Cablevision Systems Corporation Reports Final Second Quarter 2006 Results and Files Restated Financial Statements for Prior Periods.BETHPAGE Bethpage (bĕthpāj`), uninc. village (1990 pop. 15,761, including Old Bethpage), Nassau co., SE N.Y., on W Long Island. Northrop Grumman Corporation's large defense plant here is being partly redeveloped for diversified industrial use. , N.Y. -- Cablevision For the unrelated Canadian company, see . Cablevision Systems Corporation is an American cable television company. It is the 5th largest cable provider in the USA, with most customers residing in New York, New Jersey, Connecticut, and Pennsylvania. Systems Corporation (NYSE NYSE See: New York Stock Exchange :CVC See CSC. ) today reported complete financial results for the second quarter ended June June: see month. 30, 2006. On August 8, 2006, the Company released select second quarter operating and financial measures, citing an expected restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of financial statements for periods prior to its second quarter of 2006. Today the Company filed with the Securities and Exchange Commission a Form 10-K/A for the year ended December December: see month. 31, 2005 and a Form 10-Q/A for the quarter ended March 31, 2006 with restated financial statements, as well as its Form 10-Q Form 10-Q See 10-Q. for the quarter ended June 30, 2006. The financial information in this release reflects the restated financial information in those reports, where applicable. Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: net revenue for the second quarter of 2006 grew 15.6% to more than $1.4 billion compared to the prior year period, reflecting solid revenue growth in Telecommunications Services In telecommunication, the term telecommunications service has the following meanings: 1. Any service provided by a telecommunication provider. 2. , Rainbow and Madison Square Garden Current arenas in the National Hockey League Western Conference Eastern Conference . Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. grew 75.1% to $166.5 million and adjusted operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. ("AOCF AOCF Association of Outplacement Consulting Firms ")(1) increased 17.5% to $469.9 million. These results include the impact of certain items in both Cable Television and at Rainbow that are described on page 2 and page 3, respectively. Excluding the impact of these items, the company's second quarter net revenue, operating income, and AOCF would have increased 15.0%, 38.5% and 9.2%, respectively. Operating highlights for the second quarter 2006 include: --Quarterly Revenue Generating Unit ("RGU RGU The Robert Gordon University (Aberdeen, Scotland) RGU Responsible Governmental Unit RGU Revenue-Generating Unit ") growth of more than 385,000 new video, high-speed high-speed adj. 1. Operated or designed for operation at high speed: a high-speed food processor. 2. Taking place at high speed: a high-speed chase. 3. data and voice units; the Company's highest second quarter RGU gain ever --Ninth consecutive quarter of basic video subscriber subscriber, n the person, usually the employee, who represents the family unit in relation to the prepayment plan. Other family members are dependents. Also called certificate holders or enrollees. gains --Cable Television net revenue growth of 17.9% as compared to the second quarter of 2005 --Average Monthly Revenue per Basic Video Customer ("RPS rps abbr. revolutions per second ") of $109.01 Results from Continuing Operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the (2) Segment results for the quarters ended June 30, 2006 and June 30, 2005 are as follows:
Operating Income
Revenue, Net (Loss) AOCF
---------------------------------------------------
$ millions Q2 2006 Q2 2005 Q2 2006 Q2 2005 Q2 2006 Q2 2005
---------------------------------------------------
(As
restated)
Telecommunications $1,049.1 $895.3 $198.2 $129.9 $439.1 $354.2
Rainbow 225.9 204.1 (1.7) (10.9) 32.5 29.3
MSG 162.0 151.6 (0.4) 7.6 18.0 29.8
Other (including
eliminations) (13.1) (19.1) (29.6) (31.5) (19.7) (13.2)
---------------------------------------------------
Total Company $1,423.9 $1,231.9 $166.5 $95.1 $469.9 $400.1
---------------------------------------------------
1. Adjusted operating cash flow ("AOCF"), a non-GAAP financial measure, is defined as operating income (loss) before depreciation and amortization (including impairments), excluding stock plan charges or credits and restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. or credits. Please refer to page 5 for a more detailed definition of AOCF and discussion of our use of AOCF as a non-GAAP financial measure and page 6 for a reconciliation of AOCF to operating income (loss) and net income (loss). 2. The operating results of Fox Sports Net (FSN (Full-Service Network) A communications network that provides shopping, movies on demand and access to databases and a variety of interactive services. ) Ohio, FSN Florida FSN Florida, formerly Fox Sports Net Florida, is a television channel that shows local sports coverage in the state of Florida. It is owned by News Corp. along with Sun Sports. , FSN Chicago Chicago, city, United States Chicago (shĭkä`gō, shĭkô`gō), city (1990 pop. 2,783,726), seat of Cook co., NE Ill., on Lake Michigan; inc. 1837. and Rainbow DBS's distribution operations are included in discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. and are not presented in the table above. The VOOM HD Networks Voom HD Networks are a group of 15 original high-definition television channels that are owned by Rainbow Media, a subsidiary of Cablevision. The channels are produced in true High Definition with Dolby Digital 5. are included in the Rainbow segment for all periods presented. Telecommunications Services - Cable Television and Lightpath Telecommunications Services includes Cable Television - Cablevision's "Optimum" branded video, high-speed data, and voice residential and commercial services offered over its cable infrastructure -- and its "Optimum Lightpath" branded, fiber-delivered commercial data and voice services. Telecommunications Services net revenues for the second quarter 2006 rose 17.2% to $1,049.1 million, operating income increased 52.7% to $198.2 million, and AOCF grew 24.0% to $439.1 million, all compared to the prior year period. Second quarter 2006 operating income and AOCF include a reduction in technical and operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. of $26.5 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the resolution of a contractual programming dispute. Excluding this item, second quarter operating income and AOCF would have increased 32.1% and 16.4%, respectively. Cable Television Cable Television second quarter 2006 net revenues increased 17.9% to $1,008.4 million, operating income increased 48.1% to $202.8 million and AOCF rose 25.4% to $423.1 million, each compared to the prior year period. The increases in net revenue, operating income, and AOCF resulted principally from growth in video, high-speed data, and voice customers, which is reflected in the addition of more than 1.5 million Revenue Generating Units since the second quarter of 2005. Second quarter 2006 Cable Television results include the item discussed above. Excluding this item, second quarter operating income and AOCF would have increased 28.6% and 17.5%, respectively. Second quarter 2006 highlights include: --Basic video customers up 35,328 or 1.2% from March 2006 and 95,486 or 3.2% from June 2005; ninth consecutive quarter of basic video subscriber gains --iO: Interactive Optimum digital video customers up 143,499 or 6.7% from March 2006 and 529,265 or 30.4% from June 2005 --Optimum Online high-speed data customers up 84,819 or 4.7% from March 2006 and 371,578 or 24.4% from June 2005 --Optimum Voice customers up 122,234 or 14.1% from March 2006 and 509,185 or 106.4% from June 2005 --Revenue Generating Units up 385,284 or 4.9% from March 2006 and 1,503,577 or 22.3% from June 2005 --Advertising revenue rose 22.6% from March 2006 and declined 1.0% from the prior year period --Cable Television RPS of $109.01, up $4.77 or 4.6% from the first quarter of 2006 and $13.79 or 14.5% from the second quarter of 2005 --AOCF margin of 42.0% (39.3% excluding the benefit of the dispute resolution discussed above) compared to 38.6% in the first quarter of 2006 and 39.4% in the second quarter of 2005 Lightpath For the second quarter 2006, Lightpath net revenues increased 11.3% to $52.9 million, operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. declined 35.2% to $4.6 million and AOCF declined 5.5% to $16.0 million, each as compared to the prior year period. The increase in net revenue is primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to growth in Optimum Voice call completion activity and Ethernet Ethernet Telecommunications networking protocol introduced by Xerox Corp. in 1979. It was developed as an inexpensive way of sending information quickly between office machines connected together in a single room or building, but it rapidly became a standard computer data services over Lightpath's fiber infrastructure, offset in part by a decline in traditional phone service usage. Second quarter 2006 operating loss and AOCF results reflect revenue growth and a credit to carrier costs, offset by increased marketing and network expenses, as compared to the prior year period. In addition, the decline in operating loss was primarily impacted by lower depreciation and amortization in the second quarter of 2006 compared to the prior year period. Revenue related to Optimum Voice call completion activity has no net impact on operating loss or AOCF. Lightpath revenue excluding Optimum Voice call activity would have increased 1.0%. Rainbow Rainbow consists of our National Programming services - AMC (Advanced Mezzanine Card) See AdvancedTCA. , IFC (Internet Foundation Classes) A class library from Netscape that provides an application framework and graphical user interface (GUI) routines for Java programmers. IFC was later made part of the Java Foundation Classes (JFC). See JFC, AFC and AWT. See also ICF. and WE tv (formerly known as WE: Women's Entertainment) as well as Other Programming which includes: FSN Bay Area, fuse, MagRack, sportskool, News 12 Networks, IFC Entertainment, VOOM HD Networks, Rainbow Network Communications, Rainbow Advertising Sales Corp. and other Rainbow ventures. After the resolution of a contractual dispute with one of its major affiliates, the operations of FSN Chicago were shut down in June 2006. Rainbow net revenues for the second quarter 2006 increased 10.7% to $225.9 million, operating loss declined 84.5% to $1.7 million and AOCF rose 11.0% to $32.5 million, all compared to the prior year period. Second quarter 2005 results exclude certain affiliate Affiliate Relationship between two companies when one company owns substantial interest, but less than a majority of the voting stock of another company, or when two companies are both subsidiaries of a third company. See: Subsidiaries, parent company. revenue attributable to the quarter that was not recognized, due to a contractual dispute, until the third quarter of 2005 when such dispute was resolved. If this net revenue had been recognized in the second quarter of 2005, second quarter 2006 net revenue would have increased 7.5% while operating loss and AOCF would have declined 66.4% and 7.5%, respectively. AMC/IFC/WE Second quarter 2006 net revenues increased 12.0% to $151.7 million, operating income rose 20.3% to $39.3 million and AOCF rose 15.5% to $57.6 million, each compared to the prior year period. As noted above, second quarter 2005 results exclude certain affiliate revenue, which was recorded in the third quarter of 2005. If this revenue had been recognized in the second quarter of 2005, AMC/IFC/WE's second quarter 2006 net revenue, operating income, and AOCF would have increased 7.2%, 2.0% and 3.4%, respectively. The second quarter 2006 results reflect: --A 13.8% increase in advertising revenue, as compared to the prior year period, driven principally by higher primetime sellout sellout The distribution of all the securities in a new issue by the selling group. rates --A 9.9% increase in affiliate revenue compared to the prior year period or a 2.7% increase if the disputed affiliate revenue described above were included in the second quarter of 2005 --Viewing subscriber increases of 7.7% at IFC, 5.0% at WE and 1.7% at AMC as compared to June 2005 --Higher contractual rights A contractual right is a claim, on other persons, that is acknowledged and perhaps reciprocated among the principals associated with that claim. Specialized contractual rights exist as part of a "contract" or agreement between persons to whom these rights belong. expense and marketing expenditures related to the premiere of new original programming Other Programming Second quarter 2006 net revenues rose 4.9% to $79.9 million, operating loss declined 5.8% to $41.0 million, and the AOCF deficit increased $4.5 million to $25.1 million, all as compared to the prior year period. The increase in net revenue was driven primarily by higher revenue at the regional sports and news networks, IFC Entertainment and fuse, partially offset by the impact of the closure of two Metro The code name for Microsoft's XPS document format. See XML Paper Specification. Channels in 2005. The increase in AOCF deficit is primarily driven by operating losses at VOOM HD Networks, regional news networks, fuse and the 2005 closure of the Metro Channels, offset by a reduction in expenses at IFC Entertainment and the growth in revenue discussed above. Madison Square Garden Madison Square Madison Square is a neighborhood on the East Side of the New York City borough of Manhattan, centered on a 6.8 acre (2.75 Hectare) public park in the New York City borough of Manhattan, named for James Madison, fourth President of the United States and co-author of the United Garden's primary businesses include: MSG MSG: see glutamic acid. Network, FSN New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , the New York Knicks, the New York Rangers The New York Rangers are a professional ice hockey team based in New York, New York, U.S.A. They are members of the Atlantic Division of the Eastern Conference of the National Hockey League (NHL). , the New York Liberty The New York Liberty is a Women's National Basketball Association (WNBA) team based in New York City. They are one of the eight original WNBA teams that began to see action in 1997, as well one of the most successful teams in WNBA history. , MSG Entertainment MSG Entertainment (Madison Square Garden Entertainment; MSGE) is a United States based entertainment promotion company and live entertainment corporate division of Madison Square Garden, L.P., which is a subsidiary of Cablevision Systems Corporations. , the MSG Arena complex and Radio City Music Hall Radio City Music Hall New York City’s famous cinema; home of the Rockettes. [Am. Hist.: NCE, 2338] See : Theater . Madison Square Garden's second quarter 2006 net revenue increased 6.9% to $162.0 million compared to the second quarter of 2005. Second quarter 2006 operating income declined $8.0 million to an operating loss of $0.4 million and AOCF declined to $18.0 million from $29.8 million, both compared to the prior year period. MSG's second quarter 2006 results were primarily impacted by: --Higher network affiliate revenue, as compared to the second quarter of 2005, despite certain retroactive Having reference to things that happened in the past, prior to the occurrence of the act in question. A retroactive or retrospective law is one that takes away or impairs vested rights acquired under existing laws, creates new obligations, imposes new duties, or attaches a rate adjustments in the second quarter of 2005 --A net increase in revenue and a net decline in AOCF resulting from the return of NHL NHL Non-Hodgkin's lymphoma, see there games after the cancellation cancellation (See: cancel) CANCELLATION. Its general acceptation, is the act of crossing a writing; it is used sometimes to signify the manual operation of tearing or destroying the instrument itself. Hyde v. Hyde, 1 Eq. Cas. Abr. 409; Rob. of the 2004-2005 hockey  Editing of this page by unregistered or newly registered users is currently disabled due to vandalism. season and the termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of the New York Mets
--Higher Knicks player related costs in the second quarter of 2006 including luxury tax expense Total Company (Results from Continuing Operations) Consolidated second quarter 2006 results are as follows: --Consolidated net revenue grew 15.6% to more than $1.4 billion, compared to the prior year period, driven primarily by the addition of more than 1.5 million Revenue Generating Units since the second quarter of 2005 in Cable Television, combined with revenue growth at all other reportable segments. --Operating income increased 75.1% to $166.5 million and consolidated AOCF increased 17.5% to $469.9 million, compared to the second quarter of 2005. The increases in operating income and AOCF reflect the net growth in revenue discussed above, partially offset by higher expenses at MSG, Rainbow's Other Programming and other corporate G&A expense. --Total company results were impacted by certain events in both the second quarter of 2006 and the second quarter of 2005 as described above. Excluding these items, the company's second quarter net revenue, operating income, and AOCF would have increased 15.0%, 38.5% and 9.2%, respectively. In addition, in April 2006 the Company paid a $10 per share special cash dividend (a total of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $2.96 billion) funded by approximately $3 billion of additional debt. Second quarter 2006 total net interest expense reflects a significant increase, as compared to the prior year period, principally as a result of the additional borrowing. 2006 Outlook The company affirms and updates the previously issued full year 2006 guidance as outlined below: Cable Television ---------------- Basic video subscribers growth + 3.5% to 4.0% Revenue Generating Unit (RGU) net additions Approximately 1.5 million Total revenue growth high teens (a) Adjusted operating cash flow growth(b) high teens (a) Capital expenditures Approximately $750 million AMC/IFC/WE ---------- Total revenue growth high single digit (a) Adjusted operating cash flow growth(b) high single digit (a) a) Percentage growth rate (2006 as compared to 2005) b) The company's definition of AOCF excludes charges or credits related to our employee stock plan and non-employee director stock plan, including those related to restricted shares, stock options and stock appreciation rights; therefore, the 2006 outlook above excludes any impact of the adoption of FASB Statement FASB Statement A standard set by the Financial Accounting Standards Board regarding a financial accounting and reporting method. Essentially, FASB statements determine the acceptable accounting practices that Certified Public Accountants use in reporting No. 123R (effective January January: see month. 1, 2006). 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 charges or credits related to our employee and non-employee director stock plans 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 exclusion /ex·clu·sion/ (eks-kloo´zhun) 1. a shutting out or elimination. 2. surgical isolation of a part, as of a segment of intestine, without removal from the body. of stock based compensation expense allows investors to better track the performance of the various operating units operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon of our business without regard to the distortive dis·tor·tive adj. Serving to distort: harsh and distortive peaks in the recorded music; a robust fortissimo without distortive vibration. effects of fluctuating fluc·tu·ate v. fluc·tu·at·ed, fluc·tu·at·ing, fluc·tu·ates v.intr. 1. To vary irregularly. See Synonyms at swing. 2. To rise and fall in or as if in waves; undulate. v. stock prices in the case of variable stock options and stock appreciation rights (for the 2005 period) or stock appreciation rights (for the 2006 period) and, in the case of restricted shares and stock options, the settlement of an obligation 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 other titles are common performance measures used by investors, analysts and peers to compare performance in our industry. Internally, we use net revenue 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 and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. liquidity presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See 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 other titles used by other companies. For a reconciliation of AOCF to operating income (loss), please see page 6 of this release. We define Free Cash Flow, which is a non-GAAP financial measure, as net cash from operating activities less capital expenditures, both of which are reported in our Statement of Cash Flows. Net cash from operating activities also 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 Indicator Anything used to predict future financial or economic trends. Notes: In the context of technical analysis, an indicator is a mathematical calculation based on a securities price and/or volume. The result is used to predict future prices. of our overall liquidity, as the amount of Free Cash Flow generated in any period is representative of cash that is available for debt service and other discretionary and non-discretionary items. It is also one of several indicators of our ability to make investments and 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 entertainment and telecommunications companies See telecom company. . Its cable television operations serve more than 3 million households in the New York metropolitan area New York–Northern New Jersey–Long Island is the most populous metropolitan area in the United States and the third most populous in the world, after Tokyo and Mexico City. . The company's advanced telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. offerings include its iO: Interactive Optimum digital television, Optimum Online Optimum Online (OOL) is a broadband Internet service provider subsidiary of Cablevision. Optimum Online serves Long Island, other parts of New York, the Bronx, Brooklyn, Westchester, parts of New Jersey, Connecticut, and Pennsylvania. high-speed Internet See broadband. , Optimum Voice digital voice-over-cable, and its Optimum Lightpath integrated business communications services. Cablevision's Rainbow Media Holdings LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control operates several successful programming businesses, including AMC, IFC, WE and other national and regional networks. In addition to its telecommunications and programming businesses, Cablevision owns Madison Square Garden and its sports teams, the New York Knicks, Rangers Rapidly deployable airborne light infantry organized and trained to conduct highly complex joint direct action operations in coordination with or in support of other special operations units of all Services. and Liberty. The company also operates New York's famed Radio City Music Hall, and owns and operates Clearview Clearview may refer to:
This earnings release contains statements that constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 industry in which it operates and the factors described in the company's filings with the Securities and Exchange Commission, including the sections entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "Risk Factors" and "Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operations" contained therein. The company disclaims any obligation to update the forward-looking statements contained herein. Cablevision's Web site: www.cablevision.com
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,
----------------------- -----------------------
2006 (a) 2005 (a) 2006 (a) 2005 (a)
----------- ----------- ----------- -----------
(As (As
restated) restated)
Revenues, net $1,423,923 $1,231,859 $2,833,281 $2,444,985
----------- ----------- ----------- -----------
Adjusted operating
cash flow (b) $ 469,945 $ 400,100 $ 866,823 $ 754,514
Stock plan expense (22,858) (29,292) (39,289) (52,742)
Restructuring
credits (charges) 2,069 (49) 2,754 (655)
----------- ----------- ----------- -----------
Operating income
before depreciation
and amortization 449,156 370,759 830,288 701,117
Depreciation and
amortization
(including
impairments) 282,653 275,690 560,058 538,379
----------- ----------- ----------- -----------
Operating income (b) 166,503 95,069 270,230 162,738
Other income
(expense):
Interest expense,
net (232,586) (185,414) (419,818) (372,747)
Equity in net income
(loss) of
affiliates 1,787 1,474 3,195 (677)
Write-off of
deferred financing
costs (3,412) - (7,999) -
Gain on sale of
affiliate interests
(c) - 65,483 - 65,483
Gain (loss) on
investments, net 70,953 (66,006) 78,191 (77,147)
Gain (loss) on
derivative
contracts, net (35,835) 66,167 (42,615) 64,535
Loss on
extinguishment of
debt (13,125) - (13,125) -
Minority interests (2,435) (1,809) (3,772) (245)
Miscellaneous, net (175) (250) 8 (113)
----------- ----------- ----------- -----------
Loss from continuing
operations before
income taxes (48,325) (25,286) (135,705) (158,173)
Income tax benefit
(expense) 22,209 (1,677) 54,867 35,512
----------- ----------- ----------- -----------
Loss from continuing
operations (26,116) (26,963) (80,838) (122,661)
Income from
discontinued
operations, net of
taxes (c) 40,702 240,761 38,316 210,322
----------- ----------- ----------- -----------
Income (loss) before
cumulative effect of
a change in
accounting principle 14,586 213,798 (42,522) 87,661
Cumulative effect of a
change in accounting
principle, net of
taxes - - (862) -
----------- ----------- ----------- -----------
Net income (loss) $ 14,586 $ 213,798 $ (43,384) $ 87,661
=========== =========== =========== ===========
Basic and diluted net
income (loss) per
share:
Loss from continuing
operations $ (0.09) $ (0.09) $ (0.29) $ (0.43)
=========== =========== =========== ===========
Income from
discontinued
operations $ 0.14 $ 0.83 $ 0.14 $ 0.73
=========== =========== =========== ===========
Cumulative effect of
a change in
accounting
principle, net of
taxes $ - $ - $ - $ -
=========== =========== =========== ===========
Net income (loss) $ 0.05 $ 0.74 $ (0.15) $ 0.30
=========== =========== =========== ===========
Basic weighted
average common
shares (in
thousands) 283,592 288,143 283,273 288,000
=========== =========== =========== ===========
(a) 2006 reflects the net operating results of FSN Chicago and Rainbow
DBS (distribution operations) as discontinued operations and 2005
reflects the net operating results of FSN Ohio, FSN Florida
(including the gain on Regional Programming Partners
restructuring), FSN Chicago and Rainbow DBS (distribution
operations) as discontinued operations.
(b) The 2006 periods include the collection of $26.5 million in June
2006 related to the resolution of a contractual programming
dispute, $23.0 million of which was due for periods prior to the
second quarter of 2006 but not recognized as a reduction to
programming costs because it was being disputed and not paid by
the affiliate.
(c) In 2005, the Company recorded a pre-tax gain in continuing
operations of $66.6 million and an after-tax gain in discontinued
operations of $265.5 million resulting from the Regional
Programming Partners restructuring. In addition, in 2006, the
Company recorded $46.1 million, net of taxes, representing the
collection in June 2006 of affiliate revenue that had not been
previously recognized due to a contractual dispute recorded 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) included in this earnings release:
-- Stock plan benefit (expense). For the 2006 period, this adjustment
eliminates the compensation cost relating to stock options, stock
appreciation rights and restricted stock granted under our
employee stock plan and non-employee director plan which has been
recorded pursuant to the adoption of FASB Statement No. 123R. For
the 2005 period, this adjustment eliminates the benefit or expense
associated with vesting and marking to market of variable stock
options and stock appreciation rights and charges related to the
issuance of restricted stock (as restated to include adjustments
resulting from the Company's stock option review).
-- Restructuring credits (charges). This adjustment eliminates the
charges or credits associated with costs related to the
elimination of positions, facility realignment, and other related
restructuring activities in all periods.
-- Depreciation and amortization (including impairments). This
adjustment eliminates depreciation and amortization (including
impairments) of long-lived assets in all periods.
Six Months Ended June 30,
-------------------------
2006 (a) 2005 (b)
------------ ------------
CONSOLIDATED FREE CASH FLOW CALCULATION (c)
-------------------------------------------
Net cash provided by operating activities (d) $ 456,427 $ 410,903
Less: capital expenditures (e) (488,526) (353,518)
------------ ------------
Consolidated free cash flow $ (32,099) $ 57,385
============ ============
(a) Excludes the net operating results of FSN Chicago and the net
operating results and capital expenditures of Rainbow DBS
(distribution operations), which are reported in discontinued
operations. Discontinued operations provided a total of $81.2
million in cash for the six months ended June 30, 2006. This
amount includes the collection of $78.0 million of affiliate
revenue in June 2006 that had not been previously recognized.
(b) Excludes the net operating results of FSN Chicago and the net
operating results and capital expenditures of FSN Ohio, FSN
Florida and Rainbow DBS (distribution operations), which are
reported in discontinued operations. Discontinued operations used
a total of $99.6 million of cash for the six months ended June 30,
2005.
(c) See non-GAAP financial measures on page 5 of this release for a
definition and discussion of Free Cash Flow.
(d) The level of net cash provided by operating activities will
continue to 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.
(e) 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
June 30,
-----------------------
%
2006 (a) 2005 (a) Change
----------- ----------- --------
Cable Television $1,008,390 $ 855,562 17.9 %
Optimum Lightpath 52,948 47,575 11.3 %
Eliminations (b) (12,288) (7,841) (56.7)%
----------- -----------
Total Telecommunications 1,049,050 895,296 17.2 %
----------- -----------
AMC/IFC/WE 151,682 135,413 12.0 %
Other Programming (c) 79,923 76,195 4.9 %
Eliminations (b) (5,730) (7,513) 23.7 %
----------- -----------
Total Rainbow 225,875 204,095 10.7 %
----------- -----------
MSG 162,044 151,565 6.9 %
Other (d) 19,726 19,948 (1.1)%
Eliminations (e) (32,772) (39,045) 16.1 %
----------- -----------
Total Cablevision $1,423,923 $1,231,859 15.6 %
=========== ===========
Six Months Ended
June 30,
-----------------------
%
2006 (a) 2005 (a) Change
----------- ----------- --------
Cable Television $1,961,046 $1,669,013 17.5 %
Optimum Lightpath 106,904 95,317 12.2 %
Eliminations (b) (25,617) (17,888) (43.2)%
----------- -----------
Total Telecommunications 2,042,333 1,746,442 16.9 %
----------- -----------
AMC/IFC/WE 297,178 270,379 9.9 %
Other Programming (c) 146,668 147,970 (0.9)%
Eliminations (b) (11,554) (13,847) 16.6 %
----------- -----------
Total Rainbow 432,292 404,502 6.9 %
----------- -----------
MSG 385,886 331,058 16.6 %
Other (d) 38,227 43,470 (12.1)%
Eliminations (e) (65,457) (80,487) 18.7 %
----------- -----------
Total Cablevision $2,833,281 $2,444,985 15.9 %
=========== ===========
(a) 2006 excludes the net revenues of FSN Chicago and 2005 excludes
the net revenues of FSN Ohio, FSN Florida, FSN Chicago and Rainbow
DBS (distribution operations), which are reported in discontinued
operations.
(b) Represents intra-segment revenues.
(c) Includes FSN Bay Area, fuse, Mag Rack, Sportskool, News 12
Networks, IFC Entertainment, VOOM HD Networks, Metro Channels
(through May 2005), Rainbow Network Communications, Rainbow
Advertising Sales Corp. and other Rainbow ventures.
(d) Represents net revenues of Clearview Cinemas and PVI Virtual
Media. In May 2005, Cablevision exchanged its 60% interest in PVI
Latin America for the 40% interest in the rest of PVI that it did
not already own.
(e) Represents inter-segment revenues.
CABLEVISION SYSTEMS CORPORATION
CONSOLIDATED RESULTS FROM CONTINUING OPERATIONS (Cont'd)
(Dollars in thousands)
(Unaudited)
OPERATING INCOME (LOSS) AND ADJUSTED OPERATING CASH FLOW
--------------------------------------------------------
Operating Income
(Loss)
---------------------
Three Months Ended
June 30,
--------------------- %
2006 (a) 2005 (a) Change
---------- ---------- --------
(As
restated)
Cable Television $202,798 $136,893 48.1 %
Optimum Lightpath (4,562) (7,040) 35.2 %
---------- ----------
Total Telecommunications 198,236 129,853 52.7 %
---------- ----------
AMC/IFC/WE 39,310 32,684 20.3 %
Other Programming (b) (40,995) (43,539) 5.8 %
---------- ----------
Total Rainbow (1,685) (10,855) 84.5 %
---------- ----------
MSG (376) 7,606 (104.9)%
Other (c) (29,672) (31,535) 5.9 %
---------- ----------
Total Cablevision $166,503 $ 95,069 75.1 %
========== ==========
Adjusted Operating
Cash Flow
--------------------
Three Months Ended
June 30,
-------------------- %
2006 (a) 2005 (a) Change
--------- --------- --------
Cable Television $423,053 $337,229 25.4 %
Optimum Lightpath 16,042 16,967 (5.5)%
--------- ---------
Total Telecommunications 439,095 354,196 24.0 %
--------- ---------
AMC/IFC/WE 57,609 49,889 15.5 %
Other Programming (b) (25,074) (20,566) (21.9)%
--------- ---------
Total Rainbow 32,535 29,323 11.0 %
--------- ---------
MSG 18,022 29,765 (39.5)%
Other (c) (19,707) (13,184) (49.5)%
--------- ---------
Total Cablevision $469,945 $400,100 17.5 %
========= =========
Operating Income
(Loss)
--------------------
Six Months Ended
June 30,
-------------------- %
2006 (a) 2005 (a) Change
--------- ---------- --------
(As
restated)
Cable Television $360,852 $254,090 42.0 %
Optimum Lightpath (11,363) (16,448) 30.9 %
--------- ----------
Total Telecommunications 349,489 237,642 47.1 %
--------- ----------
AMC/IFC/WE 80,256 80,462 (0.3)%
Other Programming (b) (85,924) (86,260) 0.4 %
--------- ----------
Total Rainbow (5,668) (5,798) 2.2 %
--------- ----------
MSG (12,685) (6,276) (102.1)%
Other (c) (60,906) (62,830) 3.1 %
--------- ----------
Total Cablevision $270,230 $162,738 66.1 %
========= ==========
Adjusted Operating
Cash Flow
--------------------
Six Months Ended
June 30,
-------------------- %
2006 (a) 2005 (a) Change
--------- ---------- --------
Cable Television $790,662 $648,515 21.9 %
Optimum Lightpath 30,075 31,074 (3.2)%
--------- ----------
Total Telecommunications 820,737 679,589 20.8 %
--------- ----------
AMC/IFC/WE 116,416 113,075 3.0 %
Other Programming (b) (56,105) (42,951) (30.6)%
--------- ----------
Total Rainbow 60,311 70,124 (14.0)%
--------- ----------
MSG 24,881 33,024 (24.7)%
Other (c) (39,106) (28,223) (38.6)%
--------- ----------
Total Cablevision $866,823 $754,514 14.9 %
========= ==========
(a) 2006 excludes the operating income (loss) and AOCF of FSN Chicago
and Rainbow DBS (distribution operations) and 2005 excludes the
operating income (loss) and AOCF of FSN Ohio, FSN Florida, FSN
Chicago and Rainbow DBS (distribution operations), which are
reported in discontinued operations.
(b) Includes FSN Bay Area, fuse, Mag Rack, Sportskool, News 12
Networks, IFC Entertainment, VOOM HD Networks, Metro Channels
(through May 2005), Rainbow Network Communications, Rainbow
Advertising Sales Corp. and other Rainbow ventures.
(c) Includes operating results of Clearview Cinemas, PVI Virtual Media
and unallocated corporate general and administrative costs.
CABLEVISION SYSTEMS CORPORATION
SUMMARY OF OPERATING STATISTICS
(Unaudited)
June 30, March 31, June 30,
CABLE TELEVISION 2006 2006 2005
---------------- ---------- ---------- ----------
Revenue Generating Units
Basic Video Customers 3,101,044 3,065,716 3,005,558
iO Digital Video Customers 2,270,748 2,127,249 1,741,483
Optimum Online High-Speed Data
Customers 1,891,442 1,806,623 1,519,864
Optimum Voice Customers 987,542 865,308 478,357
Residential Telephone Customers 6,655 7,251 8,592
---------- ---------- ----------
Total Revenue Generating Units 8,257,431 7,872,147 6,753,854
========== ========== ==========
Customer Relationships (a) 3,263,970 3,223,636 3,146,426
----------------------------------------------------------------------
Homes Passed 4,519,000 4,501,000 4,464,000
Penetration
Basic Video to Homes Passed 68.6% 68.1% 67.3%
iO Digital to Basic Penetration 73.2% 69.4% 57.9%
Optimum Online to Homes Passed 41.9% 40.1% 34.0%
Optimum Voice to Homes Passed 21.9% 19.2% 10.7%
----------------------------------------------------------------------
Monthly Churn
Basic Video 1.7% 1.5% 1.7%
iO Digital Video 2.0% 1.9% 2.3%
Optimum Online High-Speed Data 2.0% 1.7% 2.0%
----------------------------------------------------------------------
Revenue for the three months ended
(dollars in millions)
Video (b)(c) $ 645 $ 616 $ 578
High-Speed Data (b) 223 212 187
Voice (b) 85 74 36
Advertising (b) 29 23 29
Other (b)(d) 26 28 26
---------- ---------- ----------
Total Cable Television Revenue (e) $ 1,008 $ 953 $ 856
========== ========== ==========
Average Monthly Revenue per Basic
Video Customer ("RPS") (e) $109.01 $104.24 $ 95.22
----------------------------------------------------------------------
(a) Number of customers who receive at least one of the Company's
services, including business modem only customers.
(b) Certain reclassifications have been made to the prior period
revenue information to conform to the 2006 presentation.
(c) Includes analog, digital, PPV, VOD and DVR revenue.
(d) Includes installation revenue, NY Interconnect, home shopping and
other product offerings. For the second quarter 2006, installation
revenue and certain ancillary revenues attributable to the
high-speed data and voice products have been classified to Other.
Prior periods have been reclassified to conform to this
presentation.
(e) RPS is calculated by dividing average monthly cable television
GAAP revenue for the quarter by the average number of basic video
subscribers for the quarter.
======================================================================
June 30, March 31, June 30,
RAINBOW 2006 2006 2005
------- ---------- ---------- ----------
Viewing Subscribers
(in thousands)
AMC 78,600 77,500 77,300
WE 52,800 51,400 50,300
IFC 38,800 38,000 36,000
fuse 40,600 39,800 34,700
Consolidated Regional Sports (Bay Area) 3,600 3,700 3,600
Non-Consolidated Regional Sports
(New England) 3,800 3,800 3,700
CABLEVISION SYSTEMS CORPORATION
CAPITALIZATION AND LEVERAGE
(Dollars in thousands)
(Unaudited)
CAPITALIZATION
--------------
June 30, 2006
--------------
Cash and cash equivalents (a) $ 535,393
==============
Bank debt $ 5,083,750
Collateralized indebtedness 990,738
Senior notes and debentures 5,993,358
Senior subordinated notes and debentures 496,816
Capital lease obligations and notes payable 80,043
--------------
Debt $ 12,644,705
==============
LEVERAGE
--------
Debt $ 12,644,705
Less: Collateralized indebtedness of unrestricted
subsidiaries (b) (990,738)
Cash and cash equivalents (c) (413,071)
--------------
Net debt $ 11,240,896
==============
Leverage
Ratios
--------------
Consolidated net debt to AOCF leverage ratio (b)(d) 5.9
Restricted Group leverage ratio (Bank Test) (e) 5.1
CSC Holdings notes and debentures leverage ratio (e) 5.1
Cablevision senior notes leverage ratio (f) 6.0
Rainbow National Services notes leverage ratio (g) 5.4
(a) Includes $122.3 million of cash designated for the future payment
of the special cash dividend (as declared on April 7, 2006) on
certain unvested and/or unexercised equity securities issued under
the company's equity plans.
(b) Collateralized indebtedness is excluded from the leverage
calculation 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.
(c) Excludes $122.3 million of cash designated for the future payment
of the special cash dividend (as declared on April 7, 2006) on
certain unvested and/or unexercised equity securities issued under
the company's equity plans.
(d) AOCF is annualized based on the second quarter 2006 results, as
reported, except with respect to Madison Square Garden, which is
based on a trailing 12 months due to its seasonal nature.
(e) Reflects the debt to cash flow ratios applicable under CSC
Holdings' bank credit agreement and senior and senior subordinated
notes indentures, respectively, (which exclude Cablevision's $1.5
billion of senior notes and the debt and cash flows related to CSC
Holdings' unrestricted subsidiaries, including Rainbow and MSG).
The annualized AOCF (as defined) used in the ratios is $1.7
billion.
(f) Adjusts the debt to cash flow ratio as calculated under the CSC
Holdings notes and debentures leverage ratio to include
Cablevision's $1.5 billion of senior notes.
(g) Reflects the debt to cash flow ratio under the Rainbow National
Services notes indentures. The annualized AOCF (as defined) used
in the notes ratio is $258.1 million.
CABLEVISION SYSTEMS CORPORATION
CAPITAL EXPENDITURES
(Dollars in thousands)
(Unaudited)
Three Months Ended
June 30,
-------------------
2006 2005
--------- ---------
CAPITAL EXPENDITURES (a)
------------------------
Consumer premise equipment $135,237 $ 95,660
Scalable infrastructure 27,525 27,493
Line extensions 9,263 8,776
Upgrade/rebuild 1,296 1,790
Support 19,880 28,319
--------- ---------
Total Cable Television (b) 193,201 162,038
Optimum Lightpath 8,566 5,041
--------- ---------
Total Telecommunications 201,767 167,079
Rainbow 4,452 8,107
MSG 4,706 4,080
Other (Corporate, Theatres and PVI) 5,205 1,031
--------- ---------
Total Cablevision $216,130 $180,297
========= =========
Six Months Ended
June 30,
-------------------
2006 2005
--------- ---------
CAPITAL EXPENDITURES (a)
------------------------
Consumer premise equipment $301,827 $227,499
Scalable infrastructure 96,549 34,088
Line extensions 16,913 16,552
Upgrade/rebuild 2,153 2,881
Support 33,998 34,916
--------- ---------
Total Cable Television (c) 451,440 315,936
Optimum Lightpath 17,083 11,745
--------- ---------
Total Telecommunications 468,523 327,681
Rainbow 5,299 12,828
MSG 6,374 5,241
Other (Corporate, Theatres and PVI) 8,330 7,768
--------- ---------
Total Cablevision $488,526 $353,518
========= =========
(a) Excludes the capital expenditures of FSN Ohio, FSN Florida, FSN
Chicago and Rainbow DBS (distribution operations), which are
reported as discontinued operations.
(b) The increase in second quarter 2006 capital expenditures, as
compared to the prior year period, principally relates to consumer
premise equipment spending, which is primarily the result of
growth in Revenue Generating Units, offset in part by a decline in
support capital expenditures.
(c) The increase in capital expenditures for the six-month period
ending June 30, 2006, as compared to the prior year period, is
principally related to increases in consumer premise equipment and
scalable infrastructure spending. The consumer premise equipment
spending primarily relates to Revenue Generating Unit growth. The
increase in scalable infrastructure spending primarily relates to
an increase in speed to 15-megabits for the core Optimum Online
service and the introduction of the 30-megabit Optimum Online
Boost premium service.
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