SOURCE: Cequel Communications Holdings I, LLC

November 12, 2010 08:00 ET

Suddenlink Reports Third Quarter and Year-to-Date 2010 Financial and Operating Results

ST. LOUIS, MO--(Marketwire - November 12, 2010) - Cequel Communications Holdings I, LLC ("Cequel," and together with its subsidiaries, the "Company" or "Suddenlink") today reported financial and operating results for the three and nine months ended September 30, 2010.

Third Quarter Pro Forma Highlights

  • Third quarter pro forma revenues of $423.2 million grew 7.6% compared to the third quarter of the prior year. Pro forma revenues for the first nine months of 2010 of $1,259.2 million grew 7.3% compared to the first nine months of the prior year.

  • Pro forma Adjusted EBITDA (as defined herein) for the third quarter of $153.3 million grew 9.8% compared to the third quarter of the prior year. Pro forma adjusted EBITDA for the first nine months of 2010 was $456.4 million, an increase of 10.8% compared to the first nine months of the prior year.

  • Pro forma Revenue generating units ("RGUs") increased 76,200 for the third quarter and 236,900 year-over-year, or an 8.5% annual gain.

  • Total pro forma average monthly revenue per basic video customer for the third quarter was $114.74, an increase of 10.7% compared to the third quarter of the prior year.

  • Bundled customers represented 57.8% of total customer relationships at September 30, 2010, an increase from 52.0% at September 30, 2009, primarily from growth in triple play customer relationships, which represented 20.1% of total customer relationships at September 30, 2010, versus 15.1% at September 30, 2009.

"We achieved exceptional financial and operating results in the third quarter and a record-setting pace for net RGU gains in the first nine months of the year," said Suddenlink Chairman and CEO Jerry Kent. "These results continue to validate the strategic investments we're making in our employees, infrastructure, services, and the experience customers have with Suddenlink."

Pro Forma Third Quarter 2010 Compared to Pro Forma Third Quarter 2009

Operating results and year-over-year changes as described below are presented on a pro forma basis to include the acquisition of a cable system in Greenwood, Mississippi, which occurred on August 1, 2010, as if that transaction had been consummated on January 1, 2009.

Third quarter 2010 revenues rose 7.6%, largely attributable to the increase in the number of telephone, high-speed Internet and digital video customers, video price increases implemented in late 2009 and first quarter 2010, and increases in advertising revenue, offset in part by the decrease in basic video customers over the past twelve months and the impact of bundling and promotional discounts.

Video revenues increased 2.1%, primarily due to basic rate increases, increases in premium service revenue, and customer growth in our digital and advanced video services, offset in part by a loss of approximately 34,400 basic video customers over the past twelve months. Basic video customers decreased by approximately 4,900 during the third quarter 2010, compared with a loss of approximately 8,400 during the same period in the prior year. Digital video customers increased by approximately 98,300 over the last twelve months and increased by approximately 33,900 during the third quarter 2010, compared with an increase of approximately 16,200 during the same period in the prior year.

High-speed Internet revenues increased 10.8%, due to an increase in residential high-speed Internet customers of approximately 80,800 over the last twelve months, and growth in commercial high-speed Internet services to small and medium sized businesses, as we added approximately 3,100 commercial high-speed Internet customers over the last twelve months. Residential high-speed Internet customers grew by approximately 24,700 during the third quarter 2010, as compared to a gain of approximately 24,300 during the third quarter 2009.

Telephone revenues increased 26.0%, primarily due to an increase in residential telephone customers of approximately 92,200 over the last twelve months, and growth in commercial telephone services to small and medium sized businesses, as we added approximately 5,700 commercial telephone customers over the last twelve months. This growth was offset in part by average revenue per unit declines in our residential telephone product as a result of bundling and promotional discounts. Residential telephone customers grew by 22,500 during the third quarter 2010, as compared to a gain of 26,300 during the third quarter 2009.

Advertising revenues increased 14.9%, due to higher local and national advertising sales revenues, including political and automotive advertising.

Other revenues increased 12.1%, due to, among other things, increased converter rental revenues for high-definition and DVR capable digital converters, increased home networking revenues, and higher franchise and administrative fees associated with the underlying growth of the business.

Operating costs and expenses rose 6.3%, primarily due to higher programming costs, increased telephone service costs, and increased net compensation and employee related expenses, increased contract labor expense, and higher bad debt expenses.

Adjusted EBITDA for the third quarter 2010 was $153.3 million, an increase of 9.8% from the same quarter last year, resulting in an Adjusted EBITDA margin of 36.2%, an increase of 70 basis points.

Income from operations for the third quarter 2010 was $59.0 million, an increase of 0.1% compared to $58.9 million for the third quarter 2009, as growth in depreciation expense limited the overall growth in income from operations.

Net loss was $5.8 million for the third quarter 2010 compared to a net loss of $7.2 million for the third quarter 2009.

Liquidity and Capital Resources

The following discussion of liquidity and capital resources is presented on an actual basis and does not include historical results or pro forma adjustments for the Greenwood acquisition.

At September 30, 2010, the Company had approximately $316.4 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 were $87.4 million and $54.9 million for the three months ended September 30, 2010 and 2009, respectively. 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 expected to provide 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.

During the second quarter 2010, the Company increased its forecast of capital expenditures to be approximately $345.0 to $355.0 million for the full year 2010. The increase in the capital expenditure range relates to increased capital expenditures for the Greenwood, Mississippi system acquired on August 1, 2010, additional commercial cellular backhaul opportunities providing fiber connectivity to carrier cell sites, and digital subscriber growth in excess of our original expectations and historical trends. There are no further updates to this forecast.

Net cash provided by operating activities was $95.8 million for the three months ended September 30, 2010, compared to $81.8 million for the three months ended September 30, 2009. This change was primarily due to increases in operating income before depreciation and amortization expense and net changes in current assets and liabilities due to timing of payments for interest, accrued expenses and other payables. Net cash used in investing activities was $107.7 million for the three months ended September 30, 2010, compared to $54.9 million for the three months ended September 30, 2009, primarily as a result of capital expenditures related to Project Imagine and related success based capital expenditures and the Greenwood acquisition. Net cash used in financing activities was $0.1 million for the three months ended September 30, 2010, compared to $12.5 million for the three months ended September 30, 2009. The decrease was a result of the purchase of interest rate caps and repayment of long-term debt in 2009 that did not occur in the same period in 2010.

Free Cash Flow (as defined herein) for the quarter ended September 30, 2010 was $4.3 million compared to $24.9 million for the quarter ended September 30, 2009. The decrease in Free Cash Flow for the third quarter 2010 as compared to 2009 is due to 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 in 2010.

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 (as defined below), was 5.2x at September 30, 2010. The Total Leverage Ratio for Cequel net of cash on hand was 4.7x at September 30, 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 amended and restated credit and guaranty agreement, was 3.2x at September 30, 2010.

Senior Note Issuance

On May 4, 2010, Cequel and its subsidiary co-issuer Cequel Capital Corporation (together the "Issuers") issued an additional $600.0 million aggregate principal amount of senior notes due November 2017 (the "Additional Notes"). The Additional Notes bear interest at 8.625% and were sold at an offering price of 102% yielding an effective interest rate of 8.167% or yield to maturity effective interest rate of 8.262%. Suddenlink used the net proceeds of the Additional Notes, contributed to Suddenlink by the Issuers, to prepay the entire outstanding balance of $487.3 million of the 2nd Lien Credit Facility, along with related fees and expenses, with the remaining net proceeds used for working capital and general corporate purposes.

Acquisition of Broadband System

On August 1, 2010, the Company completed the acquisition of the Greenwood, Mississippi cable system from Windjammer Communications, LLC, purchasing the assets of the broadband system, which serves approximately 8,000 basic video customers, for approximately $20.3 million plus adjustments for working capital items as defined in the asset purchase agreement.

Disposition of Broadband System

On October 1, 2010, the Company signed an agreement to sell cable systems in Salem, West Virginia and Oakland, Maryland, serving approximately 2,800 customers, for a sale price of approximately $4.5 million, subject to adjustment. The sale is expected to close in the fourth quarter of 2010.

Conference Call

As previously announced, the Company will host a conference call to discuss its third quarter results at 12:00 p.m. (Eastern Time) on Friday, November 12, 2010. 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                20474099

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.

Quarterly Report

The information in this press release should be read in conjunction with the financial statements and footnotes contained in the Company's quarterly report for the quarter ended September 30, 2010, which will be posted on the Company's website (www.suddenlink.com) on November 12, 2010.

Use of Non-GAAP Financial Measures

The Company uses certain measures that are not defined by Generally Accepted Accounting Principles, or 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 loss, plus interest expense, provision for income taxes, depreciation, amortization, non-cash share based compensation expense, loss on swap termination, loss on extinguishment of debt and (gain)/loss on sale of cable assets. 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 provided by 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 Company's 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 as described;
  • greater than anticipated effects of the current, or future, economic downturns or other factors which may negatively affect 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 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; and
  • fluctuations in interest rates which may cause the Company's interest expense to vary from quarter to quarter.

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 nine month periods
2     Pro Forma Consolidated Statements of Operations - three and nine
      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 Operating Statistics
8     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          Nine Months Ended
                      September 30,               September 30,
                   ------------------ Percent --------------------  Percent
                     2010      2009   Change    2010       2009     Change
                   --------  --------  -----  ---------  ---------  ------
Revenues:
 Video             $209,055  $203,814    2.6% $ 631,701  $ 615,760     2.6%
 High Speed
  Internet          101,209    91,150   11.0%   297,946    271,638     9.7%
 Telephone           31,575    25,028   26.2%    89,668     69,710    28.6%
 Advertising Sales   18,361    15,908   15.4%    53,093     47,180    12.5%
 Other               62,308    55,442   12.4%   181,942    162,407    12.0%
                   --------  --------         ---------  ---------
Total Revenues      422,508   391,342    8.0% 1,254,350  1,166,695     7.5%

Costs and
 Expenses:
 Operating
  (excluding
  depreciation and
  amortization)     176,682   168,911   -4.6%   526,651    501,811    -5.0%
 Selling, general
  and administrative
  (excluding
  non-cash share
  based compensation
  expense)           92,722    83,411  -11.2%   272,418    254,656    -7.0%
                   --------  --------         ---------  ---------
Operating costs
 and expenses       269,404   252,322   -6.8%   799,069    756,467    -5.6%
                   --------  --------         ---------  ---------
Adjusted EBITDA     153,104   139,020   10.1%   455,281    410,228    11.0%
                   --------  --------         ---------  ---------
Adjusted EBITDA
 Margin (a)            36.2%     35.5%             36.3%      35.2%

 Depreciation and
  amortization       94,179    79,003  -19.2%   265,475    242,785    -9.3%
 Non-cash share
  based compensation
  expense               880     1,836   52.1%     4,690      5,467    14.2%
 Gain on sale of
  cable assets         (758)     (177) 328.2%    (1,005)      (233) -331.3%
                   --------  --------         ---------  ---------
Income from
 operations          58,803    58,358    0.8%   186,121    162,209    14.7%
                   --------  --------         ---------  ---------
Interest expense,
 net                (64,217)  (62,066)  -3.5%  (194,768)  (181,412)   -7.4%
Loss on swap
 termination              -         -     NM    (17,774)         -      NM
Loss on
 extinguishment of
 debt                     -         -     NM    (16,344)         -      NM
                   --------  --------         ---------  ---------
Loss before
 provision for
 income taxes        (5,414)   (3,708) -46.0%   (42,765)   (19,203) -122.7%
Provision for
 income taxes          (523)   (4,023)  87.0%    (4,870)    (5,087)    4.3%
                   --------  --------         ---------  ---------
Net loss           $ (5,937) $ (7,731)  23.2% $ (47,635) $ (24,290)  -96.1%
                   ========  ========         =========  =========

(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          Nine Months Ended
                      September 30,               September 30,
                   ------------------ Percent --------------------  Percent
                     2010      2009   Change    2010       2009     Change
                   --------  --------  -----  ---------  ---------  ------
                  Pro Forma  Pro Forma        Pro Forma  Pro Forma
                     (b)       (b)               (b)        (b)
Revenues:
 Video             $209,553  $205,280    2.1% $ 635,194  $ 620,305     2.4%
 High Speed
  Internet          101,312    91,417   10.8%   298,656    272,456     9.6%
 Telephone           31,587    25,061   26.0%    89,752     69,817    28.6%
 Advertising Sales   18,370    15,984   14.9%    53,163     47,406    12.1%
 Other               62,374    55,646   12.1%   182,406    163,036    11.9%
                   --------  --------         ---------  ---------
Total Revenues      423,196   393,388    7.6% 1,259,171  1,173,020     7.3%
Costs and
 Expenses:
 Operating
  (excluding
  depreciation and
  amortization)     177,075   170,012   -4.2%   529,409    505,257    -4.8%
 Selling, general
  and administrative
  (excluding
  non-cash share
  based compensation
  expense)           92,870    83,846  -10.8%   273,377    255,846    -6.9%
                   --------  --------         ---------  ---------
Operating costs
 and expenses       269,945   253,858   -6.3%   802,786    761,103    -5.5%
                   --------  --------         ---------  ---------
Adjusted EBITDA     153,251   139,530    9.8%   456,385    411,917    10.8%
                   --------  --------         ---------  ---------
Adjusted EBITDA
 Margin (a)            36.2%     35.5%             36.2%      35.1%
 Depreciation and
  amortization       94,179    79,003  -19.2%   265,475    242,785    -9.3%
 Non-cash share
  based compensation
  expense               880     1,836   52.1%     4,690      5,467    14.2%
 Gain on sale of
  cable assets         (758)     (177) 328.2%    (1,005)      (233) -331.3%
                   --------  --------         ---------  ---------
Income from
 operations          58,950    58,868    0.1%   187,225    163,898    14.2%
                   --------  --------         ---------  ---------
Interest expense,
 net                (64,217)  (62,066)  -3.5%  (194,768)  (181,412)   -7.4%
Loss on swap
 termination              -         -     NM    (17,774)         -      NM
Loss on
 extinguishment of
 debt                     -         -     NM    (16,344)         -      NM
                   --------  --------         ---------  ---------
Loss before
 provision for
 income taxes        (5,267)   (3,198) -64.7%   (41,661)   (17,514) -137.9%
Provision for
 income taxes          (523)   (4,023)  87.0%    (4,870)    (5,087)    4.3%
                   --------  --------         ---------  ---------
Net loss           $ (5,790) $ (7,221)  19.8% $ (46,531) $ (22,601) -105.9%
                   ========  ========         =========  =========

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

(b) Pro forma to include the acquisition of the Greenwood, Mississippi
    cable system from Windjammer Communications, LLC on August 1, 2010, as
    if that transaction had been consummated on January 1, 2009.





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

                                                 September 30, December 31,
                                                      2010         2009
                                                  ------------ ------------
ASSETS
Cash and cash equivalents                         $    316,408 $    257,003
Accounts receivable, net                               142,576      127,896
Prepaid expenses                                        20,789       14,460
                                                  ------------ ------------
  Total current assets                                 479,773      399,359

Property, plant and equipment, net                   1,328,129    1,302,297
Intangible assets, net                               2,088,024    2,096,122
Other assets, net                                       50,032       60,033
                                                  ------------ ------------
  Total assets                                    $  3,945,958 $  3,857,811
                                                  ============ ============

LIABILITIES AND MEMBER'S EQUITY
Accounts payable and accrued expenses             $    237,278 $    234,610
Deferred revenue                                       106,731      101,945
Current portion of long-term debt                       20,382        5,096
Other current liabilities                               85,269       91,691
                                                  ------------ ------------
  Total current liabilities                            449,660      433,342

Long-term debt, less current portion                 3,150,795    3,040,745
Deferred tax liabilities                                25,164       23,299
Other long-term liabilities                             46,785       83,667
                                                  ------------ ------------
  Total liabilities                                  3,672,404    3,581,053

Total member's equity                                  273,554      276,758
                                                  ------------ ------------
  Total liabilities and member's equity           $  3,945,958 $  3,857,811
                                                  ============ ============





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

                                    Three Months Ended  Nine Months Ended
                                       September 30,      September 30,
                                    ------------------  ------------------
                                      2010      2009      2010      2009
                                    --------  --------  --------  --------
Net cash provided by operating
 activities                         $ 95,793  $ 81,759  $131,904  $273,822
Net cash used in investing
 activities                         (107,692)  (54,927) (287,907) (162,531)
Net cash provided by/(used in)
 financing activities                    (86)  (12,456)  215,408   (27,175)
                                    --------  --------  --------  --------
Increase/(decrease) in cash and
 cash equivalents                    (11,985)   14,376    59,405    84,116
Cash and cash equivalents,
 beginning of period                 328,393   240,257   257,003   170,517
                                    --------  --------  --------  --------
Cash and cash equivalents, end of
 period                             $316,408  $254,633  $316,408  $254,633
                                    ========  ========  ========  ========



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

                                      Three Months Ended  Nine Months Ended
                                         September 30,      September 30,
                                      ------------------- -----------------
                                        2010      2009      2010     2009
                                      --------- --------- -------- --------

Customer premise equipment            $  26,075 $  14,216 $ 97,128 $ 53,233
Scalable infrastructure                   6,973     7,369   30,161   20,514
Line extensions                           1,712     1,732    5,178    4,417
Upgrade/rebuild                           6,435       614   21,013    1,483
Commercial                                5,879     3,141   11,878    9,446
Support capital                          40,347    27,812   98,267   74,200
                                      --------- --------- -------- --------
                                      $  87,421 $  54,884 $263,625 $163,293
                                      ========= ========= ======== ========




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

                                September    June     December   September
                                   30,        30,        31,        30,
                                  2010       2010       2009       2009
                                ---------  ---------  ---------  ---------
                                  Actual     Actual     Actual     Actual
                                ---------  ---------  ---------  ---------
Revenue Generating Units (RGU):
Basic video customers (a)       1,228,300  1,225,100  1,239,100  1,254,500
Digital video customers (b)       631,400    595,400    545,100    530,800
Residential high-speed Internet
 customers (c)                    814,600    787,000    749,100    731,300
Residential telephone
 customers (d)                    345,700    322,800    280,400    253,200
                                ---------  ---------  ---------  ---------
Total revenue generating
 units (e)                      3,020,000  2,930,300  2,813,700  2,769,800

Quarterly net customer
 additions (losses)               Actual     Actual     Actual     Actual
                                ---------  ---------  ---------  ---------
Basic video customers               3,200    (18,800)   (15,400)    (8,200)
Digital video customers            36,000     19,700     14,300     16,300
Residential high-speed Internet
 customers                         27,600      3,100     17,800     24,200
Residential telephone customers    22,900     20,600     27,200     26,300
                                ---------  ---------  ---------  ---------
Total revenue generating units     89,700     24,600     43,900     58,600

Average Revenue per Unit
 (ARPU):                          Actual     Actual     Actual     Actual
                                ---------  ---------  ---------  ---------
Average monthly revenue per
 basic video customer (f)       $  114.83  $  113.50  $  106.19  $  103.80

Residential Customer
 Relationships                    Actual     Actual     Actual     Actual
                                ---------  ---------  ---------  ---------
Total customer
 relationships (g)              1,277,800  1,264,900  1,259,700  1,267,900
Double play relationships (h)     482,300    475,000    472,200    469,500
Double play penetration (i)          37.7%      37.6%      37.5%      37.0%
Triple play relationships (j)     256,600    241,100    209,500    192,000
Triple play penetration (k)          20.1%      19.1%      16.6%      15.1%
Total bundled customers (l)       738,900    716,100    681,700    661,500
Bundled penetration (m)              57.8%      56.6%      54.1%      52.2%

Estimated Customer Penetration    Actual     Actual     Actual     Actual
                                ---------  ---------  ---------  ---------
Estimated basic penetration (n)      45.7%      46.1%      46.9%      47.5%
Estimated digital penetration (o)    51.4%      48.6%      44.0%      42.3%
Estimated residential
 high-speed Internet
 penetration (p)                     31.3%      30.6%      29.2%      28.6%
Estimated residential telephone
 penetration (q)                     15.9%      15.1%      13.4%      12.1%

Commercial Customers              Actual     Actual     Actual     Actual
                                ---------  ---------  ---------  ---------
Commercial Internet (r)            39,000     38,200     36,400     35,900
Commercial fiber (s)                  910        860        800        760
Commercial telephone (t)            9,500      7,900      5,200      3,800





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

                                September    June     December   September
                                   30,        30,        31,        30,
                                  2010       2010       2009       2009
                                ---------  ---------  ---------  ---------
                                           Pro Forma  Pro Forma  Pro Forma
                                  Actual      (u)        (u)        (u)
                                ---------  ---------  ---------  ---------
Revenue Generating Units (RGU):
Basic video customers (a)       1,228,300  1,233,200  1,247,200  1,262,700
Digital video customers (b)       631,400    597,500    547,300    533,100
Residential high-speed Internet
 customers (c)                    814,600    789,900    751,800    733,800
Residential telephone
 customers (d)                    345,700    323,200    280,700    253,500
                                ---------  ---------  ---------  ---------
Total revenue generating
 units (e)                      3,020,000  2,943,800  2,827,000  2,783,100


Quarterly net customer          Pro Forma  Pro Forma  Pro Forma  Pro Forma
 additions (losses)                (u)        (u)        (u)        (u)
                                ---------  ---------  ---------  ---------
Basic video customers              (4,900)   (19,000)   (15,500)    (8,400)
Digital video customers            33,900     19,600     14,200     16,200
Residential high-speed Internet
 customers                         24,700      3,200     18,000     24,300
Residential telephone customers    22,500     20,600     27,200     26,300
                                ---------  ---------  ---------  ---------
Total revenue generating units     76,200     24,400     43,900     58,400


Average Revenue per Unit        Pro Forma  Pro Forma  Pro Forma  Pro Forma
 (ARPU):                            (u)        (u)        (u)        (u)
                                ---------  ---------  ---------  ---------
Average monthly revenue per
 basic video customer (f)       $  114.74  $  113.32  $  106.04  $  103.66



Residential Customer                       Pro Forma  Pro Forma  Pro Forma
 Relationships                    Actual       (u)        (u)        (u)
                                ---------  ---------  ---------  ---------
Total customer
 relationships (g)              1,277,800  1,272,700  1,269,500  1,275,700
Double play relationships (h)     482,300    477,200    474,400    471,700
Double play penetration (i)          37.7%      37.5%      37.4%      37.0%
Triple play relationships (j)     256,600    241,400    209,800    192,300
Triple play penetration (k)          20.1%      19.0%      16.5%      15.1%
Total bundled customers (l)       738,900    718,600    684,200    664,000
Bundled penetration (m)              57.8%      56.5%      53.9%      52.0%



                                           Pro Forma  Pro Forma  Pro Forma
Estimated Customer Penetration    Actual      (u)        (u)        (u)
                                ---------  ---------  ---------  ---------
Estimated basic penetration (n)      45.7%      46.1%      46.8%      47.5%
Estimated digital penetration (o)    51.4%      48.4%      43.9%      42.2%
Estimated residential high-speed
 Internet penetration (p)            31.3%      30.4%      29.1%      28.4%
Estimated residential telephone
 penetration (q)                     15.9%      15.0%      13.3%      12.0%

Commercial Customers              Actual     Actual     Actual     Actual
                                ---------  ---------  ---------  ---------
Commercial Internet (r)            39,000     38,200     36,400     35,900
Commercial fiber (s)                  910        860        800        760
Commercial telephone (t)            9,500      7,900      5,200      3,800

Footnotes for Tables 6 and 7:

(a) Basic video customers include all residential customers who receive video cable services. Also included are commercial or multiple dwelling accounts that are converted to equivalent basic units 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 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 (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 (video, high-speed Internet and telephone).

(k) Triple play penetration represents triple play customers as a percentage of customer relationships.

(l) Total bundled customers represent 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 acquisition of the Greenwood, Mississippi cable system from Windjammer Communications, LLC on August 1, 2010, as if that transaction had been consummated on January 1, 2009.

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

                                    Three Months Ended  Nine Months Ended
                                      September 30,       September 30,
                                    ------------------  ------------------
                                      2010      2009      2010      2009
                                    --------  --------  --------  --------

Adjusted EBITDA                     $153,104  $139,020  $455,281  $410,228
Capital expenditures                 (87,421)  (54,884) (263,625) (163,293)
Cash interest expense                (61,423)  (59,219) (185,277) (162,020)
                                    --------  --------  --------  --------
Free Cash Flow                      $  4,260  $ 24,917  $  6,379  $ 84,915
                                    ========  ========  ========  ========



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

                                    Three Months Ended  Nine Months Ended
                                      September 30,       September 30,
                                    ------------------  ------------------
                                      2010      2009      2010      2009
                                    --------  --------  --------  --------

Net Loss                            $ (5,937) $ (7,731) $(47,635) $(24,290)
 Add back:
 Interest expense, net                64,217    62,066   194,768   181,412
 Provision for income taxes              523     4,023     4,870     5,087
 Depreciation and amortization        94,179    79,003   265,475   242,785
 Non-cash share based compensation       880     1,836     4,690     5,467
 Loss on swap termination                  -         -    17,774         -
 Loss on extinguishment of debt            -         -    16,344         -
 Gain on sale of cable assets           (758)     (177)   (1,005)     (233)

                                    --------  --------  --------  --------
Adjusted EBITDA                     $153,104  $139,020  $455,281  $410,228
                                    ========  ========  ========  ========



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

                                    Three Months Ended  Nine Months Ended
                                      September 30,       September 30,
                                    ------------------  ------------------
                                      2010      2009      2010      2009
                                    --------  --------  --------  --------

Net cash from operating activities  $ 95,793  $ 81,759  $131,904  $273,822
Capital expenditures                 (87,421)  (54,884) (263,625) (163,293)
Current income tax expense               323     2,293     3,005     2,400
Interest income                         (101)     (273)     (259)     (468)
Write-off of deferred financing
 costs                                     -         -    (6,599)        -
New borrowing premium                      -         -   (12,000)        -
Repayment of paid in kind debt
 interest                                  -         -   112,254         -
Loss on swap termination                   -         -    17,774         -
Loss on extinguishment of debt             -         -    16,344         -
Changes in assets and liabilities,
 net                                  (4,334)   (3,978)    7,581   (27,546)
                                    --------  --------  --------  --------
Free Cash Flow                      $  4,260  $ 24,917  $  6,379  $ 84,915
                                    ========  ========  ========  ========



TABLE 11
Cequel Communications Holdings I, LLC
Reconciliation of Interest Expense, net to Cash Interest Expense
(unaudited)
(in thousands)

                                    Three Months Ended  Nine Months Ended
                                      September 30,       September 30,
                                    ------------------  ------------------
                                      2010      2009      2010      2009
                                    --------  --------  --------  --------

Interest expense, net               $ 64,217  $ 62,066  $194,768  $181,412
Add: interest income                     101       273       259       468
Add: bond premium amortization           294         -       477         -
Less: deferred financing
 amortization                         (2,842)   (3,120)   (9,160)   (8,870)
Less: bond discount amortization        (347)        -    (1,067)        -
Less: non-cash paid-in kind
 interest expense                          -         -         -   (10,990)
                                    --------  --------  --------  --------
Cash interest expense               $ 61,423  $ 59,219  $185,277  $162,020
                                    ========  ========  ========  ========

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