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): February 23, 2015

 

 

MEDIACOM LLC

(Exact name of Registrant as specified in its charter)

 

 

 

New York   333-82124-01   06-1433421
(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 February 23, 2015, Mediacom LLC issued a press release announcing its financial results for the three months and year ended December 31, 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”), Adjusted 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, Adjusted 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 6 of the press release. Disclosure regarding management’s reasons for presenting these non-GAAP measures is set forth on Table 7 of the press release.

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits:

 

Exhibit
No.

  

Description

99.1    Press release issued by Mediacom LLC on February 23, 2015


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: February 23, 2015

 

Mediacom 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 Fourth Quarter and Full Year 2014

 

 

Mediacom Park, NY – February 23, 2015 – 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 and year ended December 31, 2014. These results for Mediacom Broadband LLC and Mediacom LLC remain subject to adjustments based upon completion of their respective audits for the year ended December 31, 2014.

Mediacom Broadband LLC*

Fourth Quarter 2014 Highlights:

 

    Revenues were $241.5 million, reflecting a 4.1% increase from the prior year period

 

    Operating income before depreciation and amortization (“OIBDA”) was $97.8 million, reflecting a 6.1% increase from the prior year period

 

    Free cash flow of $37.9 million, compared to $38.8 million in the prior year period

Full Year 2014 Highlights:

 

    Revenues were $948.4 million, reflecting a 3.2% increase from the prior year

 

    OIBDA was $369.7 million, reflecting a 5.2% increase from the prior year

 

    Free cash flow of $118.2 million, compared to $99.1 million in the prior year

Mediacom LLC*

Fourth Quarter 2014 Highlights:

 

    Revenues were $179.2 million, reflecting a 2.0% increase from the prior year period

 

    Adjusted OIBDA was $72.2 million, reflecting a 1.6% decrease from the prior year period

 

    Free cash flow of $30.3 million, compared to $25.4 million in the prior year period

Full Year 2014 Highlights:

 

    Revenues were $711.6 million, reflecting a 1.8% increase from the prior year

 

    Adjusted OIBDA was $284.8 million, reflecting a 0.3% increase from the prior year

 

    Free cash flow of $83.2 million, compared to $71.7 million in the prior year

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 7 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
December 31,
       
     2014     2013     YoY% Change  

Video

   $ 110,667      $ 112,864        (1.9 %) 

High-speed data

     68,056        63,120        7.8

Phone

     15,481        16,015        (3.3 %) 

Business services

     29,829        27,102        10.1

Advertising

     17,461        12,815        36.3
  

 

 

   

 

 

   

 

 

 

Total revenues

$ 241,494    $ 231,916      4.1

Service costs

  (95,035   (88,480   7.4

SG&A expenses

  (43,909   (46,944   (6.5 %) 

Management fees

  (4,750   (4,300   10.5
  

 

 

   

 

 

   

 

 

 

OIBDA (a)

$ 97,800    $ 92,192      6.1

Cash interest expense (a)

  (24,455   (22,228   10.0

Capital expenditures (b)

  (30,934   (26,709   15.8

Dividend to preferred members

  (4,500   (4,500   —     
  

 

 

   

 

 

   

 

 

 

Free cash flow (a)

$ 37,911    $ 38,755      (2.2 %) 
  

 

 

   

 

 

   

 

 

 

OIBDA margin (c)

  40.5   39.8
     December 31, 2014     December 31, 2013        

Video customers

     500,000        528,000     

High-speed data (“HSD”) customers

     564,000        534,000     

Phone customers

     218,000        207,000     
  

 

 

   

 

 

   

Primary service units (“PSUs”)

  1,282,000      1,269,000   

Video customer declines

  (4,000   (7,000

HSD customer increases

  10,000      5,000   

Phone customer increases

  5,000      3,000   
  

 

 

   

 

 

   

Quarterly PSU increases

  11,000      1,000   

Customer relationships (d)

  710,000      710,000   

Average total monthly revenue per:

PSU (e)

$ 63.06    $ 60.94   

Customer relationship (f)

$ 113.78    $ 108.88   
     December 31, 2014     December 31, 2013        

Bank credit facility

   $ 1,457,000      $ 1,608,000     

5 12% senior notes due 2021

     200,000        —       

6 38% senior notes due 2023

     300,000        300,000     
  

 

 

   

 

 

   

Total indebtedness

$ 1,957,000    $ 1,908,000   

Total leverage ratio (g)

  5.00x      5.17x   

Interest coverage ratio (h)

  4.00x      4.15x   

 

* See Tables 3 and 7.

 

Page 2 of 7


TABLE 2*

Mediacom Broadband LLC

Selected Financial Data

(Dollars in thousands)

(Unaudited)

 

     Year Ended
December 31,
       
     2014     2013     YoY% Change  

Video

   $ 449,038      $ 456,324        (1.6 %) 

High-speed data

     265,685        247,463        7.4

Phone

     63,111        65,581        (3.8 %) 

Business services

     115,348        101,120        14.1

Advertising

     55,265        48,126        14.8
  

 

 

   

 

 

   

 

 

 

Total revenues

$ 948,447    $ 918,614      3.2

Service costs

  (381,014   (365,436   4.3

SG&A expenses

  (180,084   (185,188   (2.8 %) 

Management fees

  (17,650   (16,600   6.3
  

 

 

   

 

 

   

 

 

 

OIBDA (a)

$ 369,699    $ 351,390      5.2

Cash interest expense (a)

  (94,304   (90,871   3.8

Capital expenditures (b)

  (139,168   (143,444   (3.0 %) 

Dividend to preferred members

  (18,000   (18,000   —     
  

 

 

   

 

 

   

 

 

 

Free cash flow (a)

$ 118,227    $ 99,075      19.3
  

 

 

   

 

 

   

 

 

 

OIBDA margin (c)

  39.0   38.3

TABLE 3

Mediacom Broadband LLC

Reconciliation of Non-GAAP Measures

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended
December 31,
    Year Ended
December 31,
 
     2014     2013     2014     2013  

Free cash flow

   $ 37,911      $ 38,755      $ 118,227      $ 99,075   

Capital expenditures

     30,934        26,709        139,168        143,444   

Dividend to preferred members

     4,500        4,500        18,000        18,000   

Other income (expense), net

     36        (846     (1,262     (1,793

Changes in assets and liabilities, net

     (3,984     (7,708     8,008        (10,634
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows provided by operating activities

$ 69,397    $ 61,410    $ 282,141    $ 248,092   
  

 

 

   

 

 

   

 

 

   

 

 

 

OIBDA

$ 97,800    $ 92,192    $ 369,699    $ 351,390   

Depreciation and amortization

  (36,049   (39,221   (153,478   (156,397
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

$ 61,751    $ 52,971    $ 216,221    $ 194,993   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash interest expense

$ 24,455    $ 22,228    $ 94,304    $ 90,871   

Amortization of deferred financing costs

  1,717      1,284      6,132      5,332   
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest expense, net

$ 26,172    $ 23,512    $ 100,436    $ 96,203   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

* See Tables 3 and 7.

 

Page 3 of 7


TABLE 4*

Mediacom LLC

Selected Financial and Operating Data

(Dollars in thousands, except per unit data)

(Unaudited)

 

     Three Months Ended
December 31,
       
     2014     2013     YoY% Change  

Video

   $ 85,817      $ 87,198        (1.6 %) 

High-speed data

     55,602        52,075        6.8

Phone

     13,771        14,481        (4.9 %) 

Business services

     19,003        17,532        8.4

Advertising

     5,001        4,366        14.5
  

 

 

   

 

 

   

 

 

 

Total revenues

$ 179,194    $ 175,652      2.0

Service costs

  (77,232   (73,667   4.8

SG&A expenses

  (31,009   (29,929   3.6

Management fees

  (3,250   (3,200   1.6
  

 

 

   

 

 

   

 

 

 

OIBDA (a)

$ 67,703    $ 68,856      (1.7 %) 

Investment income from affiliate

  4,500      4,500      —     
  

 

 

   

 

 

   

 

 

 

Adjusted OIBDA (a)

$ 72,203    $ 73,356      (1.6 %) 

Cash interest expense (a)

  (17,474   (22,565   (22.6 %) 

Capital expenditures (b)

  (24,474   (25,365   (3.5 %) 
  

 

 

   

 

 

   

 

 

 

Free cash flow (a)

$ 30,255    $ 25,426      19.0
  

 

 

   

 

 

   

 

 

 

Adjusted OIBDA margin (i)

  40.3   41.8
     December 31, 2014     December 31, 2013        

Video customers

     390,000        417,000     

High-speed data (“HSD”) customers

     449,000        431,000     

Phone customers

     182,000        179,000     
  

 

 

   

 

 

   

Primary service units (“PSUs”)

  1,021,000      1,027,000   

Video customer declines

  (6,000   (8,000

HSD customer increases

  6,000      4,000   

Phone customer increases

  3,000      3,000   
  

 

 

   

 

 

   

Quarterly PSU increases (declines)

  3,000      (1,000

Customer relationships (d)

  569,000      575,000   

Average total monthly revenue per:

PSU (e)

$ 58.59    $ 56.98   

Customer relationship (f)

$ 104.98    $ 102.18   
     December 31, 2014     December 31, 2013        

Bank credit facility

   $ 1,005,000      $ 852,000     

9 18% senior notes due 2019

     —          350,000     

7 14% senior notes due 2022

     250,000        250,000     
  

 

 

   

 

 

   

Total indebtedness

$ 1,255,000    $ 1,452,000   

Total leverage ratio (g)

  4.35x      4.95x   

Interest coverage ratio (h)

  4.13x      3.25x   

 

* See Tables 6 and 7.

 

Page 4 of 7


TABLE 5*

Mediacom LLC

Selected Financial Data

(Dollars in thousands)

(Unaudited)

 

     Year Ended
December 31,
       
     2014     2013     YoY% Change  

Video

   $ 346,938      $ 353,170        (1.8 %) 

High-speed data

     218,132        204,281        6.8

Phone

     56,618        59,296        (4.5 %) 

Business services

     73,600        66,354        10.9

Advertising

     16,346        15,760        3.7
  

 

 

   

 

 

   

 

 

 

Total revenues

$ 711,634    $ 698,861      1.8

Service costs

  (310,752   (301,261   3.2

SG&A expenses

  (121,772   (119,294   2.1

Management fees

  (12,350   (12,400   (0.4 %) 
  

 

 

   

 

 

   

 

 

 

OIBDA (a)

$ 266,760    $ 265,906      0.3

Investment income from affiliate

  18,000      18,000      —     
  

 

 

   

 

 

   

 

 

 

Adjusted OIBDA (a)

$ 284,760    $ 283,906      0.3

Cash interest expense (a)

  (83,147   (91,297   (8.9 %) 

Capital expenditures (b)

  (118,413   (120,943   (2.1 %) 
  

 

 

   

 

 

   

 

 

 

Free cash flow (a)

$ 83,200    $ 71,666      16.1
  

 

 

   

 

 

   

 

 

 

Adjusted OIBDA margin (i)

  40.0   40.6

TABLE 6

Mediacom LLC

Reconciliation of Non-GAAP Measures

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended
December 31,
    Year Ended
December 31,
 
     2014     2013     2014     2013  

Free cash flow

   $ 30,255      $ 25,426      $ 83,200      $ 71,666   

Capital expenditures

     24,474        25,365        118,413        120,943   

Other expense, net

     (64     (48     (1,514     (1,702

Loss on early extinguishment of debt (j)

     —          —          (15,999     —     

Changes in assets and liabilities, net

     (5,142     24,726        (12,432     5,368   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows provided by operating activities

$ 49,523    $ 75,469    $ 171,668    $ 196,275   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted OIBDA

$ 72,203    $ 73,356    $ 284,760    $ 283,906   

Investment income from affiliate

  (4,500   (4,500   (18,000   (18,000
  

 

 

   

 

 

   

 

 

   

 

 

 

OIBDA

$ 67,703    $ 68,856    $ 266,760    $ 265,906   

Depreciation and amortization

  (29,288   (28,973   (116,395   (115,341
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

$ 38,415    $ 39,883    $ 150,365    $ 150,565   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash interest expense

$ 17,474    $ 22,565    $ 83,147    $ 91,297   

Amortization of deferred financing costs

  773      773      3,668      3,146   
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest expense, net

$ 18,247    $ 23,338    $ 86,815    $ 94,443   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

* See Tables 6 and 7.

 

Page 5 of 7


TABLE 7

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 6.

 

Page 6 of 7


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 7 for information about our use of Non-GAAP financial measures.
(b)  Capital expenditures for the three months ended December 31, 2014 exclude changes in accrued property, plant and equipment, which represented cash uses of $0.7 million and $0.7 million for Mediacom Broadband LLC and Mediacom LLC, respectively. Capital expenditures for the year ended December 31, 2014 exclude changes in accrued property, plant and equipment, which represented cash uses of $0.3 million and $0.3 million for Mediacom Broadband LLC and Mediacom LLC, respectively.

Capital expenditures for the three months ended December 31, 2013 exclude changes in accrued property, plant and equipment, which represented cash uses of $3.3 million and $1.6 million for Mediacom Broadband LLC and Mediacom LLC, respectively. Capital expenditures for the year ended December 31, 2013 exclude changes in accrued property, plant and equipment, which represented cash uses of $2.6 million and $0.8 million for Mediacom Broadband LLC and Mediacom LLC, respectively.

 

(c)  Represents OIBDA as a percentage of total revenues.
(d)  Represents the total number of customers that take at least one 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 $7.0 million write-off of deferred financing costs during the year ended December 31, 2014.

 

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