Cablevision Systems Corporation Reports Third Quarter 2013 Results Business Wire BETHPAGE, N.Y. -- November 8, 2013 Cablevision Systems Corporation (NYSE:CVC) today reported financial results for the third quarter ended September 30, 2013.^1 Third quarter consolidated net revenues increased 1.8% to $1.568billion, consolidated adjusted operating cash flow (“AOCF”)^2 decreased 4.0% to $441.1million and consolidated operating income increased 3.6% to $225.4million, all compared with the prior year period. Operating highlights for the third quarter 2013 include: *Average Monthly Revenue per Video Customer (“RPS”) of $164.61, an increase of $8.38 or 5.4%, compared with the prior year period. *Cable advertising revenue growth of 8.8%, compared to the prior year period. *Year to date Consolidated Free Cash Flow from Continuing Operations^2 of $77.3 million. Cablevision President and CEO James L. Dolan said, “Cablevision continues to enhance the overall Optimum experience for our customers with improved products and a superior level of service. At the same time, we have taken a number of steps to improve our financial performance and strengthen our balance sheet. We expect that the investments we are making in the business will yield results as we move forward." Financial results of Bresnan Broadband Holdings, LLC (Bresnan Cable) and 1. substantially all of Clearview Cinemas (Clearview) are reflected in the Company’s consolidated financial statements as discontinued operations for all periods presented. See definition of AOCF and Consolidated Free Cash Flow from Continuing 2. Operations included in the discussion of non-GAAP financial measures on page 4 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 Lightpath, a provider of integrated business communications solutions for larger companies. Telecommunications Services net revenues for the third quarter 2013 increased 1.8% to $1.486billion, AOCF decreased 4.5% to $486.2 million and operating income decreased 5.7% to $272.5million, all compared with the prior year period. Third quarter 2012 results included a $12.0 million favorable settlement with a voice carrier. If excluded, consolidated net revenues would have increased 2.7%, AOCF would have decreased 2.2% and operating income would have decreased 1.6%, all compared to the prior year period. Cable Television Cable Television third quarter 2013 net revenues increased 1.8% to $1.407billion principally due to higher data rates, higher video revenues and increased advertising revenues, compared to the prior year period. AOCF decreased 5.4% to $447.7million and operating income decreased 7.2% to $255.8million, all compared with the prior year period. Third quarter 2013 AOCF results reflect higher operating expenses, primarily programming and other costs. Excluding the favorable settlement with a voice carrier mentioned above, consolidated net revenues would have increased 2.7%, AOCF would have decreased 2.9% and operating income would have decreased 3.1%, all compared to the prior year period. The following table illustrates the change in the Cable Television customer base during the third quarter of 2013: Customer Data (rounded to nearest thousand) Total Total Net Gain/(Loss) June 30, September 30, 2013 2013 Total Customers^(a) 3,224 (29) 3,195 Video 2,868 (37) 2,831 High-Speed Data 2,787 (13) 2,774 Voice Customers 2,290 (18) 2,272 Serviceable Passings 5,004 9 5,013 (a) Total customers are defined as the number of households/businesses that receive at least one of the Company's services. Lightpath For third quarter 2013, Lightpath net revenues increased 1.7% to $82.7million, AOCF increased 7.2% to $38.6million and operating income increased 27.0% to $16.6million, each as compared with the prior year period. Third quarter results reflect an increase in revenue from Ethernet services versus the prior year period and a higher overall gross margin. Other Other primarily consists of Newsday, News 12 Networks, MSG Varsity, Cablevision Media Sales Corporation and certain other businesses and unallocated corporate costs. Third quarter 2013 net revenues increased 2.0% to $87.6million, AOCF deficit decreased by 9.2% to a deficit of $45.1million and operating loss decreased 33.9% to a loss of $47.0million, all compared with the prior year period. Third quarter AOCF results principally reflect lower operating costs as a result of reduced activity at MSG Varsity. The improvement in operating loss reflects lower depreciation expense, primarily due to a $13.2 million adjustment related to prior periods. Other Matters On November 6, 2013, the Board of Directors of Cablevision declared a quarterly dividend of $0.15per 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 December 13, 2013 to shareholders of record at the close of business on November 22, 2013. There were no repurchases of stock during the third quarter of 2013. As of September30, 2013, the Company had approximately $455 million available under its stock repurchase authorizations. 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 6 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) plus any excess tax benefit related to share-based awards less capital expenditures (continuing operations), all 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 (NYSE: CVC) is a leading media and telecommunications company, serving millions of households and businesses throughout the greater New York area. Providing quality products that keep customers connected, Cablevision offers Optimum-branded digital cable television, high-speed Internet and phone services as well as Optimum WiFi, the nation's most robust wireless Internet network. Cablevision’s Lightpath subsidiary is a premier provider of integrated business communications solutions for larger companies. Through its local media and programming properties – News 12 Networks, Newsday Media Group and MSG Varsity – Cablevision also delivers news and information created specifically for the communities it serves. Additional information about Cablevision is available 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 86198464/ Conference call replay number (855) 859-2056/ Conference ID Number 86198464 until November 15, 2013 CABLEVISION SYSTEMS CORPORATION CONDENSED CONSOLIDATED OPERATIONS DATA AND RECONCILIATION (Dollars in thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2013^(a) 2012^(a) 2013^(a) 2012^(a) Revenues, net $ 1,567,837 $ 1,539,515 $ 4,648,684 $ 4,616,563 Adjusted operating cash 441,140 459,326 1,228,142 1,430,677 flow Share-based compensation (12,252 ) (13,519 ) (40,544 ) (37,259 ) expense Restructuring credit (56 ) (330 ) 582 61 (expense) Operating income before depreciation 428,832 445,477 1,188,180 1,393,479 and amortization Depreciation and amortization 203,405 227,814 657,603 655,350 (including impairments) Operating 225,427 217,663 530,577 738,129 income Other income (expense): Interest (145,275 ) (168,005 ) (457,862 ) (501,435 ) expense, net Gain on investments, 70,222 81,619 166,891 259,057 net Loss on equity derivative (40,750 ) (57,082 ) (93,260 ) (184,413 ) contracts, net Loss on interest rate - - - (1,828 ) swap contracts, net Loss on extinguishment of debt and write-off of (16,509 ) (61,052 ) (23,146 ) (61,052 ) deferred financing costs, net Miscellaneous, 805 474 1,673 1,278 net Income from continuing operations 93,920 13,617 124,873 249,736 before income taxes Income tax (34,172 ) (9,905 ) (44,036 ) (101,544 ) expense Income from continuing 59,748 3,712 80,837 148,192 operations Income (loss) from discontinued 235,286 (7,576 ) 333,516 (31,163 ) operations, net of income taxes Net income 295,034 (3,864 ) 414,353 117,029 (loss) Net loss (income) attributable (433 ) 73 (534 ) (44 ) to noncontrolling interests Net income (loss) attributable to Cablevision $ 294,601 $ (3,791 ) $ 413,819 $ 116,985 Systems Corporation stockholders Basic net income (loss) per share attributable to Cablevision Systems Corporation stockholders: Income from continuing $ 0.23 $ 0.01 $ 0.31 $ 0.56 operations Income (loss) from $ 0.90 $ (0.03 ) $ 1.28 $ (0.12 ) discontinued operations Net income $ 1.13 $ (0.01 ) $ 1.59 $ 0.44 (loss) Basic weighted average common 261,287 259,905 260,473 263,570 shares (in thousands) Diluted net income (loss) per share attributable to Cablevision Systems Corporation stockholders: Income from continuing $ 0.22 $ 0.01 $ 0.30 $ 0.55 operations Income (loss) from $ 0.88 $ (0.03 ) $ 1.26 $ (0.12 ) discontinued operations Net income $ 1.10 $ (0.01 ) $ 1.56 $ 0.44 (loss) Diluted weighted average common 267,558 264,636 265,487 268,704 shares (in thousands) Amounts attributable to Cablevision Systems Corporation stockholders: Income from continuing operations, $ 59,315 $ 3,785 $ 80,303 $ 148,148 net of income taxes Income (loss) from discontinued 235,286 (7,576 ) 333,516 (31,163 ) operations, net of income taxes Net income $ 294,601 $ (3,791 ) $ 413,819 $ 116,985 (loss) (a) Operating results of Bresnan Cable and Clearview have been reflected in discontinued operations for all periods presented. 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 credit (expense). This adjustment eliminates the expense or credit 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) Nine Months Ended September 30, 2013^(b) 2012^(b) Net cash provided by operating $ 813,593 $ 890,763 activities^(c) Add: excess tax benefit related to 4,682 - share-based awards Less: capital expenditures^(d) (740,944 ) (742,232 ) Consolidated free cash flow from $ 77,331 $ 148,531 continuing operations (a) See Non-GAAP Financial Measures on page 4 of this release for a definition and discussion of Free Cash Flow from Continuing Operations. (b) Operating results of Bresnan Cable and Clearview have been reflected in discontinued operations for all periods presented. 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 12 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 % September 30, 2013^(a) 2012^(a) Change Cable Television $ 1,406,963 $ 1,382,027 1.8 % Lightpath 82,651 81,273 1.7 % Eliminations^(b) (4,100 ) (4,570 ) 10.3 % Telecommunications 1,485,514 1,458,730 1.8 % Other^(c) 87,624 85,915 2.0 % Eliminations^(d) (5,301 ) (5,130 ) (3.3 )% Total Cablevision $ 1,567,837 $ 1,539,515 1.8 % Nine Months Ended % September 30, 2013^(a) 2012^(a) Change Cable Television $ 4,165,152 $ 4,137,744 0.7 % Lightpath 247,596 241,942 2.3 % Eliminations^(b) (13,365 ) (14,490 ) 7.8 % Telecommunications 4,399,383 4,365,196 0.8 % Other^(c) 265,063 267,349 (0.9 )% Eliminations^(d) (15,762 ) (15,982 ) 1.4 % Total Cablevision $ 4,648,684 $ 4,616,563 0.7 % (a) Net revenues of Bresnan Cable and Clearview have been reflected in discontinued operations for all periods presented as applicable. (b) Represents intra-segment revenues. (c) Represents revenues of Newsday, News 12 Networks, Cablevision Media Sales Corp., and certain other entities. (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 % % September 30, September 30, 2013^(a) 2012^(a) Change 2013^(a) 2012^(a) Change Cable Television $ 447,674 $ 473,005 (5.4 )% $ 255,840 $ 275,718 (7.2 )% Lightpath 38,566 35,968 7.2 % 16,633 13,099 27.0 % Telecommunications 486,240 508,973 (4.5 )% 272,473 288,817 (5.7 )% Other^(b) (45,100 ) (49,647 ) 9.2 % (47,046 ) (71,154 ) 33.9 % Total Cablevision $ 441,140 $ 459,326 (4.0 )% $ 225,427 $ 217,663 3.6 % Adjusted Operating Operating Income Cash Flow (Loss) Nine Months Ended Nine Months Ended % % September 30, September 30, 2013^(a) 2012^(a) Change 2013^(a) 2012^(a) Change Cable Television $ 1,277,223 $ 1,473,758 (13.3 )% $ 692,584 $ 908,873 (23.8 )% Lightpath 109,186 103,147 5.9 % 42,141 34,717 21.4 % Telecommunications 1,386,409 1,576,905 (12.1 )% 734,725 943,590 (22.1 )% Other^(b) (158,267 ) (146,228 ) (8.2 )% (204,148 ) (205,461 ) 0.6 % Total Cablevision $ 1,228,142 $ 1,430,677 (14.2 )% $ 530,577 $ 738,129 (28.1 )% (a) Operating results of Bresnan Cable and Clearview have been reflected in discontinued operations for all periods presented as applicable. Includes unallocated corporate general and administrative costs and the operating results of Newsday, News 12 Networks, MSG Varsity, Cablevision (b) Media Sales Corp., and certain other items. In addition, amounts include costs historically allocated to Bresnan Cable and Clearview that were not eliminated as a result of the Bresnan Cable and Clearview sales. CABLEVISION SYSTEMS CORPORATION SUMMARY OF CABLE TELEVISION OPERATING STATISTICS (Unaudited) September 30, June 30, September 30, CABLE TELEVISION 2013 2013^(a)(b) 2012^(a) (in thousands) Total 3,195 3,224 3,273 Customers^(c) Video Customers 2,831 2,868 2,943 High-Speed Data 2,774 2,787 2,775 Customers Voice Customers 2,272 2,290 2,275 Serviceable Passings (in 5,013 5,004 4,964 thousands)^(d) Penetration Total Customers to Serviceable 63.7 % 64.4 % 65.9 % Passings Video Customers to Serviceable 56.5 % 57.3 % 59.3 % Passings High-Speed Data Customers to 55.3 % 55.7 % 55.9 % Serviceable Passings Voice Customers to Serviceable 45.3 % 45.8 % 45.8 % Passings Revenues for the three months ended (dollars in millions) Video^(e) $ 797 $ 793 $ 792 High-Speed Data 336 338 308 Voice 210 211 221 Advertising 40 37 37 Other^(f) 24 23 24 Total Cable Television $ 1,407 $ 1,402 $ 1,382 Revenue Average Monthly Cable Television Revenue per $ 146.11 $ 144.74 $ 140.72 Customer (“RPC”)^(g) Average Monthly Cable Television Revenue per Video $ 164.61 $ 162.42 $ 156.23 Customer (“RPS”)^(h) (a) Operating results of Bresnan Cable have been reflected in discontinued operations for all periods presented as applicable. Amounts exclude customers located in the areas most severely impacted by Superstorm Sandy who we were unable to contact and those whose billing (b) we decided to suspend temporarily during restoration of their homes. As of June 30, 2013 these customers represented approximately 2 thousand total customers, video, high-speed data and voice, respectively. (c) Represents the number of households/businesses that receive at least one of the Company's services. (d) Includes residential and commercial passings. (e) Includes equipment rental, DVR, video-on-demand and pay-per-view revenue. (f) Includes installation revenue, home shopping, advertising sales commissions and other product offerings. RPC is calculated by dividing average monthly cable television GAAP (g) revenue for the quarter by the average number of total customers for the quarter. RPS is calculated by dividing average monthly cable television GAAP (h) 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 September 30, 2013 Cash and cash equivalents $ 824,298 Credit facility debt $ 3,931,618 Senior notes and debentures 5,175,437 Collateralized indebtedness 748,445 Capital lease obligations and other 39,806 Debt $9,895,306 LEVERAGE Debt $9,895,306 Less: Collateralized indebtedness of unrestricted 748,445 subsidiaries^(a) Cash and cash equivalents 824,298 Net debt $ 8,322,563 Leverage Ratios^(b) Consolidated net debt to AOCF leverage 4.7x ratio^(a)(c) Restricted Group leverage ratio (Credit Facility 3.2x Test)^(d)(e) CSC Holdings notes and debentures leverage 3.5x ratio^(e)(f) Cablevision senior notes leverage ratio^(e)(g) 5.6x 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 third quarter 2013 results, as reported. Reflects the net debt to cash flow ratio as defined in the CSC Holdings’ credit facility debt agreement (which excludes approximately $2.9 (d) billion of Cablevision’s senior notes and the debt and cash flows related to CSC Holdings’ unrestricted subsidiaries which are primarily comprised of Newsday). The annualized AOCF (as defined) used in the Restricted Group leverage ratio was $1.846 billion. (e) Includes CSC Holdings’ guarantee of Newsday LLC’s $640 million senior secured credit facility. Reflects the debt to cash flow ratio applicable under CSC Holdings’ senior notes and debentures indentures (which excludes approximately (f) $2.9 billion of Cablevision’s senior notes and the debt and cash flows related to CSC Holdings’ unrestricted subsidiaries which are primarily comprised of Newsday). The annualized AOCF (as defined) used in the CSC Holdings notes and debentures leverage ratio was $1.797 billion. Adjusts the debt to cash flow ratio as calculated under the CSC Holdings (g) notes and debentures leverage ratio to include approximately $2.9 billion of Cablevision’s senior notes plus $754 million of Cablevision’s senior notes that were contributed to Newsday Holdings LLC. CABLEVISION SYSTEMS CORPORATION CAPITAL EXPENDITURES (Dollars in thousands) (Unaudited) Three Months Ended September 30, 2013 2012^(a) CAPITAL EXPENDITURES Consumer premise equipment $ 48,894 $ 100,046 Scalable infrastructure 111,398 81,635 Line extensions 7,451 7,149 Upgrade/rebuild 9,470 4,726 Support 32,011 53,904 Total Cable Television 209,224 247,460 Lightpath 29,211 21,704 Total Telecommunications 238,435 269,164 Other^(b) 6,659 8,645 Total Cablevision $ 245,094 $ 277,809 Nine Months Ended September 30, 2013^(a) 2012^(a) CAPITAL EXPENDITURES Consumer premise equipment $ 210,981 $ 234,961 Scalable infrastructure 242,579 239,245 Line extensions 21,401 23,229 Upgrade/rebuild 26,467 13,824 Support 129,163 128,374 Total Cable Television 630,591 639,633 Lightpath 81,949 70,579 Total Telecommunications 712,540 710,212 Other^(b) 28,404 32,020 Total Cablevision $ 740,944 $ 742,232 (a) Capital expenditures for Bresnan Cable and Clearview have been reflected in discontinued operations. (b) Other primarily includes Newsday, 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
Cablevision Systems Corporation Reports Third Quarter 2013 Results
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