Form 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): August 4, 2015

 

 

MEDIACOM LLC

(Exact name of Registrant as specified in its charter)

 

 

 

New York

 

333-82124-01

 

06-1433421

(State of incorporation)  

(Commission

File No.)

 

(IRS Employer

Identification No.)

1 Mediacom Way

Mediacom Park, NY 10918

(Address of principal executive offices)

Registrant’s telephone number: (845) 443-2600

 

 

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 August 4, 2015, Mediacom LLC issued a press release announcing its financial results for the three months ended June 30, 2015. A copy of the press release is being furnished as Exhibit 99.1 to this report and is incorporated herein by reference.

The press release contains disclosure of operating income before depreciation and amortization (“OIBDA”), Adjusted 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, Adjusted 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 4 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 LLC on August 4, 2015


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: August 4, 2015

 

Mediacom 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 Second Quarter 2015

 

 

Mediacom Park, NY – August 4, 2015 – 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 ended June 30, 2015.

Mediacom Broadband LLC*

 

    Revenues were $246.1 million, reflecting a 3.9% increase from the prior year period

 

    Operating income before depreciation and amortization (“OIBDA”) was $95.2 million, reflecting a 2.7% increase from the prior year period

 

    Free cash flow of $27.8 million, compared to $30.9 million in the prior year period

 

    Net quarterly decline of 1,000 primary service units (“PSUs”), compared to a net decline of 5,000 PSUs in the prior year period

Mediacom LLC*

 

    Revenues were $185.6 million, reflecting a 3.8% increase from the prior year period

 

    Adjusted OIBDA was $75.4 million, reflecting a 4.9% increase from the prior year period

 

    Free cash flow of $24.1 million, compared to $17.2 million in the prior year period

 

    Net quarterly increase of 3,000 PSUs, compared to a net decline of 9,000 PSUs in the prior year period

About Mediacom

Mediacom Communications Corporation is the eighth largest cable operator in the U.S. serving about 1.3 million customers in smaller markets primarily in the Midwest and Southeast. Mediacom offers a wide array of information, communications and entertainment services to households and businesses, including video, high-speed data, phone, and home security and automation. Through Mediacom Business, the company provides innovative broadband solutions to commercial and public sector customers of all sizes, and sells advertising and production services under the OnMedia brand. More information about Mediacom is available at www.mediacomcc.com.

Contacts:

 

Investor Relations

  

Media Relations

Jack P. Griffin

  

Thomas J. Larsen

Vice President,

Corporate Finance

  

Senior Vice President,

Government and Public Relations

(845) 443-2654

  

(845) 443-2754

 

* 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
June 30,
     
     2015     2014     YoY% Change

Video

   $ 115,310      $ 113,641      1.5%

High-speed data

     73,095        66,302      10.2%

Phone

     15,260        16,073      (5.1%)

Business services

     31,819        28,369      12.2%

Advertising

     10,648        12,404      (14.2%)
  

 

 

   

 

 

   

 

Total revenues

   $ 246,132      $ 236,789      3.9%

Service costs

     (101,305     (94,397   7.3%

SG&A expenses

     (44,863     (45,421   (1.2%)

Management fees

     (4,750     (4,300   10.5%
  

 

 

   

 

 

   

 

OIBDA (a)

   $ 95,214      $ 92,671      2.7%

Cash interest expense (a)

     (22,094     (23,242   (4.9%)

Capital expenditures (b)

     (40,820     (34,002   20.1%

Dividend to preferred members

     (4,500     (4,500  
  

 

 

   

 

 

   

 

Free cash flow (a)

   $ 27,800      $ 30,927      (10.1%)
  

 

 

   

 

 

   

 

OIBDA margin (c)

     38.7     39.1  
     June 30, 2015     June 30, 2014      

Video customers

     494,000        515,000     

High-speed data (“HSD”) customers

     585,000        548,000     

Phone customers

     228,000        212,000     
  

 

 

   

 

 

   

Primary service units (“PSUs”)

     1,307,000        1,275,000     

Video customer declines

     (8,000     (9,000  

HSD customer increases

     4,000        2,000     

Phone customer increases

     3,000        2,000     
  

 

 

   

 

 

   

Quarterly PSU declines

     (1,000     (5,000  

Customer relationships (d)

     723,000        708,000     

Average total monthly revenue per:

      

PSU (e)

   $ 62.75      $ 61.78     

Customer relationship (f)

   $ 113.79      $ 111.01     
     June 30, 2015     June 30, 2014      

Bank credit facility

   $ 1,397,000      $ 1,348,000     

5 12% senior notes due 2021

     200,000        200,000     

6 38% senior notes due 2023

     300,000        300,000     
  

 

 

   

 

 

   

Total debt

   $ 1,897,000      $ 1,848,000     
  

 

 

   

 

 

   

Total leverage ratio (g)

     4.98x        4.99x     

Interest coverage ratio (h)

     4.31x        3.99x     

 

* See Tables 3 and 5.

 

Page 2 of 7


TABLE 2*

Mediacom LLC

Selected Financial and Operating Data

(Dollars in thousands, except per unit data)

(Unaudited)

 

     Three Months
Ended June 30,
     
     2015     2014     YoY% Change

Video

   $ 88,865      $ 87,801      1.2%

High-speed data

     59,500        54,407      9.4%

Phone

     13,448        14,480      (7.1%)

Business services

     20,032        18,311      9.4%

Advertising

     3,774        3,844      (1.8%)
  

 

 

   

 

 

   

 

Total revenues

   $ 185,619      $ 178,843      3.8%

Service costs

     (81,376     (77,391   5.1%

SG&A expenses

     (30,139     (30,918   (2.5%)

Management fees

     (3,250     (3,200   1.6%
  

 

 

   

 

 

   

 

OIBDA (a)

   $ 70,854      $ 67,334      5.2%

Investment income from affiliate

     4,500        4,500     
  

 

 

   

 

 

   

 

Adjusted OIBDA (a)

   $ 75,354      $ 71,834      4.9%

Cash interest expense (a)

     (15,180     (22,583   (32.8%)

Capital expenditures (b)

     (36,030     (32,027   12.5%
  

 

 

   

 

 

   

 

Free cash flow (a)

   $ 24,144      $ 17,224      40.2%
  

 

 

   

 

 

   

 

Adjusted OIBDA margin (i)

     40.6     40.2  
     June 30, 2015     June 30, 2014      

Video customers

     385,000        404,000     

High-speed data (“HSD”) customers

     466,000        439,000     

Phone customers

     187,000        179,000     
  

 

 

   

 

 

   

Primary service units (“PSUs”)

     1,038,000        1,022,000     

Video customer declines

     (4,000     (9,000  

HSD customer increases

     6,000        1,000     

Phone customer increases (declines)

     1,000        (1,000  
  

 

 

   

 

 

   

Quarterly PSU increases (declines)

     3,000        (9,000  

Customer relationships (d)

     581,000        571,000     

Average total monthly revenue per:

      

PSU (e)

   $ 59.69      $ 58.08     

Customer relationship (f)

   $ 106.77      $ 103.86     
     June 30, 2015     June 30, 2014      

Bank credit facility

   $ 968,000      $ 827,000     

9 18% senior notes due 2019

     —          350,000     

7 14% senior notes due 2022

     250,000        250,000     
  

 

 

   

 

 

   

Total debt

   $ 1,218,000      $ 1,427,000     
  

 

 

   

 

 

   

Total leverage ratio (g)

     4.04x        4.97x     

Interest coverage ratio (h)

     4.96x        3.18x     

 

* See Tables 4 and 6.

 

Page 3 of 7


TABLE 3

Mediacom Broadband LLC

Reconciliation of Non-GAAP Measures

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended
June 30,
 
     2015     2014  

Free cash flow

   $ 27,800      $ 30,927   

Capital expenditures

     40,820        34,002   

Dividend to preferred members

     4,500        4,500   

Other expense, net

     (318     (449

Changes in assets and liabilities, net

     (3,420     (1,584
  

 

 

   

 

 

 

Net cash flows provided by operating activities

   $ 69,382      $ 67,396   
  

 

 

   

 

 

 

OIBDA

   $ 95,214      $ 92,671   

Depreciation and amortization

     (35,933     (39,678
  

 

 

   

 

 

 

Operating income

   $ 59,281      $ 52,993   
  

 

 

   

 

 

 

Cash interest expense

   $ 22,094      $ 23,242   

Amortization of deferred financing costs

     1,739        1,471   
  

 

 

   

 

 

 

Interest expense, net

   $ 23,833      $ 24,713   
  

 

 

   

 

 

 

TABLE 4

Mediacom LLC

Reconciliation of Non-GAAP Measures

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended
June 30,
 
     2015     2014  

Free cash flow

   $ 24,144      $ 17,224   

Capital expenditures

     36,030        32,027   

Other expense, net

     (269     (273

Changes in assets and liabilities, net

     (570     20,295   
  

 

 

   

 

 

 

Net cash flows provided by operating activities

   $ 59,335      $ 69,273   
  

 

 

   

 

 

 

Adjusted OIBDA

   $ 75,354      $ 71,834   

Investment income from affiliate

     (4,500     (4,500
  

 

 

   

 

 

 

OIBDA

   $ 70,854      $ 67,334   

Depreciation and amortization

     (29,927     (28,819
  

 

 

   

 

 

 

Operating income

   $ 40,927      $ 38,515   
  

 

 

   

 

 

 

Cash interest expense

   $ 15,180      $ 22,583   

Amortization of deferred financing costs

     723        1,031   
  

 

 

   

 

 

 

Interest expense, net

   $ 15,903      $ 23,614   
  

 

 

   

 

 

 

 

Page 4 of 7


TABLE 5

Mediacom Broadband LLC

Capital Expenditures

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended
June 30,
 
     2015      2014  

Customer premise equipment

   $ 18,511       $ 15,386   

Enterprise networks

     2,315         3,168   

Scalable infrastructure

     7,003         4,888   

Line extensions

     1,573         1,516   

Upgrade / rebuild

     6,831         5,096   

Support capital

     4,587         3,948   
  

 

 

    

 

 

 

Total capital expenditures

   $ 40,820       $ 34,002   
  

 

 

    

 

 

 

TABLE 6

Mediacom LLC

Capital Expenditures

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended
June 30,
 
     2015      2014  

Customer premise equipment

   $ 16,706       $ 15,217   

Enterprise networks

     2,143         2,443   

Scalable infrastructure

     5,187         6,077   

Line extensions

     2,156         1,425   

Upgrade / rebuild

     7,058         4,741   

Support capital

     2,780         2,124   
  

 

 

    

 

 

 

Total capital expenditures

   $ 36,030       $ 32,027   
  

 

 

    

 

 

 

 

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, for Mediacom LLC, Adjusted OIBDA as OIBDA plus investment income from its preferred membership interest in Mediacom Broadband LLC, its 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 on Mediacom LLC’s preferred membership interest. 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 they enable them to assess our performance in a manner similar to the methods used by management, and provide measures that can be used to analyze our value and evaluate our performance compared to other 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.

Free cash flow is used by management to evaluate our ability to repay debt and 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 as it provides an additional measure that can be used to analyze our value and evaluate our performance compared to other companies in the cable industry. Free cash flow may not be comparable to similarly titled 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 4.

 

Page 6 of 7


Cautionary Statement Regarding Forward-Looking Statements

This press release may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our beliefs with respect to future events and 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. Significant 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 exclude changes in accrued property, plant and equipment, which represented cash sources of $2.3 million and $2.9 million at Mediacom Broadband LLC and Mediacom LLC, respectively, during the three months ended June 30, 2015, and a cash use of $1.7 million and a cash source of $0.3 million at Mediacom Broadband LLC and Mediacom LLC, respectively, during the three months ended June 30, 2014.
(c)  Represents OIBDA as a percentage of total revenues.
(d)  Represents the total number of customers that receive at least one service, without regard to which service(s) customers purchase.
(e)  Represents average total monthly revenues for the quarter divided by average PSUs for such quarter.
(f)  Represents average total monthly revenues for the quarter divided by average customer relationships for such quarter.
(g)  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.
(h)  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.
(i)  Represents Adjusted OIBDA as a percentage of total revenues.

 

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