8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 28, 2013

 

 

MEDIACOM BROADBAND LLC

(Exact name of Registrant as specified in its charter)

 

 

 

Delaware   333-72440   06-1615412

(State

of incorporation)

 

(Commission

File No.)

 

(IRS Employer

Identification No.)

100 Crystal Run Road

Middletown, New York 10941

(Address of principal executive offices)

Registrant’s telephone number: (845) 695-2600

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

 

  ¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

  ¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

  ¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

  ¨ 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.

On February 28, 2013, Mediacom Broadband LLC issued a press release announcing its financial results for the three months and year ended December 31, 2012. A copy of the press release is being furnished as Exhibit 99.1 to this report and incorporated herein by reference.

The press release contains disclosure of operating income before depreciation and amortization (“OIBDA”), free cash flow and cash interest expense, which are not measures of performance calculated in accordance with generally accepted accounting principles (GAAP) in the United States. Reconciliations of OIBDA, free cash flow and cash interest expense to the most directly comparable financial measures calculated and presented in accordance with GAAP are presented on Table 3 of the press release. Disclosure regarding management’s reasons for presenting these non-GAAP measures is set forth on Table 7 of the press release.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits:

 

Exhibit
No.

  

Description

99.1    Press release issued by Mediacom Broadband LLC on February 28, 2013


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: February 28, 2013

 

Mediacom Broadband LLC
By:   /s/ Mark E. Stephan
  Mark E. Stephan
 

Executive Vice President and

Chief Financial Officer

EX-99.1

Exhibit 99.1

 

LOGO    

 

For Immediate Release

Mediacom Broadband LLC and Mediacom LLC Report

Results for Fourth Quarter and Full Year 2012

 

 

Middletown, NY – February 28, 2013 – MEDIACOM BROADBAND LLC AND MEDIACOM LLC, wholly-owned subsidiaries of Mediacom Communications Corporation, today each reported unaudited financial and operating highlights for the three months and year ended December 31, 2012. These results for Mediacom Broadband LLC and Mediacom LLC remain subject to adjustments based upon completion of their respective audits for the year ended December 31, 2012.

Mediacom Broadband LLC*

Fourth Quarter 2012 Highlights:

 

   

Revenues were $228.5 million, reflecting a 4.3% increase from the prior year period

 

   

Operating income before depreciation and amortization (“OIBDA”) was $91.1 million, reflecting a 5.0% increase from the prior year period

 

   

Free cash flow of $30.8 million, compared to $2.6 million in the prior year period

Full Year 2012 Highlights:

 

   

Revenues were $897.4 million, reflecting a 2.6% increase from the prior year

 

   

OIBDA was $345.4 million, reflecting a 3.6% increase from the prior year

 

   

Free cash flow of $73.0 million, compared to $41.8 million in the prior year

Mediacom LLC*

Fourth Quarter 2012 Highlights:

 

   

Revenues were $171.8 million, reflecting a 2.3% increase from the prior year period

 

   

Adjusted OIBDA was $71.7 million, reflecting a 0.6% increase from the prior year period

 

   

Free cash flow of $23.7 million, compared to $20.0 million in the prior year period

Full Year 2012 Highlights:

 

   

Revenues were $681.7 million, reflecting a 0.9% increase from the prior year

 

   

Adjusted OIBDA was $277.7 million, reflecting a 1.6% increase from the prior year

 

   

Free cash flow of $80.2 million, compared to $77.0 million in the prior year

About Mediacom

Mediacom Communications Corporation is the nation’s eighth largest cable television company and one of the leading cable operators focused on serving the smaller cities in the United States, with a significant customer concentration in the Midwestern and Southeastern regions. Mediacom Communications offers a wide array of information, communications and entertainment services, including video, high-speed data and phone, and provides innovative broadband communications solutions through its Mediacom Business division that can be tailored to any size business. Mediacom Communications’ advertising sales and productions services are sold under its OnMedia division. More information about Mediacom Communications is available at www.mediacomcc.com.

Contacts:

 

Investor Relations

 

Media Relations

Mark E. Stephan

 

Thomas J. Larsen

Executive Vice President and Chief Financial Officer

 

Group Vice President, Legal and Public Affairs

(845) 695-2640

 

(845) 695-2754

 

* See Table 7 for information regarding our use of non-GAAP measures and definitions of OIBDA, Adjusted OIBDA and free cash flow.


TABLE 1*

Mediacom Broadband LLC

Selected Financial and Operating Data

(Dollars in thousands, except per unit data)

(Unaudited)

 

     Three Months Ended
December 31,
    % Change  
     2012     2011    

Video

   $ 114,620      $ 117,676        (2.6 )% 

High-speed data

     58,362        53,610        8.9

Phone

     16,428        16,690        (1.6 )% 

Business services

     22,453        16,480        36.2

Advertising

     16,608        14,644        13.4
  

 

 

   

 

 

   

 

 

 

Total revenues

   $ 228,471      $ 219,100        4.3

Service costs

     (86,837     (84,245     3.1

SG&A expenses

     (46,726     (43,738     6.8

Management fees

     (3,800     (4,377     (13.2 )% 
  

 

 

   

 

 

   

 

 

 

OIBDA (a)

   $ 91,108      $ 86,740        5.0

Cash interest expense (a)

     (24,852     (26,864     (7.5 )% 

Capital expenditures (b)

     (30,987     (52,751     (41.3 )% 

Dividend to preferred members

     (4,500     (4,500     —     
  

 

 

   

 

 

   

 

 

 

Free cash flow (a)

   $ 30,769      $ 2,625        NM   
  

 

 

   

 

 

   

 

 

 

OIBDA margin (c)

     39.9     39.6  
   
     December 31, 2012     December 31, 2011        

Video customers

     558,000        596,000     

High-speed data (“HSD”) customers

     505,000        468,000     

Phone customers

     190,000        180,000     
  

 

 

   

 

 

   

Primary service units (“PSUs”)

     1,253,000        1,244,000     

Video customer declines

     (9,000     (16,000  

HSD customer increases

     4,000        1,000     

Phone customer increases

     1,000        1,000     
  

 

 

   

 

 

   

Quarterly PSU declines

     (4,000     (14,000  

Customer relationships (d)

     708,000        701,000     

Average total monthly revenue per:

      

Video customer (e)

   $ 135.39      $ 120.92     

PSU (f)

   $ 60.68      $ 58.38     

Customer relationship (g)

   $ 107.26      $ 103.67     
   
     December 31, 2012     December 31, 2011        

Bank credit facility

   $ 1,659,000      $ 1,497,000     

8 1/2% senior notes due 2015

     —          500,000     

6 3/8% senior notes due 2023

     300,000        —       
  

 

 

   

 

 

   

Total indebtedness

   $ 1,959,000      $ 1,997,000     

Total leverage ratio (h)

     5.38x        5.76x     

Interest coverage ratio (i)

     3.67x        3.23x     

 

* See Tables 3 and 7.

 

Page 2 of 7


TABLE 2*

Mediacom Broadband LLC

Selected Financial Data

(Dollars in thousands)

(Unaudited)

 

     Year Ended
December 31,
    % Change  
     2012     2011    

Video

   $ 464,732      $ 483,953        (4.0 )% 

High-speed data

     226,711        208,792        8.6

Phone

     66,552        66,942        (0.6 )% 

Business services

     83,795        65,098        28.7

Advertising

     55,630        49,975        11.3
  

 

 

   

 

 

   

 

 

 

Total revenues

   $ 897,420      $ 874,760        2.6

Service costs

     (356,915     (351,922     1.4

SG&A expenses

     (180,736     (173,855     4.0

Management fees

     (14,335     (15,452     (7.2 )% 
  

 

 

   

 

 

   

 

 

 

OIBDA (a)

   $ 345,434      $ 333,531        3.6

Cash interest expense (a)

     (107,452     (107,164     0.3

Capital expenditures (b)

     (146,988     (166,533     (11.7 )% 

Dividend to preferred members

     (18,000     (18,000     —     
  

 

 

   

 

 

   

 

 

 

Free cash flow (a)

   $ 72,994      $ 41,834        74.5
  

 

 

   

 

 

   

 

 

 

OIBDA margin (c)

     38.5     38.1  
   

TABLE 3

Mediacom Broadband LLC

Reconciliation of Non-GAAP Measures

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended
December 31,
    Year Ended
December 31,
 
     2012     2011     2012     2011  

Free cash flow

   $ 30,769      $ 2,625      $ 72,994      $ 41,834   

Capital expenditures

     30,987        52,751        146,988        166,533   

Dividend to preferred members

     4,500        4,500        18,000        18,000   

Other expense, net

     (372     (495     (1,483     (2,136

Loss on early extinguishment of debt (j)

     (5,901     —          (7,776     —     

Share-based compensation

     —          697        —          697   

Changes in assets and liabilities, net

     (2,441     2,516        2,315        52,631   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows provided by operating activities

   $ 57,542      $ 62,594      $ 231,038      $ 277,559   
  

 

 

   

 

 

   

 

 

   

 

 

 

OIBDA

   $ 91,108      $ 86,740      $ 345,434      $ 333,531   

Depreciation and amortization

     (38,494     (37,145     (151,240     (143,999
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

   $ 52,614      $ 49,595      $ 194,194      $ 189,532   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash interest expense

   $ 24,852      $ 26,864      $ 107,452      $ 107,164   

Amortization of deferred financing costs

     1,363        1,096        5,109        4,345   
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest expense, net

   $ 26,215      $ 27,960      $ 112,561      $ 111,509   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

* See Tables 3 and 7.

 

Page 3 of 7


TABLE 4*

Mediacom LLC

Selected Financial and Operating Data

(Dollars in thousands, except per unit data)

(Unaudited)

 

     Three Months Ended
December 31,
    % Change  
     2012     2011    

Video

   $ 88,543      $ 91,106        (2.8 )% 

High-speed data

     48,360        44,284        9.2

Phone

     14,993        15,349        (2.3 )% 

Business services

     15,112        12,962        16.6

Advertising

     4,770        4,207        13.4
  

 

 

   

 

 

   

 

 

 

Total revenues

   $ 171,778      $ 167,908        2.3

Service costs

     (72,196     (69,289     4.2

SG&A expenses

     (29,462     (28,505     3.4

Management fees

     (2,900     (3,323     (12.7 )% 
  

 

 

   

 

 

   

 

 

 

OIBDA (a)

   $ 67,220      $ 66,791        0.6

Investment income from affiliate

     4,500        4,500        —     
  

 

 

   

 

 

   

 

 

 

Adjusted OIBDA (a)

   $ 71,720      $ 71,291        0.6

Cash interest expense (a)

     (22,812     (23,103     (1.3 )% 

Capital expenditures (b)

     (25,226     (28,175     (10.5 )% 
  

 

 

   

 

 

   

 

 

 

Free cash flow (a)

   $ 23,682      $ 20,013        18.3
  

 

 

   

 

 

   

 

 

 

Adjusted OIBDA margin (k)

     41.8     42.5  
   
     December 31, 2012     December 31, 2011        

Video customers

     442,000        473,000     

High-speed data (“HSD”) customers

     410,000        383,000     

Phone customers

     166,000        159,000     
  

 

 

   

 

 

   

Primary service units (“PSUs”)

     1,018,000        1,015,000     

Video customer declines

     (10,000     (15,000  

HSD customer increases

     2,000        —       

Phone customer increases

     —          —       
  

 

 

   

 

 

   

Quarterly PSU declines

     (8,000     (15,000  

Customer relationships (d)

     571,000        569,000     

Average total monthly revenue per:

      

Video customer (e)

   $ 128.10      $ 116.48     

PSU (f)

   $ 56.03      $ 54.74     

Customer relationship (g)

   $ 100.10      $ 97.76     
   
     December 31, 2012     December 31, 2011        

Bank credit facility

   $ 922,000      $ 1,233,000     

9 1/8% senior notes due 2019

     350,000        350,000     

7 1/4% senior notes due 2022

     250,000        —       
  

 

 

   

 

 

   

Total indebtedness

   $ 1,522,000      $ 1,583,000     

Total leverage ratio (h)

     5.31x        5.55x     

Interest coverage ratio (i)

     3.14x        3.09x     

 

* See Tables 6 and 7.

 

Page 4 of 7


TABLE 5*

Mediacom LLC

Selected Financial Data

(Dollars in thousands)

(Unaudited)

 

     Year Ended
December 31,
    % Change  
     2012     2011    

Video

   $ 359,804      $ 377,946        (4.8 )% 

High-speed data

     187,473        172,587        8.6

Phone

     60,724        60,968        (0.4 )% 

Business services

     56,990        48,573        17.3

Advertising

     16,692        15,482        7.8
  

 

 

   

 

 

   

 

 

 

Total revenues

   $ 681,683      $ 675,556        0.9

Service costs

     (295,067     (293,940     0.4

SG&A expenses

     (114,992     (114,300     0.6

Management fees

     (11,885     (11,896     (0.1 )% 
  

 

 

   

 

 

   

 

 

 

OIBDA (a)

   $ 259,739      $ 255,420        1.7

Investment income from affiliate

     18,000        18,000        —     
  

 

 

   

 

 

   

 

 

 

Adjusted OIBDA (a)

   $ 277,739      $ 273,420        1.6

Cash interest expense (a)

     (92,560     (93,778     (1.3 )% 

Capital expenditures (b)

     (104,976     (102,688     2.2
  

 

 

   

 

 

   

 

 

 

Free cash flow (a)

   $ 80,203      $ 76,954        4.2
  

 

 

   

 

 

   

 

 

 

Adjusted OIBDA margin (j)

     40.7     40.5  
   

TABLE 6

Mediacom LLC

Reconciliation of Non-GAAP Measures

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended
December 31,
    Year Ended
December 31,
 
     2012     2011     2012     2011  

Free cash flow

   $ 23,682      $ 20,013      $ 80,203      $ 76,954   

Capital expenditures

     25,226        28,175        104,976        102,688   

Other expense, net

     (40     (316     (1,591     (1,913

Share-based compensation

     —          236        —          236   

Changes in assets and liabilities, net

     4,145        (217     (10,714     (17,163
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows provided by operating activities

   $ 53,013      $ 47,891      $ 172,874      $ 160,802   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted OIBDA

   $ 71,720      $ 71,291      $ 277,739      $ 273,420   

Investment income from affiliate

     (4,500     (4,500     (18,000     (18,000
  

 

 

   

 

 

   

 

 

   

 

 

 

OIBDA

   $ 67,220      $ 66,791      $ 259,739      $ 255,420   

Depreciation and amortization

     (28,595     (29,138     (115,324     (117,352
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

   $ 38,625      $ 37,653      $ 144,415      $ 138,068   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash interest expense

   $ 22,812      $ 23,103      $ 92,560      $ 93,778   

Amortization of deferred financing costs

     800        951        3,308        3,903   
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest expense, net

   $ 23,612      $ 24,054      $ 95,868      $ 97,681   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

* See Tables 6 and 7.

 

Page 5 of 7


TABLE 7

Use of Non-GAAP Financial Measures

“OIBDA,” “Adjusted OIBDA,” “cash interest expense” and “free cash flow” are not financial measures calculated in accordance with generally accepted accounting principles (“GAAP”) in the United States. We define OIBDA as operating income before depreciation and amortization and Adjusted OIBDA as OIBDA plus investment income from affiliate. We define cash interest expense as interest expense, net, less amortization of deferred financing costs. For Mediacom Broadband LLC, we define free cash flow as OIBDA less capital expenditures, cash interest expense and dividends to preferred members. For Mediacom LLC, we define free cash flow as Adjusted OIBDA less capital expenditures and cash interest expense. OIBDA, Adjusted OIBDA, cash interest expense and free cash flow have inherent limitations as discussed below.

OIBDA and Adjusted OIBDA are some of the primary measures used by management to evaluate our performance and to forecast future results. We believe OIBDA and Adjusted OIBDA are useful for investors because it enables them to assess our 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 industry. A limitation of OIBDA and Adjusted OIBDA, however, is that they exclude depreciation and amortization, which represents the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our business. Management utilizes a separate process to budget, measure and evaluate capital expenditures. OIBDA and Adjusted OIBDA may not be comparable to similarly titled measures used by other companies, which may have different depreciation and amortization policies, and are key components in our covenant calculations, as defined under our debt arrangements.

Free cash flow is used by management to evaluate our ability to repay debt, and to facilitate the growth of our business with internally generated funds. A limitation of free cash flow, however, is that it may be affected by the timing of our capital spending. We believe free cash flow is useful for investors for the same reasons and provides measures that can be used to analyze value and compare companies in the cable television industry, although our measure of free cash flow may not be directly comparable to similar measures reported by other companies.

OIBDA, Adjusted OIBDA and free cash flow should not be regarded as alternatives to operating income or net income 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. We believe that operating income is the most directly comparable GAAP financial measure to OIBDA and Adjusted OIBDA, and that net cash flows provided by operating activities is the most directly comparable GAAP financial measure to free cash flow.

Cash interest expense excludes the amortization of financing costs which were paid upon the financing of the relevant debt. We believe cash interest expense is useful for investors because it enables them to assess our cost of debt for the current period without including the amortization of financing costs that were previously paid. We believe interest expense, net, is the most directly comparable GAAP financial measure to cash interest expense.

For reconciliations of OIBDA, Adjusted OIBDA, cash interest expense and free cash flow to their most directly comparable GAAP financial measures, see Tables 3 and 6.

 

Page 6 of 7


Cautionary Statement Regarding Forward-Looking Statements

In this press release, we state our beliefs of future events and of our future financial performance. These forward-looking statements are not guarantees of future performance or results, and are subject to risks and uncertainties that could cause actual results to differ materially from historical results or those we anticipate as a result of various factors, many of which are beyond our control. Factors that may cause such differences to occur include, but are not limited to: increased levels of competition; greater than anticipated programming and other service costs; our ability to generate sufficient cash flow to meet our debt service obligations; and other risks and uncertainties discussed in the most recent Annual Reports on Form 10-K for each of Mediacom Broadband LLC and Mediacom LLC. We disclaim any obligation to update any forward-looking statements contained herein, except as required by applicable federal securities laws.

NOTES:

 

(a) 

See Table 7 for information about our use of Non-GAAP financial measures.

 

(b) 

Capital expenditures for the three months ended December 31, 2012 exclude changes in accrued property, plant and equipment, which represented cash uses of $3.3 million and $0.9 million for Mediacom Broadband LLC and Mediacom LLC, respectively. Capital expenditures for the year ended December 31, 2012 exclude changes in accrued property, plant and equipment, which represented cash uses of $8.8 million and $3.4 million for Mediacom Broadband LLC and Mediacom LLC, respectively.

 

   Capital expenditures for the three months ended December 31, 2011 exclude $2.3 million and $3.0 million of non-cash transactions representing capital expenditures which were accrued during the period at Mediacom Broadband LLC and Mediacom LLC, respectively. Capital expenditures for the year ended December 31, 2011 exclude $9.1 million and $3.0 million of non-cash transactions representing capital expenditures which were accrued during the period at Mediacom Broadband LLC and Mediacom LLC, respectively.

 

(c) 

Represents OIBDA as a percentage of total revenues.

 

(d) 

Represents the total number of customers that receive at least one level of service, without regard to which service(s) customers purchase.

 

(e) 

Represents average total monthly revenues for the quarter divided by average video customers for such quarter.

 

(f) 

Represents average total monthly revenues for the quarter divided by average PSUs for such quarter.

 

(g) 

Represents average total monthly revenues for the quarter divided by average customer relationships for such quarter.

 

(h) 

For Mediacom Broadband LLC, represents total debt at quarter end divided by annualized OIBDA for the quarter. For Mediacom LLC, represents total debt at quarter end divided by annualized Adjusted OIBDA for the quarter.

 

(i) 

For Mediacom Broadband LLC, represents OIBDA divided by cash interest expense for the quarter. For Mediacom LLC, represents Adjusted OIBDA divided by cash interest expense for the quarter.

 

(j) 

Reflects the cash portion of loss on early extinguishment, net, and excludes non-cash write-offs of $2.8 million and $3.3 million of deferred financing costs during the three months and year ended December 31, 2012, respectively.

 

(k) 

Represents Adjusted OIBDA as a percentage of total revenues.

 

Page 7 of 7