Mediacom Broadband LLC and Mediacom LLC Report Results for First Quarter 2012

MIDDLETOWN, N.Y.--(BUSINESS WIRE)--MEDIACOM BROADBAND LLC AND MEDIACOM LLC, wholly-owned subsidiaries of Mediacom Communications Corporation, today each reported unaudited financial and operating highlights for the three months ended March 31, 2012.

Mediacom Broadband LLC*

• Revenues were $221.2 million, reflecting a 2.6% increase from the prior year period
• Operating income before depreciation and amortization (“OIBDA”) was $83.4 million, reflecting a 5.0% increase from the prior year period
• Free cash flow of $17.7 million, compared to $10.7 million in the prior year period
• Net quarterly additions of 25,000 primary service units (“PSUs”), compared to a net gain of 1,000 in the prior year period

Mediacom LLC*

• Revenues were $168.7 million, reflecting a 1.4% increase from the prior year period
• Adjusted OIBDA was $68.4 million, reflecting a 7.5% increase from the prior year period
• Free cash flow of $24.5 million, compared to $19.5 million in the prior year period
• Net quarterly additions of 16,000 PSUs, compared to a net loss of 1,000 in the prior year period

About Mediacom

Mediacom Communications is the nation’s eighth largest cable television company and one of the leading cable operators focused on serving the smaller cities in the United States, with a significant concentration in the Midwestern and Southeastern regions. Mediacom Communications offers a wide array of broadband products and services, including digital television, video-on-demand, digital video recorders, high-definition television, as well as high-speed Internet access and phone service. Mediacom Communications also offers affordable broadband communications solutions that can be tailored to any size business through Mediacom Business. For more information about Mediacom Communications, please visit www.mediacomcc.com.

* See Table 5 for information regarding our use of non-GAAP measures and definitions of OIBDA, Adjusted OIBDA and free cash flow.

TABLE 1* Mediacom Broadband LLC Selected Financial and Operating Data (Dollars in thousands, except per unit data) (Unaudited)
	Three Months Ended March 31,
	2012			2011			YoY% Change
Video	$	118,051		$	123,137		(4.1	)%
High-speed data		55,389			49,782		11.3	%
Phone		16,520			16,755		(1.4	)%
Business services		19,385			14,827		30.7	%
Advertising		11,855			11,155		6.3	%
Total revenues	$	221,200		$	215,656		2.6	%
Service costs		(90,309	)		(89,985	)	0.4	%
SG&A expenses		(43,982	)		(42,194	)	4.2	%
Management fees		(3,460	)		(3,997	)	(13.4	)%
OIBDA ^(a)	$	83,449		$	79,480		5.0	%
Cash interest expense ^(a)		(26,735	)		(26,633	)	0.4	%
Capital expenditures ^(b)		(34,513	)		(37,650	)	(8.3	)%
Dividend to preferred members		(4,500	)		(4,500	)	―
Free cash flow ^(a)	$	17,701		$	10,697		65.5	%
OIBDA margin ^(c)		37.7	%		36.9	%
	March 31, 2012			March 31, 2011
Video customers		591,000			654,000
High-speed data customers		489,000			469,000
Phone customers		189,000			175,000
Primary service units (“PSUs”)		1,269,000			1,298,000
Video customer loss		(5,000	)		(9,000	)
High-speed data customer gain		21,000			10,000
Phone customer gain		9,000		―
Quarterly PSU gain		25,000			1,000
Customer relationships ^(d)		706,000			729,000
Average total monthly revenue per:
Video customer ^(e)	$	124.23		$	109.17
PSU ^(f)	$	58.68		$	55.40
Customer relationship ^(g)	$	104.81		$	98.61
	March 31, 2012			March 31, 2011
Bank credit facility	$	1,470,000		$	1,560,500
8½% senior notes due 2015		500,000			500,000
Total debt	$	1,970,000		$	2,060,500
Total leverage ratio ^(h)	5.90x			6.48x
Interest coverage ratio ^(i)	3.12x			2.98x
* See Tables 3 and 5.

TABLE 2* Mediacom LLC Selected Financial and Operating Data (Dollars in thousands, except per unit data) (Unaudited)
	Three Months Ended March 31,
	2012			2011			YoY% Change
Video	$	90,940		$	95,837		(5.1	)%
High-speed data		45,696			41,076		11.2	%
Phone		15,096			14,698		2.7	%
Business services		13,259			11,451		15.8	%
Advertising		3,666			3,244		13.0	%
Total revenues	$	168,657		$	166,306		1.4	%
Service costs		(73,713	)		(76,560	)	(3.7	)%
SG&A expenses		(27,618	)		(27,541	)	0.3	%
Management fees		(3,460	)		(3,082	)	12.3	%
OIBDA ^(a)	$	63,866		$	59,123		8.0	%
Investment income from affiliate		4,500			4,500		―
Adjusted OIBDA ^(a)	$	68,366		$	63,623		7.5	%
Cash interest expense ^(a)		(23,355	)		(23,991	)	(2.7	)%
Capital expenditures ^(b)		(20,537	)		(20,095	)	2.2	%
Free cash flow ^(a)	$	24,474		$	19,537		25.3	%
Adjusted OIBDA margin ^(j)		40.5	%		38.3	%
	March 31, 2012			March 31, 2011
Video customers		468,000			521,000
High-speed data customers		398,000			386,000
Phone customers		165,000			158,000
Primary service units (“PSUs”)		1,031,000			1,065,000
Video customer loss		(5,000	)		(9,000	)
High-speed data customer gain		15,000			7,000
Phone customer gain		6,000			1,000
Quarterly PSU gain (loss)		16,000			(1,000	)
Customer relationships ^(d)		574,000			592,000
Average total monthly revenue per:
Video customer ^(e)	$	119.49		$	105.49
PSU ^(f)	$	54.96		$	52.03
Customer relationship ^(g)	$	98.37		$	93.48
	March 31, 2012			March 31, 2011
Bank credit facility	$	980,000		$	1,255,500
9⅛% senior notes due 2019		350,000			350,000
7¼% senior notes due 2022		250,000		―
Total debt	$	1,580,000		$	1,605,500
Total leverage ratio ^(h)	5.78x			6.31x
Interest coverage ratio ^(i)	2.93x			2.65x
* See Tables 4 and 5.

TABLE 3 Mediacom Broadband LLC Reconciliation of Non-GAAP Measures (Dollars in thousands) (Unaudited)
	Three Months Ended March 31,
	2012			2011
Free cash flow	$	17,701		$	10,697
Capital expenditures		34,513			37,650
Dividend to preferred members		4,500			4,500
Other expense, net		(326	)		(808	)
Changes in assets and liabilities, net		14,859			8,627
Net cash flows provided by operating activities	$	71,247		$	60,666
OIBDA	$	83,449		$	79,480
Depreciation and amortization		(37,429	)		(35,304	)
Operating income	$	46,020		$	44,176
Cash interest expense	$	26,735		$	26,633
Amortization of deferred financing costs		1,202			792
Interest expense, net	$	27,937		$	27,425

TABLE 4 Mediacom LLC Reconciliation of Non-GAAP Measures (Dollars in thousands) (Unaudited)
	Three Months Ended March 31,
	2012			2011
Free cash flow	$	24,474		$	19,537
Capital expenditures		20,537			20,095
Other expense, net		(463	)		(556	)
Changes in assets and liabilities, net		(15,729	)		9,159
Net cash flows provided by operating activities	$	28,819		$	48,235
Adjusted OIBDA	$	68,366		$	63,623
Investment income from affiliate		(4,500	)		(4,500	)
OIBDA	$	63,866		$	59,123
Depreciation and amortization		(29,066	)		(29,299	)
Operating income	$	34,800		$	29,824
Cash interest expense	$	23,355		$	23,991
Amortization of deferred financing costs		939			1,020
Interest expense, net	$	24,294		$	25,011

TABLE 5

Use of Non-GAAP Financial Measures

“OIBDA,” “Adjusted OIBDA,” “cash interest expense” and “free cash flow” are not financial measures calculated in accordance with generally accepted accounting principles (“GAAP”) in the United States. We define OIBDA as operating income before depreciation and amortization and Adjusted OIBDA as OIBDA plus investment income from affiliate. We define cash interest expense as interest expense, net, less amortization of deferred financing costs. For Mediacom Broadband LLC, we define free cash flow as OIBDA less capital expenditures, cash interest expense and dividends to preferred members. For Mediacom LLC, we define free cash flow as Adjusted OIBDA less capital expenditures and cash interest expense. OIBDA, Adjusted OIBDA, cash interest expense and free cash flow have inherent limitations as discussed below.

OIBDA and Adjusted OIBDA are some of the primary measures used by management to evaluate our performance and to forecast future results. We believe OIBDA and Adjusted OIBDA are useful for investors because it enables them to assess our performance in a manner similar to the methods used by management, and provides a measure that can be used to analyze value and compare the companies in the cable industry. A limitation of OIBDA and Adjusted OIBDA, however, is that they exclude depreciation and amortization, which represents the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our business. Management utilizes a separate process to budget, measure and evaluate capital expenditures. OIBDA and Adjusted OIBDA may not be comparable to similarly titled measures used by other companies, which may have different depreciation and amortization policies, and are key components in our covenant calculations, as defined under our debt arrangements.

Free cash flow is used by management to evaluate our ability to repay debt, and to facilitate the growth of our business with internally generated funds. A limitation of free cash flow, however, is that it may be affected by the timing of our capital spending. We believe free cash flow is useful for investors for the same reasons and provides measures that can be used to analyze value and compare companies in the cable television industry, although our measure of free cash flow may not be directly comparable to similar measures reported by other companies.

OIBDA, Adjusted OIBDA and free cash flow should not be regarded as alternatives to operating income or net income as indicators of operating performance, or to the statement of cash flows as measures of liquidity, nor should they be considered in isolation or as substitutes for financial measures prepared in accordance with GAAP. We believe that operating income is the most directly comparable GAAP financial measure to OIBDA and Adjusted OIBDA, and that net cash flows provided by operating activities is the most directly comparable GAAP financial measure to free cash flow.

Cash interest expense excludes the amortization of financing costs which were paid upon the financing of the relevant debt. We believe cash interest expense is useful for investors because it enables them to assess our cost of debt for the current period without including the amortization of financing costs that were previously paid. We believe interest expense, net, is the most directly comparable GAAP financial measure to cash interest expense.

For reconciliations of OIBDA, Adjusted OIBDA, cash interest expense and free cash flow to their most directly comparable GAAP financial measures, see Tables 3 and 4.

Cautionary Statement Regarding Forward-Looking Statements

In this press release, we state our beliefs of future events and of our future financial performance. These forward-looking statements are not guarantees of future performance or results, and are subject to risks and uncertainties that could cause actual results to differ materially from historical results or those we anticipate as a result of various factors, many of which are beyond our control. Factors that may cause such differences to occur include, but are not limited to: increased levels of competition; greater than anticipated programming and other service costs; our ability to generate sufficient cash flow to meet our debt service obligations; and other risks and uncertainties discussed in the Annual Reports on Form 10-K for the year ended December 31, 2011 for each of Mediacom Broadband LLC and Mediacom LLC. We disclaim any obligation to update any forward-looking statements contained herein, except as required by applicable federal securities laws.

NOTES:
(a)	See Table 5 for information about our use of Non-GAAP financial measures.
(b)	Capital expenditures for Mediacom Broadband LLC exclude changes in accrued property, plant and equipment, which represented a cash use of $8.0 million during the three months ended March 31, 2012. Capital expenditures for Mediacom LLC exclude changes in accrued property, plant and equipment, which represented a cash use of $3.9 million during the three months ended March 31, 2012.
(c)	Represents OIBDA as a percentage of total revenues.
(d)	Represents the total number of customers that receive at least one level of service, without regard to which service(s) customers purchase.
(e)	Represents average total monthly revenues for the quarter divided by average video customers for such quarter.
(f)	Represents average total monthly revenues for the quarter divided by average PSUs for such quarter.
(g)	Represents average total monthly revenues for the quarter divided by average customer relationships for such quarter.
(h)	For Mediacom Broadband LLC, represents total debt at quarter end divided by annualized OIBDA for the quarter. For Mediacom LLC, represents total debt at quarter end divided by annualized Adjusted OIBDA for the quarter.
(i)	For Mediacom Broadband LLC, represents OIBDA divided by cash interest expense for the quarter. For Mediacom LLC, represents Adjusted OIBDA divided by cash interest expense for the quarter.
(j)	Represents Adjusted OIBDA as a percentage of total revenues.