Exhibit 99.1
Insight Announces Third Quarter 2007 Results
NEW YORK--(BUSINESS WIRE)--Nov. 5, 2007-- Insight Communications Company
today announced financial results for the quarter ended September 30, 2007.
"The true test of success for any business is its ability to
sustain positive financial results over time," said Michael Willner,
Insight's chief executive officer. "Our exceedingly strong third
quarter results clearly indicate that we have established an operating
business model that consistently grows RGUs at a pace that supports
ongoing positive financial returns."
Third Quarter Highlights
-- Revenue of $362.3 million, an increase of 14% over Q3 2006
-- Adjusted Operating Income before Depreciation and
Amortization* of $143.6 million, an increase of 15% over Q3
2006
-- Capital expenditures of $76.5 million
-- Free Cash Flow* of $13.6 million, an increase of $17.9 million
over Q3 2006
-- Total Customer Relationships of 1,449,400 at September 30,
2007, an increase of 54,000 compared to 1,395,400 at September
30, 2006
-- Total Revenue Generating Units ("RGUs") of 2,993,700 at
September 30, 2007, an increase of 385,000, or 15%, from
September 30, 2006, comprised of:
-- Basic customer net gain of 21,100, an improvement of 4,700
from Q3 2006 net gain of 16,400, and the best Q3
performance in the company's history. Total basic
customers at quarter end were 1,362,100, representing a
3.3% annual growth rate in basic customers from September
30, 2006
-- High-speed Internet ("HSI") customer net gain of 47,900, an
increase over net additions in Q3 2006 of 44,800 and
matching the best net gain performance in the company's
history. Total HSI customers at quarter end were 722,800,
a penetration of 29% of HSI homes passed.
-- Digital customer net gain of 26,100, an increase over net
additions in Q3 2006 of 25,500. Total digital customers at
quarter end were 687,600, a penetration of 53% of the
company's digital universe.
-- Telephone customer net gain of 44,000, surpassing Q2 2007
as the company's best growth quarter ever, and compared to
net additions in Q3 2006 of 5,700. Total telephone
customers at quarter end were 221,200, a penetration of
11% of the company's telephone universe.
-- As of September 30, 2007, 98% of the company's customers were
passed by two-way, 750 MHz or higher capacity upgraded
network.
* See explanation of these Non-GAAP measures on p. 7.
(Page 1)
Operating Results for the Three Months Ended September 30, 2007
Compared to the Three Months Ended September 30, 2006
Revenue for the three months ended September 30, 2007, totaled
$362.3 million, an increase of 14% over the prior year, due primarily
to RGU growth across all of Insight's services, as well as video rate
increases. High-speed Internet service revenue increased 28% over the
prior year, which was primarily attributable to an increased customer
base, partially offset by promotional discounts. Insight added a net
47,900 high-speed Internet customers during the quarter to end at
722,800 customers.
Basic cable service revenue increased 6% due to an increased
customer base and video rate increases, partially offset by
promotional discounts. In addition, digital service revenue increased
22% over the prior year due to an increased customer base and a $1.23
increase in digital average revenue per customer ("ARPU"). Insight
added a net 26,100 digital customers during the quarter to end at
687,600 customers.
Insight has been increasing its customer growth and retention
efforts by increasing spending on sales and marketing efforts,
emphasizing bundling and enhancing and differentiating its video
services with video-on-demand, high-definition television and digital
video recorders. The company is also continuing to focus on improving
customer satisfaction through higher service levels and increased
customer education of product offerings.
To increase its bundling opportunities and extend its growth
potential in future years, the company successfully rolled out its
telephone product in eight previously unserved districts during the
second half of 2006 and in January 2007. As a result, the company
added a net 44,000 telephone customers during the quarter to end at
221,200 customers.
(Page 2)
Revenue by service offering was as follows for the three months ended
September 30 (dollars in thousands):
Revenue by Service Offering
-------------------------------------- --------
Three Three
Months Months
Ended % of Ended % of % Change
September Total September Total in
30, 2007 Revenue 30, 2006 Revenue Revenue
---------- -------- --------- -------- --------
Basic $ 169,510 46.8% $ 159,677 50.2% 6.2%
High-speed Internet 76,994 21.2% 60,402 19.0% 27.5%
Digital 42,818 11.8% 34,979 11.0% 22.4%
Telephone 24,631 6.8% 13,249 4.2% 85.9%
Advertising 21,133 5.8% 20,024 6.3% 5.5%
Premium 13,841 3.8% 13,891 4.4% -0.4%
Franchise fees 8,081 2.2% 7,496 2.3% 7.8%
Other 5,328 1.6% 8,387 2.6% -36.5%
---------- -------- --------- -------- --------
Total $ 362,336 100.0% $ 318,105 100.0% 13.9%
========== ======== ========= ======== ========
Total Customer Relationships were 1,449,400 as of September 30,
2007, an increase of 54,000 from 1,395,400 as of September 30, 2006.
Total Customer Relationships represent the number of customers who
receive one or more of Insight's products (i.e., basic cable,
high-speed Internet or telephone) without regard to which product they
purchase.
In the quarter ended September 30, 2007, Insight added 139,100
RGUs, which represent the sum of basic, digital, high-speed Internet
and telephone customers, and as of September 30, 2007, had 2,993,700
RGUs, an increase of 15% from September 30, 2006.
RGUs by category were as follows (in thousands):
September 30, 2007 September 30, 2006
------------------ ------------------
Basic 1,362.1 1,318.8
High-speed Internet 722.8 579.3
Digital 687.6 597.7
Telephone 221.2 112.9
------------------ ------------------
Total RGUs 2,993.7 2,608.7
================== ==================
Average monthly revenue per basic customer was $89.36 for the
three months ended September 30, 2007, compared to $80.90 for the
three months ended September 30, 2006. This primarily reflects the
continued growth of high-speed Internet, video and telephone product
offerings in all markets, as well as video rate increases.
Programming and other operating costs increased $14.5 million, or
13%. Increases in programming rates, customers and the addition of new
programming content were significant drivers of the cost increase for
the quarter ended September 30, 2007.
(Page 3)
Other direct operating costs increased due to the increase in
telephone cost of service as the company successfully rolled out this
product in eight previously unserved districts during the second half
of 2006 and in January 2007 and an increase in high-speed Internet
service costs due to the increased customer base. Other operating
costs increased primarily as a result of an increase in installation
labor due to increased customer activity.
Selling, general and administrative expenses increased $14.6
million, or 17%, primarily due to increased payroll, payroll- related
costs and temporary help associated with an increase in the number of
employees and salary increases for existing employees. The increase in
the number of employees represents investments in sales and marketing,
customer care and network operations personnel to continue to upgrade
and enhance Insight's product offerings, manage its increasingly
complex network and increase customer satisfaction. A portion of the
network operations personnel increases were in support of the
company's recent telephone product launches. Partnership dissolution
costs of $3.5 million recorded in the third quarter of 2007 that
primarily related to Insight's planned division of its partnership
with Comcast significantly contributed to the increase in selling,
general and administrative expenses. Franchise fees, customer billing
and collection fees increased primarily due to the increase in
revenues and the customer base. Marketing expenses increased over the
prior year to support the continued rollout of high-speed Internet,
digital and telephone products, and to grow the company's core video
customer base.
Depreciation and amortization expense increased $4.8 million, or
7%, primarily as a result of a continued high level of capital
expenditures through September 30, 2007. These expenditures were
primarily for purchases of customer premise equipment, installation
labor and materials, capitalized labor, headend equipment, network
extensions and network capacity and bandwidth increases, all of which
Insight considers necessary in order to continue to maintain and grow
its customer base and expand its service offerings. Partially
offsetting this increase was a decrease in depreciation expense
related to certain assets that have become fully depreciated since
September 30, 2006.
As a result of the factors discussed above, Adjusted Operating
Income before Depreciation and Amortization increased $18.7 million to
$143.6 million, an increase of 15% over Q3 2006.
Interest expense decreased $7.1 million, or 11%. In October, 2006,
Insight entered into a new $2.445 billion senior secured credit
facility, using the proceeds to refinance its existing senior credit
facility and to redeem a portion of the outstanding 9 3/4% Senior
Notes and all of the outstanding 10 1/2% Senior Notes of Insight
Midwest. Because of this refinancing, lower borrowing base rates and
lower costs of borrowing as a result of improved leverage ratios, the
company's interest rate averaged 8.0% for the three months ended
September 30, 2007, as compared to 9.1% for the three months ended
September 30, 2006.
Liquidity and Capital Resources
Insight's business requires cash for operations, debt service and
capital expenditures. The cable television business has substantial
ongoing capital requirements for the provision of new services and the
construction, expansion and maintenance of its broadband networks.
(Page 4)
In the past, expenditures have been made for various purposes,
including the upgrade of the existing cable network, and will continue
to be made for customer premise equipment (e.g., set-top boxes),
installation and deployment of new product and service offerings,
capitalized payroll, network capacity, bandwidth increases, network
extensions, and, to a lesser extent, network upgrades. Historically,
Insight has been able to meet its cash requirements with cash flow
from operations, borrowings under its credit facilities and issuances
of private and public debt and equity.
Cash provided by operations for the nine months ended September
30, 2007 and 2006 was $270.5 million and $200.6 million. The increase
was primarily attributable to the decrease in net loss and the timing
of cash receipts and payments related to working capital accounts.
Cash used in investing activities for the nine months ended
September 30, 2007 and 2006 was $209.1 million and $213.5 million, and
was primarily for capital expenditures. These expenditures principally
constituted purchases of customer premise equipment, installation
labor and materials, capitalized labor, telephony equipment, headend
equipment, network extensions and network capacity and bandwidth
increases, all of which are necessary to grow the customer base and
expand the company's service offerings.
Cash used in financing activities for the nine months ended
September 30, 2007 was $65.4 million compared to $2.4 million of cash
provided by financing activities for the nine months ended September
30, 2006. The uses of cash in 2007 were primarily for the repayment of
Insight's credit facility and, in 2006 cash was provided by net
proceeds from borrowings under the credit facility.
Free Cash Flow for the nine months ended September 30, 2007
totaled $61.3 million, compared to ($12.7) million for the nine months
ended September 30, 2006. This increase in Free Cash Flow from
September 30, 2006 to September 30, 2007 of $74.0 million was
primarily driven by the following:
-- A $59.6 million increase in Adjusted Operating Income before
Depreciation and Amortization;
-- A $26.0 million increase in the generation of Free Cash Flow
over the same period in the prior year from changes in working
capital accounts; and
-- A $4.1 million decrease in capital expenditures.
These increases in cash flow were offset by:
-- A $16.2 million increase in cash interest expense paid, which
was primarily driven by interest on the 12 1/4% Senior
Discount Notes, which was paid in cash in February 2007,
whereas in February 2006 it was paid in-kind. Partially
offsetting this increase was a decrease in interest rates.
Insight believes that the Insight Midwest Holdings credit
facility, cash on-hand and cash flow from operations are sufficient to
support the company's current operating plan. As of September 30,
2007, Insight had the ability to draw upon $214.3 million of unused
availability to fund any shortfall resulting from the inability of
Insight Midwest's cash from operations to fund its capital
expenditures, meet its debt service requirement or otherwise fund its
operations. Insight expects to use any available Free Cash Flow to
repay its indebtedness.
(Page 5)
Division of Insight Midwest Partnership
Insight Midwest holds all of the cable systems served by Insight
and is equally owned by Insight and Comcast. On April 1, 2007, Insight
Midwest's partnership agreement was amended, and Insight and Comcast
agreed on a division of the partnership's assets and liabilities. Upon
completion of the transaction, Insight will own all of the cable
systems serving customers in Louisville, Lexington, Bowling Green, and
Covington, Ky., and in Evansville, Ind. and Columbus, Ohio. Comcast
will own all of the cable systems serving customers in Rockford/Dixon,
Quincy/Macomb, Springfield, Peoria, and Champaign/Urbana, Ill., and in
Bloomington, Anderson, and Lafayette/Kokomo, Ind. Pending completion
of the transaction, Insight continues to serve as general partner and
manager of all of the cable systems of Insight Midwest. In conjunction
with the division of assets and liabilities, the Insight systems group
was initially allocated approximately $1.260 billion of the
partnership's debt, and the Comcast systems group was initially
allocated approximately $1.335 billion of the partnership's debt. The
closing is subject to closing conditions, including local governmental
approvals and regulatory approvals and is expected to be completed by
the end of 2007.
The table below shows the company's RGU net additions for the
three months ended September 30, 2007 in the Insight Systems Group and
the Comcast Systems Group (in thousands).
Insight Systems Comcast Systems
RGU Net Additions Group Group
--------------- ---------------
Basic 11.5 9.7
Digital 12.9 13.2
High-speed Internet 24.4 23.5
Telephone 25.1 18.8
--------------- ---------------
Total RGUs 73.9 65.2
=============== ===============
The tables below show the company's total RGUs as of September 30,
2007 and 2006 in the Insight Systems Group and the Comcast Systems
Group (in thousands).
September 30, September 30,
Total RGUs - Insight Systems Group 2007 2006
------------- -------------
Basic 665.8 634.9
Digital 365.6 311.2
High-speed Internet 366.7 291.2
Telephone 164.1 112.5
------------- -------------
Total RGUs 1,562.2 1,349.8
============= =============
(Page 6)
September 30, September 30,
Total RGUs - Comcast Systems Group 2007 2006
------------- -------------
Basic 696.3 683.9
Digital 322.0 286.5
High-speed Internet 356.1 288.1
Telephone 57.1 0.4
------------- -------------
Total RGUs 1,431.5 1,258.9
============= =============
Use of Adjusted Operating Income before Depreciation and
Amortization and Free Cash Flow
Insight utilizes Adjusted Operating Income before Depreciation and
Amortization (defined as operating income before depreciation,
amortization, non-cash stock-based compensation and partnership
dissolution costs), among other measures, to evaluate the performance
of its businesses. Adjusted Operating Income before Depreciation and
Amortization is considered an important indicator of the operational
strength of Insight's businesses and is a component of its annual
compensation programs. In addition, Insight's debt agreements use
Adjusted Operating Income before Depreciation and Amortization,
adjusted for certain non-recurring items, in their leverage and other
covenant calculations. Insight also uses this measure to determine how
it will allocate resources and capital. Insight's management finds
this measure helpful because it captures all of the revenue and
ongoing operating expenses of its businesses and therefore provides a
means to directly evaluate the ability of the business operations to
generate returns and to compare operating capabilities across its
businesses. This measure is also used by equity and fixed income
research analysts in their reports to investors evaluating Insight's
businesses and other companies in the cable television industry.
Insight believes Adjusted Operating Income before Depreciation and
Amortization is useful to investors because it enables them to assess
its performance in a manner similar to the methods used by Insight's
management and provides a measure that can be used to analyze, value
and compare companies in the cable television industry that may have
different depreciation, amortization and stock-based compensation
policies.
A limitation of Adjusted Operating Income before Depreciation and
Amortization, however, is that it does not reflect the periodic costs
of certain capitalized tangible and intangible assets used in
generating revenues in Insight's businesses. Management evaluates the
costs of such tangible and intangible assets through other financial
measures such as capital expenditures, investment spending and Free
Cash Flow. Management also evaluates the costs of capitalized tangible
and intangible assets by analyzing returns provided on the capital
dollars deployed. Another limitation of Adjusted Operating Income
before Depreciation and Amortization is that it does not reflect
income net of interest expense, which is a significant expense for the
company because of the substantial debt it has incurred to acquire
cable television systems and finance capital expenditures to upgrade
its cable network. Management evaluates the impact of interest expense
through other measures, including interest expense itself, Free Cash
Flow, the returns analysis discussed above and debt service covenant
ratios under Insight's credit facility.
Free Cash Flow is net cash provided by operating activities (as
defined by accounting principles generally accepted in the United
States) less capital expenditures. Free Cash Flow is considered to be
an important indicator of Insight's liquidity, including its ability
to repay indebtedness.
(Page 7)
Insight believes Free Cash Flow is useful for investors because it
enables them to assess Insight's ability to service its debt and to
fund continued growth with internally generated funds in a manner
similar to the methods used by Insight's management, and provides a
measure that can be used to analyze, value and compare companies in
the cable television industry.
Both Adjusted Operating Income before Depreciation and
Amortization and Free Cash Flow should be considered in addition to,
not as a substitute for, Operating Income, Net Income and various cash
flow measures (e.g., Net Cash Provided by Operating Activities), as
well as other measures of financial performance and liquidity reported
in accordance with accounting principles generally accepted in the
United States.
Reconciliation of Net Loss to Adjusted Operating Income before
Depreciation and Amortization
The following table reconciles Net Loss to Adjusted Operating
Income before Depreciation and Amortization. In addition, the table
provides the components from Net Loss to Operating Income.
Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
(in thousands)
As As
restated restated
Net loss $(10,224) $ (9,637) $(18,527) $(33,170)
Provision for income taxes 1,909 1,815 5,848 5,794
--------- --------- --------- ---------
Loss before income taxes (8,315) (7,822) (12,679) (27,376)
Minority interest income
(expense) 9,907 (1,839) 24,151 (6,454)
--------- --------- --------- ---------
Income (loss) before minority
interest and income taxes 1,592 (9,661) 11,472 (33,830)
Other (income) expense:
Other expense 6,040 28 5,258 78
Interest income (309) (366) (880) (1,247)
Interest expense 58,742 65,810 173,141 188,093
--------- --------- --------- ---------
Total other expense, net 64,473 65,472 177,519 186,924
--------- --------- --------- ---------
Operating income 66,065 55,811 188,991 153,094
Depreciation and amortization 73,554 68,743 214,787 200,398
Partnership dissolution costs 3,479 - 9,327 -
Stock-based compensation 495 335 1,209 1,219
--------- --------- --------- ---------
Adjusted Operating Income
before Depreciation and
Amortization $143,593 $124,889 $414,314 $354,711
========= ========= ========= =========
(Page 8)
Reconciliation of Net Cash Provided by Operating Activities to
Free Cash Flow
The following table provides a reconciliation from net cash
provided by operating activities to Free Cash Flow. In addition, the
table provides the components from net cash provided by operating
activities to operating income.
Three Months Nine Months
Ended September 30, Ended September 30,
------------------- ---------------------
2007 2006 2007 2006
--------- --------- ---------- ----------
(in thousands)
Operating income $ 66,065 $ 55,811 $ 188,991 $ 153,094
Depreciation and
amortization 73,554 68,743 214,787 200,398
Partnership dissolution
costs 3,479 - 9,327 -
Stock-based compensation 495 335 1,209 1,219
--------- --------- ---------- ----------
Adjusted Operating Income
before Depreciation and
Amortization 143,593 124,889 414,314 354,711
Changes in working
capital accounts (1) 9,089 (6,918) 22,720 (3,246)
Cash paid for interest (62,529) (50,603) (166,251) (150,074)
Cash paid for taxes (26) (64) (285) (755)
--------- --------- ---------- ----------
Net cash provided by
operating activities 90,127 67,304 270,498 200,636
Capital expenditures (76,496) (71,544) (209,176) (213,309)
--------- --------- ---------- ----------
Free Cash Flow $ 13,631 $ (4,240) $ 61,322 $ (12,673)
========= ========= ========== ==========
(1) Changes in working capital accounts are based on the net cash
changes in current assets and current liabilities, excluding changes
related to interest and taxes and other non-cash expenses.
About Insight Communications
Insight Communications is the ninth largest cable operator in the
United States with approximately 1.4 million customer relationships in
the four contiguous states of Illinois, Kentucky, Indiana and Ohio.
Insight offers bundled, state-of-the-art video, high-speed Internet
and voice telephony services 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. 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 anticipates. Factors that
could have a material and adverse impact on actual results include:
all of the services offered by Insight face a wide range of
competition; Insight has substantial debt and has significant interest
payment requirements; upon completion of the division of Insight's
joint venture with a subsidiary of Comcast Corporation it will face
new challenges as a smaller company; the terms of Insight Midwest's
indebtedness limits Insight's ability to access the cash flow of
Insight Midwest's subsidiaries; Insight has a history of net losses;
Insight's programming costs are substantial; general business
conditions, economic uncertainty or slowdown, and the effects of
governmental regulation; and the other risk factors described in
Insight's annual report on Form 10-K and other periodic filings.
Insight does not undertake any obligation to publicly update or
release any revisions to these forward-looking statements to reflect
events or circumstances after the date of this press release or to
reflect the occurrence of unanticipated events, except as required by
law.
(Page 9)
Insight Communications Company, Inc.
Consolidated Balance Sheets
(dollars in thousands, except share and per share amounts)
September 30, December 31,
2007 2006
------------- ------------
(unaudited)
Assets
Cash and cash equivalents $ 39,576 $ 43,573
Trade accounts receivable, net of allowance
for doubtful accounts of $1,211 and $1,148
as of September 30, 2007 and December 31,
2006 31,957 31,060
Prepaid expenses and other current assets 8,764 8,828
------------- ------------
Total current assets 80,297 83,461
Fixed assets, net 1,146,142 1,151,260
Goodwill 187,982 187,982
Franchise costs 2,361,959 2,361,959
Deferred financing costs, net of
accumulated amortization of $32,121 and
$29,473 as of September 30, 2007 and
December 31, 2006 16,817 19,053
Investments 3,137 7,000
Other non-current assets 2,567 2,941
------------- ------------
Total assets $3,798,901 $3,813,656
============= ============
(Page 10)
Insight Communications Company, Inc.
Consolidated Balance Sheets
(dollars in thousands, except share and per share amounts)
September 30, December 31,
2007 2006
------------- ------------
(unaudited)
Liabilities and stockholders' equity
Accounts payable $ 47,135 $ 43,772
Accrued expenses and other current
liabilities 58,136 45,521
Accrued property taxes 20,133 13,595
Accrued programming costs (inclusive of
$37,323 and $30,677 due to related parties
as of September 30, 2007 and December 31,
2006) 54,651 45,880
Deferred revenue 1,303 2,076
Interest payable 53,453 49,518
------------- ------------
Total current liabilities 234,811 200,362
Deferred revenue 196 683
Deferred tax liability 218,377 212,648
Debt 2,743,878 2,805,722
Other non-current liabilities 874 -
Minority interest 269,783 245,634
Stockholders' equity:
Voting preferred stock, $.01 par value:
Series A - 1,000,000 shares authorized;
848,945 shares issued and outstanding as
of September 30, 2007 and December 31,
2006 8 8
Series B - 1,000,000 shares authorized;
517,836 shares issued and outstanding as
of September 30, 2007 and December 31,
2006 5 5
Non-voting preferred stock, $.01 par value:
Series C - 15,000,000 shares authorized;
13,364,693 shares issued and outstanding
as of September 30, 2007 and December
31, 2006 134 134
Series D - 50,000,000 shares authorized;
47,015,659 shares issued and outstanding
as of September 30, 2007 and December
31, 2006 470 470
Non-voting common stock, $.01 par value:
Series E - 5,000,000 shares authorized;
3,555,497 and 3,536,247 shares issued
and outstanding as of September 30, 2007
and December 31, 2006 36 35
Series F - 100,000 shares authorized;
94,660 and 93,250 shares issued and
outstanding as of September 30, 2007 and
December 31, 2006 1 1
Voting common stock, $.01 par value:
Series G - 10,000,000 shares authorized;
0 shares issued and outstanding as of
September 30, 2007 and December 31, 2006 - -
Additional paid-in-capital 827,716 826,509
Accumulated deficit (497,388) (478,861)
Accumulated other comprehensive income - 306
------------- ------------
Total stockholders' equity 330,982 348,607
------------- ------------
Total liabilities and stockholders'
equity $3,798,901 $3,813,656
============= ============
(Page 11)
Insight Communications Company, Inc.
Consolidated Statements of Operations
(unaudited)
(dollars in thousands)
Three months ended Nine months ended
September 30, September 30,
--------------------- ----------------------
2007 2006 2007 2006
---------- ---------- ----------- ----------
As As
restated restated
Revenue $ 362,336 $318,105 $1,057,308 $ 931,103
Operating costs and
expenses:
Programming and other
operating costs
(exclusive of
depreciation and
amortization)
(inclusive of $52,256
and $155,182, and
$47,772 and $135,110
of programming
expense incurred
through related
parties for the three
and nine months ended
September 30, 2007
and 2006) 123,839 109,307 366,000 333,676
Selling, general and
administrative
(inclusive of $495
and $1,209, and $335
and $1,219 of stock-
based compensation
for the three and
nine months ended
September 30, 2007
and 2006) 98,878 84,244 287,530 243,935
Depreciation and
amortization 73,554 68,743 214,787 200,398
---------- --------- ----------- ----------
Total operating costs
and expenses 296,271 262,294 868,317 778,009
---------- --------- ----------- ----------
Operating income 66,065 55,811 188,991 153,094
Other income (expense):
Interest expense (58,742) (65,810) (173,141) (188,093)
Interest income 309 366 880 1,247
Other expense (6,040) (28) (5,258) (78)
---------- --------- ----------- ----------
Total other expense, net (64,473) (65,472) (177,519) (186,924)
Income (loss) before
minority interest and
income taxes 1,592 (9,661) 11,472 (33,830)
Minority interest income
(expense) (9,907) 1,839 (24,151) 6,454
---------- --------- ----------- ----------
Loss before income taxes (8,315) (7,822) (12,679) (27,376)
Provision for income
taxes (1,909) (1,815) (5,848) (5,794)
---------- --------- ----------- ----------
Net loss ($10,224) ($9,637) ($18,527) ($33,170)
========== ========= =========== ==========
(Page 12)
Insight Communications Company, Inc.
Consolidated Statement of Cash Flows
(unaudited)
(dollars in thousands)
Nine months ended
September 30,
---------------------
2007 2006
---------- ----------
As
restated
Operating activities:
Net loss ($18,527) ($33,170)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 214,787 200,398
Stock-based compensation 1,209 1,219
Minority interest 24,151 (6,454)
Provision for losses on trade accounts
receivable 13,272 13,959
Amortization of note discount 3,156 6,663
Impairment of investment 3,863 -
Deferred income taxes 5,729 5,728
Loss on disposal of fixed assets 2,077 -
Changes in operating assets and
liabilities:
Trade accounts receivable (14,169) (13,093)
Prepaid expenses and other assets 422 (1,808)
Accounts payable 3,363 (3,236)
Interest payable 3,935 31,324
Accrued expenses and other liabilities 27,230 (894)
---------- ----------
Net cash provided by operating activities 270,498 200,636
---------- ----------
Investing activities:
Purchase of fixed assets (209,176) (213,309)
Sale of fixed assets 94 572
Purchase of investments - (778)
---------- ----------
Net cash used in investing activities (209,082) (213,515)
---------- ----------
Financing activities:
Repayment of credit facilities (75,000) (62,625)
Proceeds from borrowings under credit
facilities 10,000 65,000
Debt issuance costs (412) -
Other (1) 1
---------- ----------
Net cash (used in) provided by financing
activities (65,413) 2,376
---------- ----------
Net decrease in cash and cash equivalents (3,997) (10,503)
Cash and cash equivalents, beginning of period 43,573 29,782
---------- ----------
Cash and cash equivalents, end of period $ 39,576 $ 19,279
========== ==========
(Page 13)
Insight Communications Company, Inc.
Operating Statistics
(in thousands, except per customer and penetration data)
Q3 Q2 Q3
2007 2007 2006
-----------------------------
Customer Relationships 1,449.4 1,424.1 1,395.4
Total Average Monthly Revenue per Basic
Customer $ 89.36 $ 88.27 $ 80.90
Basic Cable
- ----------------------------------------
Homes Passed 2,495.9 2,483.9 2,456.0
Basic Cable Customers 1,362.1 1,341.0 1,318.8
Basic Cable Penetration 54.6% 54.0% 53.7%
Cable Revenue $169,510 $169,891 $159,677
Average Monthly Cable Revenue per Basic
Customer $ 41.81 $ 42.18 $ 40.61
High-Speed Internet ("HSI")
- ----------------------------------------
HSI Homes Passed 2,473.2 2,458.0 2,418.5
HSI Customers 722.8 674.9 579.3
HSI Penetration 29.2% 27.5% 24.0%
HSI Revenue $ 76,994 $ 73,260 $ 60,402
Average Monthly HSI Revenue per Basic
Customer $ 18.99 $ 18.19 $ 15.36
Average Monthly HSI Revenue per HSI
Customer $ 36.72 $ 36.70 $ 36.15
Digital Cable
- ----------------------------------------
Digital Universe 1,296.4 1,281.3 1,255.2
Digital Customers 687.6 661.5 597.7
Digital Cable Penetration 53.0% 51.6% 47.6%
Digital Revenue $ 42,818 $ 42,954 $ 34,979
Average Monthly Digital Revenue per
Basic Customer $ 10.56 $ 10.66 $ 8.90
Average Monthly Digital Revenue per
Digital Customer $ 21.16 $ 21.77 $ 19.93
Telephone
- ----------------------------------------
Telephone Universe (marketable homes) 2,031.6 1,973.6 1,008.1
Telephone Customers 221.2 177.2 112.9
Telephone Penetration (to marketable
homes) 10.9% 9.0% 11.2%
Telephone Revenue $ 24,631 $ 20,083 $ 13,249
Average Monthly Telephone Revenue per
Basic Customer $ 6.07 $ 4.99 $ 3.37
Average Monthly Telephone Revenue per
Telephone Customer $ 41.22 $ 41.20 $ 40.13
Advertising Revenue
- ----------------------------------------
Advertising Revenue $ 21,133 $ 21,674 $ 20,024
Average Monthly Advertising Revenue per
Basic Customer $ 5.21 $ 5.38 $ 5.09
Other Revenue
- ----------------------------------------
Other Revenue $ 27,250 $ 27,641 $ 29,774
Average Monthly Other Revenue per Basic
Customer $ 6.72 $ 6.87 $ 7.57
(Page 14)
Insight Communications Company, Inc.
NCTA Standard Reporting Categories
Capital Expenditures
(unaudited)
(in thousands)
Insight Consolidated Three Months Three Months
Ended Ended
September 30, September 30,
2007 2006
- ----------------------------------------------------------------------
Customer Premise Equipment $ 51,784 $ 37,661
Scaleable Infrastructure 5,300 15,454
Line Extensions 6,435 7,022
Upgrade/Rebuild 6,446 3,096
Support Capital 6,531 8,311
---------------------------
Total Insight Consolidated $ 76,496 $ 71,544
---------------------------
Insight Consolidated Nine Months Nine Months
Ended Ended
September 30, September 30,
2007 2006
- ----------------------------------------------------------------------
Customer Premise Equipment $141,066 $123,339
Scaleable Infrastructure 18,308 28,115
Line Extensions 17,603 20,185
Upgrade/Rebuild 14,028 11,552
Support Capital 18,171 30,118
---------------------------
Total Insight Consolidated $209,176 $213,309
---------------------------
(Page 15)
CONTACT: Insight Communications
Sandy Colony, 917-286-2300
SVP, Communications