guidance
Given current trends in the business, and to a lesser extent the
effect of certain completed and pending asset sales, the Company is
revising its full-year 2007 financial guidance as follows:
- Revenue growth of 7 - 8% from 8 - 9%
- Adjusted OIBDA growth of 6 - 7% from 7 - 8%
Capital expenditure guidance is unchanged at approximately $215
million.
Use of Non-GAAP Financial Measures
"Adjusted OIBDA" and "Free Cash Flow" are not financial measures
calculated in accordance with generally accepted accounting principles
("GAAP") in the United States. The Company defines Adjusted OIBDA as
operating income before depreciation and amortization and non-cash,
share-based compensation charges, and defines Free Cash Flow as
Adjusted OIBDA less interest expense, net, cash taxes and capital
expenditures.
Adjusted OIBDA is one of the primary measures used by management
to evaluate the Company's performance and to forecast future results.
The Company believes Adjusted OIBDA is useful for investors because it
enables them to assess the Company's performance in a manner similar
to the methods used by management, and provides a measure that can be
used to analyze, value and compare the companies in the cable
television industry, which may have different depreciation and
amortization policies, as well as different non-cash, share-based
compensation programs. A limitation of Adjusted OIBDA, however, is
that it excludes depreciation and amortization, which represents the
periodic costs of certain capitalized tangible and intangible assets
used in generating revenues in the Company's business. Management
utilizes a separate process to budget, measure and evaluate capital
expenditures. In addition, Adjusted OIBDA has the limitation of not
reflecting the effect of the Company's non-cash, share-based
compensation charges.
Free Cash Flow is used by management to evaluate the Company's
ability to service its debt and to fund continued growth with
internally generated funds. The Company believes Free Cash Flow is
useful for investors because it enables them to assess the Company's
ability to service its debt and to fund continued growth with
internally generated funds in a manner similar to the method used by
management, and provide measures that can be used to analyze, value
and compare companies in the cable television industry. The Company's
definition of Free Cash Flow eliminates the impact of quarterly
working capital fluctuations.
Adjusted OIBDA and Free Cash Flow should not be regarded as
alternatives to operating income, net income or net loss as indicators
of operating performance or to the statement of cash flows as measures
of liquidity, nor should they be considered in isolation or as
substitutes for financial measures prepared in accordance with GAAP.
The Company believes that operating income is the most directly
comparable GAAP financial measure to Adjusted OIBDA, and that net cash
flows provided by operating activities is the most directly comparable
GAAP financial measure to Free Cash Flow. Reconciliations of
historical presentations of Adjusted OIBDA and Free Cash Flow to their
most directly comparable GAAP financial measures are provided in Table
6. The Company is unable to reconcile these non-GAAP measures on a
forward-looking basis primarily because it is impractical to project
the timing of certain events, such as the initiation of depreciation
relative to network construction projects, or changes in working
capital.
Company Description
Mediacom Communications is the nation's 8th largest cable
television company and one of the leading cable operators focused on
serving the smaller cities and towns in the United States. Mediacom
Communications offers a wide array of broadband products and services,
including traditional video services, digital television,
video-on-demand, digital video recorders, high-definition television,
high-speed Internet access and phone service. More information about
Mediacom Communications can be accessed on the Internet at:
www.mediacomcc.com.
Forward Looking Statements
You should carefully review the information contained in this
Quarterly Report and in other reports or documents that we file from
time to time with the Securities and Exchange Commission (the "SEC").
In this Quarterly Report, we state our beliefs of future events
and of our future financial performance. In some cases, you can
identify those so-called 'forward-looking statements" by words such as
"may," "will," "should," "expects," "plans," "anticipates,"
"believes," "estimates," "predicts," "potential," or "continue" or the
negative of those words and other comparable words. These
forward-looking statements are subject to risks and uncertainties that
could cause actual results to differ materially from historical
results or those we anticipate. Factors that could cause actual
results to differ from those contained in the forward-looking
statements include, but are not limited to: existing and future
competition in our video, high-speed Internet access and phone
businesses; our ability to achieve anticipated customer and revenue
growth and to successfully implement our growth strategy, including
the introduction of new products and services and acquisitions;
increasing programming costs; changes in laws and regulations; our
ability to generate sufficient cash flow to meet our debt service
obligations and access capital to maintain our financial flexibility;
our Class B common stock has substantial voting rights and, through
his beneficial ownership of the Class B common stock, our Chairman and
CEO generally has the ability to control the outcome of all matters
requiring stockholder approval; and the other risks and uncertainties
discussed in this Quarterly Report and in our Annual Report on Form
10-K for the year ended December 31, 2006 and other reports or
documents that we file from time to time with the SEC. Statements
included in this Quarterly Report are based upon information known to
us as of the date of that this Quarterly Report is filed with the SEC,
and we assume no obligation to update or alter our forward-looking
statements made in this Quarterly Report, whether as a result of new
information, future events or otherwise, except as otherwise required
by applicable federal securities laws.
Tables:
(1) Consolidated Statements of Operations-three month periods
(2) Consolidated Statements of Operations-six month periods
(3) Condensed Consolidated Balance Sheets
(4) Condensed Statements of Cash Flows
(5) Capital Expenditure Data
(6) Reconciliation Data - Historical
(7) Calculation - Free Cash Flow
(8) Summary Operating Statistics
TABLE 1
Consolidated Statements of Operations
(All amounts in thousands, except per share data)
(Unaudited)
Three Months Ended
June 30,
--------------------- Percent
2007 2006 Change
---------- ---------- --------
Video $ 226,029 $ 222,559 1.6%
Data 69,405 58,037 19.6
Phone 13,281 5,876 126.0
Advertising 16,019 15,949 0.4
---------- ---------- --------
Total revenues $ 324,734 $ 302,421 7.4%
---------- ---------- --------
Service costs $ 133,836 $ 121,862 9.8%
SG&A expenses 65,717 60,395 8.8
Corporate expenses 5,920 5,232 13.1
---------- ---------- --------
Total operating costs $ 205,473 $ 187,489 9.6%
---------- ---------- --------
Adjusted OIBDA $ 119,261 $ 114,932 3.8%
Non-cash, share-based compensation
charges (1,366) (898) 52.1
Depreciation and amortization (56,934) (54,184) 5.1
---------- ---------- --------
Operating income $ 60,961 $ 59,850 1.9%
Interest expense, net $ (60,022) $ (56,890) 5.5%
Loss on early extinguishment of debt - (7,532) NM
Gain on derivatives, net 9,214 807 NM
Other expense, net (2,196) (2,983) (26.4)
---------- ---------- --------
Income (loss) before income taxes 7,957 (6,748) NM
(Provision for) benefit from income
taxes (14,601) 12,473 NM
---------- ---------- --------
Net (loss) income $ (6,644) $ 5,725 NM
========== ========== ========
Basic weighted average shares
outstanding 109,758 110,922
Basic (loss) gain per share $ (0.06) $ 0.05
Diluted weighted average shares
outstanding 109,758 112,476
Diluted (loss) gain per share $ (0.06) $ 0.05
----------------------------------------------------------------------
Adjusted OIBDA margin (a) 36.7% 38.0%
Operating income margin (b) 18.8% 19.8%
Note: Certain reclassifications have been made to prior period amounts
to conform to the current period presentation.
(a) Represents Adjusted OIBDA as a percentage of revenues.
(b) Represents operating income as a percentage of revenues.
TABLE 2
Consolidated Statements of Operations
(All amounts in thousands, except per share data)
(Unaudited)
Six Months Ended
June 30,
--------------------- Percent
2007 2006 Change
---------- ---------- ---------
Video $ 441,657 $ 439,451 0.5%
Data 134,953 113,547 18.9
Phone 24,825 9,441 162.9
Advertising 31,174 29,330 6.3
---------- ---------- ---------
Total revenues $ 632,609 $ 591,769 6.9%
---------- ---------- ---------
Service costs $ 266,073 $ 240,252 10.7%
SG&A expenses 128,042 118,510 8.0
Corporate expenses 11,786 10,506 12.2
---------- ---------- ---------
Total operating costs $ 405,901 $ 369,268 9.9%
---------- ---------- ---------
Adjusted OIBDA $ 226,708 $ 222,501 1.9%
Non-cash, share-based compensation
charges (2,687) (2,053) 30.9
Depreciation and amortization (110,735) (107,901) 2.6
---------- ---------- ---------
Operating income $ 113,286 $ 112,547 0.7%
Interest expense, net $(119,012) $(112,542) 5.7%
Loss on early extinguishment of debt - (7,532) NM
Gain on derivatives, net 4,819 1,322 NM
Gain on sale of assets and
investments, net 10,781 - NM
Other expense, net (4,904) (5,624) (12.8)
---------- ---------- ---------
Income (loss) before income taxes 4,970 (11,829) NM
Provision for income taxes (28,495) (19,653) NM
---------- ---------- ---------
Net loss $ (23,525) $ (31,482) NM
========== ========== =========
Basic weighted average shares
outstanding 109,824 112,218
Basic loss per share $ (0.21) $ (0.28)
Diluted weighted average shares
outstanding 109,824 112,218
Diluted loss per share $ (0.21) $ (0.28)
----------------------------------------------------------------------
Adjusted OIBDA margin (a) 35.8% 37.6%
Operating income margin (b) 17.9% 19.0%
Note: Certain reclassifications have been made to prior period amounts
to conform to the current period presentation.
(a) Represents Adjusted OIBDA as a percentage of revenues.
(b) Represents operating income as a percentage of revenues.
TABLE 3
Condensed Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)
June 30, December 31,
2007 2006
------------ ------------
ASSETS
Cash and cash equivalents $ 14,697 $ 36,385
Subscriber accounts receivable, net 76,213 75,722
Prepaid expenses and other assets 17,719 17,248
Deferred tax assets 2,176 2,467
------------ -------------
Total current assets $ 110,805 $ 131,822
Property, plant and equipment, net 1,447,672 1,451,134
Intangible assets, net 2,036,247 2,037,107
Other assets, net 29,209 32,287
------------ -------------
Total assets $ 3,623,933 $ 3,652,350
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 254,013 $ 275,611
Deferred revenue 50,502 46,293
Current portion of long-term debt 84,678 75,563
------------ -------------
Total current liabilities $ 389,193 $ 397,467
Long-term debt, less current portion 3,053,750 3,069,036
Deferred tax liabilities 287,392 259,300
Other non-current liabilities 13,488 21,361
Total stockholders' deficit (119,890) (94,814)
------------ -------------
Total liabilities and stockholders'
deficit $ 3,623,933 $ 3,652,350
============ ============
Note: Certain reclassifications have been made to prior period
amounts to conform to the current period presentation.
TABLE 4
Condensed Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Six Months Ended
June 30,
------------------------
2007 2006
----------- ------------
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net cash flows provided by operating
activities $ 75,182 $ 107,727
----------- ------------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Capital expenditures (111,776) (104,781)
Acquisition of cable system (7,274) -
Proceeds from sale of assets and
investments 22,948 -
----------- ------------
Net cash flows used in investing
activities $ (96,102) $ (104,781)
----------- ------------
CASH FLOWS (USED IN) PROVIDED BY FINANCING
ACTIVITIES:
New borrowings 140,166 1,581,000
Repayment of debt (146,335) (1,345,632)
Redemption of senior notes - (172,500)
Repurchase of common stock (4,331) (34,386)
Other financing activities - book
overdrafts 9,272 (3,173)
Proceeds from issuance of common stock in
employee stock purchase plan 460 460
Financing costs - (193)
----------- ------------
Net cash flows (used in) provided by
financing activities $ (768) $ 25,576
----------- ------------
Net (decrease) increase in cash and cash
equivalents $ (21,688) $ 28,522
CASH AND CASH EQUIVALENTS, beginning of
period $ 36,385 $ 17,281
----------- ------------
CASH AND CASH EQUIVALENTS, end of period $ 14,697 $ 45,803
=========== ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for interest,
net of amounts capitalized $ 123,049 $ 118,845
TABLE 5
Capital Expenditure Data
(Dollars in thousands)
(Unaudited)
Six Months Ended
June 30,
-----------------------
2007 2006
----------- -----------
Customer premise equipment $ 61,877 $ 49,846
Scalable infrastructure 16,711 16,544
Line extensions 8,509 6,524
Upgrade/Rebuild 12,825 22,763
Support capital 11,854 9,104
----------- -----------
Total $ 111,776 $ 104,781
=========== ===========
TABLE 6
Reconciliation Data - Historical
Reconciliation of Adjusted OIBDA to Operating Income
(Dollars in thousands)
(Unaudited)
Three Months Ended
June 30,
-------------------------
2007 2006
----------- -----------
Adjusted OIBDA $ 119,261 $ 114,932
Non-cash, share-based compensation charges (1,366) (898)
Depreciation and amortization (56,934) (54,184)
----------- -----------
Operating income $ 60,961 $ 59,850
=========== ===========
Six Months Ended
June 30,
-------------------------
2007 2006
----------- -----------
Adjusted OIBDA $ 226,708 $ 222,501
Non-cash, share-based compensation charges (2,687) (2,053)
Depreciation and amortization (110,735) (107,901)
----------- -----------
Operating income $ 113,286 $ 112,547
=========== ===========
Note: Certain reclassifications have been made to prior period amounts
to conform to the current period presentation.
TABLE 6
Reconciliation Data - Historical (cont)
Reconciliation of Free Cash Flow to Net Cash Flows
Provided by Operating Activities
(Dollars in thousands)
(Unaudited)
Six Months Ended
June 30,
----------------------
2007 2006
---------- ----------
Free cash flow $ (4,172) $ 5,066
Capital expenditures 111,776 104,781
Other expenses 284 (2,864)
Non-cash, share-based compensation charges (2,687) (2,053)
Change in assets and liabilities, net (30,019) 2,797
---------- ----------
Net cash flows provided by operating
activities $ 75,182 $ 107,727
========== ==========
Note: Certain reclassifications have been made to prior period amounts
to conform to the current period presentation.
TABLE 7
Calculation - Free Cash Flow
(Dollars in thousands)
(Unaudited)
Three Months Ended
June 30,
------------------------
2007 2006
----------- -----------
Adjusted OIBDA $ 119,261 $ 114,932
Cash taxes (43) (56)
Capital expenditures (61,919) (57,162)
Interest expense, net (60,022) (56,890)
----------- -----------
Free cash flow $ (2,723) $ 824
=========== ===========
Six Months Ended
June 30,
------------------------
2007 2006
----------- -----------
Adjusted OIBDA $ 226,708 $ 222,501
Cash taxes (92) (112)
Capital expenditures (111,776) (104,781)
Interest expense, net (119,012) (112,542)
----------- -----------
Free cash flow $ (4,172) $ 5,066
=========== ===========
Note: Certain reclassifications have been made to prior period amounts
to conform to the current period presentation.
TABLE 8
Summary Operating Statistics
(Unaudited)
Actual Actual Actual
June 30, March 31, June 30,
2007 2007 2006
---------- ----------- ----------
Estimated homes passed 2,835,000 2,822,000 2,813,000
Total revenue generating units
(RGUs)(a) 2,633,000 2,615,000 2,478,000
Quarterly net RGU additions 18,000 24,000 9,000
Average monthly revenue per RGU(b) $41.25 $39.43 $40.75
Customer relationships(c) 1,413,000 1,430,000 1,459,000
Video
Basic subscribers 1,344,000 1,362,000 1,400,000
Quarterly net basic subscriber
losses (18,000) (18,000) (22,000)
Digital customers 532,000 530,000 496,000
Quarterly net digital customer
additions (losses) 2,000 2,000 (1,000)
Digital penetration(d) 39.6% 38.9% 35.4%
Data
Data customers 613,000 600,000 516,000
Quarterly net data customer
additions 13,000 22,000 12,000
Data penetration(e) 21.6% 21.3% 18.3%
Phone
Estimated marketable phone
homes(f) 2,450,000 2,350,000 1,700,000
Phone customers 144,000 123,000 66,000
Quarterly net phone customers
additions 21,000 18,000 20,000
Phone penetration(g) 5.9% 5.2% 3.9%
Average total monthly revenue per
basic subscriber(h) $80.00 $74.85 $71.44
Note: Certain reclassifications have been made to prior period amounts
to conform to the current period presentation.
(a) Represents the total of basic subscribers, digital customers, data
customers and phone customers at the end of each period.
(b) Represents average monthly revenues for the last three months of
the period divided by average RGUs for such period.
(c) The total number of customers that receive at least one level of
service, encompassing video, data and phone, without regard to which
service(s) customers purchase.
(d) Represents digital customers as a percentage of basic subscribers.
(e) Represents data customers as a percentage of estimated homes
passed.
(f) Represents the estimated number of homes to which the Company is
currently marketing phone service.
(g) Represents phone customers as a percentage of estimated marketable
phone homes.
(h) Represents average monthly revenues for the last three months of
the period divided by average basic subscribers for such period.
(1) Adjusted OIBDA excludes non-cash, share-based compensation
charges.
CONTACT:
Mediacom Communications Corporation
Investor Relations
Matt Derdeyn
845-695-2612
Group Vice President, Corporate Finance and Treasurer
or
Media Relations
Thomas Larsen
845-695-2754
Vice President, Legal Affairs
SOURCE:
Mediacom Communications Corporation
