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 7, 2018

 

 

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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company    ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

 

 

 

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Item 2.02. Results of Operations and Financial Condition.

On May 7, 2018, Mediacom Broadband LLC issued a press release announcing its financial results for the three months ended March 31, 2018. 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 financial measures 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 2 of the press release. Disclosure regarding management’s reasons for presenting these non-GAAP measures is set forth on Table 4 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 7, 2018

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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 7, 2018

 

Exhibit 99.1

 

		For Immediate Release

Mediacom Broadband LLC Reports

Results for First Quarter 2018

 

 

Mediacom Park, NY – May 7, 2018 – MEDIACOM BROADBAND LLC, a wholly-owned subsidiary of Mediacom Communications Corporation, today reported unaudited financial and operating highlights for the three months ended March 31, 2018.

Mediacom Broadband LLC Results for First Quarter 2018*

 

•

Revenues were $269.7 million, reflecting a 3.1% increase from the prior year period

 

•

Operating income was $65.5 million, reflecting a 4.5% increase from the prior year period

 

•

Operating income before depreciation and amortization (“OIBDA”) was $102.9 million, reflecting a 3.7% increase from the prior year period

 

•

Net cash flows provided by operating activities were $82.2 million, compared to $81.1 million in the prior year period

 

•

Free cash flow of $37.6 million, compared to $32.0 million in the prior year period

About Mediacom

Mediacom Communications Corporation is the 5th largest cable operator in the U.S. serving almost 1.4 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.mediacomcable.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 and free cash flow are defined under “Use of Non-GAAP Financial Measures” in Table 4 and are reconciled to operating income and net cash flows provided by operating activities, respectively, in Table 2. The effects of recent changes to certain accounting standards on our revenue recognition are noted in Table 5.

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TABLE 1*

Mediacom Broadband LLC

Selected Financial and Operating Data

(Dollars in thousands, except per unit data)

(Unaudited)

 

		Three Months Ended March 31,								YoY% Change
		2018				2017
Video		$	107,672			$	111,304				(3.3%)
High-speed data			97,501				89,532				8.9%
Phone			15,149				14,265				6.2%
Business services			40,153				36,670				9.5%
Advertising			9,206				9,737				(5.5%)
Total revenues		$	269,681			$	261,508				3.1%
Service costs			(113,042	)			(109,062	)			3.6%
SG&A expenses			(47,708	)			(47,517	)			0.4%
Management fees			(6,000	)			(5,650	)			6.2%
OIBDA (a)		$	102,931			$	99,279				3.7%
Cash interest expense (a)			(15,966	)			(16,737	)			(4.6%)
Capital expenditures			(44,889	)			(46,037	)			(2.5%)
Dividend to preferred members			(4,500	)			(4,500	)			—
Free cash flow (a)		$	37,576			$	32,005				17.4%
OIBDA margin (b)			38.2	%			38.0	%
		March 31, 2018				March 31, 2017				YoY% Change
Video customers			453,000				461,000				(1.7%)
High-speed data (“HSD”) customers			679,000				652,000				4.1%
Phone customers			323,000				273,000				18.3%
Primary service units (“PSUs”)			1,455,000				1,386,000				5.0%
Video customer declines			(2,000	)			(2,000	)
HSD customer increases			11,000				9,000
Phone customer increases			11,000				9,000
Quarterly PSU increases			20,000				16,000
Customer relationships (c)			756,000				757,000				(0.1%)
Average total monthly revenue per:
PSU (d)		$	62.21			$	63.26				(1.7%)
Customer relationship (e)		$	118.99			$	115.38				3.1%
		March 31, 2018				March 31, 2017
Bank credit facility		$	1,039,750			$	1,091,000
5 1⁄2% senior notes due 2021			200,000				200,000
6 3⁄8% senior notes due 2023			300,000				300,000
Total debt (f)		$	1,539,750			$	1,591,000
Cash			(170,970	)			(9,502	)
Net debt (a)		$	1,368,780			$	1,581,498
Net leverage ratio (g)			3.32	x			3.98	x
Interest coverage ratio (h)			6.45	x			5.93	x

 

*

See Table 2 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 3 for details of capital expenditures. See Table 5 regarding the effect of recent changes to certain accounting standards on our revenue recognition. See footnotes on Page 4, which contain important disclosures regarding the definitions used for selected unaudited financial and operating data.

 

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TABLE 2

Mediacom Broadband LLC

Reconciliation of Non-GAAP Measures

(Dollars in thousands)

(Unaudited)

 

		Three Months Ended March 31,
		2018				2017
Net cash flows provided by operating activities		$	82,184			$	81,071
Capital expenditures			(44,889	)			(46,037	)
Dividend to preferred members			(4,500	)			(4,500	)
Other expense, net			321				318
Changes in assets and liabilities, net			4,460				1,153
Free cash flow		$	37,576			$	32,005
Operating income		$	65,495			$	62,700
Depreciation and amortization			37,436				36,579
OIBDA		$	102,931			$	99,279
Interest expense, net		$	17,133			$	17,793
Amortization of deferred financing costs			(1,167	)			(1,056	)
Cash interest expense		$	15,966			$	16,737
TABLE 3 Mediacom Broadband LLC Capital Expenditures (Dollars in thousands) (Unaudited)
		Three Months Ended March 31,
		2018				2017
Customer premise equipment		$	20,925			$	20,036
Enterprise networks			1,700				2,096
Scalable infrastructure			13,315				10,998
Line extensions			2,035				2,582
Upgrade / rebuild			4,356				7,043
Support capital			2,558				3,282
Total capital expenditures		$	44,889			$	46,037

 

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TABLE 4

Use of Non-GAAP Financial Measures

“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. We define cash interest expense as interest expense, net, less amortization of deferred financing costs. We define free cash flow as OIBDA less capital expenditures, cash interest expense and dividends to preferred members.

OIBDA is one of the primary measures used by management to evaluate our performance and to forecast future results. We believe OIBDA is useful for investors because it enables 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, however, is that it excludes 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 might 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 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 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.

Net debt is used as an alternative to total debt for comparison purposes under certain circumstances in which we have greater than usual levels of cash. On April 2, 2018, Mediacom Broadband LLC and Mediacom Broadband Corporation (together, “Mediacom Broadband”) announced the redemption of their existing 6 ³⁄₈% Senior Notes due 2023 at an aggregate redemption price of $309.6 million, which was funded in part by $158.0 million of such excess cash. Due to timing of the transaction, Mediacom Broadband temporarily had greater than usual levels of cash as of March 31, 2018, and therefore we believe net debt to be the most appropriate comparative measure.

For reconciliations of OIBDA, cash interest expense and free cash flow to their most directly comparable GAAP financial measures, see Table 2.

 

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TABLE 5

Changes in Accounting Standards – Revenue Recognition

As of January 1, 2018, we adopted Accounting Standards Update No. 2014-09 – Revenues from Contracts with Customers and related guidance (collectively, “revenue recognition”), which was issued by the Financial Accounting Standards Board. Adoption of this accounting standard affected both the timing of revenue recognition (the “timing change”) and the allocation of revenues among video, HSD and phone within our multi-product offerings, in which we offer product bundles at a discount (the “allocation change”). We adopted this accounting standard using a modified retrospective transition, and accordingly, the impact of such adoption was reflected in our financial results only for the three months ended March 31, 2018 and previously reported results were not restated. The adoption of the new standard did not have a material impact on our results of operations for this period. Excluding the impact of the timing change, the total revenues and OIBDA for Mediacom Broadband LLC would have increased 2.9% and 3.3%, respectively, for the three months ended March 31, 2018. Because of the allocation change, we recorded a decrease in our video revenues and corresponding increases in our HSD and phone revenues. Excluding the overall impact of the timing change and the allocation change for Mediacom Broadband LLC, video revenues would have decreased 1.4%, HSD revenues would have increased 6.3% and phone revenues would have increased 5.0% for the three months ended March 31, 2018.

FOOTNOTES:

 

(a)	See Table 4 for information about our use of Non-GAAP financial measures.

 

(b)	Represents OIBDA as a percentage of total revenues.

 

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

 

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

 

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

 

(f)	Total debt excludes the effect of deferred financing costs, net.

 

(g)	Represents net debt at quarter end divided by annualized OIBDA for the quarter.

 

(h)	Represents OIBDA divided by cash interest expense for the quarter.

 

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