UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
_______________________
FORM
10-Q/A
(Amendment
No. 1)
_______________________
Quarterly
Report Pursuant to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
For
the quarterly period ended March 31, 2006
Commission
File Number: 0-29227
Mediacom
Communications Corporation
(Exact
name of Registrant as specified in its charter)
|
Delaware
|
06-1566067
|
|
|
(State
of incorporation)
|
(I.R.S.
Employer Identification
Number)
|
100
Crystal Run Road
Middletown,
NY 10941
(Address
of principal executive offices)
(845)
695-2600
(Registrant’s
telephone number)
Indicate
by check mark whether the Registrant (1) has filed all reports required to
be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during
the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements
for
the past 90 days.
|
R
Yes
|
£
No
|
Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
one):
|
£
Large accelerated filer
|
R
Accelerated filer
|
£
Non-accelerated filer
|
Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
|
£
Yes
|
R
No
|
As
of
April 28, 2006, there were 84,163,532 shares of Class A common stock and
27,073,628 shares
of
Class
B common
stock outstanding.
EXPLANATORY
NOTE
Mediacom
Communications Corporation hereby amends its Quarterly Report on Form 10-Q
for
the quarterly period ended March 31, 2006, filed on May 10, 2006, as set
forth
in this Quarterly Report on Form 10-Q/A (Amendment No.1) (the “Form 10-Q/A”).
This Form 10-Q/A amends Exhibit 32.1 (Section 1350 Certifications) to correct
a
typographical error in the date reflecting the period ended for the Form
10-Q.
2
FORM
10-Q
FOR
THE PERIOD ENDED MARCH 31, 2006
TABLE
OF CONTENTS
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23
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23
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24
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24
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24
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24
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25
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Cautionary
Statement Regarding Forward-Looking Statements
You
should carefully review the information contained in this Quarterly Report
and
in other reports or documents that we file from time to time with the Securities
and Exchange Commission (the “SEC”).
In
this
Quarterly Report, we state our beliefs of future events and of our future
financial performance. In some cases, you can identify those so-called
“forward-looking statements” by words such as “may,” “will,” “should,”
“expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,”
“potential,” or “continue” or the negative of those words and other comparable
words. These forward-looking statements are subject to risks and uncertainties
that could cause actual results to differ materially from historical results
or
those we anticipate. Factors that could cause actual results to differ from
those contained in the forward-looking statements include, but are not limited
to: competition in our video, high-speed Internet access and phone businesses;
our ability to achieve anticipated customer and revenue growth and to
successfully introduce new products and services; increasing programming costs;
changes in laws and regulations; our ability to generate sufficient cash flow
to
meet our debt service obligations and access capital to maintain our financial
flexibility and the other risks and uncertainties discussed in this Quarterly
Report and in our Annual Report on Form 10-K for the year ended December 31,
2005 and other reports or documents that we file from time to time with the
SEC.
Statements included in this Quarterly Report are based upon information known
to
us as of the date that this Quarterly Report is filed with the SEC, and we
assume no obligation to update or alter our forward-looking statements made
in
this Quarterly Report, whether as a result of new information, future events
or
otherwise, except as otherwise required by applicable federal securities
laws.
|
FINANCIAL
STATEMENTS
|
MEDIACOM
COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
(All
dollar amounts in thousands, except share amounts)
(Unaudited)
|
March
31,
2006
|
December
31,
2005
|
||||||
|
ASSETS
|
|||||||
|
CURRENT
ASSETS
|
|||||||
|
Cash
and cash equivalents
|
$
|
20,881
|
$
|
17,281
|
|||
|
Accounts
receivable, net of allowance for doubtful accounts of $2,639 and
$3,078,
respectively
|
58,309
|
63,845
|
|||||
|
Prepaid
expenses and other current assets
|
25,783
|
23,046
|
|||||
|
Deferred
tax asset
|
2,782
|
2,782
|
|||||
|
Total
current assets
|
107,755
|
106,954
|
|||||
|
Investment
in cable television systems:
|
|||||||
|
Property,
plant and equipment, net of accumulated depreciation of $1,276,388
and
$1,229,738, respectively
|
1,449,608
|
1,453,588
|
|||||
|
Franchise
rights, net of accumulated amortization of $140,947
|
1,803,971
|
1,803,971
|
|||||
|
Goodwill,
net of accumulated amortization of $3,232
|
221,382
|
221,382
|
|||||
|
Subscriber
lists and other intangible assets, net of accumulated amortization
of
$158,278 and $157,755, respectively
|
13,300
|
13,823
|
|||||
|
Total
investment in cable television systems
|
3,488,261
|
3,492,764
|
|||||
|
Other
assets, net of accumulated amortization of $26,307 and $24,617
respectively
|
46,405
|
49,780
|
|||||
|
Total
assets
|
$
|
3,642,421
|
$
|
3,649,498
|
|||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
|
CURRENT
LIABILITIES
|
|||||||
|
Accounts
payable and accrued expenses
|
$
|
251,499
|
$
|
270,137
|
|||
|
Deferred
revenue
|
43,714
|
41,073
|
|||||
|
Current
portion of long-term debt
|
228,412
|
222,770
|
|||||
|
Total
current liabilities
|
523,625
|
533,980
|
|||||
|
Long-term
debt, less current portion
|
2,865,678
|
2,836,881
|
|||||
|
Deferred
tax liabilities
|
232,157
|
200,090
|
|||||
|
Other
non-current liabilities
|
19,455
|
19,440
|
|||||
|
Total
liabilities
|
3,640,915
|
3,590,391
|
|||||
|
Commitments
and contingencies (Note 9)
|
|||||||
|
STOCKHOLDERS'
EQUITY
|
|||||||
|
Class
A common stock, $.01 par value; 300,000,000 shares authorized; 93,402,352
shares issued and 84,300,221 shares outstanding as of March 31, 2006
and
93,280,535 shares issued and 88,050,009 shares outstanding as of
December
31, 2005
|
934
|
933
|
|||||
|
Class
B common stock, $.01 par value; 100,000,000 shares authorized; 27,336,939
shares issued and outstanding as of March 31, 2006 and December 31,
2005,
respectively
|
274
|
274
|
|||||
|
Additional
paid-in capital
|
987,342
|
990,584
|
|||||
|
Deferred
compensation
|
-
|
(4,857
|
)
|
||||
|
Accumulated
deficit
|
(938,399
|
)
|
(901,191
|
)
|
|||
|
Treasury
stock, at cost, 9,102,131 and 5,230,526 shares of Class A common
stock, as
of March 31, 2006 and December 31, 2005, respectively
|
(48,645
|
)
|
(26,636
|
)
|
|||
|
Total
stockholders' equity
|
1,506
|
59,107
|
|||||
|
Total
liabilities and stockholders' equity
|
$
|
3,642,421
|
$
|
3,649,498
|
|||
The
accompanying notes to the unaudited financial
statements
are an integral part of these statements
MEDIACOM
COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
(All
amounts in thousands, except per share data)
(Unaudited)
|
Three
Months Ended
March
31,
|
|||||||
|
2006
|
2005
|
||||||
|
Revenues
|
$
|
289,348
|
$
|
266,244
|
|||
|
Costs
and expenses:
|
|||||||
|
Service
costs (exclusive of depreciation and amortization of $53,717
and $53,925, respectively, shown separately below)
|
118,523
|
106,344
|
|||||
|
Selling,
general and administrative expenses
|
58,428
|
55,652
|
|||||
|
Corporate
expenses
|
5,984
|
5,274
|
|||||
|
Depreciation
and amortization
|
53,717
|
53,925
|
|||||
|
Operating
income
|
52,696
|
45,049
|
|||||
|
Interest
expense, net
|
(55,652
|
)
|
(51,274
|
)
|
|||
|
Gain
on derivatives, net
|
515
|
8,070
|
|||||
|
Other
expense
|
(2,641
|
)
|
(2,696
|
)
|
|||
|
Loss
before (provision for) benefit from income taxes
|
(5,082
|
)
|
(851
|
)
|
|||
|
(Provision
for) benefit from income taxes
|
(32,126
|
)
|
10
|
||||
|
Net
loss
|
$
|
(37,208
|
)
|
$
|
(841
|
)
|
|
|
Weighted
average shares outstanding
|
113,529
|
117,861
|
|||||
|
Basic
and diluted loss per share
|
$
|
(0.33
|
)
|
$
|
(0.01
|
)
|
|
The
accompanying notes to the unaudited financial
statements
are an integral part of these statements
MEDIACOM
COMMUNICATIONS CORPORATION AND
SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(All
dollar amounts in thousands)
(Unaudited)
|
Three
Months Ended
March
31,
|
|||||||
|
2006
|
2005
|
||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
|
Net
loss
|
$
|
(37,208
|
)
|
$
|
(841
|
)
|
|
|
Adjustments
to reconcile net loss to net cash provided by operating
activities:
|
|||||||
|
Depreciation
and amortization
|
53,717
|
53,925
|
|||||
|
Gain
on derivatives, net
|
(515
|
)
|
(8,070
|
)
|
|||
|
Amortization
of deferred financing costs
|
1,690
|
1,662
|
|||||
|
Non-cash
share-based compensation
|
1,155
|
151
|
|||||
|
Deferred
income taxes
|
32,067
|
125
|
|||||
|
Changes
in assets and liabilities, net of effects from
acquisitions:
|
|||||||
|
Accounts
receivable, net
|
5,536
|
3,275
|
|||||
|
Prepaid
expenses and other assets
|
(519
|
)
|
(4,026
|
)
|
|||
|
Accounts
payable and accrued expenses
|
(25,764
|
)
|
(17,547
|
)
|
|||
|
Deferred
revenue
|
2,641
|
1,181
|
|||||
|
Other
non-current liabilities
|
15
|
(520
|
)
|
||||
|
Net
cash flows provided by operating activities
|
32,815
|
29,315
|
|||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
|
Capital
expenditures
|
(47,619
|
)
|
(54,789
|
)
|
|||
|
Net
cash flows used in investing activities
|
(47,619
|
)
|
(54,789
|
)
|
|||
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
|
New
borrowings
|
105,000
|
299,000
|
|||||
|
Repayment
of debt
|
(70,561
|
)
|
(281,669
|
)
|
|||
|
Proceeds
from issuance of common stock in employee stock purchase
plan
|
461
|
477
|
|||||
|
Other
financing activities - book overdrafts
|
5,658
|
(10,223
|
)
|
||||
|
Repurchases
of Class A common stock
|
(22,009
|
)
|
-
|
||||
|
Financing
costs
|
(145
|
)
|
(50
|
)
|
|||
|
Net
cash flows provided by financing activities
|
18,404
|
7,535
|
|||||
|
Net
increase (decrease) in cash and cash equivalents
|
3,600
|
(17,939
|
)
|
||||
|
CASH
AND CASH EQUIVALENTS, beginning of period
|
17,281
|
23,875
|
|||||
|
CASH
AND CASH EQUIVALENTS, end of period
|
$
|
20,881
|
$
|
5,936
|
|||
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION:
|
|||||||
|
Cash
paid during the period for interest, net of amounts
capitalized
|
$
|
78,620
|
$
|
70,635
|
|||
The
accompanying notes to the unaudited financial
statements
are an integral part of these statements
MEDIACOM
COMMUNICATIONS CORPORATION AND
SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
(1)
|
Statement
of Accounting Presentation and Other
Information
|
Basis
of Preparation of Unaudited Consolidated Financial
Statements
Mediacom
Communications Corporation (“MCC,” and collectively with its subsidiaries, the
“Company”) has prepared these unaudited consolidated financial statements as
of
March
31, 2006 and 2005. In the opinion of management, such statements include all
adjustments, consisting of normal recurring accruals
and
adjustments, necessary for a fair presentation of the Company’s consolidated
results of operations and financial position for the interim periods presented.
The accounting policies followed during such interim periods reported are in
conformity with generally accepted accounting principles in the United States
of
America and are consistent with those applied during annual periods, except
for
the adoption of SFAS No. 123(R) “Share-Based
Payment” (“SFAS
No. 123(R)”), as discussed in Note 8. For a summary of the Company’s accounting
policies and other information, refer to the Company’s Annual Report on Form
10-K for the year ended December 31, 2005.
The
results of operations for the interim periods are not necessarily indicative
of
the results that might be expected for future interim periods or for the full
year ending December 31, 2006.
Reclassifications
Certain
reclassifications have been made to prior year’s amounts to conform to the
current year’s presentation.
|
(2)
|
Liquidity
and Capital Resources
|
The
Company has a significant level of debt, interest expense obligations and
liabilities in the normal course of business. The majority of the Company’s debt
that matures during the next twelve months consists of $172.5 million of
convertible notes due July 1, 2006. Although the Company has not yet determined
how it will satisfy that obligation, several alternatives are available,
including the repayment of the notes with availability under the Company’s
subsidiary credit facilities. As of March 31, 2006, the Company had unused
revolving credit commitments of $813.0 million, all of which could be borrowed
and used for general corporate purposes based on the terms and conditions of
its
debt arrangements.
|
(3)
|
Recently
Issued Accounting
Pronouncements
|
In
February 2006, the FASB issued SFAS Statement No. 155, “Accounting
for Certain Hybrid Financial Instruments, Amendment of FASB Statement No. 133
and 140”
(“SFAS
No. 155”). SFAS No. 155 amends SFAS No. 133, “Accounting
for Derivative Instruments and Hedging Activities”
(“SFAS
No. 133”) and SFAS No. 140, “Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities”
(“SFAS
No. 140”). SFAS No. 155 gives entities the option of applying fair value
accounting to certain hybrid financial instruments in their entirety if they
contain embedded derivatives that would otherwise require bifurcation under
SFAS
No. 133. SFAS No. 155 will be effective as of January 1, 2007 and the Company
does not believe that the adoption will have a material impact on its
consolidated financial condition or results of operations.
In
March
2006, the FASB issued SFAS No. 156, “Accounting
for Servicing of Financial Assets - an Amendment of FASB Statement No
140.”
SFAS No
156 provides guidance on the accounting for servicing assets and liabilities
when an entity undertakes an obligation to service a financial asset by entering
into a servicing contract. This statement is effective for all transactions
in
fiscal years beginning after September 15, 2006. The Company does not expect
the
adoption of SFAS No. 156 will have a material impact on its consolidated
financial condition or results of operations.
|
(4)
|
Earnings
Per Share
|
The
Company calculates earnings per share in accordance with SFAS No. 128,
“Earnings
per Share.”
SFAS
No. 128 computes basic earnings (loss) per share by dividing the net income
(loss) by the weighted average number of shares of common stock outstanding
during the period. Diluted earnings per share (“Diluted EPS”) is computed by
dividing the net income (loss) by the weighted average number of shares of
common stock outstanding during the period plus the effects of any potentially
dilutive securities. Diluted EPS considers the impact of potentially dilutive
securities except in periods in which there is a loss because the inclusion
of
the potential common shares would have an anti-dilutive effect. The Company’s
potentially dilutive securities include common shares which may be issued upon
exercise of its stock options, conversion of convertible senior notes or vesting
of restricted stock units. Diluted EPS excludes the impact of potential common
shares related to our stock options in periods in which the option exercise
price is greater than the average market price of the Company’s Class A common
stock during the period.
MEDIACOM
COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
For
the
three months ended March 31, 2006 and 2005, the Company generated net losses
so
the inclusion of the potential common shares would have been anti-dilutive.
Accordingly, diluted loss per share equaled basic loss per share. Diluted
loss per share for the three months ended March 31, 2006 and 2005, excludes
approximately 10.8 million and 10.3 million, respectively, potential common
shares related to the Company’s convertible senior notes and share-based
compensation plans.
|
(5)
|
Property,
Plant and Equipment
|
As
of
March 31, 2006
and
December 31, 2005,
property, plant and equipment consisted of (dollars in thousands):
|
March
31,
2006
|
December
31,
2005
|
||||||
|
Land
and land improvements
|
$
|
7,149
|
$
|
7,149
|
|||
|
Buildings
and leasehold improvements
|
40,844
|
40,653
|
|||||
|
Cable
systems, equipment and subscriber devices
|
2,571,042
|
2,531,840
|
|||||
|
Vehicles
|
65,234
|
64,729
|
|||||
|
Furniture,
fixtures and office equipment
|
41,727
|
38,955
|
|||||
|
2,725,996
|
2,683,326
|
||||||
|
Accumulated
depreciation
|
(1,276,388
|
)
|
(1,229,738
|
)
|
|||
|
Property,
plant and equipment, net
|
$
|
1,449,608
|
$
|
1,453,588
|
|||
MEDIACOM
COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
(6)
|
Accounts
Payable and Accrued
Expenses
|
Accounts
payable and accrued expenses consist of the following (dollars in
thousands):
|
March
31,
2006
|
December
31,
2005
|
||||||
|
Accounts
payable
|
$
|
12,655
|
$
|
6,329
|
|||
|
Book
overdrafts(1)
|
32,056
|
26,330
|
|||||
|
Accrued
interest
|
41,556
|
65,282
|
|||||
|
Accrued
payroll and benefits
|
25,739
|
25,824
|
|||||
|
Accrued
programming costs
|
50,246
|
52,807
|
|||||
|
Accrued
property, plant and equipment
|
18,398
|
14,839
|
|||||
|
Accrued
taxes and fees
|
25,132
|
30,617
|
|||||
|
Subscriber
advance payments
|
11,063
|
10,096
|
|||||
|
Other
accrued expenses
|
34,654
|
38,013
|
|||||
|
$
|
251,499
|
$
|
270,137
|
||||
(1) Book
overdrafts represent outstanding checks in excess of funds on deposit at the
Company’s disbursement accounts. The Company transfers funds from its depository
accounts to its disbursement accounts upon daily notification of checks
presented for payment. Changes in book overdrafts are reported as part of cash
flows from financing activities in the Company’s consolidated statement of cash
flows.
|
(7)
|
Debt
|
As
of
March 31, 2006 and December 31, 2005, debt consisted of (dollars in thousands):
|
March
31,
2006
|
December
31,
2005
|
||||||
|
Bank
credit facilities
|
$
|
1,693,750
|
$
|
1,658,750
|
|||
|
8½%
senior notes due 2015
|
200,000
|
200,000
|
|||||
|
7⅞%
senior notes due 2011
|
125,000
|
125,000
|
|||||
|
9½%
senior notes due 2013
|
500,000
|
500,000
|
|||||
|
11%
senior notes due 2013
|
400,000
|
400,000
|
|||||
|
5¼%
convertible senior notes due 2006
|
172,500
|
172,500
|
|||||
|
Capital
lease obligations
|
2,840
|
3,401
|
|||||
|
$
|
3,094,090
|
$
|
3,059,651
|
||||
|
Less:
Current portion
|
228,412
|
222,770
|
|||||
|
Total
long-term debt
|
$
|
2,865,678
|
$
|
2,836,881
|
|||
Bank
Credit Facilities
The
average interest rates on outstanding debt under the bank credit facilities
as
of March
31,
2006 and 2005,
were
6.6% and
4.8%,
respectively, before giving effect to the interest rate exchange agreements
discussed below. As of
March
31, 2006, the
Company
had unused credit commitments of approximately $813.0 million under its bank
credit facilities, all of which could be borrowed and used for general corporate
purposes based on the terms and conditions of the Company’s debt arrangements.
The Company was in compliance with all covenants under its debt arrangements
as
of March
31,
2006.
As
of
March 31, 2006, approximately $22.8 million letters of credit were issued to
various parties as collateral for our performance relating primarily to
insurance and franchise requirements.
MEDIACOM
COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Interest
Rate Exchange Agreements
The
Company uses interest rate exchange agreements in order to fix the interest
rate
on its floating rate debt. As of March 31, 2006, the Company had interest rate
exchange agreements with various banks pursuant to which the interest rate
on
$800.0 million is fixed at a weighted average rate of approximately 3.3%. The
Company’s interest rate exchange agreements are scheduled to expire on the
amounts of $500.0 million, $200.0 million and $100.0 million during the year
ended December 31, 2006, 2007 and 2009, respectively. For the three months
ended March 31, 2006, based on the mark-to-market valuation, the Company
recorded on its consolidated balance sheet an accumulated investment in
derivatives of $13.4 million, which is a component of prepaid and other
non-current assets and a gain on derivatives of $0.5 million and $8.0
million for the three months ended March 31, 2006 and 2005,
respectively.
|
(8)
|
Stockholder’s
Equity
|
Stock
Repurchase Plans
In
February 2006, the Board of Directors authorized an additional $50.0 million
stock repurchase program. During the three months ended March 31, 2006, the
Company repurchased approximately 3.9 million shares for an aggregate cost
of
$22.0 million, at an average price per share of $5.68. As of March 31, 2006,
approximately $51.4 million remains available under the Class A stock repurchase
program.
Share-based
Compensation
Effective
January 1, 2006, the Company adopted SFAS No. 123(R) using the modified
prospective method. SFAS No. 123(R) revises SFAS No. 123, “Accounting
for Stock-Based Compensation”(SFAS
No.
123) and supersedes Accounting Principles Board (“APB”) Opinion No. 25,
“Accounting
for Stock Issued to Employees”
(APB
No. 25). SFAS No. 123(R) requires the cost of all share-based payments to
employees, including grants of employee stock options, to be recognized in
the
financial statements based on their fair values at the grant date, or the date
of later modification, over the requisite service period. In addition, SFAS
123(R) requires unrecognized cost, based on the amounts previously disclosed
in
the Company’s pro forma footnote disclosure, related to options vesting after
the date of initial adoption to be recognized in the financial statements over
the remaining requisite service period.
Under
this method, prior periods are not restated and the amount of compensation
cost
recognized includes (i) compensation cost for all share-based payments granted
prior to, but not yet vested as of January 1, 2006, based on the grant date
fair
value estimated in accordance with the provisions of SFAS No. 123 and (ii)
compensation cost for all share-based payments granted subsequent to January
1,
2006, based on the grant date fair value estimated in accordance with the
provisions of SFAS No. 123(R). The Company uses the Black-Scholes option pricing
model which requires extensive use of accounting judgment and financial
estimates, including estimates of the expected term employees will retain their
vested stock options before exercising them, the estimated volatility of the
Company’s stock price over the expected term, and the number of options that
will be forfeited prior to the completion of their vesting requirements.
Application of alternative assumptions could produce significantly different
estimates of the fair value of share-based compensation and consequently, the
related amounts recognized in the Consolidated Statements of Operations. The
provisions of SFAS No. 123(R) apply to new stock awards and stock awards
outstanding, but not yet vested, on the effective date. In March 2005, the
SEC
issued Staff Accounting Bulletin No. 107, "Share-based Payment" (SAB
No. 107), relating to SFAS No. 123(R). We have applied the provisions of SAB
No.
107 in our adoption.
MEDIACOM
COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Impact
of the Adoption of SFAS No. 123(R)
Upon
adoption of SFAS 123(R), the Company recognizes share-based compensation
expenses associated with share awards on a straight-line basis over the
requisite service period using the fair value method. The incremental
share-based compensation expense recognized due to the adoption of SFAS
123(R)
was $0.7 million for the three months ended March 31, 2006. Compensation
expense
related to restricted stock units was recognized before the implementation
of
SFAS No. 123(R). Results for prior periods have not been restated.
Total
share-based compensation for the three month period ended March 31, 2006 was
as
follows (all dollar amounts in thousands except per share data):
|
Three
Months Ended
March
31,
2006
|
||||
|
Share-based
compensation expense by type of award:
|
||||
|
Employee
stock options
|
$
|
575
|
||
|
Employee
stock purchase plan
|
176
|
|||
|
Restricted
stock units
|
404
|
|||
|
Total
share-based compensation expense
|
1,155
|
|||
|
Tax
effect on stock-based compensation expense
|
-
|
|||
|
Net
effect on net loss
|
$
|
(1,155
|
)
|
|
|
Effect
on loss per share:
|
||||
|
Basic
and diluted
|
$
|
(0.01
|
)
|
|
As
required by SFAS No. 123(R), the Company made an estimate of expected
forfeitures and is recognizing compensation costs only for those equity awards
expected to vest. The cumulative effect of initially adopting SFAS No. 123(R)
was not material. The total future compensation cost related to unvested
share-based awards that are expected to vest was $9.7 million as of March 31,
2006, which will be recognized over a weighted average period of 2.8 years.
In
November 2005, the FASB issued FASB Staff Position No. FAS 123(R)-3, Transition
Election Related to Accounting for Tax Effects of Shared-Based Payment Awards.
The Company has not yet adopted a method for calculating tax effects of
share-based compensation pursuant to SFAS No. 123(R).
Pro
Forma Information for Periods Prior to the Adoption of SFAS
No. 123(R)
Prior
to
January 1, 2006, the Company accounted for share-based compensation in
accordance with APB No. 25, as permitted by SFAS No. 123, and accordingly did
not recognize compensation expense for stock options with an exercise price
equal to or greater than the market price of the underlying stock at the date
of
grant. Had the fair value method prescribed by SFAS No. 123 been applied, the
effect on net loss and loss per share would have been as follows for the three
months ended March 31, 2005 (dollars in thousands, except per share
data):
|
Three
Months Ended
March
31,
2005
|
||||
|
Net
loss as reported
|
$
|
(841
|
)
|
|
|
Add:
Total
share-based compensation expense included in net loss as reported
above
|
151
|
|||
|
Deduct:
Total share-based compensation expense determined under fair value
based
method for all awards
|
(1,266 | ) | ||
|
Pro
forma net loss
|
$
|
(1,956
|
)
|
|
|
Basic
and diluted loss per share:
|
||||
|
As
reported
|
$
|
(0.01
|
)
|
|
|
Pro
forma
|
$
|
(0.02
|
)
|
|
MEDIACOM
COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Valuation
Assumptions
As
required by SFAS 123(R), the Company estimated the fair value of stock options
using the Black-Scholes valuation model and the straight-line attribution
approach with the following weighted average assumptions:
|
Employee
Stock Option Plans
Three
Months Ended
March
31,
|
Employee
Stock Purchase Plans
Three
Months Ended
March
31,
|
||||||||||||
|
2006
|
2005
|
2006
|
2005
|
||||||||||
|
Dividend
yield
|
0
|
%
|
0
|
%
|
0
|
%
|
0
|
%
|
|||||
|
Expected
volatility
|
55.3
|
%
|
45.0
|
%
|
33.0
|
%
|
45.0
|
%
|
|||||
|
Risk
free interest rate
|
4.8
|
%
|
3.4
|
%
|
4.8
|
%
|
3.7
|
%
|
|||||
|
Expected
option life (in years)
|
4.1
|
6.0
|
0.5
|
0.5
|
|||||||||
|
Forfeiture
rate
|
14.0
|
%
|
14.0
|
%
|
-
|
-
|
|||||||
The
Company does not expect to declare dividends. Expected volatility is based
on a
combination of implied and historical volatility of the Company’s Class A common
stock. Prior to January 1, 2006, the Company used historical data and other
factors to estimate the option life of the share-based payments granted. For
the
three months ended March 31, 2006, the Company elected the simplified method
in
accordance with SAB 107 to estimate the option life of share-based awards.
The risk free rate is based on the U.S. Treasury yield in effect at the date
of
grant. The forfeiture rate is based on trends in actual option
forfeitures.
Stock
Option Plan
In
April
2003, MCC’s Board of Directors adopted the Company’s 2003 Incentive Plan, or the
“2003 Plan”, which amended and restated the Company’s 1999 Stock Option Plan and
incorporated into the 2003 Plan options that were previously granted outside
the
1999 Stock Option Plan. The 2003 Plan was approved by MCC’s stockholders in June
2003. The 2003 Plan provides for the grant of incentive stock options,
nonqualified stock options, restricted shares, and other share-based awards,
in
addition to annual incentive awards.
MEDIACOM
COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The
following table summarizes the activity of the Company’s option plans for the
three months ended March 31, 2006:
|
Shares
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Term
(in
years)
|
||||||||
|
Outstanding
at January 1, 2006
|
4,931,915
|
$
|
14.12
|
|||||||
|
Granted
|
400,000
|
5.77
|
||||||||
|
Exercised
|
-
|
-
|
||||||||
|
Forfeited
|
(48,615
|
)
|
13.40
|
|||||||
|
Expired
|
-
|
-
|
||||||||
|
Outstanding
at March 31, 2006
|
5,283,300
|
$
|
13.36
|
5.2
|
||||||
|
Exercisable
at March 31, 2006
|
3,826,963
|
$
|
15.68
|
4.9
|
||||||
The
weighted average fair value at the date of grant of a Class A common stock
option granted under the Company’s option plan during the three months ended
March 31, 2006 and 2005 was $5.72 and $5.91, respectively. During the three
months ended March 31, 2006, approximately 259,685 shares vested with a weighted
average exercise price of $9.26.
The
following table summarizes information concerning stock options outstanding
as
of March 31, 2006:
|
Options
Outstanding
|
Options
Exercisable
|
||||||||||||||||||||||||
|
Range
of
Exercise
Prices
|
Number
of
Shares
Outstanding
|
Weighted
Average
Remaining
Contractual
Life
|
Weighted
Average
Exercise
Price
|
Aggregate
Intrinsic
Value
(in
thousands)
|
Number
of
Shares
Outstanding
|
Weighted
Average
Remaining
Contractual
Life
|
Weighted
Average
Exercise
Price
|
Aggregate
Intrinsic
Value
(in
thousands)
|
|||||||||||||||||
|
$5.00
- $12.00
|
2,580,260
|
6.4
years
|
$
|
7.81
|
$
|
104
|
1,141,973
|
6.7
years
|
$
|
8.61
|
$
|
22
|
|||||||||||||
|
$12.01
- $18.00
|
483,900
|
4.9
years
|
17.11
|
-
|
468,390
|
4.9
years
|
17.17
|
-
|
|||||||||||||||||
|
$18.01
- $22.00
|
2,219,050
|
3.8
years
|
19.01
|
-
|
2,216,600
|
3.7
years
|
19.00
|
-
|
|||||||||||||||||
|
|
5,283,300
|
5.2
years
|
$
|
13.36
|
$
|
104
|
3,826,963
|
4.9
years
|
$
|
15.68
|
$
|
22
|
|||||||||||||
The
aggregate intrinsic value in the table above represents the total pre-tax
intrinsic value, based on the Company’s average stock price of $5.80 per share
during the three months ended March 31, 2006, which would have been received
by
the option holders had all option holders exercised their options as of that
date.
Restricted
Stock Units
The
Company grants restricted stock units to certain employees and directors
(“participants”) in Class A common stock. Awards of restricted stock units
("RSUs") are valued by reference to shares of common stock that entitle
participants to receive, upon the settlement of the unit, one share of common
stock for each unit. The awards are subject to annual vesting periods not
exceeding 4 years from the date of grant. The Company made estimates of expected
forfeitures based on historic voluntary termination behavior and trends of
actual RSU forfeitures and recognized compensation costs for equity awards
expected to vest. The intrinsic value of outstanding RSUs, based on the
Company’s average stock price of $5.80 per share during the three months ended
March 31, 2006, was $8.8 million.
MEDIACOM
COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The
following table summarizes the activity of the Company’s restricted stock unit
awards for the three months ended March 31, 2006:
|
Number
of Non-Vested
Share
Unit Awards
|
Weighted
Average
Grant
Date
Fair Value
|
||||||
|
Unvested
Awards at January 1, 2006
|
1,132,300
|
$
|
5.46
|
||||
|
Granted
|
411,700
|
5.74
|
|||||
|
Awards
Vested
|
(27,500
|
)
|
5.69
|
||||
|
Forfeited
|
(5,725
|
)
|
5.70
|
||||
|
Unvested
Awards at March 31, 2006
|
1,510,775
|
$
|
5.53
|
||||
Employee
Stock Purchase Plan
The
Company maintains an employee stock purchase plan (“ESPP”). Under the plan, all
employees are allowed to participate in the purchase of MCC’s Class A common
stock at 85% of the lower of the fair market value on the first or last day
of each six month offering period. Shares purchased by employees amounted to
94,317 and 85,716 for the three months ended for March 31, 2006 and 2005,
respectively. The net proceeds to the Company were approximately $0.5 million
for each of the periods ended March 31, 2006 and 2005, respectively.
Compensation expense related to the adoption of SFAS 123(R) was $0.2 million
for
the three months ended March 31, 2006. Compensation expense was not recorded
on
the issuance of these shares in accordance with APB No. 25 for the three months
ended March 31, 2005.
|
(9)
|
Commitments
and Contingencies
|
Legal
Proceedings
Mediacom
LLC, a wholly owned subsidiary of the Company, is named as a defendant in a
putative class action, captioned
Gary
Ogg and Janice Ogg v. Mediacom, LLC
(Case
No. CV101-2809CC), pending in
the
Circuit Court of Clay County, Missouri, by which the plaintiffs are seeking
class-based damages for an alleged trespass. The lawsuit was originally
filed on April 24, 2001. Pursuant to license agreements with the relevant
state and county authorities and utility companies, Mediacom LLC placed
interconnect fiber optic cable within state and county highway rights-of-way
and
on existing utility easements in areas of Missouri not presently served by
a
cable franchise. The lawsuit alleges that Mediacom LLC was required but
failed to obtain permission from the adjoining landowners to place the
cable. The lawsuit has not made a claim for specified damages. An
order declaring that this action is appropriate for class relief was entered
on
April 14, 2006, and Mediacom LLC is currently pursuing its appellate remedies
with respect to that order. Mediacom LLC intends to vigorously defend
against any claims made by the plaintiffs. Mediacom LLC has tendered the
lawsuit to its insurance carrier for defense and indemnification. The
carrier has agreed to defend Mediacom LLC under a reservation of rights, and
a
declaratory judgment action is pending regarding the carrier's defense and
coverage responsibilities. Mediacom LLC is unable to reasonably evaluate
the likelihood of an unfavorable outcome or quantify the possible damages,
if
any, associated with these matters, or judge whether or not those damages would
be material to its consolidated financial position, results of operations,
cash
flows or business.
The
Company is involved in various legal actions arising in the ordinary course
of
business. In the opinion of management, the ultimate disposition of these
matters will not have a material adverse effect on the Company’s consolidated
financial position, results of operations, cash flows or business.
MEDIACOM
COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
(10)
|
Income
Taxes
|
During
the quarter ended March 31, 2006, the Company determined that an additional
portion of its deferred tax assets from net operating loss carryforwards
will not be realized under the more-likely-than-not standard required by SFAS
No. 109, “Accounting
for Income Taxes.”
As a
result, the Company increased its valuation allowance and recognized a $32.1
million corresponding non-cash charge to income tax expense for the three months
ended March 31, 2006. This amount represents the portion of deferred tax
liabilities related to the basis differences of the Company’s indefinite-lived
intangible assets.
|
(11)
|
Related
Party Transactions
|
Mediacom
Management Corporation (“Mediacom Management”), a Delaware corporation, holds a
1% direct ownership interest in Mediacom California LLC, which in turn holds
a
1% interest in Mediacom Arizona LLC. These ownership interests represent less
than 1% of the Company’s total revenues. Mediacom Management is wholly-owned by
the Chairman and CEO of MCC.
One
of
the Company’s directors is a partner of a law firm that performs various legal
services for the Company. For the three months ended March 31, 2006 and 2005,
there were no amounts paid to this law firm for services performed.
|
(12)
|
Subsequent
Events
|
On
May 5,
2006, the operating subsidiaries of Mediacom LLC refinanced a $543.1 million
term loan with a new term loan in the amount of $650.0 million. Borrowings
under
the new term loan bear interest at a rate that is 0.5% less than the interest
rate of the term loan that it replaced. The new term loan matures in January
2015, whereas the term loan it replaced had a maturity of February
2013.
On
May 5,
2006, the operating subsidiaries of Mediacom Broadband LLC, one of the Company's
wholly-owned subsidiaries, refinanced a $495.0 million term loan with a new
term loan in the amount of $800.0 million. The new term loan consists of two
tranches: (i) a $550.0 million term loan which was funded on May 5, 2006; and
(ii) a $250.0 million delayed-draw term loan which the operating
subsidiaries may borrow at any time until July 1, 2006. Borrowings under
the new term loan bear interest at a rate that is 0.25% less than the interest
rate of the term loan that it replaced. The new term loan matures in January
2015, whereas the term loan it replaced had a maturity of February
2014.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
The
following discussion should be read in conjunction with the Company’s unaudited
consolidated financial statements as of, and for the three months ended, March
31, 2006 and 2005, and with the Company’s annual report on Form 10-K for the
year ended December 31, 2005.
Overview
Mediacom
Communications Corporation is the nation’s eighth largest cable television
company based on customers served and the leading cable operator focused on
serving the smaller cities and towns in the United States. Through our
interactive broadband network, we provide our customers with a wide array of
broadband products and services, including video services, such as
video-on-demand (“VOD”), high-definition television (“HDTV”) and digital video
recorders (“DVRs”), high-speed data access (“HSD”), and phone service. Where our
phone service is available, we offer triple-play bundles of video, HSD and
voice. Bundled products and services offer our customers a single provider
contact for ordering, provisioning, billing and customer care.
As
of
March 31, 2006, our cable systems passed an estimated 2.81 million homes and
served 1.42 million basic video subscribers in 23 states. We provide digital
video services to 497,000 digital customers, representing a penetration of
35.0%
of our basic subscribers. We also currently provide HSD to 504,000 data
customers, representing a penetration of 17.9% of our estimated homes passed.
We
introduced phone service during the second quarter of 2005 and marketed and
provided service to about 1.6 million homes and 46,000 customers, respectively
as of March 31, 2006.
Adjusted
operating income before depreciation and amortization (“Adjusted OIBDA”) noted
below represents operating income before depreciation and amortization and
non-cash stock compensation charges. Adjusted OIBDA is not a financial measure
calculated in accordance with generally accepted accounting principles (“GAAP”)
in the United States of America. However, Adjusted OIBDA is one of the primary
measures used by management to evaluate our performance and to forecast future
results. We believe Adjusted OIBDA is useful for investors because it enables
them to assess our performance in a manner similar to the method used by
management, and provides a measure that can be used to analyze, value and
compare our performance with other companies in our business, although our
measure may not be directly comparable to similar measures used by other
companies. In addition, our debt agreements use Adjusted OIBDA in their covenant
calculations.
Limitations
of this measure, however, are 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, and non-cash
stock compensation charges. Therefore, Adjusted OIBDA should not be regarded
as
a substitute for operating income, net income (loss), or net cash flows provided
from operating activities, or other measures of performance or liquidity
we have
reported in accordance with GAAP. We believe that operating income is the
most
directly comparable GAAP financial measure to Adjusted OIBDA. Refer to Note
8 of
our financial statements for more information on non-cash stock compensation
costs.
Actual
Results of Operations
Three
Months Ended March 31, 2006 Compared to Three Months Ended March 31,
2005
The
following table sets forth the unaudited consolidated statements of operations
for the three months ended March 31, 2006 and 2005 (dollars in thousands and
percentage changes that are not meaningful are marked NM):
|
Three
Months Ended
March
31,
|
|||||||||||||
|
2006
|
2005
|
$
Change
|
%
Change
|
||||||||||
|
Revenues
|
$
|
289,348
|
$
|
266,244
|
$
|
23,104
|
8.7
|
%
|
|||||
|
Costs
and expenses:
|
|||||||||||||
|
Service
costs
|
118,523
|
106,344
|
12,179
|
11.5
|
%
|
||||||||
|
Selling,
general and administrative expenses
|
58,428
|
55,652
|
2,776
|
5.0
|
%
|
||||||||
|
Corporate
expenses
|
5,984
|
5,274
|
710
|
13.5
|
%
|
||||||||
|
Depreciation
and amortization
|
53,717
|
53,925
|
(208
|
)
|
(0.4
|
%)
|
|||||||
|
Operating
income
|
52,696
|
45,049
|
7,647
|
17.0
|
%
|
||||||||
|
Interest
expense, net
|
(55,652
|
)
|
(51,274
|
)
|
(4,378
|
)
|
8.5
|
%
|
|||||
|
Gain
on derivatives, net
|
515
|
8,070
|
(7,555
|
)
|
NM
|
||||||||
|
Other
expense
|
(2,641
|
)
|
(2,696
|
)
|
55
|
(2.0
|
%)
|
||||||
|
Loss
before (provision for) benefit from income taxes
|
(5,082
|
)
|
(851
|
)
|
(4,231
|
)
|
NM
|
||||||
|
(Provision
for) benefit from income taxes
|
(32,126
|
)
|
10
|
(32,136
|
)
|
NM
|
|||||||
|
Net
loss
|
$
|
(37,208
|
)
|
$
|
(841
|
)
|
$
|
(36,367
|
)
|
NM
|
|||
The
following represents a reconciliation of Adjusted OIBDA to operating income,
which is the most directly comparable GAAP measure (dollars in
thousands):
|
Three
Months Ended
March
31,
|
|||||||||||||
|
2006
|
2005
|
$
Change
|
%
Change
|
||||||||||
|
Adjusted
OIBDA
|
$
|
107,568
|
$
|
99,125
|
$
|
8,443
|
8.5
|
%
|
|||||
|
Non-cash
stock compensation charges
|
(1,155
|
)
|
(151
|
)
|
(1,004
|
)
|
NM
|
||||||
|
Depreciation
and amortization
|
(53,717
|
)
|
(53,925
|
)
|
208
|
0.4
|
%
|
||||||
|
Operating
income
|
$
|
52,696
|
$
|
45,049
|
$
|
7,647
|
17.0
|
%
|
|||||
Revenues
The
following table sets forth revenue, subscriber and monthly average revenue
statistics for the three months ended March 31, 2006 and 2005 (dollars in
thousands, except per subscriber data):
|
Three
Months Ended
March
31,
|
|||||||||||||
|
2006
|
2005
|
$
Change
|
%
Change
|
||||||||||
|
Video
|
$
|
217,227
|
$
|
209,764
|
$
|
7,463
|
3.6
|
%
|
|||||
|
Data
|
55,092
|
45,041
|
10,051
|
22.3
|
%
|
||||||||
|
Phone
|
3,648
|
-
|
3,648
|
NM
|
|||||||||
|
Advertising
|
13,381
|
11,439
|
1,942
|
17.0
|
%
|
||||||||
|
$
|
289,348
|
$
|
266,244
|
$
|
23,104
|
8.7
|
%
|
||||||
|
Three
Months Ended
March
31,
|
|||||||||||||
|
2006
|
2005
|
Increase/(Decrease)
|
%
Change
|
||||||||||
|
Basic
subscribers
|
1,422,000
|
1,461,000
|
(39,000
|
)
|
(2.7
|
%)
|
|||||||
|
Data
customers
|
504,000
|
407,000
|
97,000
|
23.8
|
%
|
||||||||
|
Phone
customers
|
46,000
|
-
|
46,000
|
NM
|
|||||||||
|
Average
monthly video revenue per basic subscriber (1)
|
$
|
50.90
|
$
|
47.91
|
$
|
2.99
|
6.2
|
%
|
|||||
|
Average
monthly data revenue per data subscriber
(2)
|
$
|
37.40
|
$
|
38.80
|
$
|
(1.40
|
)
|
(3.6
|
%)
|
||||
(1)
Average
monthly video revenue per basic subscriber is calculated based on monthly video
revenue divided by the average number of basic subscribers for the
quarter.
(2)
Average
monthly data revenue per data subscriber is calculated based on monthly data
revenue divided by the average number of data subscribers for the
quarter.
Video
revenues represent monthly subscription fees charged to customers for our core
cable television products and services (including basic, expanded basic and
digital cable programming services, wire maintenance, equipment rental and
services to commercial establishments), pay-per-view charges, installation,
reconnection and late payment fees, and other ancillary revenues. Data revenues
primarily represent monthly subscription fees charged to customers, including
commercial establishments, for our data products and services and equipment
rental fees.
Revenues
rose 8.7%, largely attributable to growth in our data customers and higher
video
revenues. We continue to expand the availability, and enhance the quality,
of
our advanced video services, such as VOD, HDTV and DVRs. Over the past two
years, we have more than tripled the download speed of our HSD product. As
of
March 31, 2006, and within nine months of the initial launch of our phone
service, we were marketing this new product to almost 1.6 million homes in
our
markets. We believe that bundled products and services offer our customers
the
convenience of having a single provider contact for ordering, scheduling,
provisioning, billing and customer care. As a result, we grew our revenue
generating units (“RGUs”) by 7.4% during the three months ended March 31, 2006,
to 2.47 million from 2.30 million. RGUs represent the sum of basic subscribers
and digital, HSD and phone customers.
Video
revenues increased 3.6%, as a result of a higher service fees from our advanced
video products and services and the impact of basic rate increases applied
on
our video subscribers. Average monthly video revenue per basic video subscriber
increased 6.2%. During the three months ended March 31, 2006, we lost 1,000
subscribers compared to a gain of 3,000 subscribers for the same period last
year. Our loss of basic subscribers as of March 31, 2006, reflected losses
during the third quarter of 2005 as a result of Hurricane Katrina. Digital
customers increased 67,000 to 497,000 from the same period last year.
Data
revenues rose 22.3%, primarily
due to the 23.8% year-over-year increase in data customers, and to a lesser
extent, the growth of our enterprise network business. Average monthly data
revenue per data customer decreased 3.6% as a result of promotional offers
during 2005.
In
June
2005, we launched Mediacom Phone, and as of March 31, 2006, our phone service
was marketed to approximately 1.6 million of our estimated 2.8 million homes
and
served 46,000 customers. We expect to market Mediacom Phone to approximately
2.5
million homes by year-end 2006.
Advertising
revenues increased 17.0%, as a result of stronger local and regional advertising
.
Costs
and Expenses
Service
costs include: programming expenses; employee expenses related to wages and
salaries of technical personnel who maintain our cable network, perform customer
installation activities, and provide customer support; data costs, including
costs of bandwidth connectivity and customer provisioning; and field
operating costs, including outside contractors, vehicle, utilities and pole
rental expenses. Programming expenses, which are generally paid on a per
subscriber basis, have historically increased due to both increases in the
rates
charged for existing programming services and the introduction of new
programming services to our customers.
Service
costs rose 11.5%, primarily due to increases in programming costs, and, to
a
lesser extent, phone service and employee expenses. Programming expense, the
largest component of service costs, increased 10.2%, principally as a result
of
higher unit costs charged by our programming vendors and, to a lesser extent,
a
benefit we recognized in the first quarter of 2005 relating to a certain
contract renewal, offset in part by a lower base of basic subscribers. Recurring
expenses related to our phone service grew incrementally with the increase
of
customers since our launch of Mediacom Phone service in the second quarter
of
2006. Personnel costs grew by 7.2%, due to increased headcount of our technical
workforce for customer installation activity and higher employee related
insurance expenses.
Selling,
general and administrative expenses include: wages and salaries for our call
centers, customer service and support and administrative personnel; franchise
fees and taxes; and office costs related to billing, telecommunications,
marketing, bad debt, advertising and office administration.
Selling,
general and administrative expenses rose 5.0%, principally due to higher
employee and tax expenses, offset in part by a significant decrease in marketing
costs. Employee expenses grew 13.5%, as a result of increased headcount of
our
administrative, direct sales and customer service personnel. Taxes and other
fees were higher by 14.0%, primarily due to an increase in property taxes and
franchise fee expenses. The increase in these expenses was significantly offset
by a 27.0% decrease in marketing costs as a result of reduced contracted third
party sales and lower advertising expenses. Selling, general and administrative
expenses as a percentage of revenues were 20.2% and 21.0% for the three months
ended March 31, 2006 and 2005, respectively.
We
expect
continued revenue growth in advanced services, which include digital video,
HDTV, DVRs, HSD and phone service. As a result, we expect our service costs
and
selling, general and administrative expenses to increase.
Corporate
expenses reflect compensation of corporate employees and other corporate
overhead. Corporate expenses rose 13.5%, principally due to increases in
employee compensation which includes non-cash share-based compensation expense
of $710,000, offset in part by a decrease in professional fees. Corporate
expenses as a percentage of revenues were 2.1% and 2.0% for the three months
ended March 31, 2006 and 2005, respectively.
Adjusted
OIBDA
Adjusted
OIBDA rose 8.5%, principally due to revenue growth, partially offset by higher
costs and expenses.
Operating
Income
Operating
income grew 17.0%, largely due to growth in Adjusted OIBDA and
relatively unchanged depreciation and amortization expense.
Interest
Expense, Net
Interest
expense, net, increased by 8.5%, primarily due to higher market interest rates
on variable rate debt and to a lesser extent, higher average
indebtedness.
Gain
on Derivatives, Net
We
enter
into interest rate exchange agreements or “interest rate swaps,” with
counterparties to fix the interest rate on a portion of our variable rate debt
to reduce the potential volatility in our interest expense that would otherwise
result from changes in variable market interest rates. As of March 31, 2006
we
had interest rate swaps with an aggregate principal amount of $800.0 million.
The changes in their mark-to-market values are derived from changes in market
interest rates, the decrease in their time to maturity and the creditworthiness
of the counterparties. As a result of the quarterly mark-to-market valuation
of
these interest rate swaps, we recorded a gain on derivatives amounting to $0.5
million and $8.1 million for the three months ended March 31, 2006 and 2005,
respectively.
Other
Expense
Other
expense was $2.6 million and $2.7 million for the three months ended March
31,
2006 and 2005, respectively. Other expense primarily represents amortization
of
deferred financing costs and fees on unused credit commitments.
(Provision
for) Benefit from Income Taxes
Provision
for income taxes was approximately $32.1 million for the three months ended
March 31, 2006, as compared to a benefit from income taxes of $10,000 for the
three months ended March 31, 2005. During the quarter ended March 31, 2006,
based on our assessment of the facts and circumstances, we determined that
an
additional portion of our deferred tax assets from net operating loss
carryforwards will not be realized under the more-likely-than-not standard
required by SFAS No. 109. As
a
result, we increased our valuation allowance and recognized a $32.1 million
corresponding non-cash charge to income tax expense for the three months ended
March 31, 2006. This amount represents the portion of deferred tax liabilities
related to the basis differences of our indefinite-lived intangible assets.
Net
Loss
As
a
result of the factors described above, we incurred a net loss for the three
months ended March 31, 2006 of $37.2 million, as compared to net loss of $0.8
million for the three months ended March 31, 2005.
Liquidity
and Capital Resources
Overview
We
have
invested, and will continue to invest, in our network to enhance its reliability
and capacity, and in the further deployment of advanced broadband services.
Our
capital spending has recently shifted away from network upgrade investments
to
the deployment of VOD, HDTV, DVRs, HSD and phone services. We also may continue
to make strategic acquisitions of cable systems. We have a high level of
indebtedness and incur significant amounts of interest expense each year. We
believe that we will meet our debt service, capital spending and other
requirements through a combination of our net cash flows from operating
activities, borrowing availability under our bank credit facilities and our
ability to secure future external financing.
As
of
March 31, 2006, our total debt was $3.09 billion. Of this amount, $228.4 million
matures within the twelve months ending March 31, 2007. During the three months
ended March 31, 2006, we paid cash interest of $77.6 million. Our cash interest
payments have historically been higher in the first and third calendar quarters
of the year due to the timing of the cash interest payments on our senior notes
and convertible senior notes.
Most
of
our debt maturing within the twelve months ending March 31, 2007, consists
of
$172.5 million of convertible notes due July 1, 2006. Although we have not
yet
determined how we will satisfy that obligation, several alternatives may be
available to us, including the repayment of the notes with availability under
our subsidiary credit facilities. As of March 31, 2006, we had unused revolving
credit commitments of $813.0 million, all of which could be borrowed and used
for general corporate purposes based on the terms and conditions of our debt
arrangements.
On
May 5,
2006, we refinanced a $543.1 million term loan with a new term loan in the
amount of $650.0 million. Borrowings under the new term loan bear interest
at a
rate that is 0.5% less than the interest rate of the term loan that it replaced.
The new term loan matures in January 2015, whereas the term loan it replaced
had
a maturity of February 2013.
On
May 5,
2006, we refinanced a $495.0 million term loan with a new term loan in the
amount of $800.0 million. The new term loan consists of two tranches: (i) a
$550.0 million term loan which was funded on May 5, 2006; and (ii) a $250.0
million delayed-draw term loan which we may borrow at any time until July 1,
2006. Borrowings under the new term loan bear interest at a rate that is 0.25%
less than the interest rate of the term loan that it replaced. The new term
loan
matures in January 2015, whereas the term loan it replaced had a maturity of
February 2014.
As
of
March 31, 2006, after giving effect to these refinancings but excluding any
borrowings under the $250.0 million delayed-draw term loan, we had unused
credit
commitments of about $961.0 million, all of which could be borrowed and used
for
general corporate purposes based on the terms and conditions of our debt
arrangements. As of March 31, 2006, after giving effect to these
refinancings and assuming that the $250.0 million delayed-draw term loan
is
borrowed in full, we had unused credit commitments of about $1,011.0 million,
all of which could be borrowed and used for general corporate purposes based
on
the terms and conditions of our debt arrangements.
For
all
periods through March 31, 2006, we were in compliance with all of the covenants
under our debt arrangements. Continued access to our credit facilities is
subject to our remaining in compliance with the covenants of these credit
facilities, including covenants tied to our operating performance. We believe
that we will not have any difficulty in the foreseeable future complying with
these covenants and that we will meet our current and long-term debt service,
capital spending and other cash requirements through a combination of our net
cash flows from operating activities, borrowing availability under our bank
credit facilities and our ability to secure future external financing. However,
there can be no assurance that we will be able to obtain sufficient future
financing, or, if we were able to do so, that the terms would be favorable
to
us. We expect that we will continue to be able to generate funds and obtain
financing sufficient to service our long-term business plan, service our debt
obligations and complete any future acquisitions if the opportunities
arise.
Operating
Activities
Net
cash
flows provided by operating activities were $32.8 million for the three months
ended March 31, 2006, as compared to $29.3 million for the comparable period
last year. The change of $3.5 million is primarily due to higher operating
income, a net increase in operating assets and liabilities offset in part by
an
increase in cash paid for interest.
Operating
income increased $7.6 million principally from higher revenues. The change
in
operating assets and liabilities was lower by $0.5 million due to the timing
of
our cash payments and cash receipts. We made cash interest payments of $77.6
million and $70.6 million for the three months ended March 31, 2006 and 2005,
respectively.
Investing
Activities
Net
cash
flows used in investing activities were $47.6 million for the three months
ended
March 31, 2006, as compared to $54.8 million for the prior year consisted of
capital expenditures. Capital expenditures decreased $7.2 million mainly due
to
lower spending on customer premise equipment.
Financing
Activities
Net
cash
flows provided by financing activities were $18.4 million for the three months
ended March 31, 2006, as compared to net cash flows used in financing activities
of $7.5 million for the comparable period in 2005. Our principal financing
activities included the following:
•
Net
borrowings under our credit facilities of $33.4 million to fund operations
and
the share repurchase of our Class A common stock.
•
Pursuant
to our Board authorized share repurchase program, we repurchased approximately
3.9 million shares of our Class A common stock for approximately $22.0 million
during the three months ended March 31, 2006.
Contractual
Obligations and Commercial Commitments
There
have been no material changes to the Company’s contractual obligations
and
commercial commitments
as
previously disclosed in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2005.
Critical
Accounting Judgments and Estimates
The
preparation of our financial statements requires us to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses, and related disclosure of contingent assets and liabilities.
Periodically, we evaluate our estimates, including those related to doubtful
accounts, long-lived assets, capitalized costs and accruals. We base our
estimates on historical experience and on various other assumptions that we
believe are reasonable. Actual results may differ from these estimates under
different assumptions or conditions.
Share-based
Compensation
We
estimate the fair value of stock options granted using the Black-Scholes
option-pricing model. This fair value is then amortized on a straight-line
basis
over the requisite service periods of the awards, which is generally the vesting
period. This option-pricing model requires the input of highly subjective
assumptions, including the option’s expected life and the price volatility of
the underlying stock. The estimation of stock awards that will ultimately vest
requires judgment, and to the extent actual results or updated estimates differ
from our current estimates, such amounts will be recorded as a cumulative
adjustment in the periods the estimates are revised. Actual results, and future
changes in estimates, may differ substantially from our current estimates.
For
a
discussion of other critical accounting judgments and estimates we identified
that we believe require significant judgment in the preparation of our
consolidated financial statements, please refer to our Form 10-K for the year
ended December 31 2005.
Inflation
and Changing Prices
Our
systems’ costs and expenses are subject to inflation and price fluctuations.
Such changes in costs and expenses can generally be passed through to
subscribers. Programming costs have historically increased at rates in excess
of
inflation and are expected to continue to do so. We believe that under the
Federal Communications Commission’s existing cable rate regulations we may
increase rates for cable television services to more than cover any increases
in
programming. However, competitive conditions and other factors in the
marketplace may limit our ability to increase our rates.
|
ITEM
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
There
have been no significant changes to the information required under this Item
from what was disclosed in our 2005 Form 10-K.
|
ITEM
4.
|
CONTROLS
AND PROCEDURES
|
Our
management carried out an evaluation, with the participation of our Chief
Executive Officer and Chief Financial Officer, of the effectiveness of our
disclosure controls and procedures as of March 31, 2006. Based upon that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures were effective to ensure that
information required to be disclosed by us in reports that we file or submit
under the Securities Exchange Act of 1934 is recorded, processed, summarized
and
reported within the time periods specified in the rules and forms of the
Securities and Exchange Commission. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by an issuer in the reports that it files or submits
under the Exchange Act are accumulated and communicated to the issuer's
management, including its principal executive and principal financial officers,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
There
has
not been any change in our internal control over financial reporting in
connection with the evaluation required by Rule 13a-15(d) under the Exchange
Act
that occurred during the quarter ended March 31, 2006 that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
|
ITEM
1.
|
LEGAL
PROCEEDINGS
|
See
Note
9 to our consolidated financial statements.
|
RISK
FACTORS
|
There
have been no material changes in the risk factors from those disclosed in our
risk factors section in Item 1A of our 2005 Form 10-K.
|
ITEM
2.
|
UNREGISTERED
SALE OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
During
the quarter ended March 31, 2006, we granted stock options to certain of our
employees and non-employee directors to purchase an aggregate of 400,000 shares
of Class A common stock at exercise prices ranging from $5.68 to $5.83 per
share. The grant of stock options to the employees and non-employee directors
was not registered under the Securities Act of 1933 because the stock options
either did not involve an offer or sale for purposes of Section 2(a)(3) of
the
Securities Act of 1933, in reliance on the fact that the stock options were
granted for no consideration, or were offered and sold in transactions not
involving a public offering, exempt from registration under the Securities
Act
of 1933 pursuant to Section 4(2).
The
following is a summary of our share repurchases of our Class A common stock
during the first quarter of 2006 under our Board-authorized repurchase
program:
|
Period
|
Total
Number
of
Shares
Purchased
|
(1) |
Average
Price
Per
Share
|
Total
Number of
Shares
Purchased
as
Part of Publicly
Announced
Program
|
Total
Dollars
Purchased
Under
the
Program
|
Approxiamte
Dollar
Value
of Shares that
May
Yet Be
Purchased
Under
the
Program
|
(2) | |||||||||
|
January
|
1,650,000
|
$
|
5.70
|
1,650,000
|
$
|
9,410,227
|
$
|
13,953,640
|
||||||||
|
February
|
466,300
|
5.82
|
466,300
|
2,715,192
|
61,238,448
|
|||||||||||
|
March
|
1,745,000
|
5.63
|
1,745,000
|
9,824,746
|
51,413,702
|
|||||||||||
|
First
Quarter 2006
|
3,861,300
|
$
|
5.68
|
3,861,300
|
$
|
21,950,165
|
$
|
51,413,702
|
||||||||
(1)
Total
number of shares purchased does not include approximately 10,305 withheld to
satisfy tax withholding obligations on vesting of restricted stock units.
(2)
A
$50.0
million share repurchase plan was authorized by our Board of Directors in May
2000 and reaffirmed in August 2004. On February 21, 2006, our Board authorized
an additional $50.0 million stock repurchase program.
|
ITEM
5.
|
OTHER
INFORMATION
|
On
May 5,
2006, the operating subsidiaries of Mediacom LLC refinanced a $543.1 million
term loan with a new term loan in the amount of $650.0 million. Borrowings
under
the new term loan bear interest at a floating rate or rates equal to, at the
option of the operating subsidiaries, the LIBOR rate or the prime rate, plus
a
margin specified in their credit facility. The margin of the new term
loan is 0.5% less than the margin of the term loan that it replaced. The
new term loan matures in January 2015, whereas the term loan it replaced had
a
maturity of February 2013. The obligations of the operating subsidiaries under
the new term loan are governed by the terms of their credit
facility.
On
May 5,
2006, the operating subsidiaries of Mediacom Broadband LLC refinanced a $495.0
million term loan with a new term loan in the amount of $800.0 million. The
new
term loan consists of two tranches: (i) a $550.0 million term loan which was
funded on May 5, 2006; and (ii) a $250.0 million delayed-draw term loan
which the operating subsidiaries may borrow at any time until July 1,
2006. Borrowings under the new term loan bear interest at a floating rate or
rates equal to, at the option of the operating subsidiaries, the LIBOR rate
or
the prime rate, plus a margin specified in their credit facility. The margin
of
the new term loan is 0.25% less than the interest rate of the term loan that
it
replaced. The new term loan matures in January 2015, whereas the term loan
it
replaced had a maturity of February 2014. The obligations of the operating
subsidiaries under the new term loan are governed by the terms of their credit
facility.
Proceeds
from each new term loan were used to pay in full the outstanding indebtedness
of
the term loan it replaced and to reduce the outstanding balance
of the revolving credit portion of each credit
facility.
JPMorgan
Chase Bank (the administrative agent of the credit facilities), several of
the
lenders of the Broadband credit facility or their respective affiliates have
in
the past performed, and may in the future from time to time perform, investment
banking, financial advisory, lending and/or commercial banking services for
the
Registrant and certain of its subsidiaries and affiliates, for which service
they have in the past received, and may in the future receive, customary
compensation and reimbursement of expenses.
|
EXHIBITS
|
|
Exhibit
Number
|
Exhibit
Description
|
|
|
10.1
*
|
Incremental
Facility Agreement, dated as of May 5, 2006, between the operating
subsidiaries of Mediacom LLC, the lenders signatory thereto and
JPMorgan
Chase Bank, N.A., as administrative agent
|
|
|
10.2
*
|
Incremental
Facility Agreement, dated as of May 5, 2006, between the operating
subsidiaries of Mediacom Broadband LLC, the lenders signatory thereto
and
JPMorgan Chase Bank, N.A., as administrative agent
|
|
|
10.3
*
|
Amendment
No. 1, dated as of May 5, 2006, to the Credit Agreement, dated
as of
October 21, 2004, among the operating subsidiaries of Mediacom
LLC, the
lenders thereto and JPMorgan Chase Bank, as administrative agent
for the
lenders.
|
|
|
10.4
*
|
Amendment
No. 2, dated as of May 5, 2006, to the Amendment and Restatement,
dated as
of December 16, 2004, of Credit Agreement, dated as of July 18,
2001,
among the operating subsidiaries of Mediacom Broadband LLC, the
lenders
thereto and JP Morgan Chase Bank, as administrative agent for the
lenders.
|
|
|
Rule
13a-14(a) Certifications
|
||
|
Section
1350 Certifications
|
|
*
|
Previously
filed with this Form 10-Q.
|
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, thereunto
duly authorized.
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MEDIACOM
COMMUNICATIONS CORPORATION
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June
28, 2006
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By:
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/s/
MARK E. STEPHAN
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Mark
E. Stephan
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Executive
Vice President and Chief Financial Officer
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26
Exhibit
31.1
CERTIFICATIONS
I,
Rocco
B. Commisso, certify that:
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(1)
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I
have reviewed this report on Form 10-Q of Mediacom Communications
Corporation;
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(2)
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Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
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|
(3)
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Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
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|
(4)
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The
registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
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|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being
prepared;
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|
b)
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Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
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|
c)
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Evaluated
the effectiveness of the registrant's disclosure controls and procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of end of the period covered
by
this report based on such evaluation;
and
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d)
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Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely
to
materially affect, the registrant’s internal control over financial
reporting; and
|
|
(5)
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The
registrant's other certifying officer and I have disclosed, based
on our
most recent evaluation of internal control over financial reporting,
to
the registrant's auditors and the audit committee of registrant's
board of
directors (or persons performing the equivalent
function):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record,
process, summarize and report financial information;
and
|
|
b)
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Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control
over financial reporting.
|
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June
28, 2006
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By:
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/s/
ROCCO B. COMMISSO
|
|
|
Rocco
B. Commisso
|
|||
|
Chief
Executive Officer
|
Exhibit
31.1
CERTIFICATIONS
I,
Mark
E. Stephan, certify that:
(1) I
have
reviewed this report on Form 10-Q of Mediacom Communications
Corporation;
|
(2)
|
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such
statements
were made, not misleading with respect to the period covered
by this
report;
|
|
(3)
|
Based
on my knowledge, the financial statements, and other financial
information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of
the
registrant as of, and for, the periods presented in this
report;
|
|
(4)
|
The
registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures
(as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act
Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision,
to ensure
that material information relating to the registrant, including
its
consolidated subsidiaries, is made known to us by others within
those
entities, particularly during the period in which this report
is being
prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such
internal
control over financial reporting to be designed under our supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant's disclosure controls and
procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of end of the period
covered by
this report based on such evaluation;
and
|
|
d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably
likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
|
(5)
|
The
registrant's other certifying officer and I have disclosed, based
on our
most recent evaluation of internal control over financial reporting,
to
the registrant's auditors and the audit committee of registrant's
board of
directors (or persons performing the equivalent
function):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design
or
operation of internal control over financial reporting which
are
reasonably likely to adversely affect the registrant's ability
to record,
process, summarize and report financial information;
and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control
over financial reporting.
|
|
June
28, 2006
|
By:
|
/s/
MARK E. STEPHAN
|
|
|
Mark
E. Stephan
|
|||
|
Executive
Vice President and Chief Financial Officer
|
Exhibit
32.1
CERTIFICATION
PURSUANT TO
18
U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Quarterly year changed Report of Mediacom Communications
Corporation (the “Company”) on Form 10-Q for the period ended March 31, 2006 as
filed with the Securities and Exchange Commission on the date hereof (the
“Report”), Rocco B. Commisso, Chief Executive Officer and Mark E. Stephan, Chief
Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as
adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002,
that:
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(1)
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the
Report fully complies with the requirements of section 13(a) or 15(d)
of
the Securities Exchange Act of 1934;
and
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(2)
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the
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
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June
28, 2006
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By:
|
/s/
ROCCO B. COMMISSO
|
|
|
Rocco
B. Commisso
|
|||
|
Chief
Executive Officer
|
|||
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By:
|
/s/
MARK E. STEPHAN
|
||
|
Mark
E. Stephan
|
|||
|
Chief
Financial Officer
|