MIDDLETOWN, N.Y.-- (BUSINESS WIRE) -- MEDIACOM COMMUNICATIONS CORPORATION (Nasdaq: MCCC) today reported financial results for the three and nine months ended September 30, 2009. Mediacom Communications will hold a teleconference today at 10:30 a.m. Eastern Time to discuss its financial results. A live broadcast of the teleconference can be accessed through our web site at www.mediacomcc.com.

Pro Forma Third Quarter 2009 Financial Highlights *

• Revenues increased 4.8% to $363.4 million¹
• Adjusted operating income before depreciation and amortization (“Adjusted OIBDA”) grew 5.3% to $131.3 million^{1, 2}
• Revenue generating units (“RGUs”) grew 6,000 for the quarter and 106,000 year-over-year, or a 3.7% annual gain¹

Actual Third Quarter 2009 Financial Highlights *

• Revenues increased 3.1% to $363.4 million
• Adjusted OIBDA rose 3.9% to $131.3 million²
• Operating income decreased 0.3% to $70.9 million
• Free cash flow was $20.3 million, or $0.30 per basic weighted average share, compared to negative $10.6 million, or negative $0.11 per basic weighted average share

“We began the year with significant uncertainties as to whether the recession and financial crisis would have a meaningful impact on our business,” stated Rocco B. Commisso, Mediacom’s Chairman and CEO. “Even though our RGU additions softened considerably, I am pleased to report another quarter of solid financial performance in this protracted economic downturn, as we delivered year-over-year pro forma growth rates in both revenues and Adjusted OIBDA that were among the highest in the cable and telecom sectors.”

“These results keep us on track to meet or exceed our free cash flow per share guidance of $1.30 for 2009. Year-to-date, we have produced nearly $83 million of after-tax free cash flow, compared to $2 million in the same period last year – representing about $1.15 per basic weighted average share. Just as important, in the third quarter we were successful in accessing the debt markets to complete $650 million of refinancing transactions, enabling our Company to extend debt maturities to the 2017-2019 timeframe and to lower our cost of debt,” concluded Mr. Commisso.

^{* See Notes on Page 4 regarding pro forma presentation and Adjusted OIBDA.}

Three Months Ended September 30, 2009 Compared to Pro Forma Three Months Ended September 30, 2008

Operating results and year-over-year changes in the narrative below are presented on a pro forma basis for the three months ended September 30, 2008, to take into account our contribution of non-strategic cable systems under the Exchange Agreement, with affiliates of Morris Communications Company, LLC. The Exchange Agreement closed in February 2009. See “Morris Transaction” below for information regarding the Exchange Agreement. As of the contribution date, these cable systems served approximately 25,000 basic subscribers and 51,000 RGUs. For all periods presented, see Table 8 for pro forma summary operating statistics, Table 9 for the pro forma presentation of operating data and Table 10 for a reconciliation of actual and pro forma operating data.

Revenues rose 4.8% to $363.4 million, mainly due to a 3.7% year-over-year increase in RGUs, partially offset by lower advertising revenues.

• Video revenues increased 2.5%, primarily due to customer growth in digital and other advanced video products and services, including digital video recorders (“DVRs”) and high-definition television (“HDTV”). During the quarter, we lost 19,000 basic subscribers, and year-over-year, we lost 36,000 basic subscribers, representing a reduction of 2.8%.
  
  
  
  During the quarter, we added 7,000 digital customers to end the quarter with 665,000 customers, or a 52.7% penetration of basic subscribers. Year-over-year, we gained 52,000 digital customers, representing an 8.5% growth rate. As of September 30, 2009, 37.1% of our digital customers were taking DVR and/or HDTV services.

• High-speed data revenues rose 10.1%, mainly due to a year-over-year gain of 52,000 high-speed data customers, or 7.3 % and, to a lesser extent, higher unit pricing. During the quarter, we added 11,000 high-speed data customers to end the quarter with 765,000 high-speed data customers, or a 27.4% penetration of estimated homes passed.
• Phone revenues grew 22.3%, largely due to a year-over-year increase of 38,000 phone customers, or 16.1%, and, to a much lesser extent, higher unit pricing. During the quarter, we added 7,000 phone customers to end the quarter with 274,000 phone customers, or a 10.4% penetration of estimated marketable phone homes.
• Advertising revenues were 15.6% lower, principally due to declines in automotive and political advertising in national and, to a lesser extent, local markets.

Total operating costs grew 4.5%, primarily due to increases in programming unit costs, offset in part by improved productivity in our call centers and a reduction in vehicle fuel and other service related expenses.

Adjusted OIBDA rose 5.3%, resulting in a margin of 36.1%, as compared to a margin of 35.9% for the same period last year. Operating income was essentially flat, as the increase in Adjusted OIBDA was mostly offset by higher depreciation and amortization expense.

Liquidity and Capital Resources

We have included the Condensed Statements of Cash Flows for the nine months ended September 30, 2009 and 2008 in Table 4 to provide more details regarding liquidity and capital resources.

Significant sources of cash for the nine months ended September 30, 2009 were:

• Issuance of $350.0 million of 9 ⅛% senior notes due August 2019. See “New Financings”;
• Net bank financing of $334.0 million, including a $300.0 million new term loan, with a final maturity of March 2017. See “New Financings”; and
• Net cash flows from operating activities of $245.8 million.

Significant uses of cash for the nine months ended September 30, 2009 were:

• Tender for, and redemption of, $625.0 million of outstanding senior notes. See “New Financings”;
• Capital expenditures of approximately $167.2 million; and
• Funding of the cash portion totaling $110.0 million under the Exchange Agreement. See “Morris Transaction.”

For the nine months ended September 30, 2009, free cash flow was significantly higher than the prior year period, increasing from $2.0 million to $82.8 million. See Table 7 for further detail.

New Financings

On August 25, 2009, we entered into an incremental facility agreement that provides for a new term loan under our existing credit facilities in the amount of $300.0 million (the “new term loan”). The new term loan matures in March 2017 and beginning in December 2009 will be subject to quarterly reductions of 0.25%, with a final payment at maturity representing 92.75% of the original principal amount. On the same date, we issued $350.0 million aggregate principal amount of 9 ⅛% Senior Notes due August 2019. Net proceeds from the issuance of the Senior Notes and borrowings under the new term loan totaled $626.1 million, after giving effect to original issue discount and financing costs, and were used to fund tender offers and redemption of our existing 7 ⅞% Senior Notes due 2011, with an original principal amount of $125 million, and 9 ½% Senior Notes due 2013, with an original principal amount of $500 million.

Morris Transaction

On September 7, 2008, we entered into a Share Exchange Agreement (the “Exchange Agreement”) with affiliates of Morris Communications Company. On February 13, 2009, we completed the Exchange Agreement pursuant to which we exchanged all of the outstanding shares of stock of a wholly-owned subsidiary, which held (i) non-strategic cable television systems located in Western North Carolina serving approximately 25,000 basic subscribers, and (ii) approximately $110 million in cash, for 28,309,674 shares of Mediacom Class A common stock owned by an affiliate of Morris Communications.

Financial Position

At September 30, 2009, our total net debt outstanding (total debt less cash balances) was $3.375 billion, an increase of $5.0 million from the total net debt outstanding as of June 30, 2009. Our net debt leverage³ was 6.3 times as of September 30, 2009, as compared to 6.4 times for the prior year period. As of the same date, our unused credit facilities were $583.5 million, all of which could be borrowed and used for general corporate purposes based on the terms and conditions of our debt arrangements. As of the date of this press release, about 58% of our total debt was at fixed interest rates or subject to interest rate protection.

Notes:

Company Description

Mediacom Communications is the nation’s seventh largest cable television company and one of the leading cable operators focused on serving the smaller cities and towns in the United States. Mediacom Communications offers a wide array of broadband products and services, including traditional video services, digital television, video-on-demand, DVRs, HDTV, high-speed data access and phone service. More information about Mediacom Communications can be accessed on the Internet at: www.mediacomcc.com.

Cautionary Statement Regarding Forward-Looking Statements

You should carefully review the information contained in this Press Release and in other reports or documents that we file from time to time with the SEC.

In this Press Release, we state our beliefs of future events and of our future financial performance. In some cases, you can identify those so-called “forward-looking statements” by words such as “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should” or “will,” or the negative of those and other comparable words. 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 from existing and new competitors;
• lower demand for our video, high-speed data and phone services;
• our ability to successfully introduce new products and services to meet customer demands and preferences;
• changes in laws, regulatory requirements or technology that may cause us to incur additional costs and expenses;
• greater than anticipated increases in programming costs and delivery expenses related to our products and services;
• changes in assumptions underlying our critical accounting policies;
• the ability to secure hardware, software and operational support for the delivery of products and services to our customers;
• disruptions or failures of network and information systems upon which our business relies;
• our reliance on certain intellectual properties;
• our ability to generate sufficient cash flow to meet our debt service obligations;
• fluctuations in short term interest rates which may cause our interest expense to vary from quarter to quarter;
• instability in the capital and credit markets, which may impact our ability to refinance future debt maturities or provide funding for potential strategic transactions, on similar terms as we currently experience; and
• other risks and uncertainties discussed in this Press Release, our Annual Report on Form 10-K for the year ended December 31, 2008 and other reports or documents that we file from time to time with the SEC.

Statements included in this Press Release are based upon information known to us as of the date that this Press Release is filed with the SEC, and we assume no obligation to update or alter our forward-looking statements made in this Press Release, whether as a result of new information, future events or otherwise, except as required by applicable federal securities laws.

Note: Certain reclassifications have been made to prior period amounts to conform to the current period presentation.

Note: Certain reclassifications have been made to prior period amounts to conform to the current period presentation.

Note: Certain reclassifications have been made to prior period amounts to conform to the current period presentation.

TABLE 11

Use of Non-GAAP Financial Measures

“Adjusted OIBDA” and “Free Cash Flow” are not financial measures calculated in accordance with generally accepted accounting principles (“GAAP”) in the United States. We define Adjusted OIBDA as operating income before depreciation and amortization and non-cash, share-based compensation charges, and Free Cash Flow as Adjusted OIBDA less interest expense, net, cash taxes and capital expenditures.

Adjusted OIBDA is one of the primary measures used by management to evaluate our performance and to forecast future results. We believe Adjusted OIBDA is 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 television industry, which may have different depreciation and amortization policies, as well as different non-cash, share-based compensation programs. A limitation of Adjusted OIBDA, however, is that it excludes 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. In addition, Adjusted OIBDA has the limitation of not reflecting the effect of our non-cash, share-based compensation charges.

Free Cash Flow is used by management to evaluate our ability to service our debt and to fund continued growth with internally generated funds. We believe Free Cash Flow, and Free Cash Flow per share, 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. Our definition of Free Cash Flow eliminates the impact of quarterly working capital fluctuations.

Adjusted OIBDA and Free Cash Flow should not be regarded as alternatives to operating income, net income or net loss 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 Adjusted OIBDA, and that net cash flows provided by operating activities is the most directly comparable GAAP financial measure to Free Cash Flow. Reconciliations of historical presentations of Adjusted OIBDA and Free Cash Flow to their most directly comparable GAAP financial measures are provided in Table 6. We are unable to reconcile these non-GAAP measures on a forward-looking basis primarily because it is impractical to project the timing of certain events, such as the initiation of depreciation relative to network construction projects, or changes in working capital.