Cablevision Systems Corporation Reports Third Quarter 2006 Results.BETHPAGE, N.Y. -- Cablevision Systems Corporation (NYSE NYSE See: New York Stock Exchange :CVC See CSC. ) today reported financial results for the third quarter ended September 30, 2006, including strong revenue 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 ")1growth. Consolidated net revenue for the third quarter of 2006 grew 13.4% to more than $1.4 billion compared to the prior year period, reflecting solid revenue growth in Telecommunications Services. 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. increased 25.6% to $135.4 million and AOCF increased 16.1% to $438.8 million. Operating highlights for the third 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 288,000 new video, high-speed data and voice units * Tenth consecutive quarter of basic video subscriber gains * Cable Television net revenue growth of 18.7% and AOCF growth of 17.5% as compared to the third quarter of 2005 * Average Monthly Revenue per Basic Video Customer ("RPS rps abbr. revolutions per second ") of $111.13 Cablevision President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. James L. Dolan commented: "For the third quarter, Cablevision achieved impressive gains in company-wide consolidated revenue and adjusted operating cash flow. Our success continues to be driven by strong subscriber increases in digital video, voice and data, as well as analog video The original video recording method that stores continuous waves of red, green and blue intensities. In analog video, the number of rows is fixed. There are no real columns, and the maximum detail is determined by the frequency response of the analog system. , which recorded its tenth consecutive quarter of basic subscriber growth. This led to our core cable business enjoying its highest year-over-year quarterly gain in net revenue since the company began offering its full suite of digital products in 2004 and helped us maintain our industry-leading penetration rates across all Cablevision's telecommunications services," concluded Mr. Dolan. 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 September 30, 2006 and September 30, 2005 are as follows: [TABLE OMITTED] 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 or credits. Please refer to page 4 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 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. 3. The operating income (loss) for third quarter 2005 and nine months ended September 30, 2005 have been restated as previously reported in the company's Form 10-K/A for the year ended December 31, 2005. These restatements were made to reflect additional non-cash stock-based compensation (expense) benefit, and related tax effects, relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc a number of stock option grants during the period 1997 through 2002, as well as other impacts associated with other forms of stock-based compensation. 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 third quarter 2006 rose 18.1% to $1,075.8 million, operating income increased 18.5% to $168.5 million, and AOCF grew 16.4% to $411.5 million, all compared to the prior year period. Cable Television Cable Television third quarter 2006 net revenues increased 18.7% to $1,035.5 million, operating income increased 19.1% to $174.6 million and AOCF rose 17.5% to $397.6 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 nearly 1.5 million Revenue Generating Units since the end of the third quarter of 2005. Third quarter 2006 highlights include: * Basic video customers up 9,756 or 0.3% from June 2006 and 101,736 or 3.4% from September 2005; tenth consecutive quarter of basic video subscriber gains * iO: Interactive Optimum digital video customers up 93,587 or 4.1% from June 2006 and 521,241 or 28.3% from September 2005 * 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 data customers up 72,438 or 3.8% from June 2006 and 363,446 or 22.7% from September 2005 * Optimum Voice customers up 113,086 or 11.5% from June 2006 and 499,420 or 83.1% from September 2005 * Revenue Generating Units up 288,139 or 3.5% from June 2006 and 1,483,546 or 21.0% from September 2005 * Cable Television RPS of $111.13, up $2.12 or 1.9% from the second quarter of 2006 and $14.44 or 14.9% from the third quarter of 2005 Lightpath For third quarter 2006, Lightpath net revenues increased 5.3% to $52.0 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. increased 39.8% to $6.1 million and AOCF declined 8.3% to $14.0 million, each as compared to the prior year period. The increase in net revenue is primarily attributable to growth in Ethernet data services and Optimum Voice call completion activity, offset by a decline in traditional circuit switched services. Operating loss and AOCF were impacted by higher sales and marketing costs partially offset by the increase in revenue discussed above. 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 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. Rainbow net revenues for the third quarter of 2006 increased 3.1% to $217.0 million, operating income declined 23.1% to $15.2 million and AOCF rose 3.1% to $47.5 million, all compared to the prior year period. Third quarter 2005 results include certain affiliate revenue attributable to the second quarter of 2005 that was not recognized until the third quarter of 2005 due to a contractual dispute. Excluding this revenue, third quarter 2006 net revenue would have increased 6.2% while operating income and AOCF would have grown 9.0% and 18.1%, respectively. AMC/IFC/WE tv Third quarter 2006 net revenues of $144.5 million were essentially flat compared to the same period in 2005. Operating income declined 3.4% to $51.6 million and AOCF rose 1.2% to $69.3 million, each compared to the prior year period. Excluding the 2005 revenue impact noted above, AMC/IFC/WE tv's third quarter 2006 net revenue, operating income, and AOCF would have increased 4.6%, 8.5% and 10.7%, respectively. The third quarter 2006 results reflect: * A 15.4% increase in advertising revenue, as compared to the prior year period, driven principally by higher primetime sellout rates * Viewing subscriber increases of 7.1% at IFC, 4.8% at WE tv and 4.4% at AMC (AMC's growth includes 1.8 million new Canadian New Canadian Noun Canad a recent immigrant to Canada subscribers), all compared to September 2005 * Slightly lower 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. than the prior year period, principally due to lower programming costs Other Programming Third quarter 2006 net revenues rose 9.0% to $78.5 million, operating loss increased 8.2% to $36.4 million, and the AOCF deficit decreased 2.6% to $21.8 million, all as compared to the prior year period. The increase in net revenue was driven primarily by higher revenue at the VOOM HD Networks, FSN Bay Area, and fuse. The improvement in AOCF deficit is the result of better performance at most of the Other Programming services, offset by higher losses at VOOM HD Networks. Madison Square Garden Current arenas in the National Hockey League Western Conference Eastern Conference 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, 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 third quarter 2006 net revenue declined 4.9% to $128.5 million compared to the third quarter of 2005. Third quarter 2006 operating loss increased $8.9 million to $24.6 million and AOCF decreased $7.9 million to a deficit of $6.1 million, both compared to the prior year period. The third quarter of 2005 included $13.2 million in retroactive MSG Networks affiliate fees. Excluding the impact of this 2005 retroactive item, Madison Square Garden's third quarter 2006 net revenue increased $6.5 million, operating loss decreased $4.3 million and AOCF increased $5.3 million, in each case compared to the prior year period. In addition, MSG's third quarter 2006 results were primarily impacted by: * Net higher revenues of $14.9 million and higher costs of $9.6 million from non-NHL events at Madison Square Garden and Radio City Music Hall * Lower net provisions for certain team personnel transactions (including the final resolution of the dispute with the Knicks' ex-head coach) of $2.7 million * Higher expense due to the return of National Hockey League National Hockey League (NHL) Organization of professional North American ice-hockey teams. The league was formed in 1917 by five Canadian teams; the first U.S. team, the Boston Bruins, was added in 1924. It today consists of 30 teams in two conferences and six divisions. games after the cancellation of the 2004-2005 season of $4.6 million * Lower advertising sales revenue and sublicense fees totaling $11.0 million resulting from the loss of the Mets broadcast rights agreement, offset by $11.9 million of lower broadcast rights fees (other than those related to the resumption of National Hockey League games) primarily due to the termination of the Mets broadcast rights agreement Other Matters In April 2006 the company paid a $10 per share special cash dividend (a total of approximately $2.96 billion of which $121.2 million has been set aside for the future payment of the dividend on certain equity based securities) funded by approximately $3 billion of additional debt. Third 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. On October 8, 2006, the company received a proposal from the Dolan Family Group to acquire, at a purchase price of $27.00 per share in cash, all the outstanding shares of the company's common stock, except for the shares held by the Dolan Family Group. The company's Board of Directors appointed a special transaction committee of independent directors to review the proposal. The special transaction committee has retained Willkie Farr & Gallagher LLP LLP - Lower Layer Protocol as its legal counsel and Lehman Brothers Inc. and Morgan Stanley as financial advisors. The Dolan Family Group proposal contemplates that substantially all of the purchase price in the transaction would be funded by the incurrence of additional indebtedness by the company and its subsidiaries. 2006 Outlook The company affirms the previously issued full year 2006 guidance as outlined below: [TABLE OMITTED] 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 of share-based compensation expense allows investors to better track the performance of the various operating units 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 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 liquidity presented in accordance with U.S. 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 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. 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 offerings include its iO: Interactive Optimum digital television, Optimum Online high-speed Internet, 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 tv 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 and Liberty. The company also operates New York's famed Radio City Music Hall, and owns and operates Clearview Cinemas. Additional information about Cablevision Systems Corporation is available on the Web at www.cablevision.com. This earnings release contains statements that constitute forward-looking statements 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 "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 The conference call will be Webcast live today at 10:00 a.m. EST Conference call dial-in number is (973) 935-2967 Conference call replay number (973) 341-3080/ pin #8018574 until November 15, 2006 [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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