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): May 3, 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 May 3, 2016, Mediacom Broadband LLC issued a press release announcing its financial results for the three months ended March 31, 2016. 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 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 May 3, 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: May 3, 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

 

For Immediate Release

LOGO

 

Mediacom Broadband LLC and Mediacom LLC Report

Results for First Quarter 2016

 

 

 

Mediacom Park, NY May 3, 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 ended March 31, 2016.

 

Mediacom Broadband LLC*

 

   

Revenues were $255.2 million, reflecting a 6.4% increase from the prior year period

 

   

Operating income before depreciation and amortization (“OIBDA”) was $98.4 million, reflecting a 7.9% increase from the prior year period

 

   

Free cash flow of $32.5 million, compared to $30.1 million in the prior year period

 

   

Net quarterly increase of 21,000 primary service units (“PSUs”), compared to a net quarterly increase of 26,000 PSUs in the prior year period

 

Mediacom LLC*

 

   

Revenues were $189.6 million, reflecting a 5.3% increase from the prior year period

 

   

Adjusted OIBDA was $75.1 million, reflecting a 4.6% increase from the prior year period

 

   

Free cash flow of $26.6 million, compared to $28.0 million in the prior year period

 

   

Net quarterly increase of 17,000 PSUs, compared to a net quarterly increase of 14,000 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 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

 

* OIBDA, Adjusted OIBDA and free cash flow are defined under “Use of Non-GAAP Financial Measures” in Table 7 and are reconciled to operating income and net cash flows provided by operating activities in Tables 3 and 4.


TABLE 1*

Mediacom Broadband LLC

Selected Financial and Operating Data

(Dollars in thousands, except per unit data)

(Unaudited)

 

     Three Months Ended
March 31,
     
     2016     2015     YoY% Change

Video

   $ 112,702      $ 113,370      (0.6%)

High-speed data

     80,037        70,601      13.4%

Phone

     14,562        15,232      (4.4%)

Business services

     34,034        30,598      11.2%

Advertising

     13,883        10,152      36.8%
  

 

 

   

 

 

   

 

Total revenues

   $ 255,218      $ 239,953      6.4%

Service costs

     (104,475     (100,225   4.2%

SG&A expenses

     (46,968     (43,775   7.3%

Management fees

     (5,350     (4,750   12.6%
  

 

 

   

 

 

   

 

OIBDA (a)

   $ 98,425      $ 91,203      7.9%

Cash interest expense (a)

     (19,079     (22,164   (13.9%)

Capital expenditures (b)

     (42,345     (34,410   23.1%

Dividend to preferred members

     (4,500     (4,500   —  
  

 

 

   

 

 

   

 

Free cash flow (a)

   $ 32,501      $ 30,129      7.9%
  

 

 

   

 

 

   

 

OIBDA margin (c)

     38.6     38.0  
     March 31, 2016     March 31, 2015     YoY% Change

Video customers

     479,000        502,000      (4.6%)

High-speed data (“HSD”) customers

     621,000        581,000       6.9%

Phone customers

     245,000        225,000       8.9%
  

 

 

   

 

 

   

Primary service units (“PSUs”)

     1,345,000        1,308,000       2.8%

Video customer (declines) increases

     (1,000     2,000     

HSD customer increases

     16,000        17,000     

Phone customer increases

     6,000        7,000     
  

 

 

   

 

 

   

Quarterly PSU increases

     21,000        26,000     

Customer relationships (d)

     740,000        719,000      2.9%

Average total monthly revenue per:

      

PSU (e)

   $ 63.75      $ 61.76      3.2%

Customer relationship (f)

   $ 115.59      $ 111.94      3.3%
     March 31, 2016     March 31, 2015      

Bank credit facility

   $ 1,280,000      $ 1,422,000     

5 1/2% senior notes due 2021

     200,000        200,000     

6 3/8% senior notes due 2023

     300,000        300,000     
  

 

 

   

 

 

   

Total debt (g)

   $ 1,780,000      $ 1,922,000     

Total leverage ratio (h)

     4.52x        5.27x     

Interest coverage ratio (i)

     5.16x        4.11x     

 

* See Table 3 for reconciliations of OIBDA to operating income, cash interest expense to interest expense, net, and free cash flow to net cash flows from operating activities. See Table 5 for a breakout of capital expenditures. See footnotes on Page 7, which contain important disclosures regarding the definitions used for selected unaudited financial and operating data.

 

Page 2 of 7


TABLE 2*

Mediacom LLC

Selected Financial and Operating Data

(Dollars in thousands, except per unit data)

(Unaudited)

 

     Three Months Ended
March 31,
     
     2016     2015     YoY% Change

Video

   $ 86,691      $ 86,291      0.5%

High-speed data

     65,057        57,443      13.3%

Phone

     12,846        13,541      (5.1%)

Business services

     21,705        19,583      10.8%

Advertising

     3,270        3,186      2.6%
  

 

 

   

 

 

   

 

Total revenues

   $ 189,569      $ 180,044      5.3%

Service costs

     (84,951     (80,644   5.3%

SG&A expenses

     (30,340     (28,844   5.2%

Management fees

     (3,650     (3,250   12.3%
  

 

 

   

 

 

   

 

OIBDA (a)

   $ 70,628      $ 67,306      4.9%

Investment income from affiliate

     4,500        4,500      —  
  

 

 

   

 

 

   

 

Adjusted OIBDA (a)

   $ 75,128      $ 71,806      4.6%

Cash interest expense (a)

     (12,336     (15,256   (19.1%)

Capital expenditures (b)

     (36,218     (28,580   26.7%
  

 

 

   

 

 

   

 

Free cash flow (a)

   $ 26,574      $ 27,970      (5.0%)
  

 

 

   

 

 

   

 

Adjusted OIBDA margin (j)

     39.6     39.9  
     March 31, 2016     March 31, 2015     YoY% Change

Video customers

     374,000        389,000      (3.9%)

High-speed data (“HSD”) customers

     493,000        460,000      7.2%

Phone customers

     199,000        186,000      7.0%
  

 

 

   

 

 

   

 

Primary service units (“PSUs”)

     1,066,000        1,035,000      3.0%

Video customer declines

     (1,000     (1,000  

HSD customer increases

     13,000        11,000     

Phone customer increases

     5,000        4,000     
  

 

 

   

 

 

   

Quarterly PSU increases

     17,000        14,000     

Customer relationships (d)

     593,000        578,000      2.6%

Average total monthly revenue per:

      

PSU (e)

   $ 59.75      $ 58.38      2.3%

Customer relationship (f)

   $ 107.28      $ 104.65      2.5%
     March 31, 2016     March 31, 2015      

Bank credit facility

   $ 920,000      $ 988,000     

7 1/4% senior notes due 2022

     250,000        250,000     
  

 

 

   

 

 

   

Total debt (g)

   $ 1,170,000      $ 1,238,000     
  

 

 

   

 

 

   

Total leverage ratio (h)

     3.89x        4.31x     

Interest coverage ratio (i)

     6.09x        4.71x     

 

* See Table 4 for reconciliations of OIBDA and Adjusted OIBDA to operating income, cash interest expense to interest expense, net, and free cash flow to net cash flows from operating activities. See Table 6 for a breakout of capital expenditures. See footnotes on Page 7, which contain important disclosures regarding the definitions used for selected unaudited financial and operating data.

 

Page 3 of 7


TABLE 3

Mediacom Broadband LLC

Reconciliation of Non-GAAP Measures

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended
March  31,
 
     2016     2015  

Free cash flow

   $ 32,501      $ 30,129   

Capital expenditures

     42,345        34,410   

Dividend to preferred members

     4,500        4,500   

Other expense, net

     (469     (218

Changes in assets and liabilities, net

     15,526        8,893   
  

 

 

   

 

 

 

Net cash flows provided by operating activities

   $ 94,403      $ 77,714   
  

 

 

   

 

 

 

OIBDA

   $ 98,425      $ 91,203   

Depreciation and amortization

     (35,328     (36,193
  

 

 

   

 

 

 

Operating income

   $ 63,097      $ 55,010   
  

 

 

   

 

 

 

Cash interest expense

   $ 19,079      $ 22,164   

Amortization of deferred financing costs

     1,588        1,738   
  

 

 

   

 

 

 

Interest expense, net

   $ 20,667      $ 23,902   
  

 

 

   

 

 

 

 

TABLE 4

Mediacom LLC

Reconciliation of Non-GAAP Measures

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended
March 31,
 
     2016     2015  

Free cash flow

   $ 26,574      $ 27,970   

Capital expenditures

     36,218        28,580   

Other expense, net

     (444     (229

Changes in assets and liabilities, net

     (24,646     (3,431
  

 

 

   

 

 

 

Net cash flows provided by operating activities

   $ 37,702      $ 52,890   
  

 

 

   

 

 

 

Adjusted OIBDA

   $ 75,128      $ 71,806   

Investment income from affiliate

     (4,500     (4,500
  

 

 

   

 

 

 

OIBDA

   $ 70,628      $ 67,306   

Depreciation and amortization

     (29,907     (29,894
  

 

 

   

 

 

 

Operating income

   $ 40,721      $ 37,412   
  

 

 

   

 

 

 

Cash interest expense

   $ 12,336      $ 15,256   

Amortization of deferred financing costs

     734        722   
  

 

 

   

 

 

 

Interest expense, net

   $ 13,070      $ 15,978   
  

 

 

   

 

 

 

 

Page 4 of 7


TABLE 5

Mediacom Broadband LLC

Capital Expenditures

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended
March 31,
 
     2016      2015  

Customer premise equipment

   $ 19,347       $ 21,197   

Enterprise networks

     1,959         2,419   

Scalable infrastructure

     9,547         3,715   

Line extensions

     2,552         1,303   

Upgrade / rebuild

     5,810         3,224   

Support capital

     3,130         2,552   
  

 

 

    

 

 

 

Total capital expenditures

   $ 42,345       $ 34,410   
  

 

 

    

 

 

 

 

TABLE 6

Mediacom LLC

Capital Expenditures

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended
March 31,
 
     2016      2015  

Customer premise equipment

   $ 17,301       $ 16,495   

Enterprise networks

     1,626         1,284   

Scalable infrastructure

     7,371         4,282   

Line extensions

     1,736         1,278   

Upgrade / rebuild

     5,626         3,484   

Support capital

     2,558         1,757   
  

 

 

    

 

 

 

Total capital expenditures

   $ 36,218       $ 28,580   
  

 

 

    

 

 

 

 

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 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, 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.

 

FOOTNOTES:

 

(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 a cash source of $1.1 million and a cash use of $0.9 million at Mediacom Broadband LLC and Mediacom LLC, respectively, during the three months ended March 31, 2016, and a cash use of $0.1 million and a cash source of $0.6 million at Mediacom Broadband LLC and Mediacom LLC, respectively, during the three months ended March 31, 2015.
(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) Total debt excludes the effect of deferred financing costs, net.
(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) Represents Adjusted OIBDA as a percentage of total revenues.

 

Page 7 of 7