Exhibit 99.1
Insight Announces Second Quarter 2003 Results
NEW YORK--(BUSINESS WIRE)--July 31, 2003--Insight Communications
Company (Nasdaq: ICCI) today announced financial results for the
quarter ended June 30, 2003.
Revenue for the three months ended June 30, 2003 totaled $223.0
million, an increase of 11% over the prior year, due primarily to
customer gains in high-speed data and digital services as well as
basic rate increases. Operating cash flow ("OCF") increased to $94.5
million for the three months ended June 30, 2003 from $89.3 million
for the three months ended June 30, 2002, an increase of 6%. A
reconciliation of operating cash flow to operating income appears
below in the discussion of operating data results.
Revenue Generating Units ("RGUs"), representing the sum of basic,
digital, high-speed data and telephone customers as defined by the
NCTA Standard Reporting Categories, increased by 7,500 during the
quarter to 1,877,500. High-speed data net additions were 11,200;
digital net additions were 4,800; and telephone additions were 4,500.
These gains were offset by the seasonal reduction of 13,000 basic
customers, reflecting the large number of university communities
served and the Company's history of reporting such net losses during
the second quarter of the year when students leave for the summer.
"This quarter marks an important milestone for Insight
Communications. Having completed our planned system upgrades, 95% of
our customers are now served by an upgraded network of 750MHz or
higher," said Michael S. Willner, Vice Chairman and Chief Executive
Officer of Insight Communications. "Despite our usual second quarter
weaknesses, we posted RGU growth of 10% year-over-year, driven by the
gains in new products. Second quarter average monthly revenue per
basic customer increased 11% over the prior year to $57.10, driven by
the continued successful rollout of new products and by basic rate
increases. We continue to see the power of the upgraded platform and
are excited by the vast potential it offers for growth."
Capital expenditures totaled $43.6 million in the second quarter,
a 39% reduction over the prior year's quarter. Of the total,
approximately 47% was for Customer Premise Equipment and 24% was for
Upgrade/Rebuild costs, as defined by the NCTA Standard Reporting
Categories. For the three months ended June 30, 2003, capital
expenditures per customer totaled approximately $33.62. Capital was
funded through cash generated from operations as well as through bank
borrowings.
"This quarter was largely in line with our expectations, with the
exception of telephony," said Kim D. Kelly, President and Chief
Operating Officer of Insight Communications. "While we experienced
delays in the rollout of telephony in the first half of the year, we
continue to believe that the product will be a strong performer in the
second half."
"Due to reduced spending in telephony as well as in our upgrade
program, we are reducing capital expenditure guidance for the year to
$200 million," continued Kelly. "This represents a year-over-year
decline of 30% in capital expenditures and enhances our free cash flow
position."
Monthly operating cash flow margin per basic customer decreased to
42.4% for the quarter ended June 30, 2003, down from 44.5% for the
prior year's quarter.
The Company recently announced its plan to refinance all of the
indebtedness of its Ohio operating subsidiary. In connection with the
refinancing plan, the Company expects to acquire the outstanding
equity of Coaxial Communications, which holds 800,000 shares of the
Company's outstanding common stock and which the Company expects to
retire.
"This transaction represents the Company's continued focus on
strengthening the balance sheet, achieving positive free cash flow,
and reducing structural complexity," said Dinni Jain, Senior Vice
President and Chief Financial Officer. "Simplifying our capital
structure allows us to reduce costs and maintain our focus on
operations."
Operating results for the three months ended June 30, 2003,
compared to the three months ended June 30, 2002
The $22.2 million or 11% increase in revenue was primarily a
result of gains in high-speed data and digital services, which
increased 59% and 21% over the prior year's quarter. In addition,
basic cable service revenue increased 7% primarily due to basic rate
increases.
RGUs were approximately 1,877,500 as of June 30, 2003 compared to
approximately 1,707,000 as of June 30, 2002. This represents a growth
rate of 10%. On a same store basis, RGUs grew 9% from the prior year
quarter.
Average monthly revenue per basic customer, including management
fee revenue and SourceSuite revenue, was $57.10 for the three months
ended June 30, 2003, compared to $51.63 for the three months ended
June 30, 2002 primarily reflecting the continued successful rollout of
new product offerings in all markets. Average monthly revenue per
basic customer for high-speed data and digital service increased to
$10.85 for the three months ended June 30, 2003, up from $7.87 for the
three months ended June 30, 2002.
Programming and other operating costs increased $11.7 million or
17%. The increase is primarily attributable to a 10% increase in
programming costs, due to increased programming and rates, reduced
programming launch support, increased customers served, and additional
programming added in the newly rebuilt systems. The increase in
Programming and other operating costs is also attributable to a 73%
increase in high-speed data costs due to increased customers served.
Additionally, other operating costs increased as a result of a
decrease in the amount of technical employee salaries capitalized due
to the near completion of rebuild activity and increases in plant
maintenance costs.
Selling, general and administrative expenses increased $5.4
million or 13%, primarily as a result of increased costs related to
annual salary increases and increases in payroll related costs for
existing employees as well as the addition of new employees.
Additionally, the increase is related to increased marketing costs to
promote new and existing services and a decrease in funds received for
marketing support (recorded as a reduction to selling, general and
administrative expenses) for new channel launches.
Depreciation and amortization expense increased $10.8 million or
22% primarily as a result of additional capital expenditures through
June 30, 2003 to support the continued rebuild of the Illinois
systems, extend the plant and continue the rollout of digital,
high-speed data and telephone services to existing and new service
areas.
OCF increased $5.2 million or 6%, primarily due to increased
basic, digital and high-speed data revenue, offset by increases in
programming and other operating costs and selling, general and
administrative costs. The following is a reconciliation of operating
income to OCF:
Three months ended June 30,
2003 2002
-------------------------------
(in thousands)
Operating income $34,183 $39,824
Adjustment:
Depreciation and amortization 60,275 49,481
-------------------------------
Operating Cash Flow $94,458 $89,305
===============================
Interest expense remained relatively flat quarter over quarter.
The decrease of $261,000 or 1% is primarily as a result of lower
interest rates, which averaged 7.7% for the three months ended June
30, 2003, versus 7.9% for the three months ended June 30, 2002.
Partially offsetting this decrease was higher outstanding debt, which
averaged $2.63 billion for the three months ended June 30, 2003,
versus $2.56 billion for the three months ended June 30, 2002.
Minority interest increased $4.3 million or 104% as a direct
result of the increase in the net loss attributable to common
interests recorded by Insight Midwest.
For the three months ended June 30, 2003, the net loss was $7.5
million.
Insight Communications (NASDAQ: ICCI) is the 9th largest cable
operator in the United States, serving approximately 1.4 million
customers in the four contiguous states of Illinois, Kentucky, Indiana
and Ohio. Insight specializes in offering bundled, state-of-the-art
services in mid-sized communities, delivering basic and digital video,
high-speed data and the recent deployment of voice telephony in
selected markets to its customers.
Any statements in this press release that are not historical facts
are forward-looking statements within the meaning of Section 21E of
the Securities Exchange Act of 1934, as amended. The words "estimate,"
"expect," "anticipate" and other expressions that indicate future
events and trends identify forward-looking statements. The above
forward-looking statements are subject to risks and uncertainties and
are subject to change based upon a variety of factors that could cause
actual results to differ materially from those Insight Communications
anticipates. Factors that could have a material and adverse impact on
actual results include competition, increasing programming costs,
changes in laws and regulations, our substantial debt and the other
risk factors described in Insight Communications' annual report on
Form 10-K, as amended, for the year ended December 31, 2002. All
forward-looking statements in this press release are qualified by
reference to the cautionary statements included in Insight
Communications' Form 10-K.
INSIGHT COMMUNICATIONS COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
June 30, Dec. 31,
2003 2002
----------- -----------
unaudited
Assets
Cash and cash equivalents $104,917 $74,850
Investments 4,173 3,666
Trade accounts receivable, net of allowance for
doubtful accounts of $1,276 and $1,296 as of
June 30, 2003 and December 31, 2002 28,710 25,725
Launch funds receivable 1,315 5,197
Prepaid expenses and other assets 16,624 16,177
----------- -----------
Total current assets 155,739 125,615
Fixed assets, net 1,216,057 1,220,251
Goodwill 72,430 72,965
Franchise costs 2,361,933 2,331,282
Deferred financing costs, net of accumulated
amortization of $11,304 and $9,030 as of June
30, 2003 and December 31, 2002 31,025 33,298
Other non-current assets 5,465 5,651
----------- -----------
Total assets $3,842,649 $3,789,062
=========== ===========
Liabilities and stockholders' equity
Accounts payable $13,705 $47,220
Accrued expenses and other liabilities 22,031 23,035
Accrued property taxes 21,681 14,428
Accrued programming costs 64,244 34,922
Deferred revenue 6,369 4,132
Interest payable 23,852 24,685
Debt - current portion 45,834 5,000
Preferred interest distribution payable 5,250 5,250
----------- -----------
Total current liabilities 202,966 158,672
Deferred revenue 5,522 6,533
Debt 2,595,900 2,576,004
Other non-current liabilities 42,407 53,085
Minority interest 219,052 224,803
Preferred interests 195,173 191,820
Stockholders' equity:
Preferred stock; $.01 par value; 100,000,000
shares authorized; no shares issued and
outstanding as of June 30, 2003 and December
31, 2002 - -
Common stock; $.01 par value:
Class A - 300,000,000 shares authorized;
50,809,778 and 50,704,390 shares issued and
outstanding as of June 30, 2003 and December
31, 2002 508 507
Class B - 100,000,000 shares authorized;
9,329,468 and 9,354,468 shares issued and
outstanding as of June 30, 2003 and December
31, 2002 93 93
Additional paid-in-capital 820,526 829,873
Accumulated deficit (241,147) (237,956)
Deferred stock compensation (5,317) (5,882)
Accumulated other comprehensive income (loss) 6,966 (8,490)
----------- -----------
Total stockholders' equity 581,629 578,145
----------- -----------
Total liabilities and stockholders' equity $3,842,649 $3,789,062
=========== ===========
Note: Certain prior period amounts have been reclassified to
conform to the current period presentation.
INSIGHT COMMUNICATIONS COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts)
Three months ended Six months ended
June 30, June 30,
------------------- -------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Revenue $223,047 $200,824 $438,092 $393,569
Operating costs and expenses:
Programming and other
operating costs 81,638 69,985 161,506 140,105
Selling, general and
administrative 46,951 41,534 92,045 82,414
High-speed data charges - - - 4,116
Depreciation and amortization 60,275 49,481 115,269 97,925
--------- --------- --------- ---------
Total operating costs and
expenses 188,864 161,000 368,820 324,560
--------- --------- --------- ---------
Operating income 34,183 39,824 69,272 69,009
Other income (expense):
Gain on cable system exchange - - 26,992 -
Interest expense (50,570) (50,831) (102,016) (102,766)
Interest income 248 441 482 1,338
Other 1,820 (28) 1,815 (25)
--------- --------- --------- ---------
Total other expense, net (48,502) (50,418) (72,727) (101,453)
Loss before minority interest,
impairment of investments and
income taxes (14,319) (10,594) (3,455) (32,444)
Minority interest 8,492 4,163 2,014 14,089
Impairment write-down of
investments (1,500) - (1,500) (205)
--------- --------- --------- ---------
Loss before income taxes (7,327) (6,431) (2,941) (18,560)
Provision for income taxes (125) (125) (250) (250)
--------- --------- --------- ---------
Net loss (7,452) (6,556) (3,191) (18,810)
Accrual of preferred interests (5,203) (5,002) (10,353) (9,957)
--------- --------- --------- ---------
Net loss applicable to common
stockholders $(12,655) $(11,558) $(13,544) $(28,767)
========= ========= ========= =========
Basic and diluted loss per
share attributable to common
stockholders $(.21) $(.19) $(.23) $(.48)
Basic and diluted weighted-
average shares outstanding 60,125 60,272 60,103 60,259
Note: Certain prior period amounts have been reclassified to
conform to the current period presentation.
INSIGHT COMMUNICATIONS COMPANY, INC.
SUPPLEMENTAL INFORMATION
(unaudited)
(in thousands)
Three months ended
June 30,
2003 2002
---------- ----------
Insight Consolidated
- --------------------------------------------
Revenues $223,047 $200,824
System Cash Flow (a) 99,283 93,612
System Cash Flow Margin 44.5% 46.6%
Corporate Overhead (5,401) (5,017)
Management Fee Income 576 710
Operating Cash Flow (a) 94,458 89,305
Operating Cash Flow Margin 42.3% 44.5%
Capital Expenditures 43,566 71,271
Total Debt, including Preferred Interests 2,836,907 2,727,402
Reconciliation of Operating Income to
Operating & System Cash Flow
- --------------------------------------
Operating income $34,183 $39,824
Adjustment:
Depreciation and amortization 60,275 49,481
---------- ----------
Operating Cash Flow (a) $94,458 $89,305
---------- ----------
Adjustments:
Corporate Overhead 5,401 5,017
Management Fee Income (576) (710)
---------- ----------
System Cash Flow (a) $99,283 $93,612
========== ==========
Insight Ohio
- ------------------------------------------------
Revenues $17,052 $15,655
System Cash Flow (a) 7,075 7,143
System Cash Flow Margin 41.5% 45.6%
Management Fee Expense (514) (458)
Operating Cash Flow (a) 6,561 6,685
Operating Cash Flow Margin 38.5% 42.7%
Capital Expenditures 2,807 8,669
Total Debt, including Preferred Interests 217,673 213,670
Reconciliation of Operating Income to
Operating & System Cash Flow
- -----------------------------------------------
Operating income $1,403 $2,761
Adjustment:
Depreciation and amortization 5,158 3,924
---------- ----------
Operating Cash Flow (a) $6,561 $6,685
---------- ----------
Adjustment:
Management Fee Expense 514 458
---------- ----------
System Cash Flow (a) $7,075 $7,143
========== ==========
(a) Operating cash flow ("OCF") represents operating income before
depreciation and amortization. System cash flow represents OCF
excluding management fees and, for Insight Consolidated, corporate
overhead.
Certain prior period amounts have been reclassified to conform to
the current period presentation.
INSIGHT COMMUNICATIONS COMPANY, INC.
SUPPLEMENTAL INFORMATION
(unaudited)
(in thousands)
Six months ended June 30,
2003 2002
-------------- ----------
Insight Consolidated
- --------------------------------------------
Revenues $438,092 $393,569
System Cash Flow (a) 194,053 175,457
System Cash Flow Margin 44.3% 44.6%
Corporate Overhead (10,746) (9,868)
Management Fee Income 1,234 1,345
Operating Cash Flow (a) 184,541 166,934
Operating Cash Flow Margin 42.1% 42.4%
Capital Expenditures 84,111 121,619
Total Debt, including Preferred Interests 2,836,907 2,727,402
Reconciliation of Operating Income to
Operating & System Cash Flow
- -----------------------------------------------------------
Operating income $69,272 $69,009
Adjustment:
Depreciation and amortization 115,269 97,925
---------- ----------
Operating Cash Flow(a) $184,541 $166,934
---------- ----------
Adjustments:
Corporate Overhead 10,746 9,868
Management Fee Income (1,234) (1,345)
---------- ----------
System Cash Flow (a) $194,053 $175,457
========== ==========
Insight Ohio
- ------------------------------------------------
Revenues $33,843 $30,695
System Cash Flow (a) 14,054 13,514
System Cash Flow Margin 41.5% 44.0%
Management Fee Expense (1,016) (897)
Operating Cash Flow (a) 13,038 12,617
Operating Cash Flow Margin 38.5% 41.1%
Capital Expenditures 5,062 13,453
Total Debt, including Preferred Interests 217,673 213,670
Reconciliation of Operating Income to
Operating & System Cash Flow
- -----------------------------------------------------------
Operating income $3,127 $5,013
Adjustment:
Depreciation and amortization 9,911 7,604
---------- ----------
Operating Cash Flow(a) $13,038 $12,617
---------- ----------
Adjustment:
Management Fee Expense 1,016 897
---------- ----------
System Cash Flow (a) $14,054 $13,514
========== ==========
(a)Operating cash flow ("OCF") represents operating income before
depreciation and amortization. The adjustment to OCF for Insight
Consolidated excludes high-speed data charges of $4.1 million for the
three months ended March 31, 2002 that were included in previous
reports filed by us. System cash flow represents OCF excluding
management fees and, for Insight Consolidated, corporate overhead.
Certain prior period amounts have been reclassified to conform to
the current period presentation.
INSIGHT COMMUNICATIONS COMPANY, INC.
OPERATING STATISTICS
(in thousands, except per customer and penetration data)
Q2 Q1 Q2
INSIGHT CONSOLIDATED 2003 (a) 2003 (a) 2002
- -------------------------------------------------- --------- ---------
Customer Relationships 1,321.8 1,334.3 1,315.1
Total Average Monthly Revenue per
Customer $57.10 $55.34 $51.63
Basic Cable
- -----------------------------------------
Homes Passed 2,300.2 2,296.4 2,244.3
Basic Cable Customers 1,295.7 1,308.7 1,291.1
Basic Cable Penetration 56.3% 57.0% 57.5%
Basic Cable Revenue $133,625 $130,851 $125,034
Average Monthly Basic Cable Revenue
per Customer 34.21 33.67 32.14
High-Speed Data
- -----------------------------------------
"Modem Ready" Homes Passed 2,189.0 2,096.7 1,905.2
Modem Customers 179.5 168.3 103.4
"Modem Ready" Penetration 8.2% 8.0% 5.4%
Modem Revenue $22,352 $20,262 $14,080
Average Monthly Modem Revenue per
Customer 5.72 5.21 3.62
Average Monthly Modem Revenue per Modem
Customer 42.85 43.17 47.43
Digital Cable
- -----------------------------------------
Digital Universe 1,241.7 1,259.0 1,185.8
Digital Customers 360.2 355.4 294.8
Digital Cable Penetration 29.0% 28.2% 24.9%
Digital Revenue $20,049 $19,132 $16,550
Average Monthly Digital Revenue per
Customer 5.13 4.92 4.25
Average Monthly Digital Revenue per
Digital Customer 18.68 18.59 19.11
Telephone
- -----------------------------------------
Telephone Universe (marketable homes) 612.9 559.4 303.5
Telephone Customers 42.2 37.7 17.6
Telephone Penetration (to marketable
homes) 6.9% 6.7% 5.8%
Telephone Revenue $2,796 $2,568 $1,130
Average Monthly Telephone Revenue per
Customer 0.72 0.66 0.29
Advertising Revenue
- -----------------------------------------
Advertising Revenue $15,179 $12,535 $13,292
Average Monthly Advertising Revenue per
Customer 3.89 3.23 3.44
Other Revenue
- -----------------------------------------
Other Revenue $29,046 $29,697 $30,738
Average Monthly Other Revenue per
Customer 7.43 7.65 7.89
(a)2003 customer data includes effects of the swap of our Griffin,
GA system for the managed New Albany, IN and Shelbyville, KY systems.
Certain prior period amounts have been reclassified to conform to
the current period presentation.
Note: All "per customer" figures reflect revenue per Basic Cable
Customers.
INSIGHT COMMUNICATIONS COMPANY, INC.
OPERATING STATISTICS
(in thousands, except per customer and penetration data)
Q2 Q1 Q2
INSIGHT OHIO 2003 2003 2002
- ------------------------------------------------------ ------- -------
Customer Relationships 89.6 89.8 87.9
Total Average Monthly Revenue per Customer $65.29 $63.85 $59.52
Basic Cable
- -----------------------------------------------
Homes Passed 202.1 200.7 194.2
Basic Cable Customers 86.9 87.2 87.8
Basic Cable Penetration 43.0% 43.4% 45.2%
Basic Cable Revenue $7,965 $8,054 $7,554
Average Monthly Basic Cable Revenue per
Customer 30.50 30.63 28.72
High-Speed Data
- -----------------------------------------------
"Modem Ready" Homes Passed 186.8 185.5 175.0
Modem Customers 20.9 19.6 15.9
"Modem Ready" Penetration 11.2% 10.6% 9.1%
Modem Revenue $2,762 $2,544 $2,048
Average Monthly Modem Revenue per Customer 10.57 9.67 7.79
Average Monthly Modem Revenue per Modem
Customer 45.40 44.39 45.53
Digital Cable
- -----------------------------------------------
Digital Universe 80.8 81.1 78.8
Digital Customers 30.6 29.8 27.1
Digital Cable Penetration 37.9% 36.8% 34.4%
Digital Revenue $1,594 $1,545 $1,369
Average Monthly Digital Revenue per Customer 6.10 5.88 5.20
Average Monthly Digital Revenue per Digital
Customer 17.58 17.41 17.18
Telephone
- -----------------------------------------------
Telephone Universe (marketable homes) 113.2 93.3 20.0
Telephone Customers 2.8 1.9 0.3
Telephone Penetration (to marketable homes) 2.4% 2.0% 1.5%
Telephone Revenue $217 $125 $10
Average Monthly Telephone Revenue per
Customer 0.83 0.48 0.04
Advertising Revenue
- -----------------------------------------------
Advertising Revenue $1,322 $1,188 $1,154
Average Monthly Advertising Revenue per
Customer 5.06 4.52 4.39
Other Revenue
- -----------------------------------------------
Other Revenue $3,192 $3,334 $3,520
Average Monthly Other Revenue per Customer 12.23 12.67 13.42
Certain prior period amounts have been reclassified to conform to
the current period presentation.
Note: All "per customer" figures reflect revenue per Basic Cable
Customers.
INSIGHT COMMUNICATIONS COMPANY, INC.
NCTA STANDARD REPORTING CATEGORIES
CAPITAL EXPENDITURES
(unaudited)
(in thousands)
----------------------------------
Q2 2003 YTD 2003 2003 FY 2002 FY
Insight Consolidated Actual Actual Guidance Actual
- ----------------------------------------------------------------------
Customer Premise Equipment $20,311 $43,503 $115,309 $106,060
Scaleable Infrastructure 3,559 6,557 13,775 32,019
Line Extensions 5,382 8,192 21,254 29,446
Upgrade/Rebuild 10,417 18,545 31,065 87,735
Support Capital 3,897 7,314 18,574 27,744
----------------------------------
Total Insight Consolidated $43,566 $84,111 $199,977 $283,004
----------------------------------
----------------------------------
Q2 2003 YTD 2003 2003 FY 2002 FY
Insight Ohio Actual Actual Guidance Actual
- ----------------------------------------------------------------------
Customer Premise Equipment $1,448 $2,920 $9,963 $13,600
Scaleable Infrastructure 44 245 1,625 4,698
Line Extensions 510 218 2,330 3,264
Upgrade/Rebuild 590 1,227 1,353 9,937
Support Capital 215 452 1,467 2,163
----------------------------------
Total Insight Ohio $2,807 $5,062 $16,738 $33,662
----------------------------------
CONTACT: Insight Communications
Dinesh C. Jain, 917-286-2300