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): February 25, 2016

 

 

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.)

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 February 25, 2016, Mediacom Broadband LLC issued a press release announcing its financial results for the three months and year ended December 31, 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”), 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 9 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 25, 2016


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 25, 2016

 

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

Mediacom Broadband LLC and Mediacom LLC Report

Results for Fourth Quarter and Full Year 2015

 

 

Mediacom Park, NY – February 25, 2016 – 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, 2015. 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, 2015.

Mediacom Broadband LLC*

Fourth Quarter 2015 Highlights:

 

    Revenues were $250.9 million, reflecting a 3.9% increase from the prior year period

 

    Operating income before depreciation and amortization (“OIBDA”) was $101.4 million, reflecting a 3.7% increase from the prior year period

 

    Free cash flow of $35.5 million, compared to $39.8 million in the prior year period

Full Year 2015 Highlights:

 

    Revenues were $982.4 million, reflecting a 3.6% increase from the prior year

 

    OIBDA was $379.6 million, reflecting a 2.7% increase from the prior year

 

    Free cash flow of $122.6 million, compared to $120.1 million in the prior year

Mediacom LLC*

Fourth Quarter 2015 Highlights:

 

    Revenues were $186.9 million, reflecting a 4.3% increase from the prior year period

 

    Adjusted OIBDA was $76.6 million, reflecting a 6.1% increase from the prior year period

 

    Free cash flow of $25.1 million, compared to $28.4 million in the prior year period

Full Year 2015 Highlights:

 

    Revenues were $738.7 million, reflecting a 3.8% increase from the prior year

 

    Adjusted OIBDA was $297.3 million, reflecting a 4.4% increase from the prior year

 

    Free cash flow of $100.3 million, compared to $81.3 million in the prior year

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 through its wholly-owned subsidiaries, Mediacom Broadband LLC and Mediacom LLC. 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 9 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,
     
     2015     2014     YoY% Change

Video

   $ 110,728      $ 110,667      0.1%

High-speed data

     76,853        68,056      12.9%

Phone

     14,672        15,481      (5.2%)

Business services

     33,772        29,829      13.2%

Advertising

     14,838        17,461      (15.0%)
  

 

 

   

 

 

   

 

Total revenues

   $ 250,863      $ 241,494      3.9%

Service costs

     (98,923     (95,035   4.1%

SG&A expenses

     (45,771     (43,909   4.2%

Management fees

     (4,750     (4,750  
  

 

 

   

 

 

   

 

OIBDA (a)

   $ 101,419      $ 97,800      3.7%

Cash interest expense (a)

     (21,604     (24,455   (11.7%)

Capital expenditures (b)

     (39,818     (29,041   37.1%

Dividend to preferred members

     (4,500     (4,500  
  

 

 

   

 

 

   

 

Free cash flow (a)

   $ 35,497      $ 39,804      (10.8%)
  

 

 

   

 

 

   

 

OIBDA margin (c)

     40.4     40.5  
     December 31, 2015     December 31, 2014      

Video customers

     480,000        500,000     

High-speed data (“HSD”) customers

     605,000        564,000     

Phone customers

     239,000        218,000     
  

 

 

   

 

 

   

Primary service units (“PSUs”)

     1,324,000        1,282,000     

Video customer declines

     (2,000     (4,000  

HSD customer increases

     12,000        10,000     

Phone customer increases

     6,000        5,000     
  

 

 

   

 

 

   

Quarterly PSU increases

     16,000        11,000     

Customer relationships (d)

     732,000        710,000     

Average total monthly revenue per:

      

PSU (e)

   $ 63.54      $ 63.06     

Customer relationship (f)

   $ 114.94      $ 113.78     
     December 31, 2015     December 31, 2014      

Bank credit facility

   $ 1,329,750      $ 1,457,000     

5 12% senior notes due 2021

     200,000        200,000     

6 38% senior notes due 2023

     300,000        300,000     
  

 

 

   

 

 

   

Total indebtedness

   $ 1,829,750      $ 1,957,000     
  

 

 

   

 

 

   

Total leverage ratio (g)

     4.51x        5.00x     

Interest coverage ratio (h)

     4.69x        4.00x     

 

* See Table 3 for a reconciliation of, and Table 9 for information regarding, our use of non-GAAP measures.

 

Page 2 of 8


TABLE 2*

Mediacom Broadband LLC

Selected Financial Data

(Dollars in thousands)

(Unaudited)

 

     Year Ended
December 31,
     
     2015     2014     YoY% Change

Video

   $ 451,446      $ 449,038      0.5%

High-speed data

     295,049        265,685      11.1%

Phone

     60,087        63,111      (4.8%)

Business services

     128,684        115,348      11.6%

Advertising

     47,096        55,265      (14.8%)
  

 

 

   

 

 

   

 

Total revenues

   $ 982,362      $ 948,447      3.6%

Service costs

     (401,661     (381,014   5.4%

SG&A expenses

     (182,144     (180,084   1.1%

Management fees

     (19,000     (17,650   7.6%
  

 

 

   

 

 

   

 

OIBDA (a)

   $ 379,557      $ 369,699      2.7%

Cash interest expense (a)

     (87,759     (94,304   (6.9%)

Capital expenditures (b)

     (151,204     (137,275   10.1%

Dividend to preferred members

     (18,000     (18,000  
  

 

 

   

 

 

   

 

Free cash flow (a)

   $           122,594      $           120,120      2.1%
  

 

 

   

 

 

   

 

OIBDA margin (c)

     38.6     39.0  

TABLE 3

Mediacom Broadband LLC

Reconciliation of Non-GAAP Measures

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended
December 31,
    Year Ended
December 31,
 
     2015     2014     2015     2014  

Free cash flow

   $ 35,497      $ 39,804      $ 122,594      $ 120,120   

Capital expenditures

     39,818        29,041        151,204        137,275   

Dividend to preferred members

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

Other (expense) income, net

     (1,157     36        (2,054     (1,262

Changes in assets and liabilities, net

     (3,937     (5,833     6,815        6,159   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows provided by operating activities

   $ 74,721      $ 67,548      $ 296,559      $ 280,292   
  

 

 

   

 

 

   

 

 

   

 

 

 

OIBDA

   $ 101,419      $ 97,800      $ 379,557      $ 369,699   

Depreciation and amortization

     (35,417     (36,049     (143,543     (153,478
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

   $ 66,002      $ 61,751      $ 236,014      $ 216,221   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash interest expense

   $ 21,604      $ 24,455      $ 87,759      $ 94,304   

Amortization of deferred financing costs

     1,690        1,717        6,909        6,132   
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest expense, net

   $ 23,294      $ 26,172      $ 94,668      $ 100,436   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

* See Table 3 for a reconciliation of, and Table 9 for information regarding, our use of non-GAAP measures.

 

Page 3 of 8


TABLE 4*

Mediacom LLC

Selected Financial and Operating Data

(Dollars in thousands, except per unit data)

(Unaudited)

 

     Three Months Ended
December 31,
     
     2015     2014     YoY% Change

Video

   $ 85,824      $ 85,817      0.0%

High-speed data

     62,575        55,602      12.5%

Phone

     12,939        13,771      (6.0%)

Business services

     21,355        19,003      12.4%

Advertising

     4,175        5,001      (16.5%)
  

 

 

   

 

 

   

 

Total revenues

   $ 186,868      $ 179,194      4.3%

Service costs

     (82,092     (77,232   6.3%

SG&A expenses

     (29,449     (31,009   (5.0%)

Management fees

     (3,250     (3,250  
  

 

 

   

 

 

   

 

OIBDA (a)

   $ 72,077      $ 67,703      6.5%

Investment income from affiliate

     4,500        4,500     
  

 

 

   

 

 

   

 

Adjusted OIBDA (a)

   $ 76,577      $ 72,203      6.1%

Cash interest expense (a)

     (14,592     (17,474   (16.5%)

Capital expenditures (b)

     (36,861     (26,367   39.8%
  

 

 

   

 

 

   

 

Free cash flow (a)

   $ 25,124      $ 28,362      (11.4%)
  

 

 

   

 

 

   

 

Adjusted OIBDA margin (i)

     41.0     40.3  
     December 31, 2015     December 31, 2014      

Video customers

     375,000        390,000     

High-speed data (“HSD”) customers

     480,000        449,000     

Phone customers

     194,000        182,000     
  

 

 

   

 

 

   

Primary service units (“PSUs”)

     1,049,000        1,021,000     

Video customer declines

     (5,000     (6,000  

HSD customer increases

     6,000        6,000     

Phone customer increases

     3,000        3,000     
  

 

 

   

 

 

   

Quarterly PSU increases

     4,000        3,000     

Customer relationships (d)

     585,000        569,000     

Average total monthly revenue per:

      

PSU (e)

   $ 59.49      $ 58.59     

Customer relationship (f)

   $ 106.66      $ 104.98     
     December 31, 2015     December 31, 2014      

Bank credit facility

   $ 920,250      $ 1,005,000     

7 14% senior notes due 2022

     250,000        250,000     
  

 

 

   

 

 

   

Total indebtedness

   $ 1,170,250      $ 1,255,000     
  

 

 

   

 

 

   

Total leverage ratio (g)

     3.82x        4.35x     

Interest coverage ratio (h)

     5.25x        4.13x     

 

* See Table 6 for a reconciliation of, and Table 9 for information regarding, our use of non-GAAP measures.

 

Page 4 of 8


TABLE 5*

Mediacom LLC

Selected Financial Data

(Dollars in thousands)

(Unaudited)

 

     Year Ended
December 31,
     
     2015     2014     YoY% Change

Video

   $ 348,370      $ 346,938      0.4%

High-speed data

     240,513        218,132      10.3%

Phone

     53,154        56,618      (6.1%)

Business services

     81,722        73,600      11.0%

Advertising

     14,951        16,346      (8.5%)
  

 

 

   

 

 

   

 

Total revenues

   $ 738,710      $ 711,634      3.8%

Service costs

     (326,737     (310,752   5.1%

SG&A expenses

     (119,716     (121,772   (1.7%)

Management fees

     (13,000     (12,350   5.3%
  

 

 

   

 

 

   

 

OIBDA (a)

   $ 279,257      $           266,760      4.7%

Investment income from affiliate

     18,000        18,000     
  

 

 

   

 

 

   

 

Adjusted OIBDA (a)

   $           297,257      $ 284,760      4.4%

Cash interest expense (a)

     (59,900     (83,147   (28.0%)

Capital expenditures (b)

     (137,041     (120,306   13.9%
  

 

 

   

 

 

   

 

Free cash flow (a)

   $ 100,316      $ 81,307      23.4%
  

 

 

   

 

 

   

 

Adjusted OIBDA margin (i)

     40.2     40.0  

TABLE 6

Mediacom LLC

Reconciliation of Non-GAAP Measures

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended
December 31,
    Year Ended
December 31,
 
     2015     2014     2015     2014  

Free cash flow

   $ 25,124      $ 28,362      $ 100,316      $ 81,307   

Capital expenditures

     36,861        26,367        137,041        120,306   

Other income (expense), net

     548        (64     (201     (1,514

Loss on early extinguishment of debt (j)

                          (15,999

Changes in assets and liabilities, net

     620        (3.495     (8,139     (10,785
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows provided by operating activities

   $ 63,153      $ 51,170      $ 229,017      $ 173,315   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted OIBDA

   $ 76,577      $ 72,203      $ 297,257      $ 284,760   

Investment income from affiliate

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

 

 

   

 

 

   

 

 

   

 

 

 

OIBDA

   $ 72,077      $ 67,703      $ 279,257      $ 266,760   

Depreciation and amortization

     (30,276     (29,288     (120,542     (116,395
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

   $ 41,801      $ 38,415      $ 158,715      $ 150,365   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash interest expense

   $ 14,592      $ 17,474      $ 59,900      $ 83,147   

Amortization of deferred financing costs

     729        773        2,901        3,668   
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest expense, net

   $ 15,321      $ 18,247      $ 62,801      $ 86,815   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

* See Table 6 for a reconciliation of, and Table 9 for information regarding, our use of non-GAAP measures.

 

Page 5 of 8


TABLE 7

Mediacom Broadband LLC

Capital Expenditures

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended
December 31,
     Year Ended
December 31,
 
     2015      2014      2015      2014  

Customer premise equipment

   $ 24,139       $ 15,264       $ 80,885       $ 62,746   

Enterprise networks

     1,922         2,760         9,209         11,621   

Scalable infrastructure

     4,575         2,545         21,277         28,621   

Line extensions

     1,833         1,597         6,351         6,155   

Upgrade / rebuild

     4,458         3,840         20,306         16,074   

Support capital

     2,891         3,035         13,176         12,058   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total capital expenditures

   $ 39,818       $ 29,041       $ 151,204       $ 137,275   
  

 

 

    

 

 

    

 

 

    

 

 

 

TABLE 8

Mediacom LLC

Capital Expenditures

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended
December 31,
     Year Ended
December 31,
 
     2015      2014      2015      2014  

Customer premise equipment

   $ 20,065       $ 14,250       $ 69,584       $ 59,194   

Enterprise networks

     1,575         2,244         6,905         8,274   

Scalable infrastructure

     3,966         2,463         17,295         23,580   

Line extensions

     1,584         1,485         7,439         5,335   

Upgrade / rebuild

     7,260         3,597         25,590         15,898   

Support capital

     2,411         2,328         10,228         8,025   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total capital expenditures

   $ 36,861       $ 26,367       $ 137,041       $ 120,306   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

Page 6 of 8


TABLE 9

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 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, including original issue discount, 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 7 of 8


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 9 for information about our use of Non-GAAP financial measures.
(b)  Capital expenditures for the three months ended December 31, 2015 exclude changes in accrued property, plant and equipment, which represented cash sources of $4.4 million and $3.9 million for Mediacom Broadband LLC and Mediacom LLC, respectively. Capital expenditures for the year ended December 31, 2015 exclude changes in accrued property, plant and equipment, which represented cash sources of $4.9 million and $6.4 million for Mediacom Broadband LLC and Mediacom LLC, respectively.

 

   Capital expenditures for the three months ended December 31, 2014 exclude changes in accrued property, plant and equipment, which represented cash uses of $0.7 million for both Mediacom Broadband LLC and Mediacom LLC. Capital expenditures for the year ended December 31, 2014 exclude changes in accrued property, plant and equipment, which represented cash uses of $0.3 million for both Mediacom Broadband LLC and Mediacom LLC.

 

(c)  Represents OIBDA as a percentage of total revenues.
(d)  Represents the total number of customers that take 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.
(j)  Reflects the cash portion of loss on early extinguishment, net, and excludes the $7.0 million non-cash write-off of deferred financing costs during the year ended December 31, 2014.

 

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