Form 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): November 6, 2014

 

 

MEDIACOM BROADBAND LLC

(Exact name of Registrant as specified in its charter)

 

 

 

Delaware   333-72440   06-1615412
(State of incorporation)   (Commission File No.)   (IRS Employer Identification No.)

1 Mediacom Way

Mediacom Park, NY 10918

(Address of principal executive offices)

Registrant’s telephone number: (845) 443-2600

 

 

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 November 6, 2014, Mediacom Broadband LLC issued a press release announcing its financial results for the three months ended September 30, 2014. A copy of the press release is being furnished as Exhibit 99.1 to this report and is incorporated herein by reference.

The press release contains disclosure of operating income before depreciation and amortization (“OIBDA”), free cash flow and cash interest expense, which are not measures of performance calculated in accordance with generally accepted accounting principles (“GAAP”) in the United States. Reconciliations of OIBDA, free cash flow and cash interest expense to the most directly comparable financial measures calculated and presented in accordance with GAAP are presented on Table 3 of the press release. Disclosure regarding management’s reasons for presenting these non-GAAP measures is set forth on Table 5 of the press release.

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits:

 

Exhibit No.

  

Description

99.1    Press release issued by Mediacom Broadband LLC on November 6, 2014


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.

Dated: November 6, 2014

 

Mediacom Broadband LLC
By:  

/s/ Mark E. Stephan

  Mark E. Stephan
  Executive Vice President and
  Chief Financial Officer
EX-99.1

Exhibit 99.1

 

LOGO    For Immediate Release

Mediacom Broadband LLC and Mediacom LLC Report

Results for Third Quarter 2014

 

 

Mediacom Park, NY – November 6, 2014 – 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, 2014.

Mediacom Broadband LLC*

 

    Revenues were $237.6 million, reflecting a 2.7% increase from the prior year period

 

    Operating income before depreciation and amortization (“OIBDA”) was $89.1 million, reflecting a 1.9% increase from the prior year period

 

    Free cash flow of $18.1 million, compared to $17.4 million in the prior year period

 

    Net quarterly decline of 4,000 primary service units (“PSUs”), compared to a net decline of 8,000 PSUs in the prior year period

Mediacom LLC*

 

    Revenues were $177.9 million, reflecting a 0.7% increase from the prior year period

 

    Adjusted OIBDA was $70.4 million, reflecting a 0.8% decrease from the prior year period

 

    Free cash flow of $12.9 million, compared to $16.7 million in the prior year period

 

    Net quarterly decline of 4,000 PSUs, compared to a net decline of 4,000 PSUs in the prior year period

About Mediacom

Mediacom Communications Corporation 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 customer concentration in the Midwestern and Southeastern regions. Mediacom Communications offers a wide array of information, communications and entertainment services and provides innovative broadband solutions through its Mediacom Business division. Mediacom Communications also sells advertising and production services through its OnMedia division. More information about Mediacom Communications is available at www.mediacomcc.com.

 

Contacts:   
  Investor Relations    Media Relations
      Jack P. Griffin        Thomas J. Larsen
 

    Senior Director,

      Corporate Finance

  

    Group Vice President,

      Legal and Public Affairs

      (845) 443-2654        (845) 443-2754

 

* 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,
       
     2014     2013     YoY% Change  

Video

   $ 111,245      $ 114,547        (2.9 %) 

High-speed data

     66,568        62,140        7.1

Phone

     15,708        16,331        (3.8 %) 

Business services

     29,645        26,283        12.8

Advertising

     14,445        11,951        20.9
  

 

 

   

 

 

   

 

 

 

Total revenues

   $ 237,611      $ 231,252        2.7

Service costs

     (97,592     (91,786     6.3

SG&A expenses

     (46,652     (47,762     (2.3 %) 

Management fees

     (4,300     (4,300     —     
  

 

 

   

 

 

   

 

 

 

OIBDA (a)

   $ 89,067      $ 87,404        1.9

Cash interest expense (a)

     (24,965     (21,860     14.2

Capital expenditures (b)

     (41,490     (43,609     (4.9 %) 

Dividend to preferred members

     (4,500     (4,500     —     
  

 

 

   

 

 

   

 

 

 

Free cash flow (a)

   $ 18,112      $ 17,435        3.9
  

 

 

   

 

 

   

 

 

 
      

OIBDA margin (c)

     37.5     37.8  
     September 30, 2014     September 30, 2013        

Video customers

     504,000        535,000     

High-speed data (“HSD”) customers

     554,000        529,000     

Phone customers

     213,000        204,000     
  

 

 

   

 

 

   

Primary service units (“PSUs”)

     1,271,000        1,268,000     
      

Video customer declines

     (11,000     (14,000  

HSD customer increases

     6,000        4,000     

Phone customer increases

     1,000        2,000     
  

 

 

   

 

 

   

Quarterly PSU declines

     (4,000     (8,000  
      

Customer relationships (d)

     705,000        710,000     
      

Average total monthly revenue per:

      

PSU (e)

   $ 62.22      $ 60.60     

Customer relationship (f)

   $ 112.11      $ 108.11     
     September 30, 2014     September 30, 2013        

Bank credit facility

   $ 1,337,125      $ 1,624,000     

5 12% senior notes due 2021

     200,000        —       

6 38% senior notes due 2023

     300,000        300,000     
  

 

 

   

 

 

   

Total debt

   $ 1,837,125      $ 1,924,000     
      

Total leverage ratio (g)

     5.16x        5.50x     

Interest coverage ratio (h)

     3.57x        4.00x     

 

* See Tables 3 and 5.

 

Page 2 of 6


TABLE 2*

Mediacom LLC

Selected Financial and Operating Data

(Dollars in thousands, except per unit data)

(Unaudited)

 

     Three Months Ended
September 30,
       
     2014     2013     YoY% Change  

Video

   $ 86,374      $ 89,424        (3.4 %) 

High-speed data

     54,777        51,444        6.5

Phone

     14,037        14,800        (5.2 %) 

Business services

     18,610        16,788        10.9

Advertising

     4,060        4,140        (1.9 %) 
  

 

 

   

 

 

   

 

 

 

Total revenues

   $ 177,858      $ 176,596        0.7

Service costs

     (79,481     (75,869     4.8

SG&A expenses

     (29,824     (31,105     (4.1 %) 

Management fees

     (2,700     (3,200     (15.6 %) 
  

 

 

   

 

 

   

 

 

 

OIBDA (a)

   $ 65,853      $ 66,422        (0.9 %) 

Investment income from affiliate

     4,500        4,500        —     
  

 

 

   

 

 

   

 

 

 

Adjusted OIBDA (a)

   $ 70,353      $ 70,922        (0.8 %) 

Cash interest expense (a)

     (20,125     (23,071     (12.8 %) 

Capital expenditures (b)

     (37,286     (31,188     19.6
  

 

 

   

 

 

   

 

 

 

Free cash flow (a)

   $ 12,942      $ 16,663        (22.3 %) 
  

 

 

   

 

 

   

 

 

 
      

Adjusted OIBDA margin (i)

     39.6     40.2  
     September 30, 2014     September 30, 2013        

Video customers

     396,000        425,000     

High-speed data (“HSD”) customers

     443,000        427,000     

Phone customers

     179,000        176,000     
  

 

 

   

 

 

   

Primary service units (“PSUs”)

     1,018,000        1,028,000     
      

Video customer declines

     (8,000     (9,000  

HSD customer increases

     4,000        3,000     

Phone customer increases

     —          2,000     
  

 

 

   

 

 

   

Quarterly PSU declines

     (4,000     (4,000  
      

Customer relationships (d)

     569,000        571,000     
      

Average total monthly revenue per:

      

PSU (e)

   $ 58.12      $ 57.15     

Customer relationship (f)

   $ 104.01      $ 102.82     
     September 30, 2014     September 30, 2013        

Bank credit facility

   $ 1,182,875      $ 897,000     

9 18% senior notes due 2019

     —          350,000     

7 14% senior notes due 2022

     250,000        250,000     
  

 

 

   

 

 

   

Total debt

   $ 1,432,875      $ 1,497,000     
      

Total leverage ratio (g)

     5.09x        5.28x     

Interest coverage ratio (h)

     3.50x        3.07x     

 

* See Tables 4 and 5.

 

Page 3 of 6


TABLE 3

Mediacom Broadband LLC

Reconciliation of Non-GAAP Measures

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended
September 30,
 
     2014     2013  

Free cash flow

   $ 18,112      $ 17,435   

Capital expenditures

     41,490        43,609   

Dividend to preferred members

     4,500        4,500   

Other expense, net

     (445     (435

Changes in assets and liabilities, net

     (840     2,459   
  

 

 

   

 

 

 

Net cash flows provided by operating activities

   $ 62,817      $ 67,568   
  

 

 

   

 

 

 
    

OIBDA

   $ 89,067      $ 87,404   

Depreciation and amortization

     (38,738     (39,018
  

 

 

   

 

 

 

Operating income

   $ 50,329      $ 48,386   
  

 

 

   

 

 

 
    

Cash interest expense

   $ 24,965      $ 21,860   

Amortization of deferred financing costs

     1,625        1,295   
  

 

 

   

 

 

 

Interest expense, net

   $ 26,590      $ 23,155   
  

 

 

   

 

 

 

 

TABLE 4

Mediacom LLC

Reconciliation of Non-GAAP Measures

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended
September 30,
 
     2014     2013  

Free cash flow

   $ 12,942      $ 16,663   

Capital expenditures

     37,286        31,188   

Other expense, net

     (796     (638

Loss on early extinguishment of debt (j)

     (15,999     —     

Changes in assets and liabilities, net

     2,111        (12,986
  

 

 

   

 

 

 

Net cash flows provided by operating activities

   $ 35,544      $ 34,227   
  

 

 

   

 

 

 
    

Adjusted OIBDA

   $ 70,353      $ 70,922   

Investment income from affiliate

     (4,500     (4,500
  

 

 

   

 

 

 

OIBDA

   $ 65,853      $ 66,422   

Depreciation and amortization

     (29,557     (29,211
  

 

 

   

 

 

 

Operating income

   $ 36,296      $ 37,211   
  

 

 

   

 

 

 
    

Cash interest expense

   $ 20,125      $ 23,071   

Amortization of deferred financing costs

     927        774   
  

 

 

   

 

 

 

Interest expense, net

   $ 21,052      $ 23,845   
  

 

 

   

 

 

 

 

 

Page 4 of 6


TABLE 5

Use of Non-GAAP Financial Measures

“OIBDA,” “Adjusted OIBDA,” “cash interest expense” and “free cash flow” 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. 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 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.

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.

 

 

Page 5 of 6


Cautionary Statement Regarding Forward-Looking Statements

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: increased levels of competition; 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 most recent Annual Reports on Form 10-K 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)  Capital expenditures exclude changes in accrued property, plant and equipment, which represented cash uses of $2.2 and $0.9 million at Mediacom Broadband LLC during the three months ended September 30, 2014 and 2013, respectively, and a cash use of $1.7 million and a cash source of less than $0.1 million at Mediacom LLC during the three months ended September 30, 2014 and 2013, respectively.

 

(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 PSUs for such quarter.

 

(f)  Represents average total monthly revenues for the quarter divided by average customer relationships for such quarter.

 

(g)  For Mediacom Broadband LLC, represents total debt at quarter end divided by annualized OIBDA for the quarter. For Mediacom LLC, represents total debt at quarter end divided by annualized Adjusted OIBDA for the quarter.

 

(h)  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.

 

(i)  Represents Adjusted OIBDA as a percentage of total revenues.

 

(j)  Reflects the cash portion of loss on early extinguishment, net, and excludes a $7.0 million write-off of deferred financing costs.

 

Page 6 of 6