Mediacom Posts Q1 Results

MIDDLETOWN, N.Y. -- MEDIACOM COMMUNICATIONS CORPORATION (Nasdaq: MCCC) today reported its results for the three months ended March 31, 2004.

First Quarter 2004 Financial Highlights

For the first quarter of 2004, revenues were $263.4 million, an increase of 8.5% over the comparable 2003 period. Operating income before depreciation and amortization ("OIBDA") increased by 7.3% to $104.3 million, and operating income grew to $51.6 million from $19.0 million recorded in the prior year period. Net loss was $5.7 million, or $0.05 per share, as compared to a net loss of $33.4 million, or $0.28 per share, in the first quarter of 2003.

Unlevered free cash flow was $64.3 million, an increase of 137.2% from $27.1 million in the first quarter of 2003. Free cash flow improved to $17.2 million, as compared to negative $21.6 million for the first quarter of 2003, and free cash flow of $8.7 million in the 2003 fourth quarter. The Company defines unlevered free cash flow as OIBDA less cash taxes and capital expenditures and free cash flow as OIBDA less interest expense, net, cash taxes and capital expenditures. Please see the section of this press release entitled "Use of Non-GAAP Financial Measures" for additional information regarding OIBDA, unlevered free cash flow and free cash flow.

"Our solid performance in the first quarter puts us on target to reach our financial guidance for the full year," said Rocco B. Commisso, Mediacom's Chairman and CEO. "Unlevered free cash flow more than doubled year-over-year, reflecting a margin of 24.4% of revenues, an all-time high for our Company. Equally as important, we generated free cash flow per share of $0.14 compared to negative free cash flow per share of $0.18 in the year-ago period.

"We achieved these results despite an increasingly competitive environment, which caused a decline in video customers during the quarter. On the other hand, our emphasis on profitable customer relationships allowed the Company to grow video revenues both sequentially and year-over-year. Additionally, we were pleased with the performances of both the high-speed Internet business, which delivered another record quarter, in part as a result of our customers benefiting from the faster speeds of our Mediacom Online(SM) service, and advertising sales, which grew by 16%.

"Our competitive strategy for the remainder of the year will continue to focus on improving the value proposition of our core products and offering new services to our customers. In the video business, we are enhancing our digital products by launching a richer, more affordable Starz package, and by expanding the availability of HDTV, VOD and DVRs in our footprint. In the data business, we are augmenting our existing suite of services by deploying a slower-speed Internet access product, allowing us to tap into the dial-up Internet market while also reducing customer churn. And to further strengthen our product bundle, we are on track with our plans to introduce VoIP telephony service in certain markets by the end of 2004." Mr. Commisso concluded.

Reported Results

For the three months ended March 31, 2004, the Company reported total revenues of $263.4 million, an increase of 8.5% from $242.8 million recorded in the first quarter of 2003. Video revenues increased by 3.3%, to $216.2 million from $209.3 million, primarily due to basic rate increases largely associated with increases in the cost of basic programming services, partially offset by a decline in basic subscribers and digital customers. Data revenues increased by 50.4%, to $36.5 million from $24.3 million, due largely to customer growth in the Company's high-speed Internet access service. Advertising revenues increased by 16.2%, to $10.7 million from $9.2 million, primarily as a result of bringing in-house certain markets previously managed by third parties.

OIBDA increased by 7.3% to $104.3 million from $97.2 million recorded in the first quarter of 2003. Operating income increased to $51.6 million from $19.0 million in the first quarter of 2003, due primarily to a 32.6% decrease in depreciation and amortization to $52.7 million from $78.2 million. Effective July 1, 2003, the Company changed the estimated useful lives of certain components of its cable network in conjunction with the Company's recently completed network upgrade program. These changes reduced depreciation and amortization for the three months ended March 31, 2004 by approximately $32.1 million. The impact of these changes was partially offset by an increase in depreciation related to ongoing investments in the Company's cable systems.

The Company reported a net loss of $5.7 million for the first quarter of 2004, as compared to a net loss of $33.4 million for the first quarter of 2003. The year-over-year change was primarily due to the increase in operating income described above, partly offset by a $7.6 million loss on derivatives during the first quarter of 2004, as compared to a loss on derivatives of $1.1 million in the first quarter of 2003.

Capital Expenditure and Cable Network Data

Capital expenditures for the three months ended March 31, 2004 were $39.8 million, a 43.1% decrease from the same period of the prior year. Upgrade/rebuild capital expenditures for the first quarter of 2004 declined by 78.4% year-over-year as Mediacom completed its network upgrade program. At March 31, 2004, Mediacom's digital cable service was available to approximately 99% of the entire basic subscriber base, and the Company was marketing high-speed Internet service in cable systems comprising about 96% of its total homes passed. As of the same date, approximately 98% of the Company's cable network was upgraded to 550MHz to 870MHz bandwidth capacity and 97% of its homes passed were activated with two-way communications capability.

Financial Position

At March 31, 2004, the Company had total debt outstanding of $3.037 billion, a reduction of $14 million from year-end 2003. On the same date, the Company's unused credit facilities were $748.7 million, of which approximately $612.4 million could be borrowed and used for general corporate purposes based on the terms and conditions of its debt arrangements. As of the date of this press release, approximately 72% of the Company's total debt is at fixed interest rates or subject to interest rate protection, and the Company's weighted average cost of debt capital, including interest rate swap agreements, is approximately 6.3%.

Mediacom Communications Corp.