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TheStreet Open House

Mediacom Communications Reports Results For Second Quarter 2010

MEDIACOM COMMUNICATIONS CORPORATION (Nasdaq: MCCC) today reported financial results for the three and six months ended June 30, 2010. Mediacom Communications will hold a teleconference today at 10:30 a.m. Eastern Time to discuss its financial results. A live broadcast of the teleconference can be accessed through our web site at www.mediacomcc.com.

Second Quarter 2010 Financial Highlights

  • Revenues were $377.0 million, a 3.4% increase from the prior year period
  • Adjusted operating income before depreciation and amortization (“Adjusted OIBDA”) was $139.7 million, a 2.1% increase from the prior year period 1
  • Operating income was $77.2 million, essentially flat compared to the prior year period
  • Revenue generating units (“RGUs”) grew 15,000 for the quarter and 91,000 year-over-year, representing a 3.1% annual gain
  • Free Cash Flow was $14.0 million, or $0.21 per basic share, compared to $28.5 million, or $0.42 per basic share, for the prior year period 1

Second Quarter 2010 Financial Results

Revenues rose 3.4% from the prior year period, largely due to continued growth in high-speed data and, to a lesser extent, phone and advertising revenues, offset in part by lower video revenues. Average total monthly revenue per basic subscriber rose 8.9% to $102.59.

  • Video revenues declined 0.6%, primarily due to a lower number of basic subscribers, offset in part by video rate increases and continued growth in digital customers and digital video recorder and high-definition television services. We lost 18,000 basic subscribers, compared to a loss of 15,000 in the prior year period.We added 6,000 digital customers to end the quarter with 705,000, a 58.0% penetration of basic subscribers. Year-over-year, we gained 47,000 digital customers, a 7.1% growth rate.
  • High-speed data revenues rose 10.4%, mainly due to a year-over-year gain of 60,000 high-speed data customers, or 8.0%. We gained 10,000 high-speed data customers to end the quarter with 814,000, a 29.0% penetration of estimated homes passed.
  • Phone revenues grew 9.9%, largely due to a year-over-year increase of 50,000 phone customers, or 18.7%, offset in part by higher levels of discounted pricing. We gained 17,000 phone customers to end the quarter with 317,000, a 12.0% penetration of estimated marketable phone homes.
  • Advertising revenues rose 14.0%, primarily due to increased local advertising sales, largely a result of a rebound in automotive and political advertising sales.

_______________________________

* See Notes on Page 3 regarding Adjusted OIBDA and Free Cash Flow.

Total operating costs , which exclude non-cash, share-based compensation, rose 4.3% from the prior year period, principally due to higher programming expenses and, to a much lesser extent, increases in employee, phone service and marketing costs, offset in part by lower high-speed data delivery expenses.

Adjusted OIBDA grew 2.1% from the prior year period, while the Adjusted OIBDA margin declined to 37.0% from 37.5%. Operating income was essentially flat, as the increase in Adjusted OIBDA was mostly offset by higher depreciation and amortization.

Net loss was $3.8 million, or a loss of $0.06 per basic share, compared to net income of $34.4 million, or $0.51 per basic share, in the prior year period. The swing from net income in the prior year period to a net loss was principally the result of a $29.1 million loss on derivatives, as compared to a $26.0 million gain on derivatives, offset in part by a $14.5 million provision for income taxes, for the three months ended June 30, 2009.

Capital expenditures were $64.2 million for the three months ended June 30, 2010, compared to $54.4 million during the prior year period. The increase largely reflected greater investments in scalable infrastructure for our internal phone platform and, to a much lesser extent, for our high-speed data delivery system. This was offset in part by reduced outlays for customer premise equipment, network improvements and, to a lesser extent, network extensions. Capital expenditures for the three months ended June 30, 2010 represented 17.0% of total revenues, compared to 14.9% for the prior year period.

Free Cash Flow and Financial Position

Free Cash Flow decreased 50.9% to $14.0 million, or to $0.21 per basic share, for the three months ended June 30, 2010, primarily due to a $9.8 million increase in capital expenditures and a $7.8 million net change in certain working capital accounts, partly offset by the $2.8 million year-over-year increase in Adjusted OIBDA. For the six months ended June 30, 2010, Free Cash Flow decreased 23.0% to $44.8 million, or to $0.66 per basic share, largely as a result of a $12.8 million increase in capital expenditures and a $6.5 million net change in certain working capital accounts, partly offset by a $6.0 million rise in Adjusted OIBDA.

       
(in thousands, except per share data) Three Months Ended June 30,

Six Months Ended June 30,

2010   2009 Change 2010   2009 Change
Cash provided by operating activities $ 78,157 $ 82,896 (5.7 )% $ 166,805 $ 167,346 (0.3 )%
Capital expenditures   (64,150 )   (54,395 ) 17.9     (122,000 )   (109,173 ) 11.7  
Free Cash Flow $ 14,007   $ 28,501   (50.9 )% $ 44,805   $ 58,173   (23.0 )%
 
Free Cash Flow per basic share $ 0.21 $ 0.42 (50.0 )% $ 0.66 $ 0.79 (16.5 )%

Total Net Debt Outstanding 2 was $3.270 billion as of June 30, 2010, a $13.8 million decline from December 31, 2009. As of the same date, Net Debt Leverage 2 was 5.9 times, as compared to 6.0 times for the prior year period, and we had $716.0 million of unused lines, all of which could be borrowed and used for general corporate purposes, based on the terms and conditions of our debt arrangements

_______________________________

* See Notes on Page 3 regarding Total Net Debt Outstanding and Net Debt Leverage.

Recent Developments

New Financings

On April 23, 2010, we completed $850 million of new term loans with a final maturity of October 23, 2017, and extended the termination date to December 31, 2014, on $225 million of our revolving credit commitments. The net proceeds of these new term loans were largely used to repay certain existing term loans and the full balance of outstanding loans under our revolving credit facilities, and to pay related fees and expenses. As a result of the revolver extension, total commitments under our revolving credit facilities were reduced from $830 million to $735 million.

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