Cablevision Systems Corporation Reports Second Quarter 2012 Results
Cablevision Systems Corporation Reports Second Quarter 2012 Results
Business Wire
BETHPAGE, N.Y. -- August 07, 2012
Cablevision Systems Corporation (NYSE:CVC) today reported financial results
for the second quarter ended June 30, 2012.
Second quarter consolidated net revenues grew 0.5% to $1.697 billion,
consolidated adjusted operating cash flow (“AOCF”)^1 decreased 7.2% to
$532.4 million and consolidated operating income declined 16.7% to
$260.3 million, all compared with the prior year period.
Operating highlights for the second quarter 2012 include:
* Customer Relationship additions of approximately 7,000.
* High-Speed Data and Voice customer additions of approximately 25,000 and
23,000, respectively.
* Average Monthly Revenue per Basic Video Customer (“RPS”) of $155.12, a
sequential increase of $2.59 or 1.7%.
* Cable advertising revenue growth of 8.3%, compared to the prior year
period.
Cablevision President and CEO James L. Dolan commented, "We are continuing to
invest in our operations to ensure that we are offering the best products and
service to our customers. The value proposition that Cablevision offers is
growing as we further expand our WiFi network, enhance the Optimum Online
experience and provide a growing list of both on-the-go and HDTV video
offerings. These actions are generating a positive response as evidenced by
the 24,000 net new customers we have added during the first half of 2012 and
our very strong results in the recent FCC broadband measurement tests. Our
focus on transforming the way we operate has never been stronger."
See definition of AOCF and Consolidated Free Cash Flow from Continuing
1. Operations included in the discussion of non-GAAP financial measures on
page 3 of this earnings release.
Telecommunications Services – Cable Television and Lightpath
Telecommunications Services includes Cable Television – Cablevision’s video,
high-speed data, and voice residential and commercial services offered over
its cable infrastructure -- and its “Optimum Lightpath” branded commercial
data and voice services.
Telecommunications Services net revenues for the second quarter 2012 rose 0.9%
to $1.592 billion, AOCF decreased 7.2% to $580.2 million and operating income
decreased 14.3% to $328.7 million, all compared with the prior year period.
Cable Television
Cable Television second quarter 2012 net revenues increased 0.7% to
$1.516 billion principally due to continued growth of high-speed data and
voice customers, which was partially offset by fewer video customers than
during the prior year period. AOCF decreased 7.9% to $545.7 million and
operating income decreased 14.9% to $317.7 million, all compared with the
prior year period. Second quarter 2012 AOCF results reflect modest revenue
growth, more than offset by higher operating expenses, primarily programming
costs.
The following table illustrates the change in the Cable Television customer
base during the second quarter of 2012:
Customer Data
(rounded to nearest thousand)
Total Total
Net Gain/(Loss)
March 31, June 30,
2012 2012
Customer 3,628 7 3,635
Relationships^(a)
Video 3,257 - 3,257
High-Speed Data 3,007 25 3,032
Voice 2,399 23 2,422
Serviceable Passings 5,596 17 5,613
(a) Represents the number of households/businesses that receive at
least one of the Company's services.
Optimum Lightpath
For second quarter 2012, Optimum Lightpath net revenues increased 5.2% to
$81.1 million, AOCF increased 5.4% to $34.5 million and operating income
increased 4.2% to $11.0 million, each as compared to the prior year period.
Second quarter results reflect a 12.3% increase in revenue from Ethernet
services and higher operating expenses.
Other
Other principally consists of Newsday, Clearview Cinemas, News 12 Networks,
MSG Varsity, Cablevision Media Sales Corporation and certain other businesses
and unallocated corporate costs.
Second quarter 2012 net revenues decreased 4.6% to $111.0 million, AOCF
deficit improved by 8.0% to a deficit of $47.8 million and operating loss
improved 4.1% to a loss of $68.4 million all compared with the prior year
period. Second quarter results reflect the decline of advertising revenues at
Newsday and lower revenue at Clearview Cinemas which was more than offset by
lower corporate costs.
Other Matters
RETURN OF CAPITAL
On August 1, 2012, the Board of Directors of Cablevision declared a quarterly
dividend of $0.15 per share on each outstanding share of both its Cablevision
NY Group Class A Stock and its Cablevision NY Group Class B Stock. This
quarterly dividend is payable on September 4, 2012 to shareholders of record
at the close of business on August 14, 2012.
During the second quarter of 2012, Cablevision repurchased approximately 5.6
million shares of its Class A common stock for approximately $68.4 million.
Non-GAAP Financial Measures
We define adjusted operating cash flow (“AOCF”), which is a non-GAAP financial
measure, as operating income (loss) before depreciation and amortization
(including impairments), excluding share-based compensation expense or benefit
and restructuring charges or credits. Because it is based upon operating
income (loss), AOCF also excludes interest expense (including cash interest
expense) and other non-operating income and expense items. We believe that the
exclusion of share-based compensation expense or benefit allows investors to
better track the performance of the various operating units of our business
without regard to the distortive effects of fluctuating stock prices in the
case of stock appreciation rights and, in the case of restricted shares,
restricted stock units and stock options, the expense associated with an award
that is not expected to be made in cash.
We present AOCF as a measure of our ability to service our debt and make
continuing investments, including in our capital infrastructure. We believe
AOCF is an appropriate measure for evaluating the operating performance of our
business segments and the company on a consolidated basis. AOCF and similar
measures with similar titles are common performance measures used by
investors, analysts and peers to compare performance in our industry.
Internally, we use net revenues and AOCF measures as the most important
indicators of our business performance, and evaluate management’s
effectiveness with specific reference to these indicators. AOCF should be
viewed as a supplement to and not a substitute for operating income (loss),
net income (loss), cash flows from operating activities, and other measures of
performance and/or liquidity presented in accordance with U.S. generally
accepted accounting principles ("GAAP"). Since AOCF is not a measure of
performance calculated in accordance with GAAP, this measure may not be
comparable to similar measures with similar titles used by other companies.
For a reconciliation of AOCF to operating income (loss), please see page 5 of
this release.
We define Consolidated Free Cash Flow from Continuing Operations (“Free Cash
Flow”), which is a non-GAAP financial measure, as net cash from operating
activities (continuing operations) less capital expenditures (continuing
operations), both of which are reported in our Consolidated Statement of Cash
Flows. Net cash from operating activities excludes net cash from operating
activities of our discontinued operations. We believe the most comparable GAAP
financial measure of our liquidity is net cash from operating activities. We
believe that Free Cash Flow is useful as an indicator of our overall
liquidity, as the amount of Free Cash Flow generated in any period is
representative of cash that is available for debt repayment and other
discretionary and non-discretionary cash uses. It is also one of several
indicators of our ability to make investments and/or return capital to our
shareholders. We also believe that Free Cash Flow is one of several benchmarks
used by analysts and investors who follow our industry for comparison of our
liquidity with other companies in our industry, although our measure of Free
Cash Flow may not be directly comparable to similar measures reported by other
companies.
COMPANY DESCRIPTION
Cablevision Systems Corporation is one of the nation's leading media and
telecommunications companies. In addition to delivering its Optimum-branded
cable, Internet, and voice offerings throughout the New York area, the Company
owns and operates cable systems serving homes in four Western states.
Cablevision’s local media properties include News 12 Networks, MSG Varsity and
Newsday Media Group. Cablevision also owns and operates Clearview Cinemas.
Additional information about Cablevision is available on the Web
at www.cablevision.com.
This earnings release may contain statements that constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. Investors are cautioned that any such forward-looking statements are
not guarantees of future performance or results and involve risks and
uncertainties, and that actual results or developments may differ materially
from those in the forward-looking statements as a result of various factors,
including financial community and rating agency perceptions of the company and
its business, operations, financial condition and the industries in which it
operates and the factors described in the company’s filings with the
Securities and Exchange Commission, including the sections entitled "Risk
Factors" and "Management’s Discussion and Analysis of Financial Condition and
Results of Operations" contained therein. The company disclaims any obligation
to update any forward-looking statements contained herein.
Cablevision’s Website: www.cablevision.com
The conference call will be webcast live today at 10:00 a.m. ET
Conference call dial-in number is (888) 694-4641/ Conference ID Number
99452918/ Conference call replay number (855) 859-2056/ Conference ID Number
99452918 until August 14, 2012
CABLEVISION SYSTEMS CORPORATION
CONDENSED CONSOLIDATED OPERATIONS DATA AND RECONCILIATION
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2012 2011^(a) 2012 2011^(a)
Revenues, net $ 1,697,288 $ 1,688,681 $ 3,356,045 $ 3,343,805
Adjusted
operating cash $ 532,361 $ 573,455 $ 1,045,877 $ 1,128,971
flow
Share-based
compensation (13,712 ) (13,315 ) (24,115 ) (25,879 )
expense
Restructuring
credits 93 (94 ) 391 (265 )
(expense)
Operating
income before
depreciation 518,742 560,046 1,022,153 1,102,827
and
amortization
Depreciation
and
amortization 258,403 247,605 511,750 492,788
(including
impairments)
Operating 260,339 312,441 510,403 610,039
income
Other income
(expense):
Interest (181,317 ) (188,295 ) (363,148 ) (379,379 )
expense, net
Gain on
investments, 42,113 13,312 177,438 72,384
net
Loss on equity
derivative (16,137 ) (2,823 ) (127,331 ) (42,881 )
contracts, net
Loss on
interest rate (183 ) (5,497 ) (1,828 ) (9,686 )
swap
contracts, net
Miscellaneous, 260 238 805 455
net
Income from
continuing
operations 105,075 129,376 196,339 250,932
before income
taxes
Income tax (41,286 ) (59,836 ) (75,446 ) (112,379 )
expense
Income from
continuing 63,789 69,540 120,893 138,553
operations
Income from
discontinued
operations, - 18,592 - 53,623
net of income
taxes
Net income 63,789 88,132 120,893 192,176
Net income
attributable
to (260 ) (288 ) (117 ) (267 )
noncontrolling
interests
Net income
attributable
to Cablevision $ 63,529 $ 87,844 $ 120,776 $ 191,909
Systems
Corporation
stockholders
Basic net
income per
share
attributable
to Cablevision
Systems
Corporation
stockholders:
Income from
continuing $ 0.24 $ 0.25 $ 0.46 $ 0.49
operations
Income from
discontinued $ - $ 0.07 $ - $ 0.19
operations
Net income $ 0.24 $ 0.32 $ 0.46 $ 0.68
Basic weighted
average common 263,428 278,303 265,423 280,203
shares (in
thousands)
Diluted net
income per
share
attributable
to Cablevision
Systems
Corporation
stockholders:
Income from
continuing $ 0.24 $ 0.24 $ 0.45 $ 0.48
operations
Income from
discontinued $ - $ 0.06 $ - $ 0.19
operations
Net income $ 0.24 $ 0.31 $ 0.45 $ 0.66
Diluted
weighted
average common 267,482 286,154 270,760 288,674
shares (in
thousands)
Amounts
attributable
to Cablevision
Systems
Corporation
stockholders:
Income from
continuing
operations, $ 63,529 $ 69,252 $ 120,776 $ 138,286
net of income
taxes
Income from
discontinued
operations, - 18,592 - 53,623
net of income
taxes
Net income $ 63,529 $ 87,844 $ 120,776 $ 191,909
(a) Operating results of AMC Networks Inc. for the three and six months
ended June 30, 2011 are included in discontinued operations.
CABLEVISION SYSTEMS CORPORATION
CONDENSED CONSOLIDATED OPERATIONS DATA AND RECONCILIATION (Cont’d)
(Dollars in thousands, except per share data)
(Unaudited)
ADJUSTMENTS TO RECONCILE ADJUSTED OPERATING CASH FLOW TO
OPERATING INCOME (LOSS)
The following is a description of the adjustments to operating income (loss)
in arriving at adjusted operating cash flow included in this earnings release:
* Depreciation and amortization (including impairments). This adjustment
eliminates depreciation and amortization and impairments of long-lived
assets in all periods.
* Restructuring credits (expense). This adjustment eliminates the credits or
(expense) associated with restructuring activities related to the
elimination of positions, facility realignment, asset impairments and
other related activities in all periods.
* Share-based compensation benefit (expense). This adjustment eliminates the
compensation benefit (expense) relating to stock options, stock
appreciation rights, restricted stock, and restricted stock units granted
under our employee stock plans and non-employee director plans in all
periods.
CONSOLIDATED FREE CASH FLOW FROM CONTINUING OPERATIONS^(a)
Six Months Ended June 30,
2012 2011^(b)
Net cash provided by operating $ 590,122 $ 699,592
activities^(c)
Less: capital expenditures^(d) (512,469 ) (345,298 )
Consolidated free cash flow from continuing $ 77,653 $ 354,294
operations
(a) See Non-GAAP Financial Measures on page 3 of this release for a
definition and discussion of Free Cash Flow from Continuing Operations.
(b) Operating results of AMC Networks Inc. for the six months ended June 30,
2011 are included in discontinued operations.
The level of net cash provided by operating activities will continue to
(c) depend on a number of variables in addition to our operating
performance, including the amount and timing of our interest payments
and other working capital items.
(d) See page 11 of this release for additional details relating to capital
expenditures.
CABLEVISION SYSTEMS CORPORATION
CONSOLIDATED RESULTS FROM CONTINUING OPERATIONS
(Dollars in thousands)
(Unaudited)
REVENUES, NET
Three Months Ended
%
June 30,
2012 2011^(a) Change
Cable Television $ 1,515,702 $ 1,505,785 0.7 %
Optimum Lightpath 81,136 77,098 5.2 %
Eliminations^(b) (4,882 ) (4,846 ) (0.7 )%
Telecommunications 1,591,956 1,578,037 0.9 %
Other^(c) 111,030 116,399 (4.6 )%
Eliminations^(d) (5,698 ) (5,755 ) 1.0 %
Total Cablevision $ 1,697,288 $ 1,688,681 0.5 %
Six Months Ended
%
June 30,
2012 2011^(a) Change
Cable Television $ 3,004,584 $ 2,992,689 0.4 %
Optimum Lightpath 160,669 154,366 4.1 %
Eliminations^(b) (9,922 ) (9,878 ) (0.4 )%
Telecommunications 3,155,331 3,137,177 0.6 %
Other^(c) 211,988 217,987 (2.8 )%
Eliminations^(d) (11,274 ) (11,359 ) 0.7 %
Total Cablevision $ 3,356,045 $ 3,343,805 0.4 %
(a) Revenues of AMC Networks Inc. for the three and six months ended June
30, 2011 are included in discontinued operations.
(b) Represents intra-segment revenues.
(c) Represents results from Newsday, Clearview Cinemas, News 12 Networks,
MSG Varsity, Cablevision Media Sales Corp., and certain other items.
(d) Represents inter-segment revenues.
CABLEVISION SYSTEMS CORPORATION
CONSOLIDATED RESULTS FROM CONTINUING OPERATIONS (cont’d)
(Dollars in thousands)
(Unaudited)
ADJUSTED OPERATING CASH FLOW AND OPERATING INCOME (LOSS)
Adjusted Operating Operating Income
Cash Flow (Loss)
Three Months Ended Three Months Ended
% %
June 30, June 30,
2012 2011^(a) Change 2012 2011^(a) Change
Cable Television $ 545,702 $ 592,689 (7.9 )% $ 317,736 $373,174 (14.9 )%
Optimum Lightpath 34,460 32,696 5.4 % 11,000 10,552 4.2 %
Telecommunications 580,162 625,385 (7.2 )% 328,736 383,726 (14.3 )%
Other^(b) (47,801 ) (51,930 ) 8.0 % (68,397 ) (71,285 ) 4.1 %
Total Cablevision $ 532,361 $ 573,455 (7.2 )% $ 260,339 $312,441 (16.7 )%
Adjusted Operating Operating Income
Cash Flow (Loss)
Six Months Ended Six Months Ended
% %
June 30, June 30,
2012 2011^(a) Change 2012 2011^(a) Change
Cable Television $ 1,080,044 $ 1,174,597 (8.0 )% $629,717 $ 738,489 (14.7 )%
Optimum Lightpath 67,179 65,191 3.0 % 21,618 21,461 0.7 %
Telecommunications 1,147,223 1,239,788 (7.5 )% 651,335 759,950 (14.3 )%
Other^(b) (101,346 ) (110,817 ) 8.5 % (140,932 ) (149,911 ) 6.0 %
Total Cablevision $ 1,045,877 $ 1,128,971 (7.4 )% $510,403 $ 610,039 (16.3 )%
(a) Operating results of AMC Networks Inc. for the three and six months
ended June 30, 2011 are included in discontinued operations.
Includes unallocated corporate general and administrative costs and the
(b) operating results of Newsday, Clearview Cinemas, News 12 Networks, MSG
Varsity, Cablevision Media Sales Corp. and certain other items.
CABLEVISION SYSTEMS CORPORATION
SUMMARY OF CABLE TELEVISION OPERATING STATISTICS
(Unaudited)
June 30, March 31, June 30,
CABLE TELEVISION
2012 2012 2011
(in thousands)
Customer Relationships^(a) 3,635 3,628 3,637
Video Customers 3,257 3,257 3,283
High-Speed Data Customers 3,032 3,007 2,928
Voice Customers 2,422 2,399 2,304
Serviceable Passings (in 5,613 5,596 5,557
thousands)^(b)
Penetration
Customer Relationships to 64.8 % 64.8 % 65.5 %
Serviceable Passings
Video Customers to Serviceable 58.0 % 58.2 % 59.1 %
Passings
High-Speed Data Customers to 54.0 % 53.7 % 52.7 %
Serviceable Passings
Voice Customers to Serviceable 43.1 % 42.9 % 41.5 %
Passings
Revenues for the three months
ended
(dollars in millions)
Video^(c) $ 879 $ 868 $ 888
High-Speed Data 344 338 332
Voice 224 222 221
Advertising 43 35 40
Other^(d) 26 26 25
Total Cable Television Revenue $ 1,516 $ 1,489 $ 1,506
Average Monthly Cable Television
Revenue per
Customer Relationship (“RPC”)^(e) $ 139.14 $ 137.12 $ 137.68
Average Monthly Cable Television
Revenue per
Video Customer (“RPS”) ^(f) $ 155.12 $ 152.53 $ 152.36
(a) Represents the number of households/businesses that receive at least one
of the Company's services.
(b) Includes residential and commercial passings.
(c) Includes equipment rental, DVR, video-on-demand and pay-per-view
revenue.
(d) Includes installation revenue, home shopping, advertising sales
commissions and other product offerings.
RPC is calculated by dividing average monthly cable television GAAP
(e) revenue for the quarter by the average number of customer relationships
for the quarter.
RPS is calculated by dividing average monthly cable television GAAP
(f) revenue for the quarter by the average number of video customers for the
quarter.
CABLEVISION SYSTEMS CORPORATION
CAPITALIZATION AND LEVERAGE
(Dollars in thousands)
(Unaudited)
CAPITALIZATION
June 30, 2012
Cash and cash equivalents $ 337,945
Credit facility debt $ 5,136,110
Senior notes and debentures 5,367,089
Collateralized indebtedness 515,635
Capital lease obligations and other 62,332
Debt $ 11,081,166
LEVERAGE
Debt $ 11,081,166
Less: Collateralized indebtedness of unrestricted 515,635
subsidiaries^(a)
Cash and cash equivalents 337,945
Net debt $ 10,227,586
Leverage Ratios^(b)
Consolidated net debt to AOCF leverage ratio^(a)(c) 4.8x
Restricted Group leverage ratio (Credit Facility 3.6x
Test)^(d)(e)
CSC Holdings notes and debentures leverage 3.6x
ratio^(d)(e)
Cablevision senior notes leverage ratio^(e)(f) 5.0x
Bresnan leverage ratio^(g) 6.5x
Collateralized indebtedness is excluded from the leverage calculation
(a) because it is viewed as a forward sale of the stock of unaffiliated
companies and the Company's only obligation at maturity is to deliver,
at its option, the stock or its cash equivalent.
(b) Leverage ratios are based on face amount of outstanding debt.
(c) AOCF is annualized based on the second quarter 2012 results, as
reported.
Reflects the debt to cash flow ratios applicable under CSC Holdings’
credit facility debt agreement and senior notes indentures (which
exclude Cablevision’s approximately $2.1 billion of senior notes and the
(d) debt and cash flows related to CSC Holdings’ unrestricted subsidiaries
which are primarily comprised of Bresnan and Newsday). The annualized
AOCF (as defined) used in the Restricted Group leverage ratio and the
CSC Holdings notes and debentures leverage ratio is $2.1 billion.
(e) Includes CSC Holdings’ guarantee of Newsday LLC’s $650 million senior
secured credit facility.
Adjusts the debt to cash flow ratio as calculated under the CSC Holdings
(f) notes and debentures leverage ratio to include Cablevision’s
approximately $2.1 billion of senior notes plus the $754 million of
senior notes Cablevision contributed to Newsday Holdings LLC.
Reflects the debt to cash flow ratio under the Bresnan Broadband
(g) Holdings, LLC credit facility debt agreement and senior notes
indentures. The annualized AOCF (as defined) used in the leverage ratio
is $154.4 million.
CABLEVISION SYSTEMS CORPORATION
CAPITAL EXPENDITURES
(Dollars in thousands)
(Unaudited)
CAPITAL EXPENDITURES
Three Months Ended
June 30,
2012 2011
Consumer premise equipment $ 92,649 $ 53,115
Scalable infrastructure 111,074 66,024
Line extensions 10,250 11,024
Upgrade/rebuild 7,064 8,867
Support 40,346 36,167
Total Cable Television 261,383 175,197
Optimum Lightpath 23,220 25,181
Total Telecommunications 284,603 200,378
Other^(a) 11,769 13,906
Total Cablevision $ 296,372 $ 214,284
Six Months Ended
June 30,
2012 2011
Consumer premise equipment $ 153,068 $ 105,673
Scalable infrastructure 168,187 94,928
Line extensions 18,151 19,584
Upgrade/rebuild 20,729 13,052
Support 79,460 48,997
Total Cable Television 439,595 282,234
Optimum Lightpath 48,875 43,339
Total Telecommunications 488,470 325,573
Other^(a) 23,999 19,725
Total Cablevision $ 512,469 $ 345,298
(a) Other includes Newsday, Clearview Cinemas, News 12 Networks, MSG
Varsity, Cablevision Media Sales Corporation and Corporate.
Contact:
Cablevision Systems Corporation
Charles Schueler, 516-803-1013
Executive Vice President
Media and Community Relations
or
Bret Richter, 516-803-2270
Senior Vice President
Financial Strategy & Development
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