Delaware (State of incorporation) |
0-29227 (Commission File No.) |
06-1566067 (IRS Employer Identification No.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition. |
Item 9.01. | Financial Statements and Exhibits. |
Exhibit No. | Description | |||
99.1 | Press release issued by the Registrant on August 6, 2010 |
Mediacom Communications Corporation |
||||
By: | /s/ Mark E. Stephan | |||
Mark E. Stephan | ||||
Executive Vice President and
Chief Financial Officer |
||||
| Revenues were $377.0 million, a 3.4% increase from the prior year period | ||
| Adjusted operating income before depreciation and amortization (Adjusted OIBDA) | ||
was $139.7 million, a 2.1% increase from the prior year period1 | |||
| Operating income was $77.2 million, essentially flat compared to the prior year period | ||
| Revenue generating units (RGUs) grew 15,000 for the quarter and 91,000 year-over-year, representing a 3.1% annual gain | ||
| Free Cash Flow was $14.0 million, or $0.21 per basic share, compared to $28.5 million, or $0.42 per basic share, for the prior year period1 |
| Video revenues declined 0.6%, primarily due to a lower number of basic subscribers, offset in part by video rate increases and continued growth in digital customers and digital video recorder and high-definition television services. We lost 18,000 basic subscribers, compared to a loss of 15,000 in the prior year period. | ||
We added 6,000 digital customers to end the quarter with 705,000, a 58.0% penetration of basic subscribers. Year-over-year, we gained 47,000 digital customers, a 7.1% growth rate. | |||
| High-speed data revenues rose 10.4%, mainly due to a year-over-year gain of 60,000 high-speed data customers, or 8.0%. We gained 10,000 high-speed data customers to end the quarter with 814,000, a 29.0% penetration of estimated homes passed. | ||
| Phone revenues grew 9.9%, largely due to a year-over-year increase of 50,000 phone customers, or 18.7%, offset in part by higher levels of discounted pricing. We gained 17,000 phone customers to end the quarter with 317,000, a 12.0% penetration of estimated marketable phone homes. | ||
| Advertising revenues rose 14.0%, primarily due to increased local advertising sales, largely a result of a rebound in automotive and political advertising sales. |
* | See Notes on Page 3 regarding Adjusted OIBDA and Free Cash Flow. |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
(in thousands, except per share data) | June 30, | June 30, | ||||||||||||||||||||||
2010 | 2009 | Change | 2010 | 2009 | Change | |||||||||||||||||||
Cash provided by operating activities |
$ | 78,157 | $ | 82,896 | (5.7 | )% | $ | 166,805 | $ | 167,346 | (0.3 | )% | ||||||||||||
Capital expenditures |
(64,150 | ) | (54,395 | ) | 17.9 | (122,000 | ) | (109,173 | ) | 11.7 | ||||||||||||||
Free Cash Flow |
$ | 14,007 | $ | 28,501 | (50.9 | )% | $ | 44,805 | $ | 58,173 | (23.0 | )% | ||||||||||||
Free Cash Flow per basic share |
$ | 0.21 | $ | 0.42 | (50.0 | )% | $ | 0.66 | $ | 0.79 | (16.5 | )% |
* | See Notes on Page 3 regarding Total Net Debt Outstanding and Net Debt Leverage. |
Page 2 of 11
Notes: |
(1) | Adjusted OIBDA excludes non-cash, share-based compensation charges. See Table 6 for a reconciliation of Adjusted OIBDA to operating income, which is the most directly comparable GAAP measure. Free Cash Flow is defined as cash flows provided by operating activities less capital expenditures. For a reconciliation of Free Cash Flow to cash flows provided by operating activities, see the table on page 2. For more information on our use of Non-GAAP financial measures, see Table 8. | |
(2) | Total Net Debt Outstanding represents total debt less cash and cash equivalents. Net Debt Leverage represents the ratio of Total Net Debt Outstanding to Adjusted OIBDA (annualized for the most recently completed quarter). |
About Mediacom: |
Tables:
|
Contact: | |
(1) Consolidated Statements of Operationsthree month
periods
|
Investor Relations | |
(2) Consolidated Statements of Operationssix month periods
|
Calvin Craib | |
(3) Condensed Consolidated Balance Sheets
|
Senior Vice President, | |
(4) Consolidated Statements of Cash Flows
|
Corporate Finance | |
(5) Capital Expenditure Data
|
(845) 695-2675 | |
(6) Reconciliation Data Historical |
||
(7) Summary Operating Statistics
|
Media Relations | |
(8) Use of Non-GAAP Financial Measures
|
Thomas Larsen | |
Vice President, | ||
Legal and Public Affairs | ||
(845) 695-2754 |
Page 3 of 11
| increased levels of competition from existing and new competitors; | ||
| lower demand for our video, high-speed data and phone services; | ||
| our ability to successfully introduce new products and services to meet customer demands and preferences; | ||
| changes in laws, regulatory requirements or technology that may cause us to incur additional costs and expenses; | ||
| greater than anticipated increases in programming costs and delivery expenses related to our products and services; | ||
| changes in assumptions underlying our critical accounting policies; | ||
| the ability to secure hardware, software and operational support for the delivery of products and services to our customers; | ||
| disruptions or failures of network and information systems upon which our business relies; | ||
| our reliance on certain intellectual property; | ||
| our ability to generate sufficient cash flow to meet our debt service obligations; | ||
| fluctuations in short term interest rates which may cause our interest expense to vary from quarter to quarter; | ||
| volatility in the capital and credit markets, which may impact our ability to refinance future debt maturities or provide funding for potential strategic transactions, on similar terms as we currently experience; and | ||
| other risks and uncertainties discussed in this Press Release, our Annual Report on Form 10-K for the year ended December 31, 2009 and other reports or documents that we file from time to time with the SEC. |
Page 4 of 11
Three Months Ended | ||||||||||||
June 30, | Percent | |||||||||||
2010 | 2009 | Change | ||||||||||
Video |
$ | 232,158 | $ | 233,622 | (0.6 | )% | ||||||
High-speed data |
97,325 | 88,182 | 10.4 | |||||||||
Phone |
30,804 | 28,020 | 9.9 | |||||||||
Advertising |
16,721 | 14,671 | 14.0 | |||||||||
Total revenues |
$ | 377,008 | $ | 364,495 | 3.4 | % | ||||||
Service costs |
$ | 161,653 | $ | 153,836 | 5.1 | % | ||||||
SG&A expenses |
68,687 | 66,874 | 2.7 | |||||||||
Corporate expenses |
7,014 | 6,950 | 0.9 | |||||||||
Total operating costs |
$ | 237,354 | $ | 227,660 | 4.3 | % | ||||||
Adjusted OIBDA |
$ | 139,654 | $ | 136,835 | 2.1 | % | ||||||
Non-cash, share-based compensation charges |
(1,897 | ) | (1,833 | ) | 3.5 | |||||||
Depreciation and amortization |
(60,601 | ) | (57,940 | ) | 4.6 | |||||||
Operating income |
$ | 77,156 | $ | 77,062 | 0.1 | % | ||||||
Interest expense, net |
$ | (51,883 | ) | $ | (51,331 | ) | 1.1 | % | ||||
(Loss) gain on derivatives, net |
(29,052 | ) | 25,951 | NM | ||||||||
Gain on sale of cable systems, net |
| (410 | ) | NM | ||||||||
Loss on early extinguishment of debt |
(1,234 | ) | | NM | ||||||||
Other expense, net |
(1,449 | ) | (2,361 | ) | (38.6 | ) | ||||||
(Loss) income before income taxes |
$ | (6,462 | ) | $ | 48,911 | NM | ||||||
Benefit from (provision for) income taxes |
2,622 | (14,505 | ) | NM | ||||||||
Net (loss) income |
$ | (3,840 | ) | $ | 34,406 | NM | ||||||
Basic weighted average shares outstanding |
68,119 | 67,435 | ||||||||||
Basic (loss) earnings per share |
$ | (0.06 | ) | $ | 0.51 | |||||||
Diluted weighted average shares outstanding |
68,119 | 70,857 | ||||||||||
Diluted (loss) earnings per share |
$ | (0.06 | ) | $ | 0.49 | |||||||
Adjusted OIBDA margin (a) |
37.0 | % | 37.5 | % | ||||||||
Operating income margin (b) |
20.5 | % | 21.1 | % |
(a) | Represents Adjusted OIBDA as a percentage of revenues. | |
(b) | Represents operating income as a percentage of revenues. |
Page 5 of 11
Six Months Ended | ||||||||||||
June 30, | Percent | |||||||||||
2010 | 2009 | Change | ||||||||||
Video |
$ | 461,130 | $ | 467,991 | (1.5 | %) | ||||||
High-speed data |
192,645 | 175,088 | 10.0 | |||||||||
Phone |
61,066 | 54,620 | 11.8 | |||||||||
Advertising |
30,846 | 27,234 | 13.3 | |||||||||
Total revenues |
$ | 745,687 | $ | 724,933 | 2.9 | % | ||||||
Service costs |
$ | 319,221 | $ | 306,598 | 4.1 | % | ||||||
SG&A expenses |
134,651 | 132,587 | 1.6 | |||||||||
Corporate expenses |
13,858 | 13,830 | 0.2 | |||||||||
Total operating costs |
$ | 467,730 | $ | 453,015 | 3.2 | % | ||||||
Adjusted OIBDA |
$ | 277,957 | $ | 271,918 | 2.2 | % | ||||||
Non-cash, share-based compensation charges |
(3,772 | ) | (3,577 | ) | 5.5 | % | ||||||
Depreciation and amortization |
(119,901 | ) | (116,708 | ) | 2.7 | |||||||
Operating income |
$ | 154,284 | $ | 151,633 | 1.7 | % | ||||||
Interest expense, net |
$ | (101,510 | ) | $ | (100,252 | ) | 1.3 | % | ||||
(Loss) gain on derivatives, net |
(40,760 | ) | 24,280 | NM | ||||||||
Gain on sale of cable systems, net |
| 13,781 | NM | |||||||||
Loss on early extinguishment of debt |
(1,234 | ) | | NM | ||||||||
Other expense, net |
(2,501 | ) | (4,826 | ) | (48.2 | ) | ||||||
Income before income taxes |
$ | 8,279 | $ | 84,616 | (90.2 | )% | ||||||
Provision for income taxes |
(3,601 | ) | (27,848 | ) | (87.1 | ) | ||||||
Net income |
$ | 4,678 | $ | 56,768 | (91.8 | )% | ||||||
Basic weighted average shares outstanding |
67,929 | 74,016 | ||||||||||
Basic earnings per share |
$ | 0.07 | $ | 0.77 | ||||||||
Diluted weighted average shares outstanding |
71,690 | 77,241 | ||||||||||
Diluted earnings per share |
$ | 0.07 | $ | 0.73 | ||||||||
Adjusted OIBDA margin (a) |
37.3 | % | 37.5 | % | ||||||||
Operating income margin (b) |
20.7 | % | 20.9 | % |
(a) | Represents Adjusted OIBDA as a percentage of revenues. | |
(b) | Represents operating income as a percentage of revenues. |
Page 6 of 11
June 30, | December 31, | |||||||
2010 | 2009 | |||||||
ASSETS |
||||||||
Cash and cash equivalents |
$ | 126,732 | $ | 80,916 | ||||
Subscriber accounts receivable, net |
89,502 | 86,337 | ||||||
Prepaid expenses and other assets |
25,007 | 17,030 | ||||||
Deferred tax assets |
22,959 | 22,616 | ||||||
Total current assets |
$ | 264,200 | $ | 206,899 | ||||
Property, plant and equipment, net |
1,481,568 | 1,478,489 | ||||||
Intangible assets, net |
2,017,926 | 2,019,178 | ||||||
Other assets, net |
56,528 | 50,468 | ||||||
Deferred tax assets non-current |
218,753 | 222,695 | ||||||
Total assets |
$ | 4,038,975 | $ | 3,977,729 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Accounts payable and accrued expenses |
$ | 253,785 | $ | 268,575 | ||||
Deferred revenue |
57,281 | 56,996 | ||||||
Current portion of long-term debt |
26,000 | 95,000 | ||||||
Total current liabilities |
$ | 337,066 | $ | 420,571 | ||||
Long-term debt, less current portion |
3,371,000 | 3,270,000 | ||||||
Other non-current liabilities |
57,949 | 22,130 | ||||||
Total liabilities |
3,766,015 | 3,712,701 | ||||||
Total stockholders equity |
272,960 | 265,028 | ||||||
Total liabilities and stockholders equity |
$ | 4,038,975 | $ | 3,977,729 | ||||
Page 7 of 11
Six Months Ended | ||||||||
June 30, | ||||||||
2010 | 2009 | |||||||
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES: |
||||||||
Net income |
$ | 4,678 | $ | 56,768 | ||||
Adjustments to reconcile net loss to net cash provided by operating
activities: |
||||||||
Depreciation and amortization |
119,901 | 116,708 | ||||||
Loss (gain) on derivatives, net |
40,760 | (24,280 | ) | |||||
Loss on early extinguishment of debt |
1,234 | | ||||||
Gain on sale of cable systems, net |
| (12,148 | ) | |||||
Amortization of deferred financing costs |
3,130 | 2,684 | ||||||
Share-based compensation |
3,772 | 3,577 | ||||||
Deferred income taxes |
3,601 | 27,848 | ||||||
Changes in assets and liabilities, net of effects from acquisitions: |
||||||||
Accounts receivable, net |
(3,165 | ) | (5,732 | ) | ||||
Prepaid expenses and other assets |
(6,377 | ) | (6,916 | ) | ||||
Accounts payable and accrued expenses and other current liabilities |
(719 | ) | 6,578 | |||||
Deferred revenue |
285 | 1,682 | ||||||
Other non-current liabilities |
(295 | ) | 577 | |||||
Net cash flows provided by operating activities |
$ | 166,805 | $ | 167,346 | ||||
CASH FLOWS USED IN INVESTING ACTIVITIES: |
||||||||
Capital expenditures |
$ | (122,000 | ) | $ | (109,173 | ) | ||
Net cash flows used in investing activities |
$ | (122,000 | ) | $ | (109,173 | ) | ||
CASH FLOWS USED IN FINANCING ACTIVITIES: |
||||||||
New borrowings |
$ | 1,323,750 | $ | 513,875 | ||||
Repayment of debt |
(1,291,750 | ) | (459,875 | ) | ||||
Net settlement of restricted stock units |
(1,126 | ) | (1,518 | ) | ||||
Repurchases of Class A common stock for cash |
| (110,000 | ) | |||||
Proceeds from issuance of common stock in employee stock purchase plan |
581 | 548 | ||||||
Financing costs |
(16,546 | ) | | |||||
Other financing activities book overdrafts |
(13,898 | ) | 460 | |||||
Net cash flows provided by (used in) financing activities |
$ | 1,011 | $ | (56,510 | ) | |||
Net increase in cash and cash equivalents |
45,816 | 1,663 | ||||||
CASH AND CASH EQUIVALENTS, beginning of period |
80,916 | 67,111 | ||||||
CASH AND CASH EQUIVALENTS, end of period |
$ | 126,732 | $ | 68,774 | ||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |
||||||||
Cash paid during the period for interest, net of amounts capitalized |
$ | 106,343 | $ | 102,156 | ||||
NON-CASH TRANSACTION FINANCING: |
||||||||
Assets held for sale exchanged for Class A common stock |
$ | | $ | 29,284 | ||||
Page 8 of 11
Six Months Ended | ||||||||
June 30, | ||||||||
2010 | 2009 | |||||||
Customer premise activity |
$ | 51,045 | $ | 56,149 | ||||
Commercial |
3,721 | 3,640 | ||||||
Scalable infrastructure |
49,628 | 20,750 | ||||||
Line extensions |
3,235 | 4,981 | ||||||
Upgrade/Rebuild |
8,849 | 14,504 | ||||||
Support capital |
5,522 | 9,149 | ||||||
Total |
$ | 122,000 | $ | 109,173 | ||||
Three Months Ended | ||||||||
June 30, | ||||||||
2010 | 2009 | |||||||
Adjusted OIBDA |
$ | 139,654 | $ | 136,835 | ||||
Non-cash, share-based compensation charges |
(1,897 | ) | (1,833 | ) | ||||
Depreciation and amortization |
(60,601 | ) | (57,940 | ) | ||||
Operating income |
$ | 77,156 | $ | 77,062 | ||||
Six Months Ended | ||||||||
June 30, | ||||||||
2010 | 2009 | |||||||
Adjusted OIBDA |
$ | 277,957 | $ | 271,918 | ||||
Non-cash, share-based compensation charges |
(3,772 | ) | (3,577 | ) | ||||
Depreciation and amortization |
(119,901 | ) | (116,708 | ) | ||||
Operating income |
$ | 154,284 | $ | 151,633 | ||||
Page 9 of 11
June 30, | March 31, | June 30, | ||||||||||
2010 | 2010 | 2009 | ||||||||||
Estimated homes passed |
2,804,000 | 2,802,000 | 2,790,000 | |||||||||
Total revenue generating units (RGUs)(a) |
3,052,000 | 3,037,000 | 2,961,000 | |||||||||
Quarterly RGU additions |
15,000 | 56,000 | 7,000 | |||||||||
Customer relationships(b) |
1,343,000 | 1,346,000 | 1,378,000 | |||||||||
Video |
||||||||||||
Basic subscribers |
1,216,000 | 1,234,000 | 1,282,000 | |||||||||
Quarterly basic subscriber additions (losses) |
(18,000 | ) | (4,000 | ) | (15,000 | ) | ||||||
Digital customers |
705,000 | 699,000 | 658,000 | |||||||||
Quarterly digital customer additions |
6,000 | 21,000 | 8,000 | |||||||||
Digital penetration(c) |
58.0 | % | 56.6 | % | 51.3 | % | ||||||
High-speed data |
||||||||||||
High-speed data customers |
814,000 | 804,000 | 754,000 | |||||||||
Quarterly high-speed data customer additions |
10,000 | 26,000 | 6,000 | |||||||||
High-speed data penetration(d) |
29.0 | % | 28.7 | % | 27.0 | % | ||||||
Phone |
||||||||||||
Estimated marketable phone homes(e) |
2,649,000 | 2,647,000 | 2,564,000 | |||||||||
Phone customers |
317,000 | 300,000 | 267,000 | |||||||||
Quarterly phone customer additions |
17,000 | 13,000 | 8,000 | |||||||||
Phone penetration(f) |
12.0 | % | 11.3 | % | 10.4 | % | ||||||
Average total monthly revenue per
basic subscriber(g) |
$ | 102.59 | $ | 99.43 | $ | 94.22 |
(a) | Represents the total of basic subscribers, digital customers, data customers and phone customers at the end of each period. | |
(b) | Represents 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. | |
(c) | Represents digital customers as a percentage of basic subscribers. | |
(d) | Represents data customers as a percentage of estimated homes passed. | |
(e) | Represents the estimated number of homes currently marketed for phone service. | |
(f) | Represents phone customers as a percentage of estimated marketable phone homes. | |
(g) | Represents average monthly revenues for the last three months of the period divided by average basic subscribers for such period. |
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