EX-99 3 a4446383_ex991.txt INSIGHT COMMUNICATIONS EXHIBIT 99.1 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