Suddenlink Reports Fourth Quarter And Full Year 2010 Financial And Operating Results

ST. LOUIS, MO -- (Marketwire) -- 03/11/11 -- Cequel Communications Holdings I, LLC ("Cequel," and together with its subsidiaries, the "Company" or "Suddenlink") today reported financial and operating results for the fourth quarter and full year 2010.

Fourth Quarter and Full Year 2010 HighlightsFourth quarter pro forma revenues of $434.4 million grew 8.7% comparedto the fourth quarter of the prior year. Pro forma revenues for the fullyear of 2010 of $1,691.8 million grew 7.7% compared to the full year of2009. Pro forma Adjusted EBITDA (as defined herein) for the fourth quarter of$161.9 million grew 7.1% compared to the fourth quarter of the prior year.Pro forma Adjusted EBITDA for the full year of 2010 was $617.7 million, anincrease of 9.8% compared to the full year 2009. Pro forma revenue generating units ("RGUs") increased 36,500 for thefourth quarter and 229,500 year-over-year, or an 8.1% annual gain.Total pro forma average monthly revenue per basic video customer forthe fourth quarter was $118.41, an increase of 11.6% compared to the fourthquarter of the prior year. Bundled customers represented 58.8% of total customer relationships atDecember 31, 2010, an increase from 54.0% at December 31, 2009, primarilyfrom growth in triple play customer relationships, which represented 21.0%of total customer relationships at December 31, 2010, versus 16.6% atDecember 31, 2009.

"We achieved great success in 2010, growing customer relationships by 6,500 homes while setting company records for net gains in total revenue-generating units and digital video units," said Suddenlink's Chairman and Chief Executive Officer Jerry Kent. "We believe that success is a direct result of our Project Imagine investments and unyielding focus on customer service."

Pro Forma Fourth Quarter 2010 Compared to Pro Forma Fourth Quarter 2009

Operating results and year-over-year changes as described below are presented on a pro forma basis to include a cable system in Greenwood, Mississippi that was acquired on August 1, 2010, and exclude two cable systems that were sold on November 30, 2010, as if those transactions had been consummated on January 1, 2009.

Fourth quarter 2010 revenues rose 8.7%, largely attributable to the increase in the number of telephone, high-speed Internet and digital video customers, video price increases, and increases in advertising revenue, offset in part by the decrease in basic video customers over the prior twelve month period and the impact of bundling and promotional discounts.

Video revenues increased 2.8%, primarily due to basic video rate increases, increased premium and pay per view service revenues, and customer growth in our digital and advanced video services, offset in part by a lower number of basic video customers, and digital customers taking fewer digital tiers. The Company lost approximately 9,800 basic video customers during the fourth quarter 2010, compared to a loss of 15,400 basic video customers during the fourth quarter 2009, and lost 28,500 basic video customers during 2010. Digital video customers increased by 104,500 during 2010 and grew by 20,500 during the fourth quarter 2010, compared with an increase of 14,300 during the same period in the prior year.

High-speed Internet revenues increased 11.0%, due to an increase of 75,500 residential high-speed Internet customers during 2010 and growth in commercial high-speed Internet services to small and medium sized businesses. Residential high-speed Internet customers grew by 12,800 during the fourth quarter 2010, as compared to a gain of 18,000 during the fourth quarter 2009. Commercial high-speed Internet customers grew by approximately 800 in the fourth quarter 2010, compared to approximately 600 in the fourth quarter 2009.

Telephone revenues increased 24.2%, primarily due to an increase of 78,000 residential telephone customers during 2010, and growth in commercial telephone services to small and medium sized businesses. Residential telephone customers grew by 13,000 during the fourth quarter 2010, as compared to a gain of 27,200 during the fourth quarter 2009. Commercial telephone customers grew by approximately 1,600 in the fourth quarter 2010, compared to approximately 1,400 in the fourth quarter 2009.

Advertising revenues increased 24.9%, largely due to higher local and national advertising sales revenues, including political advertising.

Other revenues increased 14.1% due to, among other things, increased converter rental charges for high-definition and DVR capable digital converters, increased home networking revenues, increased administrative fees associated with the underlying growth of the business, higher franchise fees consistent with video revenue increases, and increased wire maintenance revenue.

Operating costs and expenses rose 9.7%, primarily due to higher programming costs, higher telephone service costs, increased net compensation and employee related costs, including contract labor, increased pole attachment expense, increased general insurance and workers compensation expense, higher bad debt expense and $0.5 million of non-recurring acquisition related due diligence expenses.

Adjusted EBITDA (as defined herein) for the fourth quarter 2010 was $161.9 million, an increase of 7.1% from the same quarter last year, resulting in an Adjusted EBITDA margin of 37.3%.

Income from operations for the fourth quarter 2010 was $67.7 million, a decrease of 1.4%, compared to $68.6 million for the fourth quarter 2009 due to increased depreciation expense.

Net income was $3.9 million for the fourth quarter 2010, compared to a net loss of $18.8 million for the fourth quarter 2009. The net loss for the fourth quarter 2009 is primarily attributable to losses on the extinguishment of debt and the termination of interest rate swap contracts, associated with our November 2009 financing activities.

Pro Forma Full Year 2010 Compared to Pro Forma Full Year 2009

Operating results and year-over-year changes as described below are presented on a pro forma basis to include a cable system in Greenwood, Mississippi that was acquired on August 1, 2010, and exclude two cable systems that were sold on November 30, 2010, as if those transactions had been consummated on January 1, 2009.

Revenues for 2010 rose 7.7%, largely attributable to the increase in the number of telephone, high-speed Internet and digital video customers, video price increases, incremental video revenues from advanced video services, such as VOD, DVR and HDTV services, and increases in advertising revenues, offset in part by the decrease in basic video customers over the prior twelve months and the impact of bundling and promotional discounts.

Video revenues increased 2.5%, primarily due to basic video rate increases, increased premium service revenues, and customer growth in our digital and advanced video services, offset in part by a lower number of basic video customers, and digital customers taking fewer digital tiers. The Company lost approximately 28,500 basic video customers in 2010, compared to a reduction of approximately 36,300 basic video customers in 2009. Digital video customers grew by approximately 104,500 in 2010, as compared to an increase of approximately 48,500 in 2009.

High-speed Internet revenues increased 10.0%, principally due to an increase in residential high-speed Internet customers and growth in our commercial high-speed Internet services to small and medium sized businesses. Residential high-speed Internet customers grew by approximately 75,500 in 2010, as compared to a gain of approximately 75,100 customers in 2009. Commercial high-speed Internet customers grew by approximately 3,400 in 2010. Comparable commercial customer changes for the prior year are not available.

Telephone revenues increased 27.3%, primarily due to an increase in residential telephone customers and growth in our commercial telephone services to small and medium sized businesses. Residential telephone customers grew by approximately 78,000 in 2010, as compared to approximately 97,700 in 2009. Commercial telephone customers grew by approximately 5,900 in 2010. Comparable commercial customer changes for the prior year are not available.

Advertising revenues increased 15.7%, largely due to higher local and national advertising sales revenues, including political and automotive advertising.

Other revenues increased 12.5% due to, among other things, increased converter rental revenues for high-definition and DVR capable digital converters, increased home shopping revenues, increased home networking revenues, higher franchise fees consistent with video revenue increases, increased administrative fee revenues and higher broadcast retransmission fees, offset in part by a decline in installation revenue, due to timing of commercial installations and decreased equipment sales revenue, due to decreased modem sales.

Operating costs and expenses increased 6.5%, primarily due to higher programming costs, higher telephone service costs, increased net compensation and employee related costs, including contract labor, higher fuel and technical operating expenses, increased marketing expenses, and $1.8 million of non-recurring acquisition related due diligence expenses.

Adjusted EBITDA for 2010 was $617.7 million, an increase of 9.8% from 2009, resulting in an Adjusted EBITDA margin of 36.5%.

Income from operations for 2010 was $254.3 million, an increase of 9.7%, compared to $231.9 million for 2009.

Net loss was $43.2 million for 2010, compared to a net loss of $42.0 million for 2009.

Liquidity and Capital Resources

The following discussion of liquidity and capital resources is presented on an actual basis and does not include historical pro forma adjustments reflecting the acquisition of the Greenwood, Mississippi system in August 2010 or divestiture of two cable systems in November 2010.

At December 31, 2010, the Company had approximately $289.7 million in cash and cash equivalents on hand and a $200.0 million undrawn revolving credit facility, reduced by $12.6 million of outstanding letters of credit.

Capital expenditures for the three months ended December 31, 2010 were $90.5 million, compared to $84.1 million for the three months ended December 31, 2009, and $354.1 million for 2010 compared to $247.4 million for 2009. The Company's bandwidth investment plan, which the Company refers to as Project Imagine, is proceeding as planned. This investment in the Company's existing network, which will be made through 2012, is providing additional capacity to launch video on demand services into new areas, additional capacity for high definition channels and increased Internet speeds for the Company's customers and capacity to launch telephone service in a few additional communities.

Net cash flows provided by operating activities decreased to $64.8 million for the three months ended December 31, 2010, compared to $118.2 million for the three months ended December 31, 2009. This decrease is related to net changes in current assets and liabilities due to the timing of payments for interest, accrued expenses and other payables, offset in part by increased Adjusted EBITDA. Net cash flows used in investing activities, primarily consisting of capital expenditures, increased to $86.0 million for the three months ended December 31, 2010, compared to $84.1 million for the three months ended December 31, 2009, primarily as a result of capital expenditures related to Project Imagine and related success based capital expenditures, offset in part by net proceeds from the sale of two cable system during November 2010. Net cash flows used in financing activities were $5.5 million for the fourth quarter of 2010 and $31.7 million for the fourth quarter of 2009. The decrease was a result of financing costs related to the fourth quarter 2009 issuance of 8.625% senior notes due 2017 ("the Notes") and the amendment of our amended and restated credit and guaranty agreement (as amended, the "Credit Facility"). In November 2009, the Company issued $600.0 million of the Notes, net of discount, and used the net proceeds plus cash on hand to prepay $600.0 million of amounts outstanding under the Credit Facility and 2nd Lien Credit Facility and to pay certain associated fees and expenses.

Free Cash Flow (as defined herein) for the quarter and year ended December 31, 2010 was $9.4 million and $15.8 million, respectively, compared to $3.8 million and $88.7 million for the quarter and year ended December 31, 2009, respectively. The increase in Free Cash Flow for the fourth quarter 2010 as compared to 2009 is due to improved operating results, offset in part by additional capital expenditures related to Project Imagine and related success based capital expenditures. The decrease in Free Cash Flow for the full year 2010 is a result of additional capital expenditures related to Project Imagine and related success based capital expenditures and an increase in cash interest expense, offset in part by improved operating results.

The Total Leverage Ratio (Consolidated Total Debt to Adjusted Pro Forma EBITDA) for Cequel, as defined in and calculated in accordance with the indenture governing the Notes, was 5.07x at December 31, 2010.

The Total Leverage Ratio (Consolidated Total Debt to Adjusted Pro Forma EBITDA) for Cequel Communications, LLC, an indirect wholly owned subsidiary of Cequel, as defined in and calculated in accordance with the Credit Facility, was 3.13x at December 31, 2010.

Senior Note Issuance

On May 4, 2010 and January 19, 2011, the Cequel Communications Holdings I, LLC (the "Issuers") issued $600.0 million aggregate principal amount (the "May Additional Notes") and $625.0 million aggregate principal amount (the "January Additional Notes," respectively, and together with the May Additional Notes, the "Additional Notes"), respectively, of 8.625% senior notes due November 2017 under the Indenture. The Additional Notes form a part of the same series as the outstanding $600.0 million aggregate principal amount (the "Original Notes") of 8.625% Senior Notes due 2017, co-issued on November 4, 2009 by the Issuers. The Company used the proceeds of the May Additional Notes to repay in full all borrowings under our second lien credit and guaranty agreement (as amended, the "2nd Lien Credit Facility"), along with related fees and expenses of that offering, with the remaining net proceeds available for working capital and general corporate purposes. The Company used the proceeds of the January Additional Notes to repay all of the original capital contributions made by holders of preferred interests of Cequel Holdings, repay a portion of the capital contributions made by holders of common interests of Cequel Holdings, make certain payments to holders of options in and restricted common units of Cequel Holdings and pay related fees and expenses of that offering. In addition, the Company expects to use the remaining portion of the proceeds from the January Additional Notes and cash on hand to fund the NPG Acquisition.

The Company has not guaranteed the indebtedness of the Issuers nor pledged any of its assets as collateral to secure any obligations of the Issuers.

Acquisition of Broadband Systems

On August 1, 2010, the Company completed the acquisition of the Greenwood, Mississippi cable system from Windjammer Communications, LLC, purchasing the assets of the cable system, which serves approximately 8,000 basic video customers, for approximately $20.3 million.

On November 24, 2010, the Company entered into a stock purchase agreement with News-Press & Gazette Company to acquire all of the issued and outstanding capital stock of NPG Cable, Inc., Mercury Voice & Data Company and NPG Digital Phone, Inc., (collectively, the "NPG Companies"), for a purchase price of $350.0 million, subject to a working capital adjustment (the "NPG Acquisition"). The NPG acquisition is expected to close late in the first quarter or early in the second quarter of 2011.

Disposition of Broadband Systems

On November 30, 2010, the Company completed the divestiture of two cable systems serving approximately 2,800 basic video customers. Cash proceeds from these transactions were approximately $4.5 million. The Company recognized a net gain of approximately $2.9 million on the sale of these assets.

Conference Call

As previously announced, the Company will host a conference call to discuss its fourth quarter and full year results at 12:00 p.m. (Eastern Time) on Friday, March 11, 2011. The dial-in information for the earnings call is as follows:

Within the United States 866-394-9561International 281-312-0031Password Cequel CommunicationsConference ID 42737069

A replay of this earnings call will be available at the Investor Relations link on the Company's website (www.suddenlink.com) shortly after the conclusion of the call.

During the conference call, representatives of the Company may discuss and answer one or more questions concerning the Company's business and financial matters. The responses to these questions, as well as other matters discussed during the call, may contain information that has not been previously disclosed.

Annual Report

The information in this press release should be read in conjunction with the financial statements and footnotes contained in the Company's annual report for the year ended December 31, 2010 which will be posted on the Company's website (www.suddenlink.com) on March 11, 2011.

Use of Non-GAAP Financial Measures

The Company uses certain measures that are not defined by Generally Accepted Accounting Principles ("GAAP") to evaluate various aspects of its business. Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. Adjusted EBITDA is a non-GAAP financial measure defined as net income/(loss), plus interest expense, provision for income taxes, depreciation, amortization, non-cash share based compensation expense, (gain)/loss on sale of cable assets, loss on swap termination and loss on extinguishment of debt. Free Cash Flow is a non-GAAP financial measure defined as Adjusted EBITDA, less capital expenditures and cash interest expense. Adjusted EBITDA and Free Cash Flow may not be necessarily comparable to similarly titled measures of other companies. Furthermore, Adjusted EBITDA and Free Cash Flow have limitations as analytical tools and should not be considered in isolation from, or as an alternative to, net income or loss, operating income, cash flow from operations or other combined income or cash flow data prepared in accordance with GAAP. A reconciliation of Net Loss to Adjusted EBITDA is provided in Table 9. A reconciliation of Net Cash from Operating Activities to Free Cash Flow is provided in Table 10.

The Company believes that Adjusted EBITDA and Free Cash Flow provide information useful to investors in assessing the Company's ability to fund operations, service its debt and make additional investments from internally generated funds. In addition, Adjusted EBITDA generally correlates to the covenant calculations under the Credit Facility.

Company Description

The Company, which does business as Suddenlink Communications, is the seventh largest cable broadband company in the United States, supporting the information, communication and entertainment demands of approximately 1.3 million residential customers and thousands of commercial customers in Texas, West Virginia, Louisiana, Arkansas, North Carolina, Oklahoma, and elsewhere. Suddenlink simplifies its customers' lives through one call for support, one connection, and one bill for TV, Internet, telephone, and other services.

Cautionary Note Regarding Forward-Looking Statements

Some statements in this Press Release are known as "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

Forward-looking statements may relate to, among other things:competition for video, high-speed Internet and telephone customers;the Company's ability to achieve anticipated customer and revenuegrowth and to successfully introduce new products and services; the Company's ability to complete Project Imagine and other capitalinvestment plans on time and on budget; greater than anticipated effects of the current, or any future,economic downturn or other factors which may negatively affect itscustomers' demand for the Company's products and services; increasing programming costs and delivery expenses related to theCompany's products and services; changes in consumer preferences, laws and regulations or technologythat may cause the Company to change its operational strategies; the Company's ability to effectively integrate acquisitions and tomaximize expected operating efficiencies from its acquisitions; the Company's substantial indebtedness; the restrictions contained in the Company's financing agreements; the Company's ability to generate sufficient cash flow to meet its debtservice obligations; fluctuations in interest rates which may cause the Company's interestexpense to vary from quarter to quarter; and other risks and uncertainties, including those listed under the caption"Risk Factors" in the Annual Report.

These forward-looking statements include, but are not limited to, statements about our plans, objectives, expectations and intentions and other statements contained in this Press Release that are not historical facts. When used in this Press Release, the words "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions are generally intended to identify forward-looking statements. Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results, events or developments to differ materially from those expressed or implied by these forward-looking statements, including our plans, objectives, expectations and intentions and other factors. You should not place undue reliance on such forward-looking statements, which are based on the information currently available to the Company and speak only as of the date on which this Press Release is posted on the Company's website (www.suddenlink.com). The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made on related subjects in the Company's subsequent reports furnished to holders of the Notes.

Tables:

1 Consolidated Statements of Operations - three and twelve month periods 2 Pro Forma Consolidated Statements of Operations - three and twelve month periods 3 Condensed Consolidated Balance Sheets 4 Condensed Consolidated Statements of Cash Flows 5 Capital Expenditures 6 Summary Operating Statistics 7 Pro Forma Summary of Operating Statistics 8 Calculation of Free Cash Flow 9 Reconciliation of Net Loss to Adjusted EBITDA10 Reconciliation of Net Cash from Operating Activities to Free Cash Flow11 Reconciliation of Cash Interest ExpenseTABLE 1Cequel Communications Holdings I, LLCConsolidated Statements of Operations (unaudited)(in thousands) Three Months Ended Twelve Months Ended December 31, December 31, ------------------ Percent -------------------- Percent 2010 2009 Change 2010 2009 Change -------- -------- ------- --------- --------- ------ Actual Actual Actual ActualRevenues: Video $211,098 $204,062 3.4% $ 842,799 $ 819,822 2.8% High Speed Internet 104,304 93,700 11.3% 402,250 365,338 10.1% Telephone 33,096 26,618 24.3% 122,764 96,329 27.4% Advertising Sales 23,064 18,388 25.4% 76,157 65,568 16.1% Other 63,233 55,230 14.5% 245,175 217,637 12.7% -------- -------- --------- ---------Total Revenues 434,795 397,998 9.2% 1,689,145 1,564,694 8.0%Costs and Expenses: Operating (excluding depreciation and amortization) 180,473 167,361 -7.8% 707,124 669,172 -5.7% Selling, general and administrative (excluding non-cash share based compensation expense) 92,304 79,843 -15.6% 364,722 334,498 -9.0% -------- -------- --------- ---------Operating costs and expenses 272,777 247,204 -10.3% 1,071,846 1,003,670 -6.8% -------- -------- --------- ---------Adjusted EBITDA 162,018 150,794 7.4% 617,299 561,024 10.0% -------- -------- --------- ---------Adjusted EBITDA Margin (a) 37.3% 37.9% 36.5% 35.9% Depreciation and amortization 96,639 80,326 -20.3% 362,114 323,111 -12.1% Non-cash share based compensation expense 641 1,863 65.6% 5,331 7,330 27.3% (Gain) / loss on sale of cable assets (3,046) 333 -1014.7% (4,051) 100 4151.0% -------- -------- --------- ---------Income from operations 67,784 68,272 -0.7% 253,905 230,483 10.2% -------- -------- --------- ---------Interest expense, net (64,858) (66,539) 2.5% (259,626) (247,952) -4.7%Loss on swap termination - (7,873) NM (17,774) (7,873) -125.8%Loss on extinguishment of debt - (14,250) NM (16,344) (14,250) -14.7% -------- -------- --------- ---------Loss before provision for income taxes 2,926 (20,390) 114.4% (39,839) (39,592) -0.6%Provision for income taxes 1,089 1,264 13.8% (3,781) (3,824) 1.1% -------- -------- --------- ---------Net income/(loss) $ 4,015 $(19,126) 121.0% $ (43,620) $ (43,416) -0.5% ======== ======== ========= =========(a) Represents Adjusted EBITDA as a percentage of total revenue.TABLE 2Cequel Communications Holdings I, LLCPro Forma Consolidated Statements of Operations (unaudited)(in thousands) Three Months Ended Twelve Months Ended December 31, December 31, ------------------- Percent -------------------- Percent 2010 2009 Change 2010 2009 Change --------- -------- ------- --------- --------- ------ Pro-Forma Pro-Forma Pro-Forma Pro-Forma (b) (b) (b) (b)Revenues: Video $ 210,826 $205,102 2.8% $ 844,774 $ 824,117 2.5% High Speed Internet 104,229 93,885 11.0% 402,573 366,071 10.0% Telephone 33,096 26,652 24.2% 122,849 96,469 27.3% Advertising Sales 23,064 18,464 24.9% 76,226 65,868 15.7% Other 63,184 55,365 14.1% 245,375 218,196 12.5% --------- -------- --------- ---------Total Revenues 434,399 399,468 8.7% 1,691,797 1,570,721 7.7%Costs and Expenses: Operating (excluding depreciation and amortization) 180,243 168,172 -7.2% 708,724 672,586 -5.4% Selling, general and administrative (excluding non-cash share based compensation expense) 92,264 80,186 -15.1% 365,353 335,696 -8.8% --------- -------- --------- ---------Operating costs and expenses 272,507 248,358 -9.7% 1,074,077 1,008,282 -6.5% --------- -------- --------- ---------Adjusted EBITDA 161,892 151,110 7.1% 617,720 562,439 9.8% --------- -------- --------- ---------Adjusted EBITDA Margin (a) 37.3% 37.8% 36.5% 35.8% Depreciation and amortization 96,639 80,326 -20.3% 362,114 323,111 -12.1% Non-cash share based compensation expense 641 1,863 65.6% 5,331 7,330 27.3% (Gain) / loss on sale of cable assets (3,046) 333 -1014.7% (4,051) 100 4151.0% --------- -------- --------- ---------Income from operations 67,658 68,588 -1.4% 254,326 231,898 9.7% --------- -------- --------- ---------Interest expense, net (64,858) (66,539) 2.5% (259,626) (247,952) -4.7%Loss on swap termination - (7,873) NM (17,774) (7,873) -125.8%Loss on extinguishment of debt - (14,250) NM (16,344) (14,250) -14.7% --------- -------- --------- ---------Loss before provision for income taxes 2,800 (20,074) 113.9% (39,418) (38,177) -3.3%Provision for income taxes 1,089 1,264 13.8% (3,781) (3,824) 1.1% --------- -------- --------- ---------Net income/(loss) $ 3,889 $(18,810) 120.7% $ (43,199) $ (42,001) -2.9% ========= ======== ========= =========(a) Represents Adjusted EBITDA as a percentage of total revenue.(b) Pro forma to include the impact of the acquisition of Greenwood, which occurred on August 1, 2010, and exclude the disposition of two cable systems, which occurred on November 30, 2010, as if those transactions had been consummated on January 1, 2009.TABLE 3Cequel Communications Holdings I, LLCCondensed Consolidated Balance Sheets (unaudited)(in thousands) December 31, December 31, 2010 2009 ------------ ------------ASSETSCash and cash equivalents $ 289,685 $ 257,003Accounts receivable, net 148,280 127,896Prepaid expenses 16,072 14,460 ------------ ------------ Total current assets 454,037 399,359Property, plant and equipment, net 1,328,479 1,302,297Intangible assets, net 2,083,376 2,096,122Other assets, net 48,346 60,033 ------------ ------------ Total assets $ 3,914,238 $ 3,857,811 ============ ============LIABILITIES AND MEMBER'S EQUITYAccounts payable and accrued expenses $ 200,219 $ 234,610Deferred revenue 112,239 101,945Current portion of long-term debt 20,382 5,096Other current liabilities 80,248 91,691 ------------ ------------ Total current liabilities 413,088 433,342Long-term debt, less current portion 3,145,739 3,040,745Deferred tax liabilities 25,185 23,299Other long-term liabilities 32,756 83,667 ------------ ------------ Total liabilities 3,616,768 3,581,053Total member's equity 297,470 276,758 ------------ ------------ Total liabilites and member's equity $ 3,914,238 $ 3,857,811 ============ ============TABLE 4Cequel Communications Holdings I, LLCCondensed Consolidated Statements of Cash Flows (unaudited)(in thousands) Three Months Ended Twelve Months Ended December 31, December 31, -------------------- -------------------- 2010 2009 2010 2009 --------- --------- --------- ---------Net cash provided by operating activities $ 64,782 $ 118,181 $ 196,686 $ 392,003Net cash used in investing activities (86,016) (84,114) (373,923) (246,645)Net cash (used in)/provided by financing activities (5,489) (31,697) 209,919 (58,872) --------- --------- --------- ---------(Decrease)/increase in cash and cash equivalents (26,723) 2,370 32,682 86,486Cash and cash equivalents, beginning of period 316,408 254,633 257,003 170,517 --------- --------- --------- ---------Cash and cash equivalents, end of period $ 289,685 $ 257,003 $ 289,685 $ 257,003 ========= ========= ========= =========TABLE 5Cequel Communications Holdings I, LLCCapital Expenditures (unaudited)(in thousands) Three Months Ended Twelve Months Ended December 31, December 31, -------------------- -------------------- 2010 2009 2010 2009 --------- --------- --------- ---------Customer premise equipment $ 20,896 $ 13,514 $ 118,024 $ 66,747Scalable infrastructure 10,318 36,035 40,479 56,549Line extensions 973 1,185 6,151 5,602Upgrade/rebuild 6,068 4,962 27,081 6,445Commercial 9,561 3,250 21,439 12,696Support capital 42,683 25,147 140,950 99,347 --------- --------- --------- --------- $ 90,499 $ 84,093 $ 354,124 $ 247,386 ========= ========= ========= =========TABLE 6Cequel Communications Holdings I, LLCSummary Operating Statistics (unaudited)Approximate as of: December 31, September 30, December 31, 2010 2010 2009 ------------- ------------- ------------- Actual Actual Actual ------------- ------------- -------------Revenue Generating Units (RGU):Basic video customers (a) 1,215,700 1,228,300 1,239,100Digital video customers (b) 651,400 631,400 545,100Residential high-speed Internet customers (c) 826,300 814,600 749,100Residential telephone customers (d) 358,700 345,700 280,400 ------------- ------------- -------------Total RGUs (e) 3,052,100 3,020,000 2,813,700Quarterly net customer additions (losses) Actual Actual Actual ------------- ------------- -------------Basic video customers (12,600) 3,200 (15,400)Digital video customers 20,000 36,000 14,300Residential high-speed Internet customers 11,700 27,600 17,800Residential telephone customers 13,000 22,900 27,200 ------------- ------------- -------------Total RGUs (e) 32,100 89,700 43,900Average Revenue per Unit (ARPU): Actual Actual Actual ------------- ------------- -------------Pro forma average monthly revenue per basic video customer (f) $ 118.32 $ 114.83 $ 106.19Customer Relationships Actual Actual Actual ------------- ------------- -------------Total customer relationships (g) 1,273,000 1,277,800 1,259,700Double play relationships (h) 481,700 482,300 472,200Double play penetration (i) 37.8% 37.7% 37.5%Triple play relationships (j) 266,700 256,600 209,500Triple play penetration (k) 21.0% 20.1% 16.6%Total bundled customers (l) 748,400 738,900 681,700Bundled penetration (m) 58.8% 57.8% 54.1%Estimated Customer Penetration Actual Actual Actual ------------- ------------- -------------Estimated basic penetration (n) 45.4% 45.7% 46.9%Estimated digital penetration (o) 53.6% 51.4% 44.0%Estimated residential high-speed Internet penetration (p) 31.8% 31.3% 29.2%Estimated residential telephone penetration (q) 16.3% 15.9% 13.4%Commercial Customers Actual Actual Actual ------------- ------------- -------------Commercial Internet (r) 39,800 39,000 36,400Commercial fiber (s) 970 910 800Commercial telephone (t) 11,100 9,500 5,200TABLE 7Cequel Communications Holdings I, LLCPro Forma Summary Operating Statistics (unaudited)Approximate as of: December 31, September 30, December 31, 2010 2010 2009 ------------- ------------- ------------- Actual Pro Forma (u) Pro Forma (u) ------------- ------------- -------------Revenue Generating Units (RGU):Basic video customers (a) 1,215,700 1,225,500 1,244,200Digital video customers (b) 651,400 630,900 546,900Residential high-speed Internet customers (c) 826,300 813,500 750,800Residential telephone customers (d) 358,700 345,700 280,700 ------------- ------------- -------------Total RGUs (e) 3,052,100 3,015,600 2,822,600Quarterly net customer additions (losses) Pro Forma (u) Pro Forma (u) Pro Forma (u) ------------- ------------- -------------Basic video customers (9,800) (4,900) (15,400)Digital video customers 20,500 33,900 14,300Residential high-speed Internet customers 12,800 24,600 18,000Residential telephone customers 13,000 22,400 27,200 ------------- ------------- -------------Total RGUs (e) 36,500 76,000 44,100Average Revenue per Unit (ARPU): Pro Forma (u) Pro Forma (u) Pro Forma (u) ------------- ------------- -------------Pro forma average monthly revenue per basic video customer (f) $ 118.41 $ 114.84 $ 106.14Customer Relationships Actual Pro Forma (u) Pro Forma (u) ------------- ------------- -------------Total customer relationships (g) 1,273,000 1,274,800 1,266,500Double play relationships (h) 481,700 481,500 473,700Double play penetration (i) 37.8% 37.8% 37.4%Triple play relationships (j) 266,700 256,600 209,800Triple play penetration (k) 21.0% 20.1% 16.6%Total bundled customers (l) 748,400 738,100 683,500Bundled penetration (m) 58.8% 57.9% 54.0%Estimated Customer Penetration Actual Pro Forma (u) Pro Forma (u) ------------- ------------- -------------Estimated basic penetration (n) 45.4% 45.7% 46.8%Estimated digital penetration (o) 53.6% 51.5% 44.0%Estimated residential high-speed Internet penetration (p) 31.8% 31.4% 29.1%Estimated residential telephone penetration (q) 16.3% 15.9% 13.3%Commercial Customers Actual Actual Actual ------------- ------------- -------------Commercial Internet (r) 39,800 39,000 36,400Commercial fiber (s) 970 910 800Commercial telephone (t) 11,100 9,500 5,200(a) Basic video customers include all residential customers who receive video cable services. Also included are commercial or multi-dwelling accounts that are converted to equivalent basic units ("EBUs") by dividing the total bulk billed basic revenues of a particular system by the most prevalent retail rate paid by non-bulk basic customers in that market for a comparable level of service. This conversion method is consistent with methodology used in determining costs paid to programmers. Our methodology of calculating the number of basic video customers may not be identical to those used by other companies offering similar services.(b) Digital video customers include all basic video customers that have one or more digital set-top boxes or cable cards in use.(c) Residential high-speed Internet customers include all residential customers who subscribe to our high-speed Internet service. Excluded from these totals are all commercial high-speed Internet customers, including small and medium sized commercial cable modem accounts and customers who take our scalable, fiber-based enterprise network services.(d) Residential telephone customers include all residential customers who subscribe to our telephone service. Residential customers who take multiple telephone lines are only counted once in the total. Excluded from these totals are all commercial telephone customers.(e) Total RGUs represents the sum of basic video, digital video, residential high-speed Internet and residential telephone customers.(f) Average revenue per basic video customer represents the total revenue for a quarter, divided by three, divided by the average basic video customers for the quarter.(g) Customer relationships represent the number of residential customers who receive at least one level of service, encompassing basic video, high-speed Internet or telephone services, without regard to the number of services purchased. For example, a residential customer who purchases only high-speed Internet service and no video service will count as one customer relationship, and a residential customer who purchases both video and high-speed Internet services will also count as only one customer relationship.(h) Double play customer numbers reflect residential customers who subscribe to two of our core services (basic video, high-speed Internet and telephone).(i) Double play penetration represents double play customers as a percentage of customer relationships.(j) Triple play customer numbers reflect residential customers who subscribe to all three of our core services (basic video, high-speed Internet and telephone).(k) Triple play penetration represents triple play customers as a percentage of customer relationships.(l) Total bundled customers represents the sum of double play and triple play customers.(m) Bundled penetration represents total bundled customers as a percentage of customer relationships.(n) Estimated basic penetration is calculated as basic video customers divided by the estimated total homes passed of the Company.(o) Estimated digital penetration is calculated as digital video customers divided by basic video customers.(p) Estimated residential high-speed Internet penetration is calculated as residential high-speed Internet customers divided by the estimated homes passed of the Company where residential high-speed Internet service is currently available.(q) Estimated residential telephone penetration is calculated as residential telephone customers divided by the estimated homes passed of the Company where residential telephone service is currently available.(r) Commercial Internet customers consist of commercial accounts that receive high-speed Internet service via a cable modem. Commercial Internet customers are not included in Total RGUs.(s) Commercial fiber customers are commercial accounts that receive broadband service optically, via fiber connections. Commercial fiber customers are not included in Total RGUs.(t) Commercial telephone customers are commercial accounts that subscribe to our telephone service. Commercial telephone customers are not included in Total RGUs.(u) Pro forma to include the impact of the acquisition of Greenwood, which occurred on August 1, 2010, and exclude the disposition of two cable systems, which occurred on November 30, 2010, as if those transactions had been consummated on January 1, 2009.TABLE 8Cequel Communications Holdings I, LLCCalculation of Free Cash Flow (unaudited)(in thousands) Three Months Ended Twelve Months Ended December 31, December 31, -------------------- -------------------- 2010 2009 2010 2009 --------- --------- --------- ---------Adjusted EBITDA $ 162,018 $ 150,794 $ 617,299 $ 561,024Capital expenditures (90,499) (84,093) (354,124) (247,386)Cash interest expense (62,087) (62,928) (247,364) (224,949) --------- --------- --------- ---------Free Cash Flow $ 9,432 $ 3,773 $ 15,811 $ 88,689 ========= ========= ========= =========TABLE 9Cequel Communications Holdings I, LLCReconciliation of Net Loss to Adjusted EBITDA (unaudited)(in thousands) Three Months Ended Twelve Months Ended December 31, December 31, -------------------- -------------------- 2010 2009 2010 2009 --------- --------- --------- ---------Net income/(loss) $ 4,015 $ (19,126) $ (43,620) $ (43,416) Add back: Interest expense, net 64,858 66,539 259,626 247,952 Provision for income taxes (1,089) (1,264) 3,781 3,824 Depreciation and amortization 96,639 80,326 362,114 323,111 Non-cash share based compensation 641 1,863 5,331 7,330 (Gain)/loss on sale of cable assets (3,046) 333 (4,051) 100 Loss on swap termination - 7,873 17,774 7,873 Loss on extinguishment of debt - 14,250 16,344 14,250 --------- --------- --------- ---------Adjusted EBITDA $ 162,018 $ 150,794 $ 617,299 $ 561,024 ========= ========= ========= =========TABLE 10Cequel Communications Holdings I, LLCReconciliation of Net Cash from Operating Activities to Free Cash Flow(unaudited)(in thousands) Three Months Ended Twelve Months Ended December 31, December 31, -------------------- -------------------- 2010 2009 2010 2009 --------- --------- --------- ---------Net cash provided by operating activities $ 64,782 $ 118,181 $ 196,686 $ 392,003Capital expenditures (90,499) (84,093) (354,124) (247,386)Current income tax expense (1,110) (520) 1,895 1,879Interest income (113) (82) (372) (550)Write-off of deferred financing costs - - (6,599) -New borrowing bond premium - - (12,000) -Repayment of paid in kind debt interest - - 112,254 -Loss on swap termination - 7,873 17,774 7,873Loss on extinguishment of debt - 6,000 16,344 6,000Changes in assets and liabilities, net 36,372 (43,586) 43,953 (71,130) --------- --------- --------- ---------Free Cash Flow $ 9,432 $ 3,773 $ 15,811 $ 88,689 ========= ========= ========= =========TABLE 11Cequel Communications Holdings I, LLCReconciliation of Cash Interest Expense (unaudited)(in thousands) Three Months Ended Twelve Months Ended December 31, December 31, -------------------- -------------------- 2010 2009 2010 2009 --------- --------- --------- ---------Interest expense, net $ 64,858 $ 66,539 $ 259,626 $ 247,952Add: interest income 113 82 372 550Add: bond premium amortization 301 - 778 -Less: deferred financing amortization (2,844) (3,462) (12,004) (12,332)Less: bond discount amortization (341) (231) (1,408) (231)Less: non-cash paid-in kind interest expense - - - (10,990) --------- --------- --------- ---------Cash interest expense $ 62,087 $ 62,928 $ 247,364 $ 224,949 ========= ========= ========= =========

Cequel contact information: Mary Meduski EVP - Chief Financial Officer 314-315-9603 Ralph Kelly SVP - Treasurer 314-315-9403 Mike Pflantz VP - Corporate Finance 314-315-9341

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