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MEDIACOM BROADBAND LLC AND MEDIACOM LLC, wholly-owned subsidiaries of
Mediacom Communications Corporation, today each reported unaudited
financial and operating highlights for the three months ended September
30, 2012.
Mediacom Broadband LLC*
Revenues were $223.9 million, reflecting a 1.6% increase from the
prior year period
Operating income before depreciation and amortization (“OIBDA”) was
$85.3 million, reflecting a 2.3% increase from the prior year period
Free cash flow of $9.4 million, compared to $13.6 million in the prior
year period
Net quarterly decline of 8,000 primary service units (“PSUs”),
compared to a decline of 23,000 in the prior year period
Issued $300 million of 6⅜% senior notes due 2023 and a $200 million
term loan which matures in 2020
- Net proceeds were used to redeem our $500 million 8½% senior notes due
2015
- Lowers annualized interest expense by approximately $15 million
Mediacom LLC*
Revenues were $170.6 million, unchanged from the prior year period
Adjusted OIBDA was $68.2 million, reflecting a 1.4% decline from the
prior year period
Free cash flow of $14.8 million, compared to $19.3 million in the
prior year period
Net quarterly decline of 1,000 PSUs, compared to a decline of 18,000
in the prior year period
About Mediacom
Mediacom Communications is the nation’s eighth largest cable television
company and one of the leading cable operators focused on serving the
smaller cities in the United States, with a significant concentration in
the Midwestern and Southeastern regions. Mediacom Communications offers
a wide array of broadband products and services, including digital
television, video-on-demand, digital video recorders, high-definition
television, as well as high-speed Internet access and phone service.
Mediacom Communications also offers affordable broadband communications
solutions that can be tailored to any size business through Mediacom
Business. For more information about Mediacom Communications, please
visit www.mediacomcc.com.
* See Table 5 for information regarding our use of non-GAAP measures and
definitions of OIBDA, Adjusted OIBDA and free cash flow.
TABLE 1*
Mediacom Broadband LLC
Selected Financial and Operating Data
(Dollars in thousands, except per unit data)
(Unaudited)
Three Months Ended September 30,
2012
2011
% Change
Video
$
114,519
$
119,884
(4.5
)%
High-speed data
56,250
53,239
5.7
%
Phone
16,962
17,011
(0.3
)%
Business services
21,634
18,054
19.8
%
Advertising
14,500
12,056
20.3
%
Total revenues
$
223,865
$
220,244
1.6
%
Service costs
(89,176
)
(88,566
)
0.7
%
SG&A expenses
(45,964
)
(44,872
)
2.4
%
Management fees
(3,450
)
(3,414
)
1.1
%
OIBDA (a)
$
85,275
$
83,392
2.3
%
Cash interest expense (a)
(28,571
)
(26,781
)
6.7
%
Capital expenditures (b)
(42,791
)
(38,497
)
11.2
%
Dividend to preferred members
(4,500
)
(4,500
)
―
Free cash flow (a)
$
9,413
$
13,614
(30.9
)%
OIBDA margin (c)
38.1
%
37.9
%
September 30, 2012
September 30, 2011
Video customers
567,000
612,000
High-speed data (“HSD”) customers
501,000
467,000
Phone customers
189,000
179,000
Primary service units (“PSUs”)
1,257,000
1,258,000
Video customer declines
(12,000
)
(22,000
)
HSD customer increases (declines)
8,000
(3,000
)
Phone customer (declines) increases
(4,000
)
2,000
Quarterly PSU declines
(8,000
)
(23,000
)
Customer relationships (d)
712,000
708,000
Average total monthly revenue per:
Video customer (e)
$
130.23
$
117.84
PSU (f)
$
59.18
$
57.83
Customer relationship (g)
$
104.73
$
102.61
September 30, 2012
September 30, 2011
Bank credit facility
$
1,540,500
$
1,497,000
8½% senior notes due 2015
425,154
500,000
6⅜% senior notes due 2023
300,000
―
Total indebtedness
$
2,265,654
$
1,997,000
Cash and cash equivalents
(213,137
)
(7,098
)
Net debt (a)
$
2,052,517
$
1,989,902
Net leverage ratio (h)
6.02x
5.97x
Interest coverage ratio (i)
2.98x
3.11x
* See Tables 3 and 5.
TABLE 2*
Mediacom LLC
Selected Financial and Operating Data
(Dollars in thousands, except per unit data)
(Unaudited)
Three Months Ended
September 30,
2012
2011
% Change
Video
$
89,149
$
94,293
(5.5
)%
High-speed data
46,667
44,202
5.6
%
Phone
15,502
15,623
(0.8
)%
Business services
14,938
12,481
19.7
%
Advertising
4,298
3,987
7.8
%
Total revenues
$
170,554
$
170,586
―
Service costs
(74,662
)
(73,636
)
1.4
%
SG&A expenses
(29,539
)
(29,601
)
(0.2
)%
Management fees
(2,650
)
(2,644
)
0.2
%
OIBDA (a)
$
63,703
$
64,705
(1.5
)%
Investment income from affiliate
4,500
4,500
―
Adjusted OIBDA (a)
$
68,203
$
69,205
(1.4
)%
Cash interest expense (a)
(22,969
)
(23,232
)
(1.1
)%
Capital expenditures (b)
(30,415
)
(26,679
)
14.0
%
Free cash flow (a)
$
14,819
$
19,294
(23.2
)%
Adjusted OIBDA margin (j)
40.0
%
40.6
%
September 30, 2012
September 30, 2011
Video customers
452,000
488,000
High-speed data (“HSD”) customers
408,000
383,000
Phone customers
166,000
159,000
Primary service units (“PSUs”)
1,026,000
1,030,000
Video customer declines
(6,000
)
(17,000
)
HSD customer increases (declines)
7,000
(2,000
)
Phone customer (declines) increases
(2,000
)
1,000
Quarterly PSU declines
(1,000
)
(18,000
)
Customer relationships (d)
573,000
576,000
Average total monthly revenue per:
Video customer (e)
$
124.95
$
114.53
PSU (f)
$
55.38
$
54.73
Customer relationship (g)
$
99.22
$
97.79
September 30, 2012
September 30, 2011
Bank credit facility
$
857,000
$
1,253,000
9⅛% senior notes due 2019
350,000
350,000
7¼% senior notes due 2022
250,000
―
Total indebtedness
$
1,457,000
$
1,603,000
Cash
(20,668
)
(11,219
)
Net debt (a)
$
1,436,332
$
1,591,781
Net leverage ratio (h)
5.26x
5.75x
Interest coverage ratio (i)
2.97x
2.98x
* See Tables 4 and 5.
TABLE 3
Mediacom Broadband LLC
Reconciliation of Non-GAAP Measures
(Dollars in thousands)
(Unaudited)
Three Months Ended
September 30,
2012
2011
Free cash flow
$
9,413
$
13,614
Capital expenditures
42,791
38,497
Dividend to preferred members
4,500
4,500
Other expense, net
(458
)
(456
)
Loss on early extinguishment of debt (k)
(1,875
)
―
Changes in assets and liabilities, net
8,909
28,238
Net cash flows provided by operating activities
$
63,280
$
84,393
OIBDA
$
85,275
$
83,392
Depreciation and amortization
(37,645
)
(35,578
)
Operating income
$
47,630
$
47,814
Cash interest expense
$
28,571
$
26,781
Amortization of deferred financing costs
1,333
1,116
Interest expense, net
$
29,904
$
27,897
TABLE 4
Mediacom LLC
Reconciliation of Non-GAAP Measures
(Dollars in thousands)
(Unaudited)
Three Months Ended
September 30,
2012
2011
Free cash flow
$
14,819
$
19,294
Capital expenditures
30,415
26,679
Other expense, net
(653
)
(504
)
Changes in assets and liabilities, net
(16,417
)
(12,909
)
Net cash flows provided by operating activities
$
28,164
$
32,560
Adjusted OIBDA
$
68,203
$
69,205
Investment income from affiliate
(4,500
)
(4,500
)
OIBDA
$
63,703
$
64,705
Depreciation and amortization
(28,653
)
(29,506
)
Operating income
$
35,050
$
35,199
Cash interest expense
$
22,969
$
23,232
Amortization of deferred financing costs
783
961
Interest expense, net
$
23,752
$
24,193
TABLE 5
Use of Non-GAAP Financial Measures
“OIBDA,” “Adjusted OIBDA,” “cash interest expense” “free cash flow” and
“net debt” are not financial measures calculated in accordance with
generally accepted accounting principles (“GAAP”) in the United States.
We define OIBDA as operating income before depreciation and amortization
and Adjusted OIBDA as OIBDA plus investment income from affiliate. We
define cash interest expense as interest expense, net, less amortization
of deferred financing costs. For Mediacom Broadband LLC, we define free
cash flow as OIBDA less capital expenditures, cash interest expense and
dividends to preferred members. For Mediacom LLC, we define free cash
flow as Adjusted OIBDA less capital expenditures and cash interest
expense. We define net debt as total indebtedness less cash and cash
equivalents. OIBDA, Adjusted OIBDA, cash interest expense and free cash
flow have inherent limitations as discussed below.
OIBDA and Adjusted OIBDA are some of the primary measures used by
management to evaluate our performance and to forecast future results.
We believe OIBDA and Adjusted OIBDA are useful for investors because it
enables them to assess our performance in a manner similar to the
methods used by management, and provides a measure that can be used to
analyze value and compare the companies in the cable industry. A
limitation of OIBDA and Adjusted OIBDA, however, is that they exclude
depreciation and amortization, which represents the periodic costs of
certain capitalized tangible and intangible assets used in generating
revenues in our business. Management utilizes a separate process to
budget, measure and evaluate capital expenditures. OIBDA and Adjusted
OIBDA may not be comparable to similarly titled measures used by other
companies, which may have different depreciation and amortization
policies, and are key components in our covenant calculations, as
defined under our debt arrangements.
Free cash flow is used by management to evaluate our ability to repay
debt, and to facilitate the growth of our business with internally
generated funds. A limitation of free cash flow, however, is that it may
be affected by the timing of our capital spending. We believe free cash
flow is useful for investors for the same reasons and provides measures
that can be used to analyze value and compare companies in the cable
television industry, although our measure of free cash flow may not be
directly comparable to similar measures reported by other companies.
OIBDA, Adjusted OIBDA and free cash flow should not be regarded as
alternatives to operating income or net income as indicators of
operating performance, or to the statement of cash flows as measures of
liquidity, nor should they be considered in isolation or as substitutes
for financial measures prepared in accordance with GAAP. We believe that
operating income is the most directly comparable GAAP financial measure
to OIBDA and Adjusted OIBDA, and that net cash flows provided by
operating activities is the most directly comparable GAAP financial
measure to free cash flow.
Cash interest expense excludes the amortization of financing costs which
were paid upon the financing of the relevant debt. We believe cash
interest expense is useful for investors because it enables them to
assess our cost of debt for the current period without including the
amortization of financing costs that were previously paid. We believe
interest expense, net, is the most directly comparable GAAP financial
measure to cash interest expense.
Net debt is used by management as an alternative to total indebtedness
for comparison purposes under certain circumstances in which we have
greater than usual levels of cash and cash equivalents. On August 28,
2012, Mediacom Broadband LLC and Mediacom Broadband Corporation
(together, “Mediacom Broadband”) issued new 6⅜% senior notes due 2023 in
the aggregate principal amount of $300 million, the net proceeds of
which were used in part to purchase our existing 8½% senior notes due
2015 (the “8½% Notes”) in the principal amount of $74.8 million through
a cash tender offer on August 28, 2012 and September 12, 2012, with the
balance of net proceeds primarily held as cash and cash equivalents. On
October 15, 2012, Mediacom Broadband redeemed the remaining 8½% Notes in
the aggregate principal amount of $425.2 million, which was funded in
part by such excess cash and cash equivalents. Due to the timing of such
transactions, Mediacom Broadband temporarily had greater than usual
levels of cash and cash equivalents as of September 30, 2012, and
therefore we believe that net debt is the most appropriate comparative
measure.
For calculations of net debt, see Tables 1 and 2. For reconciliations of
OIBDA, Adjusted OIBDA, cash interest expense and free cash flow to their
most directly comparable GAAP financial measures, see Tables 3 and 4.
In this press release, we state our beliefs of future events and of our
future financial performance. These forward-looking statements are not
guarantees of future performance or results, and are subject to risks
and uncertainties that could cause actual results to differ materially
from historical results or those we anticipate as a result of various
factors, many of which are beyond our control. Factors that may cause
such differences to occur include, but are not limited to: lower demand
for our residential and business services resulting from competitive and
other factors; greater than anticipated programming and other service
costs; our ability to generate sufficient cash flow to meet our debt
service obligations; and other risks and uncertainties discussed in the
Annual Reports on Form 10-K for the year ended December 31, 2011 for
each of Mediacom Broadband LLC and Mediacom LLC. We disclaim any
obligation to update any forward-looking statements contained herein,
except as required by applicable federal securities laws.
NOTES:
(a)
See Table 5 for information about our use of Non-GAAP financial
measures.
(b)
For the three months ended September 30, 2012, capital expenditures
exclude changes in accrued property, plant and equipment, which
represented cash sources of $2.4 million and $0.1 million for
Mediacom Broadband LLC and Mediacom LLC, respectively. For the three
months ended September 30, 2011, capital expenditures for Mediacom
Broadband LLC exclude $2.2 million of non-cash transactions
representing capital expenditures which were accrued during the
quarter.
(c)
Represents OIBDA as a percentage of total revenues.
(d)
Represents the total number of customers that receive at least one
level of service, without regard to which service(s) customers
purchase.
(e)
Represents average total monthly revenues for the quarter divided by
average video customers for such quarter.
(f)
Represents average total monthly revenues for the quarter divided by
average PSUs for such quarter.
(g)
Represents average total monthly revenues for the quarter divided by
average customer relationships for such quarter.
(h)
For Mediacom Broadband LLC, represents net debt at quarter end
divided by annualized OIBDA for the quarter. For Mediacom LLC,
represents net debt at quarter end divided by annualized Adjusted
OIBDA for the quarter.
(i)
For Mediacom Broadband LLC, represents OIBDA divided by cash
interest expense for the quarter. For Mediacom LLC, represents
Adjusted OIBDA divided by cash interest expense for the quarter.
(j)
Represents Adjusted OIBDA as a percentage of total revenues.
(k)
Reflects the cash portion of loss on early extinguishment, net, and
excludes a $0.5 million write-off of deferred financing costs.
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