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Suddenlink Reports Third Quarter and Year-to-Date 2011 Financial and Operating Results

(November 03, 2011)

ST. LOUIS, MO -- (Marketwire) -- 11/03/11 -- 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, 2011.

"We believe our customer-centric strategy has helped us consistently produce results that are among the very best in the industry," said Suddenlink's Chairman and Chief Executive Officer Jerry Kent. "Case in point: Despite considerable economic headwinds, we have now turned in 20 consecutive quarters of pro forma revenue growth."

Third Quarter Highlights

Operating results and metrics 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 (the "Greenwood Acquisition") on August 1, 2010 and all of the issued and outstanding capital stock of NPG Cable, Inc., Mercury Voice and Data Company and NPG Digital Phone, Inc. (collectively, "NPG Cable") on April 1, 2011, and exclude two small cable systems that were sold on November 30, 2010, in each case as if those transactions had been consummated on January 1, 2010.


  • Third quarter revenues of $482.7 million grew 7.3% compared to third quarter revenues of the prior year. Revenues for the first nine months of 2011 of $1,440.2 million grew 7.5% compared to the first nine months of the prior year.

  • Adjusted EBITDA (as defined herein) for the third quarter of $177.7 million grew 9.2% compared to third quarter Adjusted EBITDA of the prior year. Adjusted EBITDA margin for the third quarter 2011 was 36.8%, an increase of 60 basis points from the third quarter 2010. Adjusted EBITDA for the first nine months of 2011 was $527.7 million, an increase of 8.7% compared to the first nine months of the prior year. Excluding the impact of certain non-recurring expenses associated almost entirely with the acquisition and integration of NPG Cable, Adjusted EBITDA for the third quarter 2011 would have increased 9.8% as compared to the third quarter last year, with Adjusted EBITDA margin of 37.1%, a 90 basis point improvement from the third quarter 2010.

  • Free Cash Flow (as defined herein) of $15.2 million for the third quarter grew $10.9 million compared to Free Cash Flow for the third quarter 2010.

  • Total customer relationships were 1,376,800, an increase of 6,800 during the third quarter and 4,800 year-over-year. RGUs increased 167,200 year-over-year, or a 5.2% gain from September 30, 2010.

  • Total average monthly revenue per basic video customer ("ARPU") for the third quarter was $126.75, an increase of 10.6% compared to ARPU for the third quarter of the prior year.

  • Bundled customers represented 61.0% of total customer relationships at September 30, 2011, an increase from 57.5% at September 30, 2010, primarily from growth in triple play customer relationships, which represented 22.8% of total customer relationships at September 30, 2011, versus 19.8% at September 30, 2010.

  • Non-video customers represented 15.2% of total customer relationships at September 30, 2011, an increase from 12.8% at September 30, 2010.

  • Commercial revenue grew 17.1% versus the third quarter of 2010, including 25.6% year over year growth in our commercial data and telephone businesses on a combined basis.

  • Project Imagine, the Company's bandwidth expansion plan, continues on plan. From the inception of Project Imagine in late 2009 through September 30, 2011, we have completed approximately 77% of our anticipated capital expenditures for Project Imagine, including success based capital, and expect to be 80% complete by the end of 2011.

Third Quarter 2011 Compared to Third Quarter 2010

Third quarter 2011 revenues rose 7.3%, largely attributable to increases in residential high-speed Internet, telephone and advanced digital video revenues, and growth in revenues from our commercial and carrier businesses. Residential revenue growth resulted from increases in the number of new telephone, high-speed Internet and digital video customers, an increase in the penetration of existing customers for these services, video and high-speed Internet rate increases, and incremental revenues from video on demand ("VOD"), high definition television ("HDTV") and digital video recorder ("DVR") services as more customers purchased advanced video services from us during the trailing twelve months. Offsetting this residential growth in part was a decrease due to the impact of bundling and promotional discounts, and a decline in basic video customers. Revenues for our commercial and carrier businesses grew due to increases in commercial high-speed data and telephone customers, and from increases in cell tower and backhaul revenues.

Video service revenues increased 1.6%, primarily due to video rate increases, increased VOD 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 purchasing fewer digital tiers of service on average.

High-speed Internet service revenues increased 12.2%, due to an increase in residential high-speed Internet customers over the trailing twelve months, the impact of rate increases and growth in our commercial high-speed Internet services to small and medium sized businesses and the growth in carrier services.

Telephone service revenues increased 20.2%, primarily due to an increase in residential telephone customers, offset in part due to the impact of bundling and promotional discounts, and growth in our commercial telephone services to small and medium sized businesses.

Advertising revenues remained consistent, as higher local and national automotive ad sales revenue were offset by lower political revenues.

Other revenues increased 13.8% due to increased converter rental revenues for high-definition and DVR capable digital converters, increased home networking revenue, increased administrative fees associated with the underlying growth of the business, higher franchise fees consistent with video service revenue increases, higher commercial installation revenue and higher broadcast retransmission fees.

Our commercial lines of business, embedded in the video, high-speed Internet, telephone service revenues and other revenue described above, are comprised of commercial and bulk video, commercial high-speed Internet, fiber based on- and off-net carrier services and commercial telephone. Commercial revenue totaled $57.0 million, or 11.8% of total revenue, in the third quarter of 2011, representing growth of 17.1% versus the third quarter of 2010. Our commercial data and telephone revenue grew 25.6% year-over-year on a combined basis. We achieved our largest ever year over year growth in commercial revenue for the quarter ended September 30, 2011.

Operating costs and expenses rose 6.2%, primarily due to higher programming costs and retransmission consent expenses, increased net compensation and employee related costs, including contract labor, higher fuel expenses, increased franchise fees, increased bad debt expense and increased marketing expenses, offset in part by a decrease in telephone service costs. In addition, the third quarter of 2011 includes approximately $1.4 million of non-recurring expenses, $1.1 million for contract termination charges and expenses associated with the integration of NPG Cable and $0.3 million for expenses related to Hurricane Irene.

Adjusted EBITDA for the third quarter 2011 was $177.7 million, an increase of 9.2% from the same quarter last year, resulting in an Adjusted EBITDA margin of 36.8%. Excluding the impact of the non-recurring expenses associated with Hurricane Irene and the acquisition and integration of NPG Cable, Adjusted EBITDA for the third quarter 2011 would have increased 9.8% from the same quarter last year.

Income from operations for the third quarter 2011 was $72.4 million, an increase of 21.5%, compared to $59.6 million for the third quarter 2010 due to revenue increases year-over-year outpacing operating, selling and administrative, and depreciation and amortization expense increases.

Net loss was approximately $5.2 million for the third quarter 2011, compared to a net loss of $5.1 million for the third quarter 2010.

Key Operating Metrics

At September 30, 2011, Suddenlink served approximately 1.4 million customers, and Suddenlink's RGUs were comprised of 1,268,300 basic video, 753,600 digital video, 937,200 residential high-speed Internet and 426,100 residential telephone customers. Suddenlink's 3.4 million RGUs as of September 30, 2011, increased 167,200, or 5.2%, over the prior year.

Approximately 61.0% of Suddenlink's residential customers subscribe to bundled services, compared to 57.5% a year ago. Approximately 313,800 of Suddenlink's residential customers receive video, high-speed Internet and telephone services as part of a triple play bundle, representing 22.8% of Suddenlink's total residential customer relationships. Pro-forma growth of 42,000 triple play customers from the third quarter of 2010 represented an increase of 15.5%. Non-video customers of approximately 209,200 at September 30, 2011 represent 15.2% of total customer relationships, and grew 18.9% on a pro-forma basis in the trailing twelve months.

Suddenlink's ARPU for the third quarter of 2011 was $126.75, an increase of 10.6% compared to the third quarter of 2010.

Basic video customers decreased by approximately 5,900 customers while digital video customers increased by approximately 21,500 customers during the third quarter of 2011. During the trailing twelve months, basic video customers decreased by approximately 39,600, or 3.0%, while digital video customers increased by approximately 79,000, or 11.7%. Estimated basic penetration at September 30, 2011, was 43.2% of estimated homes passed. Digital penetration to basic customers was 59.4%.

Residential high-speed Internet customers increased by approximately 23,000 during the third quarter of 2011, and increased 65,700, or 7.5%, during the trailing twelve months. At September 30, 2011, estimated residential high-speed Internet penetration was 33.0% of high-speed Internet capable homes passed. During the third quarter of 2011, commercial Internet customers increased by approximately 1,200 and commercial fiber customers increased by approximately 60 customers. During the trailing twelve months, commercial Internet customers increased by approximately 4,000, or 9.6% and commercial fiber customers increased by approximately 190, or 22.4%. These commercial customers are not included in total RGU counts.

Residential telephone customers grew by approximately 16,200 during the third quarter of 2011, and 62,100, or 17.1%, during the twelve months ended September 30, 2011. At September 30, 2011, estimated residential telephone penetration was 18.1% of telephone capable homes passed. During the third quarter of 2011, commercial telephone customers increased by approximately 1,500 customers, and increased by approximately 6,300 over the twelve months ended September 30, 2011, or 61.2%. These commercial customers purchase 2.8 phone lines on average and are not included in total RGU counts.

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 and NPG Cable in April 2011, or the divestiture of two cable systems in November 2010.

At September 30, 2011, the Company had approximately $137.0 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 September 30, 2011 were $89.2 million, compared to $87.4 million for the three months ended September 30, 2010. For the full year 2011, the Company expects capital expenditures at the upper end of the previously established range of $360.0 million to $370.0 million, inclusive of NPG Cable, Project Imagine and related success based capital expenditures. Through the third quarter of 2011, total capital expenditures were $288.9 million, including capital expenditures on Project Imagine and NPG Cable.

Project Imagine, our 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. Capital expenditures for Project Imagine, including success based capital, were approximately $23.6 million during the third quarter 2011 and $103.1 million for the first nine months of 2011. Since the inception of Project Imagine in late 2009 through September 30, 2011, capital expenditures for Project Imagine, including success based capital, have been $270.5 million, or approximately 77% of the total anticipated capital expenditures for Project Imagine.

Net cash flows from operating activities increased $39.4 million for the three months ended September 30, 2011. This increase is primarily due to improved operating results and net changes in current assets and liabilities. Net cash flows used in investing activities decreased $18.5 million from $107.7 million for the three months ended September 30, 2010 to $89.2 million for the three months ended September 30, 2011 due to the Greenwood Acquisition in August 2010, as purchases of property, plant and equipment was relatively flat compared to 2010. Net cash flows used in financing activities increased $7.5 million for the three months ended September 30, 2011 as compared to September 30, 2010, primarily as a result of repayments of long-term debt and capital lease and other obligations.

Free Cash Flow (as defined herein) for the quarter ended September 30, 2011 was $15.2 million, compared to free cash flow of $4.3 million for the quarter ended September 30, 2010. The increase in Free Cash Flow for the third quarter 2011 as compared to 2010 is due to improved operating results, offset in part by increases in cash interest expense and capital expenditures.

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 Cequel's 8.625% Senior Notes due 2017 (the "Notes"), was 5.34x at September 30, 2011.

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 Cequel Communications, LLC's Credit Facility, was 2.73x at September 30, 2011.

Conference Call

As previously announced, the Company will host a conference call to discuss its third quarter results at 11:00 a.m. (Eastern Time) on Thursday, November 3, 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 18358163

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, 2011 which will be posted on the Company's website (www.suddenlink.com) on November 3, 2011.

Current Report

A current report containing this earnings release will be posted on the Company's website (www.suddenlink.com) shortly after the conference call on November 3, 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 1.4 million residential customers and thousands of commercial customers in Arkansas, Louisiana, North Carolina, Oklahoma, Texas, West Virginia, 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 Company's Annual Report for the year ended December 31, 2010.

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 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 Nine Months Ended September 30, September 30, ------------------ Percent ------------------ Percent 2011 2010 Change 2011 2010 Change -------- -------- ------- -------- -------- ------- Actual Actual Actual Actual Revenues: Video $225,650 $209,055 7.9% $673,334 $631,701 6.6% High Speed Internet 121,779 101,209 20.3% 351,571 297,946 18.0% Telephone 40,557 31,575 28.4% 114,405 89,668 27.6% Advertising Sales 19,939 18,361 8.6% 56,568 53,093 6.5% Other 74,786 62,308 20.0% 215,122 181,942 18.2% -------- -------- -------- -------- Total Revenues 1,411,0 1,254,3 482,711 422,508 14.2% 00 50 12.5% Costs and Expenses: Operating (excluding depreciation and amortization) 200,902 176,682 -13.7% 588,725 526,651 -11.8% Selling, general and administrative (excluding non- cash share based compensation expense) 104,140 92,722 -12.3% 305,077 272,418 -12.0% -------- -------- -------- -------- Operating costs and expenses 305,042 269,404 -13.2% 893,802 799,069 -11.9% -------- -------- -------- -------- Adjusted EBITDA 177,669 153,104 16.0% 517,198 455,281 13.6% -------- -------- -------- -------- Adjusted EBITDA Margin (a) 36.8% 36.2% 36.7% 36.3% Depreciation and amortization 105,374 94,179 -11.9% 308,327 265,475 -16.1% Non-cash share based compensation expense 499 880 43.3% 1,594 4,690 66.0% Gain on sale of cable assets (615) (758) -18.9% (1,038) (1,005) -3.3% -------- -------- -------- -------- Income from operations 72,411 58,803 23.1% 208,315 186,121 11.9% -------- -------- -------- -------- Interest expense, (226,31 (194,76 net (75,930) (64,217) -18.2% 2) 8) -16.2% Loss on swap termination - - NM - (17,774) 100.0% Loss on extinguishment of debt - - NM - (16,344) 100.0% -------- -------- -------- -------- 3 Loss before provision for income taxes (3,519) (5,414) 35.0% (17,997) (42,765) 57.9% Provision for income taxes (1,670) (523) -219.3% (4,188) (4,870) 14.0% -------- -------- -------- -------- Net loss $ (5,189) $ (5,937) 12.6% $(22,185) $(47,635) 53.4% ======== ======== ======== ========



(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 2011 2010 Change 2011 2010 Change -------- -------- ------- -------- -------- ------- Pro- Pro- Pro- Forma Forma Forma Actual (b) (b) (b) Revenues: Video $225,650 $222,140 1.6% $686,532 $673,779 1.9% High Speed Internet 121,779 108,522 12.2% 359,633 319,824 12.4% Telephone 40,557 33,735 20.2% 116,642 96,297 21.1% Advertising Sales 19,939 19,941 0.0% 58,592 57,793 1.4% Other 74,786 65,713 13.8% 218,772 192,113 13.9% -------- -------- -------- -------- Total Revenues 1,440,1 1,339,8 482,711 450,051 7.3% 71 06 7.5% Costs and Expenses: Operating (excluding depreciation and amortization) 200,902 189,812 -5.8% 602,160 567,377 -6.1% Selling, general and administrative (excluding non- cash share based compensation expense) 104,140 97,485 -6.8% 310,349 286,988 -8.1% -------- -------- -------- -------- Operating costs and expenses 305,042 287,297 -6.2% 912,509 854,365 -6.8% -------- -------- -------- -------- Adjusted EBITDA 177,669 162,754 9.2% 527,662 485,441 8.7% -------- -------- -------- -------- Adjusted EBITDA Margin (a) 36.8% 36.2% 36.6% 36.2% Depreciation and amortization 105,374 103,025 -2.3% 317,173 292,013 -8.6% Non-cash share based compensation expense 499 880 43.3% 1,594 4,690 66.0% Gain on sale of cable assets (615) (758) -18.9% (1,038) (1,005) -3.3% -------- -------- -------- -------- Income from operations 72,411 59,607 21.5% 209,933 189,743 10.6% -------- -------- -------- -------- Interest expense, (226,31 (194,76 net (75,930) (64,217) -18.2% 2) 8) -16.2% Loss on swap termination - - NM - (17,774) 100.0% Loss on extinguishment of debt - - NM - (16,344) 100.0% -------- -------- -------- -------- Loss before provision for income taxes (3,519) (4,610) 23.7% (16,379) (39,143) 58.2% Provision for income taxes (1,670) (523) -219.3% (4,188) (4,870) 14.0% -------- -------- -------- -------- Net loss $ (5,189) $ (5,133) -1.1% $(20,567) $(44,013) 53.3% ======== ======== ======== ========



(a) Represents Adjusted EBITDA as a percentage of total revenue. (b) Pro forma to include the impact of the acquisition of a cable system in Greenwood, Mississippi on August 1, 2010 and NPG Cable on April 1, 2011, and exclude the disposition of two cable systems which occurred on November 30, 2010, in each case as if those transactions had been consummated on January 1, 2010. TABLE 3 Cequel Communications Holdings I, LLC Condensed Consolidated Balance Sheets (unaudited) (in thousands) September 30, December 31, 2011 2010 ------------- -------------- ASSETS Cash and cash equivalents $ 137,002 $ 289,685 Accounts receivable, net 167,903 148,280 Prepaid expenses 22,351 16,072 ------------- -------------- Total current assets 327,256 454,037 Property, plant and equipment, net 1,422,583 1,328,479 Intangible assets, net 2,320,257 2,083,376 Other assets, net 53,015 48,346 ------------- -------------- Total assets $ 4,123,111 $ 3,914,238 ============= ============== LIABILITIES AND MEMBER'S EQUITY Accounts payable and accrued expenses $ 273,686 $ 200,219 Deferred revenue 124,865 112,239 Current portion of long-term debt 20,382 20,382 Other current liabilities 46,240 80,248 ------------- -------------- Total current liabilities 465,173 413,088 Long-term debt, less current portion 3,771,984 3,145,739 Deferred tax liabilities 26,965 25,185 Other long-term liabilities 11,234 32,756 ------------- -------------- Total liabilities 4,275,356 3,616,768 Total member's equity (152,245) 297,470 ------------- -------------- Total liabilites and member's equity $ 4,123,111 $ 3,914,238 ============= ============== 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, -------------------- -------------------- 2011 2010 2011 2010 --------- --------- --------- --------- Net cash provided by operating activities $ 135,153 $ 95,793 $ 382,737 $ 131,904 Net cash used in investing activities (89,236) (107,692) (640,769) (287,907) Net cash (used in)/provided by financing activities (7,609) (86) 105,349 215,408 --------- --------- --------- --------- Increase/(decrease) in cash and cash equivalents 38,308 (11,985) (152,683) 59,405 Cash and cash equivalents, beginning of period 98,694 328,393 289,685 257,003 --------- --------- --------- --------- Cash and cash equivalents, end of period $ 137,002 $ 316,408 $ 137,002 $ 316,408 ========= ========= ========= ========= TABLE 5 Cequel Communications Holdings I, LLC Capital Expenditures (unaudited) (in thousands) Three Months Ended Nine Months Ended September 30, September 30, --------------------- --------------------- 2011 2010 2011 2010 ---------- ---------- ---------- ---------- Customer premise equipment $ 21,831 $ 26,075 $ 93,518 $ 97,128 Scalable infrastructure 10,927 6,973 37,026 30,161 Line extensions 1,873 1,712 5,611 5,178 Upgrade/rebuild 3,911 6,435 15,474 21,013 Commercial 7,004 5,879 21,929 11,878 Support capital 43,688 40,347 115,323 98,267 ---------- ---------- ---------- ---------- $ 89,234 $ 87,421 $ 288,881 $ 263,625 ========== ========== ========== ========== TABLE 6 Cequel Communications Holdings I, LLC Summary Operating Statistics (unaudited) Approximate as of: September 30, June 30, December 31, September 30, 2011 2011 2010 2010 ------------- ---------- ------------ ------------- Actual Actual Actual Actual ------------- ---------- ------------ ------------- Revenue Generating Units (RGU): Basic video customers (a) 1,268,300 1,274,200 1,215,700 1,228,300 Digital video customers (b) 753,600 732,100 651,400 631,400 Residential high- speed Internet customers (c) 937,200 914,200 826,300 814,600 Residential telephone customers (d) 426,100 409,900 358,700 345,700 ------------- ---------- ------------ ------------- Total RGUs (e) 3,385,200 3,330,400 3,052,100 3,020,000 Quarterly net customer additions (losses) Actual Actual Actual Actual ------------- ---------- ------------ ------------- Basic video customers (5,900) 57,200 (12,600) 3,200 Digital video customers 21,500 52,500 20,000 36,000 Residential high- speed Internet customers 23,000 57,100 11,700 27,600 Residential telephone customers 16,200 31,300 13,000 22,900 ------------- ---------- ------------ ------------- Total RGUs (e) 54,800 198,100 32,100 89,700 Average Revenue per Unit (ARPU): Actual Actual Actual Actual ------------- ---------- ------------ ------------- Pro forma average monthly revenue per basic video customer (f) $ 126.75 $ 124.74 $ 118.32 $ 114.83 Customer Relationships Actual Actual Actual Actual ------------- ---------- ------------ ------------- Total customer relationships (g) 1,376,800 1,370,000 1,273,000 1,277,800 Double play relationships (h) 526,500 519,700 481,700 482,300 Double play penetration (i) 38.2% 37.9% 37.8% 37.7% Triple play relationships (j) 313,800 302,900 266,700 256,600 Triple play penetration (k) 22.8% 22.1% 21.0% 20.1% Total bundled customers (l) 840,300 822,600 748,400 738,900 Bundled penetration (m) 61.0% 60.0% 58.8% 57.8% Non-video customer relationships (n) 209,200 198,700 169,900 164,800 Non-video as a % of total customer relationships (o) 15.2% 14.5% 13.3% 12.9% Estimated Customer Penetration Actual Actual Actual Actual ------------- ---------- ------------ ------------- Estimated basic penetration (p) 43.2% 43.7% 45.4% 45.7% Estimated digital penetration (q) 59.4% 57.5% 53.6% 51.4% Estimated residential high- speed Internet penetration (r) 33.0% 32.3% 31.8% 31.3% Estimated residential telephone penetration (s) 18.1% 17.6% 16.3% 15.9% Commercial Customers Actual Actual Actual Actual ------------- ---------- ------------ ------------- Commercial Internet (t) 45,600 44,400 39,800 39,000 Commercial fiber (u) 1,040 980 800 750 Commercial telephone (v) 16,600 15,100 11,100 9,500 TABLE 7 Cequel Communications Holdings I, LLC Pro Forma Summary Operating Statistics (unaudited) Approximate as of: September 30, June 30, December 31, September 30, 2011 2011 2010 2010 ------------- ---------- ------------ ------------- Pro Forma Actual Actual (w) Pro Forma (w) ------------- ---------- ------------ ------------- Revenue Generating Units (RGU): Basic video customers (a) 1,268,300 1,274,200 1,297,700 1,307,900 Digital video customers (b) 753,600 732,100 696,500 674,600 Residential high- speed Internet customers (c) 937,200 914,200 886,300 871,500 Residential telephone customers (d) 426,100 409,900 377,700 364,000 ------------- ---------- ------------ ------------- Total RGUs (e) 3,385,200 3,330,400 3,258,200 3,218,000 Quarterly net customer additions Pro Forma Pro Forma Pro Forma (losses) Actual (w) (w) (w) ------------- ---------- ------------ ------------- Basic video customers (5,900) (24,400) (10,200) (6,300) Digital video customers 21,500 6,200 21,900 35,100 Residential high- speed Internet customers 23,000 (4,600) 14,800 26,200 Residential telephone customers 16,200 12,200 13,700 22,800 ------------- ---------- ------------ ------------- Total RGUs (e) 54,800 (10,600) 40,200 77,800 Average Revenue per Pro Forma Pro Forma Unit (ARPU): Actual Actual (w) (w) ------------- ---------- ------------ ------------- Pro forma average monthly revenue per basic video customer (f) $ 126.75 $ 124.74 $ 118.23 $ 114.56 Customer Pro Forma Pro Forma Relationships Actual Actual (w) (w) ------------- ---------- ------------ ------------- Total customer relationships (g) 1,376,800 1,370,000 1,370,300 1,372,000 Double play relationships (h) 526,500 519,700 517,600 517,200 Double play penetration (i) 38.2% 37.9% 37.8% 37.7% Triple play relationships (j) 313,800 302,900 281,900 271,800 Triple play penetration (k) 22.8% 22.1% 20.6% 19.8% Total bundled customers (l) 840,300 822,600 799,500 789,000 Bundled penetration (m) 61.0% 60.0% 58.3% 57.5% Non-video customer relationships (n) 209,200 198,700 181,300 176,000 Non-video as a % of total customer relationships (o) 15.2% 14.5% 13.2% 12.8% Estimated Customer Pro Forma Pro Forma Penetration Actual Actual (w) (w) ------------- ---------- ------------ ------------- Estimated basic penetration (p) 43.2% 43.7% 45.3% 45.6% Estimated digital penetration (q) 59.4% 57.5% 53.7% 51.6% Estimated residential high- speed Internet penetration (r) 33.0% 32.3% 31.7% 31.3% Estimated residential telephone penetration (s) 18.1% 17.6% 15.9% 15.5% Commercial Customers Pro Forma Pro Forma Actual Actual (w) (w) ------------- ---------- ------------ ------------- Commercial Internet (t) 45,600 44,400 42,500 41,600 Commercial fiber (u) 1,040 980 900 850 Commercial telephone (v) 16,600 15,100 11,900 10,300

(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 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 basic video service will count as one customer relationship, and a residential customer who purchases both basic video and high-speed Internet services will also count as only one customer relationship. Customer relationships exclude EBUs.

(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 represents the sum of double play and triple play customers.

(m) Bundled penetration represents total bundled customers as a percentage of customer relationships.

(n) Non-video customer relationships represent the number of residential customers who receive at least one level of service, encompassing high-speed Internet or telephone services, but do not receive video services.

(o) Non-video as a % of total customer relationships represents non-video customer relationships divided by total customer relationships

(p) Estimated basic penetration is calculated as basic video customers divided by the estimated total homes passed of the Company.

(q) Estimated digital penetration is calculated as digital video customers divided by basic video customers.

(r) 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.

(s) 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.

(t) 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.

(u) Commercial fiber customers are commercial accounts that receive broadband service optically, via fiber connections. Commercial fiber customers are not included in Total RGUs.

(v) Commercial telephone customers are commercial accounts that subscribe to our telephone service. Commercial telephone customers are not included in Total RGUs.

(w) Pro forma to include the impact of the acquisition of NPG Cable on April 1, 2011, and exclude the disposition of two cable systems which occurred on November 30, 2010, in each case as if those transactions had been consummated on January 1, 2010.

TABLE 8 Cequel Communications Holdings I, LLC Calculation of Free Cash Flow (unaudited) (in thousands) Three Months Ended Nine Months Ended September 30, September 30, -------------------- -------------------- 2011 2010 2011 2010 --------- --------- --------- --------- Adjusted EBITDA $ 177,669 $ 153,104 $ 517,198 $ 455,281 Capital expenditures (89,234) (87,421) (288,881) (263,625) Cash interest expense (73,262) (61,423) (218,390) (185,277) --------- --------- --------- --------- Free Cash Flow $ 15,173 $ 4,260 $ 9,927 $ 6,379 ========= ========= ========= ========= 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, -------------------- -------------------- 2011 2010 2011 2010 --------- --------- --------- --------- Net loss $ (5,189) $ (5,937) $ (22,185) $ (47,635) Add/(subtract): Interest expense, net 75,930 64,217 226,312 194,768 Provision for income taxes 1,670 523 4,188 4,870 Depreciation and amortization 105,374 94,179 308,327 265,475 Non-cash share based compensation 499 880 1,594 4,690 Loss on swap termination - - - 17,774 Loss on extinguishment of debt - - - 16,344 Gain on sale of cable assets (615) (758) (1,038) (1,005) --------- --------- --------- --------- Adjusted EBITDA $ 177,669 $ 153,104 $ 517,198 $ 455,281 ========= ========= ========= =========

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, -------------------- -------------------- 2011 2010 2011 2010 --------- --------- --------- --------- Net cash provided by operating activities $ 135,153 $ 95,793 $ 382,737 $ 131,904 Capital expenditures (89,234) (87,421) (288,881) (263,625) Current income tax expense 920 323 2,409 3,005 Interest income (31) (101) (218) (259) Write-off of deferred financing costs - - - (6,599) New borrowing bond premium - - (17,969) (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 (31,635) (4,334) (68,151) 7,581 --------- --------- --------- --------- Free Cash Flow $ 15,173 $ 4,260 $ 9,927 $ 6,379 ========= ========= ========= ========= TABLE 11 Cequel Communications Holdings I, LLC Reconciliation of Cash Interest Expense (unaudited) (in thousands) Three Months Ended Nine Months Ended September 30, September 30, -------------------- -------------------- 2011 2010 2011 2010 --------- --------- --------- --------- Interest expense, net $ 75,836 $ 64,217 $ 150,382 $ 194,768 Add: interest income 38 101 187 259 Add: bond premium amortization 818 294 1,578 477 Less: deferred financing amortization (3,217) (2,842) (6,361) (9,160) Less: bond discount amortization (325) (347) (658) (1,067) --------- --------- --------- --------- Cash interest expense $ 73,150 $ 61,423 $ 145,128 $ 185,277 ========= ========= ========= =========

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


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