-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IUJn8E7w7ELnyDAnVpluQ5GW/9zSO3UrZEYiNAhTiS76y21snfDAd8j03s5ypDW1 E779v0NJfpVysXC6HW3IaQ== 0001157523-07-004494.txt : 20070503 0001157523-07-004494.hdr.sgml : 20070503 20070503100734 ACCESSION NUMBER: 0001157523-07-004494 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070503 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070503 DATE AS OF CHANGE: 20070503 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INSIGHT COMMUNICATIONS CO INC CENTRAL INDEX KEY: 0001084421 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 134053502 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-26677 FILM NUMBER: 07813254 BUSINESS ADDRESS: STREET 1: 126 EAST 56TH STREET CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2123712266 MAIL ADDRESS: STREET 1: INSIGHT COMMUNICATIONS CO INC STREET 2: 126 EAST 56TH STREET CITY: NEW YORK STATE: NY ZIP: 10022 8-K 1 a5393550.txt INSIGHT COMMUNICATIONS COMPANY, INC. 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): May 3, 2007 Insight Communications Company, Inc. (Exact name of Registrant as specified in its charter) Delaware 0-26677 13-4053502 (State of incorporation) (Commission File No.) (IRS Employer Identification No.) 810 7th Avenue New York, New York 10019 (Address of principal executive offices) Registrant's telephone number: (917) 286-2300 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition. On May 3, 2007, the Registrant issued a press release announcing its financial results for the quarter ended March 31, 2007. A copy of the press release is being furnished as Exhibit 99.1 to this report and incorporated herein by reference. This press release contains disclosure of adjusted operating income before depreciation and amortization and free cash flow, each of which is a financial measure that is not calculated and presented in accordance with accounting principles generally accepted in the United States ("GAAP"). Disclosure regarding management's reasons for presenting these non-GAAP measures, as well as tabular reconciliation of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP, are presented in the press release under the caption "Use of Adjusted Operating Income before Depreciation and Amortization and Free Cash Flow." Item 9.01 Financial Statements and Exhibits. (a) Financial Statements of Businesses Acquired - None (b) Pro Forma Financial Information - None (c) Shell Company Transactions - None (d) Exhibits: Exhibit No. Description ----------- ----------- 99.1 Press release issued on May 3, 2007 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Insight Communications Company, Inc. Dated: May 3, 2007 By: /s/ Elliot Brecher ------------------------------------ Elliot Brecher Senior Vice President and General Counsel EX-99.1 2 a5393550ex991.txt EXHIBIT 99.1 Exhibit 99.1 Insight Announces First Quarter 2007 Results NEW YORK--(BUSINESS WIRE)--May 3, 2007--Insight Communications Company today announced financial results for the quarter ended March 31, 2007. First Quarter Highlights -- Revenue of $339.5 million, an increase of 13% over Q1 2006 -- Adjusted Operating Income before Depreciation and Amortization* of $129.3 million, an increase of 15% over Q1 2006 -- Capital expenditures of $76.9 million -- Free Cash Flow* of $16.8 million -- Total Customer Relationships of 1,426,300 at March 31, 2007, an increase of 49,500 compared to 1,376,800 at March 31, 2006 -- Total Revenue Generating Units ("RGUs") of 2,801,600 at March 31, 2007, an increase of 319,900, or 13%, from March 31, 2006, comprised of: -- Basic customer net gain of 21,200, resulting in 1,344,000 basic customers at quarter end, representing a 2.9% annual growth rate in basic customers from March 31, 2006 -- High-speed Internet ("HSI") customer net gain of 44,800, compared to net additions in Q1 2006 of 44,400. Total HSI customers at quarter end were 656,000, a penetration of 27% of HSI homes passed. -- Digital customer net gain of 32,200, compared to net additions in Q1 2006 of 41,700. Total digital customers at quarter end were 653,800, a penetration of 51% of the company's digital universe. -- Telephone customer net gain of 24,400, the company's best growth quarter ever, compared to net additions in Q1 2006 of 9,800. Total telephone customers at quarter end were 147,800, a penetration of 7.5% of the company's telephone universe. -- As of March 31, 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 page 6. (Page 1) On April 1, 2007, Insight Midwest, L.P.'s partnership agreement was amended, and Insight agreed with Comcast on a division of Insight Midwest's assets and liabilities. Upon completion of the transaction, Insight will own 100% of the cable systems serving customers in Louisville; Lexington; Bowling Green; and Covington, Ky., and in Evansville, Ind. and Columbus, Ohio. Comcast will own 100% 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. Operating Results for the Three Months Ended March 31, 2007 Compared to the Three Months Ended March 31, 2006 Revenue for the three months ended March 31, 2007, totaled $339.5 million, an increase of 13% 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 23% over the prior year, which was attributable to an increased customer base and was partially offset by lower average revenue per customer due to promotional discounts. Insight added a net 44,800 high-speed Internet customers during the quarter to end at 656,000 customers. Basic cable service revenue increased 6% due to an increased customer base and video rate increases, partially offset by promotional discounts. Insight added a net 21,200 basic customers during the quarter to end at 1,344,000 customers. In addition, digital service revenue increased 28% over the prior year due to an increased customer base and a $1.60 increase in digital average revenue per customer ("ARPU"). Insight added a net 32,200 digital customers during the quarter to end at 653,800 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 24,400 telephone customers during the quarter to end at 147,800 customers. (Page 2) Revenue by service offering was as follows for the three months ended March 31 (dollars in thousands): Revenue by Service Offering --------------------------------------------- -------- THREE MONTHS % of THREE MONTHS % of % Change ENDED MARCH Total ENDED MARCH Total in 31, 2007 Revenue 31, 2006 Revenue Revenue ------------ --------- ------------- -------- -------- Basic $ 168,151 49.5% $ 158,207 52.5% 6.3% High-speed Internet 69,531 20.5% 56,497 18.8% 23.1% Digital 40,540 11.9% 31,723 10.5% 27.8% Advertising 17,385 5.1% 17,697 5.9% -1.8% Telephone 15,803 4.7% 11,355 3.8% 39.2% Premium 14,195 4.2% 13,394 4.4% 6.0% Franchise fees 7,998 2.4% 7,354 2.4% 8.8% Other 5,866 1.7% 5,054 1.7% 16.1% ------------ --------- ------------- -------- -------- Total $ 339,469 100.0% $ 301,281 100.0% 12.7% ============ ========= ============= ======== ======== Total Customer Relationships were 1,426,300 as of March 31, 2007, an increase of 49,500 from 1,376,800 as of March 31, 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 March 31, 2007, Insight added 122,600 RGUs, which represent the sum of basic, digital, high-speed Internet and telephone customers, and as of March 31, 2007, had 2,801,600 RGUs, an increase of 13% from March 31, 2006. RGUs by category were as follows (in thousands): March 31, 2007 March 31, 2006 ------------------- ------------------- Basic 1,344.0 1,306.7 High-speed Internet 656.0 514.8 Digital 653.8 560.5 Telephone 147.8 99.7 ------------------- ------------------- Total RGUs 2,801.6 2,481.7 =================== =================== Average monthly revenue per basic customer was $84.86 for the three months ended March 31, 2007, compared to $77.60 for the three months ended March 31, 2006. This primarily reflects the continued growth of high-speed Internet and video product offerings in all markets, as well as video rate increases. Programming and other operating costs increased $8.4 million, or 8%. Increases in programming rates, customers and the addition of new programming content were significant drivers of the cost increase for the quarter ended March 31, 2007. For the quarter ended March 31, 2006, programming costs reflected certain programming credits resulting from favorable resolution of pricing negotiations related to certain prior period programming costs that were accrued at a higher rate than the amount actually paid. Programming credits for the quarter ended March 31, 2007, were lower, causing overall programming cost increases to be greater. Direct operating costs decreased due to decreases in our high-speed Internet service costs as the company, in 2006, transitioned its Internet services in-house and realized both cost savings and operational benefits from this investment even while increasing its customer base. These decreases were partially offset by an 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. (Page 3) Selling, general and administrative expenses increased $12.5 million, or 16%, 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 information technology personnel to continue to upgrade and enhance Insight's product offerings, manage its increasingly complex network and increase customer satisfaction. A portion of the information technology personnel increases were directly related to the transition of the company's Internet services in-house. 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. Franchise fees, customer billing and collection fees increased primarily due to the increase in revenues and the customer base. Depreciation and amortization expense increased $5.0 million, or 8%, primarily as a result of an increased level of capital expenditures through March 31, 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 March 31, 2006. As a result of the factors discussed above, Adjusted Operating Income before Depreciation and Amortization increased $17.1 million to $129.3 million, an increase of 15% over Q1 2006. Interest expense decreased $3.2 million, or 5%, because of lower interest rates, which averaged 8.3% for the three months ended March 31, 2007, as compared to 8.9% for the three months ended March 31, 2006, and as a result of the redemption of our 10 1/2% senior notes and a portion of our 9 3/4% senior notes with the proceeds from our new credit facility in the fourth quarter of 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. 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. (Page 4) Cash provided by operations for the three months ended March 31, 2007 and 2006 was $93.7 million and $86.5 million. The increase was primarily attributable to the timing of cash receipts and payments related to our working capital accounts and a decrease in our net loss. These increases were partially offset by a decrease in interest payable because of the redemption of our 10 1/2% senior notes and a portion of our 9 3/4% senior notes and the refinancing of our credit facility in the fourth quarter of 2006. Cash used in investing activities for the three months ended March 31, 2007 and 2006 was $76.9 million and $57.6 million, and was primarily for capital expenditures. These expenditures principally constituted purchases of customer premise equipment, installation labor and materials and capitalized labor, all of which are necessary to grow the customer base and expand the company's service offerings. The increase in capital expenditures was driven primarily by increases in customer premise equipment purchases and installation labor and material expenditures. Cash used in financing activities for the three months ended March 31, 2007 and 2006 was $25.4 million and $20.9 million. These expenditures were primarily for the repayment of Insight's credit facility. Free Cash Flow for the three months ended March 31, 2007 totaled $16.8 million, compared to $28.9 million for the three months ended March 31, 2006. This decrease in Free Cash Flow from Q1 2006 to Q1 2007 of $12.1 million was primarily driven by the following: -- A $30.7 million increase in cash interest expense paid, which was primarily driven by the refinancing of Insight's credit facility in the fourth quarter of 2006. Insight pays interest quarterly on the new credit facility, and paid interest semi-annually (in Q2 and Q4) on the bonds it refinanced. Additionally, in February 2007, interest on the 12 1/4% Senior Discount Notes was paid in cash whereas in February 2006 it was paid in-kind; and -- A $19.3 million increase in capital expenditures. These increased uses of cash were offset by: -- A $20.5 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 $17.1 million increase in Adjusted Operating Income before Depreciation and Amortization. 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 March 31, 2007, Insight had the ability to draw upon $174.7 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) On February 12, 2007, Insight Midwest Holdings amended its $2.445 billion senior secured facility to reduce the applicable margin with respect to its $1.8 billion B Term Loan facility by 25 basis points, or 0.25%. 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 and non-cash stock-based compensation), 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. 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. (Page 6) 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 Income (Loss) to Adjusted Operating Income before Depreciation and Amortization The following table reconciles Net Income (Loss) to Adjusted Operating Income before Depreciation and Amortization. In addition, the table provides the components from Net Income (Loss) to Operating Income. Three Months Ended March 31, -------------------- 2007 2006 -------------------- (in thousands) (unaudited) Net income (loss) $ 1,804 $(10,819) Provision for income taxes 121 80 -------------------- Income (loss) before income taxes 1,925 (10,739) Minority interest (income) expense 553 (2,505) -------------------- Income (loss) before minority interest and income taxes 2,478 (13,244) Other (income) expense: Other (393) 70 Interest income (320) (512) Interest expense 57,897 61,075 -------------------- Total other expense, net 57,184 60,633 -------------------- Operating income 59,662 47,389 Depreciation and amortization 69,279 64,312 Stock-based compensation 391 550 -------------------- Adjusted Operating Income before Depreciation and Amortization $ 129,332 $112,251 ==================== (Page 7) 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 Ended March 31, --------------------- 2007 2006 --------------------- (in thousands) (unaudited) Operating income $ 59,662 $ 47,389 Depreciation and amortization 69,279 64,312 Stock-based compensation 391 550 --------------------- Adjusted Operating Income before Depreciation and Amortization 129,332 112,251 Changes in working capital accounts(1) 18,371 (2,086) Cash paid for interest (53,742) (23,087) Cash paid for taxes (242) (553) --------------------- Net cash provided by operating activities 93,719 86,525 Capital expenditures (76,927) (57,629) --------------------- Free Cash Flow $ 16,792 $ 28,896 ===================== (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 analog and digital 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 our joint venture with a subsidiary of Comcast Corporation we 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 8) Insight Communications Company, Inc. Consolidated Balance Sheets (dollars in thousands, except share and per share amounts) March 31, December 31, 2007 2006 ------------ ------------ (unaudited) Assets Cash and cash equivalents $34,975 $43,573 Investments 7,000 7,000 Trade accounts receivable, net of allowance for doubtful accounts of $1,002 and $1,148 as of March 31, 2007 and December 31, 2006 19,703 31,060 Launch funds receivable 220 355 Prepaid expenses and other current assets 7,993 8,473 ------------ ------------ Total current assets 69,891 90,461 Fixed assets, net 1,159,784 1,151,260 Goodwill 72,430 72,430 Franchise costs 2,361,959 2,361,959 Deferred financing costs, net of accumulated amortization of $30,354 and $29,473 as of March 31, 2007 and December 31, 2006 18,584 19,053 Other non-current assets 2,454 2,941 ------------ ------------ Total assets $3,685,102 $3,698,104 ============ ============ (Page 9) Insight Communications Company, Inc. Consolidated Balance Sheets (dollars in thousands, except share and per share amounts) March 31, December 31, 2007 2006 ----------- ------------ (unaudited) Liabilities and stockholders' equity Accounts payable $45,071 $43,772 Accrued expenses and other current liabilities 40,772 45,521 Accrued property taxes 17,027 13,595 Accrued programming costs (inclusive of $33,964 and $30,677 due to related parties as of March 31, 2007 and December 31, 2006) 51,663 45,880 Deferred revenue 1,457 2,076 Interest payable 53,069 49,518 ----------- ------------ Total current liabilities 209,059 200,362 Deferred revenue 493 683 Debt 2,781,772 2,805,722 Other non-current liabilities 317 - Minority interest 246,187 245,634 Stockholders' equity: Voting preferred stock, $.01 par value: Series A - 1,000,000 shares authorized; 848,945 shares issued and outstanding as of March 31, 2007 and December 31, 2006 8 8 Series B - 1,000,000 shares authorized; 517,836 shares issued and outstanding as of March 31, 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 March 31, 2007 and December 31, 2006 134 134 Series D - 50,000,000 shares authorized; 47,015,659 shares issued and outstanding as of March 31, 2007 and December 31, 2006 470 470 Non-voting common stock, $.01 par value: Series E - 5,000,000 shares authorized; 3,516,997 and 3,536,247 shares issued and outstanding as of March 31, 2007 and December 31, 2006 35 35 Series F - 100,000 shares authorized; 95,180 and 93,250 shares issued and outstanding as of March 31, 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 March 31, 2007 and December 31, 2006 - - Additional paid-in-capital 826,899 826,509 Accumulated deficit (379,961) (381,765) Accumulated other comprehensive income (loss) (317) 306 ----------- ------------ Total stockholders' equity 447,274 445,703 ----------- ------------ Total liabilities and stockholders' equity $3,685,102 $3,698,104 =========== ============ (Page 10) Insight Communications Company, Inc. Consolidated Statements of Operations (unaudited) (dollars in thousands) Three Months Ended March 31, ---------------------------- 2007 2006 -------------- ------------- Revenue $339,469 $301,281 Operating costs and expenses: Programming and other operating costs (exclusive of depreciation and amortization) (inclusive of $51,393 and $43,081 of programming expense incurred through related parties for the three months ended March 31, 2007 and 2006) 119,855 111,415 Selling, general and administrative (inclusive of $391 and $550 of stock- based compensation for the three months ended March 31, 2007 and 2006) 90,673 78,165 Depreciation and amortization 69,279 64,312 -------------- ------------- Total operating costs and expenses 279,807 253,892 -------------- ------------- Operating income 59,662 47,389 Other income (expense): Interest expense (57,897) (61,075) Interest income 320 512 Other income (expense) 393 (70) -------------- ------------- Total other expense, net (57,184) (60,633) Income (loss) before minority interest and income taxes 2,478 (13,244) Minority interest income (expense) (553) 2,505 -------------- ------------- Income (loss) before income taxes 1,925 (10,739) Provision for income taxes (121) (80) -------------- ------------- Net income (loss) $1,804 ($10,819) ============== ============= (Page 11) Insight Communications Company, Inc. Consolidated Statement of Cash Flows (unaudited) (dollars in thousands) Three Months Ended March 31, ------------------ 2007 2006 -------- --------- Operating activities: Net income (loss) $1,804 ($10,819) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 69,279 64,312 Stock-based compensation 391 550 Loss on interest rate swaps - 1,665 Minority interest 553 (2,505) Provision for losses on trade accounts receivable 2,559 2,904 Amortization of note discount 1,050 4,816 Changes in operating assets and liabilities: Trade accounts receivable 8,798 6,780 Launch funds receivable 135 387 Prepaid expenses and other assets 949 (2,710) Accounts payable 1,299 (8,092) Interest payable 3,551 31,485 Accrued expenses and other liabilities 3,351 (2,248) -------- --------- Net cash provided by operating activities 93,719 86,525 -------- --------- Investing activities: Purchase of fixed assets (76,927) (57,629) Sale of fixed assets 23 336 Purchase of investments - (257) ------------------ Net cash used in investing activities (76,904) (57,550) -------- --------- Financing activities: Repayment of credit facilities (25,000) (20,875) Debt refinancing costs (412) - Other (1) 1 -------- --------- Net cash used in financing activities (25,413) (20,874) -------- --------- Net increase (decrease) in cash and cash equivalents (8,598) 8,101 Cash and cash equivalents, beginning of period 43,573 29,782 -------- --------- Cash and cash equivalents, end of period $34,975 $37,883 ======== ========= (Page 12) Insight Communications Company, Inc. Operating Statistics (in thousands, except per customer and penetration data) Q1 Q4 Q1 2007 2006 2006 --------- ------------------- Customer Relationships 1,426.3 1,401.8 1,376.8 Total Average Monthly Revenue per Basic Customer $84.86 $83.65 $77.60 Basic Cable - ----------------------------------------- Homes Passed 2,472.7 2,465.2 2,434.9 Basic Cable Customers 1,344.0 1,322.8 1,306.7 Basic Cable Penetration 54.4% 53.7% 53.7% Cable Revenue $168,151 $162,262 $158,207 Average Monthly Cable Revenue per Basic Customer $42.03 $40.95 $40.75 High-Speed Internet ("HSI") - ----------------------------------------- HSI Homes Passed 2,446.8 2,439.6 2,387.0 HSI Customers 656.0 611.2 514.8 HSI Penetration 26.8% 25.1% 21.6% HSI Revenue $69,531 $65,202 $56,497 Average Monthly HSI Revenue per Basic Customer $17.38 $16.46 $14.55 Average Monthly HSI Revenue per HSI Customer $36.58 $36.51 $38.23 Digital Cable - ----------------------------------------- Digital Universe 1282.2 1259.6 1245.4 Digital Customers 653.8 621.6 560.5 Digital Cable Penetration 51.0% 49.3% 45.0% Digital Revenue $40,540 $37,163 $31,723 Average Monthly Digital Revenue per Basic Customer $10.13 $9.38 $8.17 Average Monthly Digital Revenue per Digital Customer $21.19 $20.32 $19.59 Telephone - ----------------------------------------- Telephone Universe (marketable homes) 1957.7 1392.7 858.3 Telephone Customers 147.8 123.4 99.7 Telephone Penetration (to marketable homes) 7.5% 8.9% 11.6% Telephone Revenue $15,803 $13,761 $11,355 Average Monthly Telephone Revenue per Basic Customer $3.95 $3.47 $2.92 Average Monthly Telephone Revenue per Telephone Customer $38.86 $38.83 $39.93 Advertising Revenue - ----------------------------------------- Advertising Revenue $17,385 $25,988 $17,697 Average Monthly Advertising Revenue per Basic Customer $4.35 $6.56 $4.56 Other Revenue - ----------------------------------------- Other Revenue $28,059 $27,078 $25,802 Average Monthly Other Revenue per Basic Customer $7.02 $6.83 $6.65 (Page 13) Insight Communications Company, Inc. NCTA Standard Reporting Categories Capital Expenditures (unaudited) (in thousands) Three Months Three Months Year Ended Ended Ended Insight Consolidated March 31, March 31, December 31, 2007 2006 2006 - ---------------------------------------------------------------------- Customer Premise Equipment $56,375 $36,642 $158,769 Scalable Infrastructure 5,455 4,491 37,820 Line Extensions 5,503 6,333 29,208 Upgrade/Rebuild 4,044 3,719 16,709 Support Capital 5,550 6,444 43,883 ------------------------------------------ Total Insight Consolidated $76,927 $57,629 $286,389 ------------------------------------------ (Page 14) CONTACT: Insight Communications Sandy Colony, 917-286-2300 SVP, Communications -----END PRIVACY-ENHANCED MESSAGE-----