SOURCE: Cequel Communications Holdings I, LLC

March 11, 2011 08:00 ET

Suddenlink Reports Fourth Quarter and Full Year 2010 Financial and Operating Results

ST. LOUIS, MO--(Marketwire - March 11, 2011) - Cequel Communications Holdings I, LLC ("Cequel," and together with its subsidiaries, the "Company" or "Suddenlink") today reported financial and operating results for the fourth quarter and full year 2010.

Fourth Quarter and Full Year 2010 Highlights

  • Fourth quarter pro forma revenues of $434.4 million grew 8.7% compared to the fourth quarter of the prior year. Pro forma revenues for the full year of 2010 of $1,691.8 million grew 7.7% compared to the full year of 2009.

  • Pro forma Adjusted EBITDA (as defined herein) for the fourth quarter of $161.9 million grew 7.1% compared to the fourth quarter of the prior year. Pro forma Adjusted EBITDA for the full year of 2010 was $617.7 million, an increase of 9.8% compared to the full year 2009.

  • Pro forma revenue generating units ("RGUs") increased 36,500 for the fourth quarter and 229,500 year-over-year, or an 8.1% annual gain.

  • Total pro forma average monthly revenue per basic video customer for the fourth quarter was $118.41, an increase of 11.6% compared to the fourth quarter of the prior year.

  • Bundled customers represented 58.8% of total customer relationships at December 31, 2010, an increase from 54.0% at December 31, 2009, primarily from growth in triple play customer relationships, which represented 21.0% of total customer relationships at December 31, 2010, versus 16.6% at December 31, 2009.

"We achieved great success in 2010, growing customer relationships by 6,500 homes while setting company records for net gains in total revenue-generating units and digital video units," said Suddenlink's Chairman and Chief Executive Officer Jerry Kent. "We believe that success is a direct result of our Project Imagine investments and unyielding focus on customer service."

Pro Forma Fourth Quarter 2010 Compared to Pro Forma Fourth Quarter 2009

Operating results and year-over-year changes as described below are presented on a pro forma basis to include a cable system in Greenwood, Mississippi that was acquired on August 1, 2010, and exclude two cable systems that were sold on November 30, 2010, as if those transactions had been consummated on January 1, 2009.

Fourth quarter 2010 revenues rose 8.7%, largely attributable to the increase in the number of telephone, high-speed Internet and digital video customers, video price increases, and increases in advertising revenue, offset in part by the decrease in basic video customers over the prior twelve month period and the impact of bundling and promotional discounts.

Video revenues increased 2.8%, primarily due to basic video rate increases, increased premium and pay per view service revenues, and customer growth in our digital and advanced video services, offset in part by a lower number of basic video customers, and digital customers taking fewer digital tiers. The Company lost approximately 9,800 basic video customers during the fourth quarter 2010, compared to a loss of 15,400 basic video customers during the fourth quarter 2009, and lost 28,500 basic video customers during 2010. Digital video customers increased by 104,500 during 2010 and grew by 20,500 during the fourth quarter 2010, compared with an increase of 14,300 during the same period in the prior year.

High-speed Internet revenues increased 11.0%, due to an increase of 75,500 residential high-speed Internet customers during 2010 and growth in commercial high-speed Internet services to small and medium sized businesses. Residential high-speed Internet customers grew by 12,800 during the fourth quarter 2010, as compared to a gain of 18,000 during the fourth quarter 2009. Commercial high-speed Internet customers grew by approximately 800 in the fourth quarter 2010, compared to approximately 600 in the fourth quarter 2009.

Telephone revenues increased 24.2%, primarily due to an increase of 78,000 residential telephone customers during 2010, and growth in commercial telephone services to small and medium sized businesses. Residential telephone customers grew by 13,000 during the fourth quarter 2010, as compared to a gain of 27,200 during the fourth quarter 2009. Commercial telephone customers grew by approximately 1,600 in the fourth quarter 2010, compared to approximately 1,400 in the fourth quarter 2009.

Advertising revenues increased 24.9%, largely due to higher local and national advertising sales revenues, including political advertising.

Other revenues increased 14.1% due to, among other things, increased converter rental charges for high-definition and DVR capable digital converters, increased home networking revenues, increased administrative fees associated with the underlying growth of the business, higher franchise fees consistent with video revenue increases, and increased wire maintenance revenue.

Operating costs and expenses rose 9.7%, primarily due to higher programming costs, higher telephone service costs, increased net compensation and employee related costs, including contract labor, increased pole attachment expense, increased general insurance and workers compensation expense, higher bad debt expense and $0.5 million of non-recurring acquisition related due diligence expenses.

Adjusted EBITDA (as defined herein) for the fourth quarter 2010 was $161.9 million, an increase of 7.1% from the same quarter last year, resulting in an Adjusted EBITDA margin of 37.3%.

Income from operations for the fourth quarter 2010 was $67.7 million, a decrease of 1.4%, compared to $68.6 million for the fourth quarter 2009 due to increased depreciation expense.

Net income was $3.9 million for the fourth quarter 2010, compared to a net loss of $18.8 million for the fourth quarter 2009. The net loss for the fourth quarter 2009 is primarily attributable to losses on the extinguishment of debt and the termination of interest rate swap contracts, associated with our November 2009 financing activities.

Pro Forma Full Year 2010 Compared to Pro Forma Full Year 2009

Operating results and year-over-year changes as described below are presented on a pro forma basis to include a cable system in Greenwood, Mississippi that was acquired on August 1, 2010, and exclude two cable systems that were sold on November 30, 2010, as if those transactions had been consummated on January 1, 2009.

Revenues for 2010 rose 7.7%, largely attributable to the increase in the number of telephone, high-speed Internet and digital video customers, video price increases, incremental video revenues from advanced video services, such as VOD, DVR and HDTV services, and increases in advertising revenues, offset in part by the decrease in basic video customers over the prior twelve months and the impact of bundling and promotional discounts.

Video revenues increased 2.5%, primarily due to basic video rate increases, increased premium service revenues, and customer growth in our digital and advanced video services, offset in part by a lower number of basic video customers, and digital customers taking fewer digital tiers. The Company lost approximately 28,500 basic video customers in 2010, compared to a reduction of approximately 36,300 basic video customers in 2009. Digital video customers grew by approximately 104,500 in 2010, as compared to an increase of approximately 48,500 in 2009.

High-speed Internet revenues increased 10.0%, principally due to an increase in residential high-speed Internet customers and growth in our commercial high-speed Internet services to small and medium sized businesses. Residential high-speed Internet customers grew by approximately 75,500 in 2010, as compared to a gain of approximately 75,100 customers in 2009. Commercial high-speed Internet customers grew by approximately 3,400 in 2010. Comparable commercial customer changes for the prior year are not available.

Telephone revenues increased 27.3%, primarily due to an increase in residential telephone customers and growth in our commercial telephone services to small and medium sized businesses. Residential telephone customers grew by approximately 78,000 in 2010, as compared to approximately 97,700 in 2009. Commercial telephone customers grew by approximately 5,900 in 2010. Comparable commercial customer changes for the prior year are not available.

Advertising revenues increased 15.7%, largely due to higher local and national advertising sales revenues, including political and automotive advertising.

Other revenues increased 12.5% due to, among other things, increased converter rental revenues for high-definition and DVR capable digital converters, increased home shopping revenues, increased home networking revenues, higher franchise fees consistent with video revenue increases, increased administrative fee revenues and higher broadcast retransmission fees, offset in part by a decline in installation revenue, due to timing of commercial installations and decreased equipment sales revenue, due to decreased modem sales.

Operating costs and expenses increased 6.5%, primarily due to higher programming costs, higher telephone service costs, increased net compensation and employee related costs, including contract labor, higher fuel and technical operating expenses, increased marketing expenses, and $1.8 million of non-recurring acquisition related due diligence expenses.

Adjusted EBITDA for 2010 was $617.7 million, an increase of 9.8% from 2009, resulting in an Adjusted EBITDA margin of 36.5%.

Income from operations for 2010 was $254.3 million, an increase of 9.7%, compared to $231.9 million for 2009.

Net loss was $43.2 million for 2010, compared to a net loss of $42.0 million for 2009.

Liquidity and Capital Resources

The following discussion of liquidity and capital resources is presented on an actual basis and does not include historical pro forma adjustments reflecting the acquisition of the Greenwood, Mississippi system in August 2010 or divestiture of two cable systems in November 2010.

At December 31, 2010, the Company had approximately $289.7 million in cash and cash equivalents on hand and a $200.0 million undrawn revolving credit facility, reduced by $12.6 million of outstanding letters of credit.

Capital expenditures for the three months ended December 31, 2010 were $90.5 million, compared to $84.1 million for the three months ended December 31, 2009, and $354.1 million for 2010 compared to $247.4 million for 2009. The Company's bandwidth investment plan, which the Company refers to as Project Imagine, is proceeding as planned. This investment in the Company's existing network, which will be made through 2012, is providing additional capacity to launch video on demand services into new areas, additional capacity for high definition channels and increased Internet speeds for the Company's customers and capacity to launch telephone service in a few additional communities.

Net cash flows provided by operating activities decreased to $64.8 million for the three months ended December 31, 2010, compared to $118.2 million for the three months ended December 31, 2009. This decrease is related to net changes in current assets and liabilities due to the timing of payments for interest, accrued expenses and other payables, offset in part by increased Adjusted EBITDA. Net cash flows used in investing activities, primarily consisting of capital expenditures, increased to $86.0 million for the three months ended December 31, 2010, compared to $84.1 million for the three months ended December 31, 2009, primarily as a result of capital expenditures related to Project Imagine and related success based capital expenditures, offset in part by net proceeds from the sale of two cable system during November 2010. Net cash flows used in financing activities were $5.5 million for the fourth quarter of 2010 and $31.7 million for the fourth quarter of 2009. The decrease was a result of financing costs related to the fourth quarter 2009 issuance of 8.625% senior notes due 2017 ("the Notes") and the amendment of our amended and restated credit and guaranty agreement (as amended, the "Credit Facility"). In November 2009, the Company issued $600.0 million of the Notes, net of discount, and used the net proceeds plus cash on hand to prepay $600.0 million of amounts outstanding under the Credit Facility and 2nd Lien Credit Facility and to pay certain associated fees and expenses.

Free Cash Flow (as defined herein) for the quarter and year ended December 31, 2010 was $9.4 million and $15.8 million, respectively, compared to $3.8 million and $88.7 million for the quarter and year ended December 31, 2009, respectively. The increase in Free Cash Flow for the fourth quarter 2010 as compared to 2009 is due to improved operating results, offset in part by additional capital expenditures related to Project Imagine and related success based capital expenditures. The decrease in Free Cash Flow for the full year 2010 is a result of additional capital expenditures related to Project Imagine and related success based capital expenditures and an increase in cash interest expense, offset in part by improved operating results.

The Total Leverage Ratio (Consolidated Total Debt to Adjusted Pro Forma EBITDA) for Cequel, as defined in and calculated in accordance with the indenture governing the Notes, was 5.07x at December 31, 2010.

The Total Leverage Ratio (Consolidated Total Debt to Adjusted Pro Forma EBITDA) for Cequel Communications, LLC, an indirect wholly owned subsidiary of Cequel, as defined in and calculated in accordance with the Credit Facility, was 3.13x at December 31, 2010.

Senior Note Issuance

On May 4, 2010 and January 19, 2011, the Cequel Communications Holdings I, LLC (the "Issuers") issued $600.0 million aggregate principal amount (the "May Additional Notes") and $625.0 million aggregate principal amount (the "January Additional Notes," respectively, and together with the May Additional Notes, the "Additional Notes"), respectively, of 8.625% senior notes due November 2017 under the Indenture. The Additional Notes form a part of the same series as the outstanding $600.0 million aggregate principal amount (the "Original Notes") of 8.625% Senior Notes due 2017, co-issued on November 4, 2009 by the Issuers. The Company used the proceeds of the May Additional Notes to repay in full all borrowings under our second lien credit and guaranty agreement (as amended, the "2nd Lien Credit Facility"), along with related fees and expenses of that offering, with the remaining net proceeds available for working capital and general corporate purposes. The Company used the proceeds of the January Additional Notes to repay all of the original capital contributions made by holders of preferred interests of Cequel Holdings, repay a portion of the capital contributions made by holders of common interests of Cequel Holdings, make certain payments to holders of options in and restricted common units of Cequel Holdings and pay related fees and expenses of that offering. In addition, the Company expects to use the remaining portion of the proceeds from the January Additional Notes and cash on hand to fund the NPG Acquisition.

The Company has not guaranteed the indebtedness of the Issuers nor pledged any of its assets as collateral to secure any obligations of the Issuers.

Acquisition of Broadband Systems

On August 1, 2010, the Company completed the acquisition of the Greenwood, Mississippi cable system from Windjammer Communications, LLC, purchasing the assets of the cable system, which serves approximately 8,000 basic video customers, for approximately $20.3 million.

On November 24, 2010, the Company entered into a stock purchase agreement with News-Press & Gazette Company to acquire all of the issued and outstanding capital stock of NPG Cable, Inc., Mercury Voice & Data Company and NPG Digital Phone, Inc., (collectively, the "NPG Companies"), for a purchase price of $350.0 million, subject to a working capital adjustment (the "NPG Acquisition"). The NPG acquisition is expected to close late in the first quarter or early in the second quarter of 2011.

Disposition of Broadband Systems

On November 30, 2010, the Company completed the divestiture of two cable systems serving approximately 2,800 basic video customers. Cash proceeds from these transactions were approximately $4.5 million. The Company recognized a net gain of approximately $2.9 million on the sale of these assets.

Conference Call

As previously announced, the Company will host a conference call to discuss its fourth quarter and full year results at 12:00 p.m. (Eastern Time) on Friday, March 11, 2011. The dial-in information for the earnings call is as follows:

Within the United States      866-394-9561
International                 281-312-0031
Password                      Cequel Communications
Conference ID                 42737069

A replay of this earnings call will be available at the Investor Relations link on the Company's website (www.suddenlink.com) shortly after the conclusion of the call.

During the conference call, representatives of the Company may discuss and answer one or more questions concerning the Company's business and financial matters. The responses to these questions, as well as other matters discussed during the call, may contain information that has not been previously disclosed.

Annual Report

The information in this press release should be read in conjunction with the financial statements and footnotes contained in the Company's annual report for the year ended December 31, 2010 which will be posted on the Company's website (www.suddenlink.com) on March 11, 2011.

Use of Non-GAAP Financial Measures

The Company uses certain measures that are not defined by Generally Accepted Accounting Principles ("GAAP") to evaluate various aspects of its business. Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. Adjusted EBITDA is a non-GAAP financial measure defined as net income/(loss), plus interest expense, provision for income taxes, depreciation, amortization, non-cash share based compensation expense, (gain)/loss on sale of cable assets, loss on swap termination and loss on extinguishment of debt. Free Cash Flow is a non-GAAP financial measure defined as Adjusted EBITDA, less capital expenditures and cash interest expense. Adjusted EBITDA and Free Cash Flow may not be necessarily comparable to similarly titled measures of other companies. Furthermore, Adjusted EBITDA and Free Cash Flow have limitations as analytical tools and should not be considered in isolation from, or as an alternative to, net income or loss, operating income, cash flow from operations or other combined income or cash flow data prepared in accordance with GAAP. A reconciliation of Net Loss to Adjusted EBITDA is provided in Table 9. A reconciliation of Net Cash from Operating Activities to Free Cash Flow is provided in Table 10.

The Company believes that Adjusted EBITDA and Free Cash Flow provide information useful to investors in assessing the Company's ability to fund operations, service its debt and make additional investments from internally generated funds. In addition, Adjusted EBITDA generally correlates to the covenant calculations under the Credit Facility.

Company Description

The Company, which does business as Suddenlink Communications, is the seventh largest cable broadband company in the United States, supporting the information, communication and entertainment demands of approximately 1.3 million residential customers and thousands of commercial customers in Texas, West Virginia, Louisiana, Arkansas, North Carolina, Oklahoma, and elsewhere. Suddenlink simplifies its customers' lives through one call for support, one connection, and one bill for TV, Internet, telephone, and other services.

Cautionary Note Regarding Forward-Looking Statements

Some statements in this Press Release are known as "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

Forward-looking statements may relate to, among other things:

  • competition for video, high-speed Internet and telephone customers;
  • the Company's ability to achieve anticipated customer and revenue growth and to successfully introduce new products and services;
  • the Company's ability to complete Project Imagine and other capital investment plans on time and on budget;
  • greater than anticipated effects of the current, or any future, economic downturn or other factors which may negatively affect its customers' demand for the Company's products and services;
  • increasing programming costs and delivery expenses related to the Company's products and services;
  • changes in consumer preferences, laws and regulations or technology that may cause the Company to change its operational strategies;
  • the Company's ability to effectively integrate acquisitions and to maximize expected operating efficiencies from its acquisitions;
  • the Company's substantial indebtedness;
  • the restrictions contained in the Company's financing agreements;
  • the Company's ability to generate sufficient cash flow to meet its debt service obligations;
  • fluctuations in interest rates which may cause the Company's interest expense to vary from quarter to quarter; and
  • other risks and uncertainties, including those listed under the caption "Risk Factors" in the Annual Report.

These forward-looking statements include, but are not limited to, statements about our plans, objectives, expectations and intentions and other statements contained in this Press Release that are not historical facts. When used in this Press Release, the words "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions are generally intended to identify forward-looking statements. Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results, events or developments to differ materially from those expressed or implied by these forward-looking statements, including our plans, objectives, expectations and intentions and other factors. You should not place undue reliance on such forward-looking statements, which are based on the information currently available to the Company and speak only as of the date on which this Press Release is posted on the Company's website (www.suddenlink.com). The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made on related subjects in the Company's subsequent reports furnished to holders of the Notes.

Tables:

 1   Consolidated Statements of Operations - three and twelve month periods
 2   Pro Forma Consolidated Statements of Operations - three and twelve
     month periods
 3   Condensed Consolidated Balance Sheets
 4   Condensed Consolidated Statements of Cash Flows
 5   Capital Expenditures
 6   Summary Operating Statistics
 7   Pro Forma Summary of Operating Statistics
 8   Calculation of Free Cash Flow
 9   Reconciliation of Net Loss to Adjusted EBITDA
10   Reconciliation of Net Cash from Operating Activities to Free Cash Flow
11   Reconciliation of Cash Interest Expense




TABLE 1
Cequel Communications Holdings I, LLC
Consolidated Statements of Operations (unaudited)
(in thousands)


                 Three Months Ended           Twelve Months Ended
                    December 31,                  December 31,
                 ------------------  Percent  --------------------  Percent
                   2010      2009    Change     2010       2009     Change
                 --------  --------  -------  ---------  ---------  ------
                  Actual    Actual              Actual     Actual
Revenues:
  Video          $211,098  $204,062      3.4% $ 842,799  $ 819,822     2.8%
  High Speed
   Internet       104,304    93,700     11.3%   402,250    365,338    10.1%
  Telephone        33,096    26,618     24.3%   122,764     96,329    27.4%
  Advertising
   Sales           23,064    18,388     25.4%    76,157     65,568    16.1%
  Other            63,233    55,230     14.5%   245,175    217,637    12.7%
                 --------  --------           ---------  ---------
Total Revenues    434,795   397,998      9.2% 1,689,145  1,564,694     8.0%
Costs and
 Expenses:
  Operating
   (excluding
   depreciation
   and
   amortization)  180,473   167,361     -7.8%   707,124    669,172    -5.7%
  Selling,
   general and
   administrative
   (excluding
   non-cash share
   based
   compensation
   expense)        92,304    79,843    -15.6%   364,722    334,498    -9.0%
                 --------  --------           ---------  ---------
Operating costs
 and expenses     272,777   247,204    -10.3% 1,071,846  1,003,670    -6.8%
                 --------  --------           ---------  ---------
Adjusted EBITDA   162,018   150,794      7.4%   617,299    561,024    10.0%
                 --------  --------           ---------  ---------
Adjusted EBITDA
 Margin (a)          37.3%     37.9%               36.5%      35.9%
  Depreciation
   and
   amortization    96,639    80,326    -20.3%   362,114    323,111   -12.1%
  Non-cash share
   based
   compensation
   expense            641     1,863     65.6%     5,331      7,330    27.3%
  (Gain) / loss
   on sale of
   cable assets    (3,046)      333  -1014.7%    (4,051)       100  4151.0%
                 --------  --------           ---------  ---------
Income from
 operations        67,784    68,272     -0.7%   253,905    230,483    10.2%
                 --------  --------           ---------  ---------
Interest
 expense, net     (64,858)  (66,539)     2.5%  (259,626)  (247,952)   -4.7%
Loss on swap
 termination            -    (7,873)      NM    (17,774)    (7,873) -125.8%
Loss on
 extinguishment
 of debt                -   (14,250)      NM    (16,344)   (14,250)  -14.7%
                 --------  --------           ---------  ---------
Loss before
 provision for
 income taxes       2,926   (20,390)   114.4%   (39,839)   (39,592)   -0.6%
Provision for
 income taxes       1,089     1,264     13.8%    (3,781)    (3,824)    1.1%
                 --------  --------           ---------  ---------
Net
 income/(loss)   $  4,015  $(19,126)   121.0% $ (43,620) $ (43,416)   -0.5%
                 ========  ========           =========  =========

(a) Represents Adjusted EBITDA as a percentage of total revenue.





TABLE 2
Cequel Communications Holdings I, LLC
Pro Forma Consolidated Statements of Operations (unaudited)
(in thousands)

                Three Months Ended            Twelve Months Ended
                    December 31,                   December 31,
                -------------------  Percent  --------------------  Percent
                  2010       2009    Change     2010       2009     Change
                ---------  --------  -------  ---------  ---------  ------
                Pro-Forma  Pro-Forma          Pro-Forma  Pro-Forma
                   (b)       (b)                 (b)        (b)
Revenues:
  Video         $ 210,826  $205,102      2.8% $ 844,774  $ 824,117     2.5%
  High Speed
   Internet       104,229    93,885     11.0%   402,573    366,071    10.0%
  Telephone        33,096    26,652     24.2%   122,849     96,469    27.3%
  Advertising
   Sales           23,064    18,464     24.9%    76,226     65,868    15.7%
  Other            63,184    55,365     14.1%   245,375    218,196    12.5%
                ---------  --------           ---------  ---------
Total Revenues    434,399   399,468      8.7% 1,691,797  1,570,721     7.7%
Costs and
 Expenses:
  Operating
   (excluding
   depreciation
   and
   amortization)  180,243   168,172     -7.2%   708,724    672,586    -5.4%
  Selling,
   general and
   administrative
   (excluding
   non-cash
   share based
   compensation
   expense)        92,264    80,186    -15.1%   365,353    335,696    -8.8%
                ---------  --------           ---------  ---------
Operating costs
 and expenses     272,507   248,358     -9.7% 1,074,077  1,008,282    -6.5%
                ---------  --------           ---------  ---------
Adjusted EBITDA   161,892   151,110      7.1%   617,720    562,439     9.8%
                ---------  --------           ---------  ---------
Adjusted EBITDA
 Margin (a)          37.3%     37.8%               36.5%      35.8%
  Depreciation
   and
   amortization    96,639    80,326    -20.3%   362,114    323,111   -12.1%
  Non-cash share
   based
   compensation
   expense            641     1,863     65.6%     5,331      7,330    27.3%
  (Gain) / loss
   on sale of
   cable assets    (3,046)      333  -1014.7%    (4,051)       100  4151.0%
                ---------  --------           ---------  ---------
Income from
 operations        67,658    68,588     -1.4%   254,326    231,898     9.7%
                ---------  --------           ---------  ---------
Interest
 expense, net     (64,858)  (66,539)     2.5%  (259,626)  (247,952)   -4.7%
Loss on swap
 termination            -    (7,873)      NM    (17,774)    (7,873) -125.8%
Loss on
 extinguishment
 of debt                -   (14,250)      NM    (16,344)   (14,250)  -14.7%
                ---------  --------           ---------  ---------
Loss before
 provision for
 income taxes       2,800   (20,074)   113.9%   (39,418)   (38,177)   -3.3%
Provision for
 income taxes       1,089     1,264     13.8%    (3,781)    (3,824)    1.1%
                ---------  --------           ---------  ---------
Net
 income/(loss)  $   3,889  $(18,810)   120.7% $ (43,199) $ (42,001)   -2.9%
                =========  ========           =========  =========

(a) Represents Adjusted EBITDA as a percentage of total revenue.

(b) Pro forma to include the impact of the acquisition of Greenwood, which
    occurred on August 1, 2010, and exclude the disposition of two cable 
    systems, which occurred on November 30, 2010, as if those transactions
    had been consummated on January 1, 2009.





TABLE 3
Cequel Communications Holdings I, LLC
Condensed Consolidated Balance Sheets (unaudited)
(in thousands)


                                                 December 31,  December 31,
                                                     2010          2009
                                                 ------------  ------------
ASSETS
Cash and cash equivalents                        $    289,685  $    257,003
Accounts receivable, net                              148,280       127,896
Prepaid expenses                                       16,072        14,460
                                                 ------------  ------------
  Total current assets                                454,037       399,359

Property, plant and equipment, net                  1,328,479     1,302,297
Intangible assets, net                              2,083,376     2,096,122
Other assets, net                                      48,346        60,033
                                                 ------------  ------------
  Total assets                                   $  3,914,238  $  3,857,811
                                                 ============  ============

LIABILITIES AND MEMBER'S EQUITY
Accounts payable and accrued expenses            $    200,219  $    234,610
Deferred revenue                                      112,239       101,945
Current portion of long-term debt                      20,382         5,096
Other current liabilities                              80,248        91,691
                                                 ------------  ------------
  Total current liabilities                           413,088       433,342

Long-term debt, less current portion                3,145,739     3,040,745
Deferred tax liabilities                               25,185        23,299
Other long-term liabilities                            32,756        83,667
                                                 ------------  ------------
  Total liabilities                                 3,616,768     3,581,053

Total member's equity                                 297,470       276,758
                                                 ------------  ------------
  Total liabilites and member's equity           $  3,914,238  $  3,857,811
                                                 ============  ============





TABLE 4
Cequel Communications Holdings I, LLC
Condensed Consolidated Statements of Cash Flows (unaudited)        
(in thousands)

                                 Three Months Ended   Twelve Months Ended
                                    December 31,          December 31,
                                --------------------  --------------------
                                  2010       2009       2010       2009
                                ---------  ---------  ---------  ---------
Net cash provided by operating
 activities                     $  64,782  $ 118,181  $ 196,686  $ 392,003
Net cash used in investing
 activities                       (86,016)   (84,114)  (373,923)  (246,645)
Net cash (used in)/provided by
 financing activities              (5,489)   (31,697)   209,919    (58,872)
                                ---------  ---------  ---------  ---------
(Decrease)/increase in cash and
 cash equivalents                 (26,723)     2,370     32,682     86,486
Cash and cash equivalents,
 beginning of period              316,408    254,633    257,003    170,517
                                ---------  ---------  ---------  ---------
Cash and cash equivalents, end
 of period                      $ 289,685  $ 257,003  $ 289,685  $ 257,003
                                =========  =========  =========  =========





TABLE 5
Cequel Communications Holdings I, LLC
Capital Expenditures (unaudited)
(in thousands)

                                 Three Months Ended   Twelve Months Ended
                                   December 31,           December 31,
                                --------------------  --------------------
                                  2010       2009       2010       2009
                                ---------  ---------  ---------  ---------

Customer premise equipment      $  20,896  $  13,514  $ 118,024  $  66,747
Scalable infrastructure            10,318     36,035     40,479     56,549
Line extensions                       973      1,185      6,151      5,602
Upgrade/rebuild                     6,068      4,962     27,081      6,445
Commercial                          9,561      3,250     21,439     12,696
Support capital                    42,683     25,147    140,950     99,347
                                ---------  ---------  ---------  ---------
                                $  90,499  $  84,093  $ 354,124  $ 247,386
                                =========  =========  =========  =========







TABLE 6
Cequel Communications Holdings I, LLC
Summary Operating Statistics (unaudited)
Approximate as of:

                               December 31,   September 30,  December 31,
                                   2010           2010           2009
                               -------------  -------------  -------------
                                   Actual         Actual         Actual
                               -------------  -------------  -------------
Revenue Generating Units
 (RGU):
Basic video customers (a)          1,215,700      1,228,300      1,239,100
Digital video customers (b)          651,400        631,400        545,100
Residential high-speed
 Internet customers (c)              826,300        814,600        749,100
Residential telephone
 customers (d)                       358,700        345,700        280,400
                               -------------  -------------  -------------
Total RGUs (e)                     3,052,100      3,020,000      2,813,700

Quarterly net customer
 additions (losses)                Actual         Actual         Actual
                               -------------  -------------  -------------
Basic video customers                (12,600)         3,200        (15,400)
Digital video customers               20,000         36,000         14,300
Residential high-speed
 Internet customers                   11,700         27,600         17,800
Residential telephone
 customers                            13,000         22,900         27,200
                               -------------  -------------  -------------
Total RGUs (e)                        32,100         89,700         43,900

Average Revenue per Unit
 (ARPU):                           Actual         Actual         Actual
                               -------------  -------------  -------------
Pro forma average monthly
 revenue per basic video
 customer (f)                  $      118.32  $      114.83  $      106.19

Customer Relationships             Actual         Actual         Actual
                               -------------  -------------  -------------
Total customer
 relationships (g)                 1,273,000      1,277,800      1,259,700
Double play relationships (h)        481,700        482,300        472,200
Double play penetration (i)             37.8%          37.7%          37.5%
Triple play relationships (j)        266,700        256,600        209,500
Triple play penetration (k)             21.0%          20.1%          16.6%
Total bundled customers (l)          748,400        738,900        681,700
Bundled penetration (m)                 58.8%          57.8%          54.1%

Estimated Customer Penetration     Actual         Actual         Actual
                               -------------  -------------  -------------
Estimated basic
 penetration (n)                        45.4%          45.7%          46.9%
Estimated digital
 penetration (o)                        53.6%          51.4%          44.0%
Estimated residential
 high-speed Internet
 penetration (p)                        31.8%          31.3%          29.2%
Estimated residential
 telephone penetration (q)              16.3%          15.9%          13.4%

Commercial Customers               Actual         Actual         Actual
                               -------------  -------------  -------------
Commercial Internet (r)               39,800         39,000         36,400
Commercial fiber (s)                     970            910            800
Commercial telephone (t)              11,100          9,500          5,200







TABLE 7
Cequel Communications Holdings I, LLC
Pro Forma Summary Operating Statistics (unaudited)
Approximate as of:

                               December 31,   September 30,  December 31,
                                   2010           2010           2009
                               -------------  -------------  -------------
                                   Actual     Pro Forma (u)  Pro Forma (u)
                               -------------  -------------  -------------
Revenue Generating
 Units (RGU):
Basic video customers (a)          1,215,700      1,225,500      1,244,200
Digital video customers (b)          651,400        630,900        546,900
Residential high-speed
 Internet customers (c)              826,300        813,500        750,800
Residential telephone
 customers (d)                       358,700        345,700        280,700
                               -------------  -------------  -------------
Total RGUs (e)                     3,052,100      3,015,600      2,822,600

Quarterly net customer
 additions (losses)            Pro Forma (u)  Pro Forma (u)  Pro Forma (u)
                               -------------  -------------  -------------
Basic video customers                 (9,800)        (4,900)       (15,400)
Digital video customers               20,500         33,900         14,300
Residential high-speed
 Internet customers                   12,800         24,600         18,000
Residential telephone
 customers                            13,000         22,400         27,200
                               -------------  -------------  -------------
Total RGUs (e)                        36,500         76,000         44,100

Average Revenue per Unit
 (ARPU):                       Pro Forma (u)  Pro Forma (u)  Pro Forma (u)
                               -------------  -------------  -------------
Pro forma average monthly
 revenue per basic video
 customer (f)                  $      118.41  $      114.84  $      106.14

Customer Relationships                Actual  Pro Forma (u)  Pro Forma (u)
                               -------------  -------------  -------------
Total customer
 relationships (g)                 1,273,000      1,274,800      1,266,500
Double play relationships (h)        481,700        481,500        473,700
Double play penetration (i)             37.8%          37.8%          37.4%
Triple play relationships (j)        266,700        256,600        209,800
Triple play penetration (k)             21.0%          20.1%          16.6%
Total bundled customers (l)          748,400        738,100        683,500
Bundled penetration (m)                 58.8%          57.9%          54.0%

Estimated Customer Penetration     Actual     Pro Forma (u)  Pro Forma (u)
                               -------------  -------------  -------------
Estimated basic
 penetration (n)                        45.4%          45.7%          46.8%
Estimated digital
 penetration (o)                        53.6%          51.5%          44.0%
Estimated residential
 high-speed Internet
 penetration (p)                        31.8%          31.4%          29.1%
Estimated residential
 telephone penetration (q)              16.3%          15.9%          13.3%

Commercial Customers               Actual         Actual         Actual
                               -------------  -------------  -------------
Commercial Internet (r)               39,800         39,000         36,400
Commercial fiber (s)                     970            910            800
Commercial telephone (t)              11,100          9,500          5,200



(a) Basic video customers include all residential customers who receive
    video cable services.  Also included are commercial or multi-dwelling
    accounts that are converted to equivalent basic units ("EBUs") by
    dividing the total bulk billed basic revenues of a particular system by
    the most prevalent retail rate paid by non-bulk basic customers in that
    market for a comparable level of service.  This conversion method is
    consistent with methodology used in determining costs paid to
    programmers.  Our methodology of calculating the number of basic video
    customers may not be identical to those used by other companies
    offering similar services.
(b) Digital video customers include all basic video customers that have one
    or more digital set-top boxes or cable cards in use.
(c) Residential high-speed Internet customers include all residential
    customers who subscribe to our high-speed Internet service.  Excluded
    from these totals are all commercial high-speed Internet customers,
    including small and medium sized commercial cable modem accounts and
    customers who take our scalable, fiber-based enterprise network
    services.
(d) Residential telephone customers include all residential customers who
    subscribe to our telephone service.  Residential customers who take
    multiple telephone lines are only counted once in the total.  Excluded
    from these totals are all commercial telephone customers.
(e) Total RGUs represents the sum of basic video, digital video,
    residential high-speed Internet and residential telephone customers.
(f) Average revenue per basic video customer represents the total revenue
    for a quarter, divided by three, divided by the average basic video
    customers for the quarter.
(g) Customer relationships represent the number of residential customers
    who receive at least one level of service, encompassing basic video,
    high-speed Internet or telephone services, without regard to the number
    of services purchased. For example, a residential customer who
    purchases only high-speed Internet service and no video service will
    count as one customer relationship, and a residential customer who
    purchases both video and high-speed Internet services will also count
    as only one customer relationship.
(h) Double play customer numbers reflect residential customers who
    subscribe to two of our core services (basic video, high-speed Internet
    and telephone).
(i) Double play penetration represents double play customers as a
    percentage of customer relationships.
(j) Triple play customer numbers reflect residential customers who
    subscribe to all three of our core services (basic video, high-speed
    Internet and telephone).
(k) Triple play penetration represents triple play customers as a
    percentage of customer relationships.
(l) Total bundled customers represents the sum of double play and
    triple play customers.
(m) Bundled penetration represents total bundled customers as a percentage
    of customer relationships.
(n) Estimated basic penetration is calculated as basic video customers
    divided by the estimated total homes passed of the Company.
(o) Estimated digital penetration is calculated as digital video customers
    divided by basic video customers.
(p) Estimated residential high-speed Internet penetration is calculated as
    residential high-speed Internet customers divided by the estimated
    homes passed of the Company where residential high-speed Internet
    service is currently available.
(q) Estimated residential telephone penetration is calculated as
    residential telephone customers divided by the estimated homes passed
    of the Company where residential telephone service is currently
    available.
(r) Commercial Internet customers consist of commercial accounts that
    receive high-speed Internet service via a cable modem.  Commercial
    Internet customers are not included in Total RGUs.
(s) Commercial fiber customers are commercial accounts that receive
    broadband service optically, via fiber connections.  Commercial fiber
    customers are not included in Total RGUs.
(t) Commercial telephone customers are commercial accounts that subscribe
    to our telephone service.  Commercial telephone customers are not
    included in Total RGUs.
(u) Pro forma to include the impact of the acquisition of Greenwood, which
    occurred on August 1, 2010, and exclude the disposition of two cable
    systems, which occurred on November 30, 2010, as if those transactions
    had been consummated on January 1, 2009.





TABLE 8
Cequel Communications Holdings I, LLC
Calculation of Free Cash Flow (unaudited)
(in thousands)

                                 Three Months Ended   Twelve Months Ended
                                    December 31,          December 31,
                                --------------------  --------------------
                                  2010       2009       2010       2009
                                ---------  ---------  ---------  ---------

Adjusted EBITDA                 $ 162,018  $ 150,794  $ 617,299  $ 561,024
Capital expenditures              (90,499)   (84,093)  (354,124)  (247,386)
Cash interest expense             (62,087)   (62,928)  (247,364)  (224,949)
                                ---------  ---------  ---------  ---------
Free Cash Flow                  $   9,432  $   3,773  $  15,811  $  88,689
                                =========  =========  =========  =========






TABLE 9
Cequel Communications Holdings I, LLC
Reconciliation of Net Loss to Adjusted EBITDA (unaudited)
(in thousands)

                                 Three Months Ended   Twelve Months Ended
                                    December 31,          December 31,
                                --------------------  --------------------
                                  2010       2009       2010       2009
                                ---------  ---------  ---------  ---------
Net income/(loss)               $   4,015  $ (19,126) $ (43,620) $ (43,416)
  Add back:
  Interest expense, net            64,858     66,539    259,626    247,952
  Provision for income taxes       (1,089)    (1,264)     3,781      3,824
  Depreciation and amortization    96,639     80,326    362,114    323,111
  Non-cash share based
   compensation                       641      1,863      5,331      7,330
  (Gain)/loss on sale of cable
   assets                          (3,046)       333     (4,051)       100
  Loss on swap termination              -      7,873     17,774      7,873
  Loss on extinguishment of
   debt                                 -     14,250     16,344     14,250
                                ---------  ---------  ---------  ---------
Adjusted EBITDA                 $ 162,018  $ 150,794  $ 617,299  $ 561,024
                                =========  =========  =========  =========






TABLE 10
Cequel Communications Holdings I, LLC
Reconciliation of Net Cash from Operating Activities to Free Cash Flow
(unaudited)
(in thousands)

                                 Three Months Ended   Twelve Months Ended
                                    December 31,          December 31,
                                --------------------  --------------------
                                  2010       2009       2010       2009
                                ---------  ---------  ---------  ---------

Net cash provided by operating
 activities                     $  64,782  $ 118,181  $ 196,686  $ 392,003
Capital expenditures              (90,499)   (84,093)  (354,124)  (247,386)
Current income tax expense         (1,110)      (520)     1,895      1,879
Interest income                      (113)       (82)      (372)      (550)
Write-off of deferred financing
 costs                                  -          -     (6,599)         -
New borrowing bond premium              -          -    (12,000)         -
Repayment of paid in kind debt
 interest                               -          -    112,254          -
Loss on swap termination                -      7,873     17,774      7,873
Loss on extinguishment of debt          -      6,000     16,344      6,000
Changes in assets and
 liabilities, net                  36,372    (43,586)    43,953    (71,130)
                                ---------  ---------  ---------  ---------
Free Cash Flow                  $   9,432  $   3,773  $  15,811  $  88,689
                                =========  =========  =========  =========





TABLE 11
Cequel Communications Holdings I, LLC
Reconciliation of Cash Interest Expense (unaudited)
(in thousands)
                                 Three Months Ended   Twelve Months Ended
                                    December 31,          December 31,
                                --------------------  --------------------
                                  2010       2009       2010       2009
                                ---------  ---------  ---------  ---------

Interest expense, net           $  64,858  $  66,539  $ 259,626  $ 247,952
Add: interest income                  113         82        372        550
Add: bond premium amortization        301          -        778          -
Less: deferred financing
 amortization                      (2,844)    (3,462)   (12,004)   (12,332)
Less: bond discount
 amortization                        (341)      (231)    (1,408)      (231)
Less: non-cash paid-in kind
 interest expense                       -          -          -    (10,990)
                                ---------  ---------  ---------  ---------
Cash interest expense           $  62,087  $  62,928  $ 247,364  $ 224,949
                                =========  =========  =========  =========


Contact Information

  • Cequel contact information:

    Mary Meduski
    EVP - Chief Financial Officer
    314-315-9603

    Ralph Kelly
    SVP - Treasurer
    314-315-9403

    Mike Pflantz
    VP - Corporate Finance
    314-315-9341