* Cablevision entered into an agreement1 to sell the Company to
Altice for $34.90 per share
* Strongest third quarter performance in customer relationships,
video and high-speed data, since 2012
* YTD Consolidated Free Cash Flow from Continuing Operations2 of
$321.7 million
* Average Monthly Cable Revenue per Customer ("RPC") of
$155.04
* Customer service initiatives continue to improve efficiencies
with a 25 percent reduction in trouble call truck rolls compared
with the prior year period
* Continued deployment of smart routers and outside access
points in the New York tri-state area to optimize WiFi experience;
ended quarter with more than 1.4 million Optimum WiFi access
points
* Reached new comprehensive agreements with CBS and Tribune,
providing additional choice and flexibility to consumers
Cablevision Systems Corporation (NYSE:CVC) today reported
financial results for the third quarter ended September 30,
2015.
Third quarter consolidated net revenues decreased 0.8% to
$1.613 billion, consolidated adjusted operating cash flow
(“AOCF”)2 decreased 11.5% to $417.3 million and consolidated
operating income decreased 27.5% to $183.1 million, all
compared with the prior year period. Third quarter 2015 results
included unfavorable items totaling $33.8 million, as discussed
later in this release. Excluding these items, consolidated net
revenues, AOCF and operating income would have decreased 0.6%, 4.4%
and 14.1%, respectively, compared to the prior year period.
Cablevision CEO James L. Dolan said, “The third quarter was
highlighted by the announcement of Cablevision’s sale to Altice for
$34.90 per share - an acquisition that will deliver significant
value for our shareholders. In the meantime, together with Altice
we are moving full speed ahead to obtain the necessary regulatory
approvals, while we remain focused on delivering superior products
and outstanding service to our customers.”
1. On September 16, 2015, Cablevision and Altice N.V.
entered into a definitive agreement pursuant to which Altice has
agreed to acquire Cablevision. Please refer to the 'Other Matters'
section on page 3 of this release for additional information on
this transaction. 2. See definition of AOCF and Consolidated Free
Cash Flow from Continuing Operations included in the discussion of
non-GAAP financial measures on page 4 of this earnings release.
CableCable includes our Optimum-branded digital cable
television, high-speed Internet and voice services as well as
Optimum WiFi, the nation's most robust WiFi network.
Cable had its strongest third quarter performance in customer
relationships, video and high-speed data since 2012. The Company
continued to optimize the density and quality of its WiFi network
through the deployment of smart routers and outside access points
in high usage areas, ending the third quarter with more than 1.4
million Optimum WiFi access points. Our continued investment in the
reliability and performance of our networks has enabled a more
innovative product set with flexible service offerings, and
enhanced our ability to monitor network performance. In addition,
our service initiatives have resulted in an improved customer
experience and have led to a decrease in the number of trouble call
truck rolls by 25 percent on a year-over-year basis.
Cable net revenues for the third quarter 2015 decreased 0.8% to
$1.447 billion, primarily due to fewer video and voice
customers compared to the prior year period and lower advertising
revenue, partially offset by an increase in high-speed data
customers, rate initiatives and continued disciplined pricing
strategies. AOCF decreased 10.0% to $423.8 million and
operating income decreased 20.4% to $226.9 million, both
compared with the prior year period. Third quarter AOCF reflects
the revenue decline as well as higher programming, legal, product
development and marketing costs, partially offset by lower employee
and customer service-related costs, as compared to the prior year
period.
In addition, third quarter 2015 results included a $12.8 million
reserve for the probable settlement of a class action legal matter
(of which $3.3 million is reflected as a reduction in revenue), and
an inventory valuation adjustment of $11.3 million. If these items
were excluded, net revenues, AOCF and operating income would have
decreased 0.5%, 4.8% and 11.9%, respectively, compared to the prior
year period.
The following table illustrates the change in the Cable customer
base during the third quarter of 2015:
Customer
Data
(rounded to nearest thousand)
Total
June 30, 2015
Net Gain/(Loss)
Total
September 30, 2015
Total Customers(a)
3,117 (10)
3,107 Video 2,637
(33) 2,604 High-Speed Data 2,781
3 2,784 Voice 2,208 (20)
2,188 Serviceable Passings 5,067
8 5,075
(a) Total customers are defined as the number
of households/businesses that receive at least one of the Company's
services.
LightpathLightpath is a premier provider of integrated
business communications solutions to large and mid-sized commercial
organizations across the New York metropolitan area.
For the third quarter 2015, Lightpath net revenues increased
3.8% to $91.2 million, AOCF increased 7.4% to
$41.9 million and operating income increased 5.7% to
$17.9 million, each as compared with the prior year period.
Third quarter results primarily reflect an increase in revenue from
Ethernet services.
OtherOther principally consists of Newsday, News 12
Networks, Cablevision Media Sales Corporation and certain other
businesses and unallocated corporate costs.
Third quarter net revenues decreased 5.6% to $83.6 million,
primarily due to lower advertising revenue at Newsday. The AOCF
deficit increased 27.4% to $48.3 million and operating loss
increased 24.7% to $61.7 million, all compared with the prior
year period. Third quarter AOCF reflects lower revenue and higher
corporate costs, partially offset by a decrease in expenses at
Newsday due to lower operating costs.
In addition, third quarter 2015 results included merger-related
costs of $9.7 million. If these costs were excluded, the AOCF
deficit and operating loss would have increased 1.8% and 5.1%,
respectively, compared to the prior year period.
Other MattersOn September 16, 2015, Cablevision and
Altice N.V. entered into a definitive agreement pursuant to which
Altice has agreed to acquire Cablevision for $34.90 in cash for
each share of Cablevision Class A and Class B common stock.
Due to the pending acquisition by Altice, Cablevision will not
hold a third quarter earnings conference call and will discontinue
conference calls to discuss its quarterly and annual results during
the pendency of the acquisition.
Due to the pending acquisition by Altice and the terms of the
merger agreement, Cablevision has suspended its stock repurchase
program and does not anticipate declaring or paying any dividends
during the pendency of the acquisition.
Assuming timely satisfaction of the necessary closing
conditions, the closing of the acquisition by Altice is expected to
occur in the first half of 2016.
For additional information, please refer to our SEC filings at
www.cablevision.com.
Non-GAAP Financial Measures
We define adjusted operating cash flow (“AOCF”), which is a
non-GAAP financial measure, as operating income (loss) before
depreciation and amortization (including impairments), excluding
share-based compensation expense and restructuring charges or
credits. Because it is based upon operating income (loss), AOCF
also excludes interest expense (including cash interest expense)
and other non-operating income and expense items. We believe that
the exclusion of share-based compensation expense allows investors
to better track the performance of the various operating units of
our business without regard to expense associated with awards that
are not expected to be made in cash, in the case of restricted
shares, restricted stock units and stock options, and the
distortive effects of fluctuating stock prices in the case of
liability classified awards.
We present AOCF as a measure of our ability to service our debt
and make continuing investments, including in our capital
infrastructure. We believe AOCF is an appropriate measure for
evaluating the operating performance of our business segments and
the Company on a consolidated basis. AOCF and similar measures with
similar titles are common performance measures used by investors,
analysts and peers to compare performance in our industry.
Internally, we use net revenues and AOCF measures as the most
important indicators of our business performance, and evaluate
management’s effectiveness with specific reference to these
indicators. AOCF should be viewed as a supplement to and not a
substitute for operating income (loss), net income (loss), cash
flows from operating activities, and other measures of performance
and/or liquidity presented in accordance with U.S. generally
accepted accounting principles ("GAAP"). Since AOCF is not a
measure of performance calculated in accordance with GAAP, this
measure may not be comparable to similar measures with similar
titles used by other companies. For a reconciliation of AOCF to
operating income (loss), please see page 7 of this release.
We define Consolidated Free Cash Flow from Continuing Operations
(“Free Cash Flow”), which is a non-GAAP financial measure, as net
cash from operating activities (continuing operations) plus any
excess tax benefit related to share-based awards less capital
expenditures (continuing operations), all of which are reported in
our Consolidated Statement of Cash Flows. Net cash from operating
activities excludes net cash from operating activities of our
discontinued operations. We believe the most comparable GAAP
financial measure of our liquidity is net cash from operating
activities. We believe that Free Cash Flow is useful as an
indicator of our overall liquidity, as the amount of Free Cash Flow
generated in any period is representative of cash that is available
for debt repayment and other discretionary and non-discretionary
cash uses. It is also one of several indicators of our ability to
make investments and/or return capital to our shareholders. We also
believe that Free Cash Flow is one of several benchmarks used by
analysts and investors who follow our industry for comparison of
our liquidity with other companies in our industry, although our
measure of Free Cash Flow may not be directly comparable to similar
measures reported by other companies.
ABOUT CABLEVISION
Cablevision Systems Corporation (NYSE: CVC) is a leading media
and telecommunications Company, serving millions of households and
businesses throughout the greater New York area. Providing quality
products that keep customers connected, Cablevision offers
Optimum-branded digital cable television, high-speed Internet and
voice services as well as Optimum WiFi, the nation's most robust
WiFi network. Cablevision’s Lightpath subsidiary is a premier
provider of integrated business communications solutions for larger
companies. Through its local media and programming properties –
News 12 Networks and Newsday Media Group – Cablevision also
delivers news and information created specifically for the
communities it serves. Additional information about Cablevision is
available at www.cablevision.com.
This earnings release may contain statements that constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Investors are
cautioned that any such forward-looking statements are not
guarantees of future performance or results and involve risks and
uncertainties, including the risks and uncertainties associated
with the expected timing and likelihood of the consummation of the
pending acquisition by Altice, including regarding the timing,
receipt and terms and conditions of any required governmental
approvals or that the pending acquisition with Altice will not be
consummated at all, and the risks that the proposed acquisition by
Altice and its announcement could have an adverse effect on the
ability of Cablevision to retain and hire key personnel and
maintain relationships with its suppliers and customers and on its
operating results and businesses generally, and that actual results
or developments may differ materially from those in the
forward-looking statements as a result of various factors,
including financial community and rating agency perceptions of the
Company and its business, operations, financial condition and the
industries in which it operates and the factors described in the
Company’s filings with the Securities and Exchange Commission,
including the sections entitled "Risk Factors" and "Management’s
Discussion and Analysis of Financial Condition and Results of
Operations" contained therein. The Company disclaims any
obligation to update any forward-looking statements contained
herein.
Due to the pending acquisition by Altice, Cablevision will not
hold a third quarter earnings conference call and will discontinue
conference calls to discuss its quarterly and annual results during
the pendency of the acquisition.
Detailed financial and operating information related to the
Company's third quarter results are available in Cablevision's Form
10-Q for the quarter ended September 30, 2015, filed today with the
Securities and Exchange Commission.
For additional information, please visit Cablevision’s Investor
Relations website at www.cablevision.com.
CABLEVISION SYSTEMS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
(Dollars in thousands, except per share
data)
(Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30, 2015
2014 2015 2014 Revenues,
net $ 1,612,601 $ 1,626,187 $ 4,880,765 $ 4,829,910
Operating expenses Technical and operating 800,879 787,628
2,402,363 2,348,928 Selling, general and administrative 411,799
377,181 1,177,971 1,120,588 Restructuring expense (credits) (481 )
(137 ) (1,017 ) 530 Depreciation and amortization (including
impairments) 217,288 209,069 650,117 644,442
Operating income 183,116 252,446 651,331 715,422 Other
income (expense): Interest expense, net (146,699 ) (146,442 )
(437,587 ) (430,459 ) Gain (loss) on investments, net (66,388 )
2,151 (20,641 ) 38,988 Gain on equity derivative contracts, net
66,143 13,679 89,616 19,715 Loss on extinguishment of debt and
write-off of deferred financing costs — (1,931 ) (1,735 ) (10,229 )
Miscellaneous, net 1,800 811 4,114 3,348
Income from continuing operations before income taxes 37,972
120,714 285,098 336,785 Income tax expense (a) (14,541 ) (48,813 )
(131,090 ) (83,722 ) Income from continuing operations, net of
income taxes 23,431 71,901 154,008 253,063 Income (loss) from
discontinued operations, net of income taxes (b) (406 ) (79 )
(10,908 ) 2,997 Net income 23,025 71,822 143,100 256,060 Net
loss (income) attributable to noncontrolling interests 78
(331 ) 231 (596 ) Net income attributable to Cablevision
Systems Corporation stockholders $ 23,103 $ 71,491 $
143,331 $ 255,464
Basic income (loss) per share
attributable to
Cablevision Systems
Corporation stockholders:
Income from continuing operations, net of income taxes $ 0.09
$ 0.27 $ 0.57 $ 0.96 Income (loss) from
discontinued operations, net of income taxes $ — $ —
$ (0.04 ) $ 0.01 Net income $ 0.09 $ 0.27 $
0.53 $ 0.97 Basic weighted average common shares (in
thousands) 270,024 265,403 269,089 263,832
Diluted income (loss) per share
attributable to
Cablevision Systems
Corporation stockholders:
Income from continuing operations, net of income taxes $ 0.08
$ 0.26 $ 0.56 $ 0.94 Income (loss) from
discontinued operations, net of income taxes $ — $ —
$ (0.04 ) $ 0.01 Net income $ 0.08 $ 0.26 $
0.52 $ 0.95 Diluted weighted average common shares
(in thousands) 277,266 271,269 275,632 269,625
Amounts attributable to Cablevision
Systems
Corporation
stockholders:
Income from continuing operations, net of income taxes $ 23,509 $
71,570 $ 154,239 $ 252,467 Income (loss) from discontinued
operations, net of income taxes (406 ) (79 ) (10,908 ) 2,997
Net income $ 23,103 $ 71,491 $ 143,331 $
255,464
Cash dividends declared per share of
common
stock
$ 0.15 $ 0.15 $ 0.45 $ 0.45 (a)
Income tax expense for the nine months ended September 30,
2014 includes a tax benefit of $53,132 resulting from the reversal
of an uncertain tax position liability. (b) The Company recorded an
expense of $10,754, net of income taxes, during the nine months
ended September 30, 2015, with respect to the decision in a case
relating to Rainbow Media Holdings LLC, a business whose operations
were previously discontinued.
CABLEVISION SYSTEMS
CORPORATION
RECONCILIATION OF OPERATING INCOME TO
ADJUSTED OPERATING CASH FLOW AND
CONSOLIDATED FREE CASH FLOW FROM
CONTINUING OPERATIONS
(Dollars in thousands) (Unaudited)
RECONCILIATION OF
OPERATING INCOME TO ADJUSTED OPERATING CASH
FLOW(a)
Three Months Ended September 30,
Nine Months Ended September 30, 2015
2014 2015 2014 Operating income $ 183,116 $
252,446 $ 651,331 $ 715,422 Share-based compensation 17,422 10,317
45,272 32,918 Restructuring expense (credits) (481) (137) (1,017)
530 Depreciation and amortization 217,288 209,069 650,117 644,442
Adjusted operating cash flow $ 417,345 $ 471,695 $ 1,345,703 $
1,393,312
CONSOLIDATED FREE
CASH FLOW FROM CONTINUING OPERATIONS(a)
Nine Months Ended September 30,
2015 2014 Net cash provided by
operating activities(b) $ 920,056 $ 1,029,004 Add: excess tax
benefits related to share-based awards 5,592 298 Less: capital
expenditures(c) (603,969) (629,945) Consolidated free cash flow
from continuing operations $ 321,679 $ 399,357 (a)
See Non-GAAP Financial Measures on page 4 of this release
for a definition and discussion of AOCF and Free Cash Flow from
Continuing Operations. (b) The level of net cash provided by
operating activities will continue to depend on a number of
variables in addition to our operating performance, including the
amount and timing of our interest payments and other working
capital items. (c) See page 12 of this release for additional
details relating to capital expenditures.
CABLEVISION SYSTEMS CORPORATION CONSOLIDATED RESULTS FROM
CONTINUING OPERATIONS (Dollars in thousands)
(Unaudited)
REVENUES,
NET
Three Months Ended September 30,
% 2015 2014 Change Cable $
1,447,470 $ 1,458,696 (0.8 )% Lightpath 91,234 87,887 3.8 %
Other(a) 83,590 88,585 (5.6 )% Eliminations(b) (9,693 ) (8,981 )
(7.9 )%
Total Cablevision $ 1,612,601
$ 1,626,187 (0.8 )%
Nine Months Ended September 30,
% 2015 2014 Change Cable
$ 4,380,152 $ 4,330,755 1.1 % Lightpath 273,398 262,671 4.1 %
Other(a) 256,681 264,935 (3.1 )% Eliminations(b) (29,466) (28,451 )
(3.6 )%
Total Cablevision $ 4,880,765 $
4,829,910 1.1 % (a)
Represents revenues of Newsday, News 12 Networks, Cablevision Media
Sales Corporation and certain other entities. (b) Represents
inter-segment revenues.
CABLEVISION SYSTEMS
CORPORATION CONSOLIDATED RESULTS FROM CONTINUING
OPERATIONS (Dollars in thousands) (Unaudited)
ADJUSTED
OPERATING CASH FLOW AND OPERATING INCOME (LOSS)
Adjusted Operating
Cash Flow
Operating Income (Loss)
Three Months Ended
September 30,
%
Three Months Ended
September 30,
% 2015 2014 Change 2015 2014 Change Cable $
423,759 $ 470,602 (10.0 )% $ 226,901 $ 284,965 (20.4 )% Lightpath
41,921 39,038 7.4 % 17,865 16,902 5.7 % Other(a) (48,335 ) (37,945
) (27.4 )% (61,650 ) (49,421 ) (24.7 )%
Total Cablevision
$ 417,345 $ 471,695
(11.5 )% $ 183,116 $
252,446 (27.5 )%
Adjusted Operating
Cash Flow
Operating Income (Loss)
Nine Months Ended
September 30,
%
Nine Months Ended
September 30,
% 2015 2014 Change 2015 2014 Change Cable $
1,333,011 $ 1,392,509 (4.3 )% $ 747,609 $ 815,434 (8.3)% Lightpath
129,078 116,783 10.5 % 57,473 51,385 11.8% Other(a) (116,386 )
(115,980 ) (0.4 )% (153,751) (151,397) (1.6)%
Total
Cablevision $ 1,345,703 $
1,393,312 (3.4 )% $
651,331 $ 715,422 (9.0)% (a)
Includes unallocated corporate general and administrative
costs and the operating results of Newsday, News 12 Networks,
Cablevision Media Sales Corporation, and certain other entities.
CABLEVISION SYSTEMS CORPORATION
SUMMARY OF CABLE OPERATING
STATISTICS
(Unaudited)
CABLE
September 30,
2015
June 30,
2015
September 30,
2014
(in thousands) Total Customers(a) 3,107 3,117 3,129 Video
Customers 2,604 2,637 2,715 High-Speed Data Customers 2,784 2,781
2,756 Voice Customers 2,188 2,208 2,240
Serviceable Passings (in thousands)(b) 5,075
5,067 5,064
Penetration Total Customers to
Serviceable Passings 61.2% 61.5% 61.8% Video Customers to
Serviceable Passings 51.3% 52.0% 53.6% High-Speed Data Customers to
Serviceable Passings 54.9% 54.9% 54.4% Voice Customers to
Serviceable Passings 43.1% 43.6% 44.2%
Revenues for the three months ended
(dollars in millions)
Video(c) $ 785 $ 813 $ 800 High-Speed Data 371 370 356 Voice
228 232 233 Advertising 32 36 43 Other(d) 31 30 27 Total Cable
Revenue $ 1,447 $ 1,481 $ 1,459
Average Monthly Cable Revenue per Customer
(“RPC”)(e)
$
155.04
$
158.52
$
154.50 (a) Represents the number of
households/businesses that receive at least one of the Company's
services. (b) Includes residential passings, as well as commercial
establishments that have connected to our cable distribution
network. (c) Includes equipment rental, DVR, franchise fees,
video-on-demand and pay-per-view revenue. (d) Includes installation
revenue, advertising sales commissions, home shopping and other
product offerings. (e) RPC is calculated by dividing average
monthly Cable GAAP revenue for the quarter by the average number of
total customers for the quarter.
CABLEVISION
SYSTEMS CORPORATION CAPITALIZATION AND LEVERAGE
(Dollars in thousands) (Unaudited)
CAPITALIZATION
September 30,
2015
Cash and cash equivalents $ 872,636 Credit facility
debt $ 2,536,684 Senior notes and debentures 5,859,407
Collateralized indebtedness 1,164,577 Capital lease obligations and
notes payable 70,560 Debt $ 9,631,228
LEVERAGE
Debt $ 9,631,228 Less: Collateralized indebtedness of
unrestricted subsidiaries(a) 1,164,577 Cash and cash equivalents
872,636 Net debt $ 7,594,015 Leverage Ratios(b) Consolidated
net debt to AOCF leverage ratio(a)(c) 4.6x Restricted Group
leverage ratio (Credit Facility Test)(d)(e) 3.0x CSC Holdings notes
and debentures leverage ratio(e)(f) 3.4x Cablevision senior notes
leverage ratio(e)(g) 5.3x (a) Collateralized
indebtedness is excluded from the leverage calculation because it
is viewed as a forward sale of the stock of an unaffiliated company
and the Company's only obligation at maturity is to deliver, at its
option, the stock or its cash equivalent. (b) Leverage ratios are
based on face amount of outstanding debt. (c) AOCF is annualized
based on the third quarter 2015 results, as reported. (d) Reflects
the net debt to cash flow ratio as defined in the CSC Holdings’
credit facility debt agreement (which excludes approximately $2.8
billion of Cablevision’s senior notes and the debt and cash flows
related to CSC Holdings’ unrestricted subsidiaries). The annualized
AOCF (as defined) used in the Restricted Group leverage ratio was
$1.758 billion. (e) Includes CSC Holdings’ guarantee of Newsday
LLC’s $480 million senior secured credit facility. (f) Reflects the
debt to cash flow ratio applicable under CSC Holdings' senior notes
and debentures indentures (which excludes approximately $2.8
billion of Cablevision’s senior notes and the debt and cash flows
related to CSC Holdings’ unrestricted subsidiaries). The annualized
AOCF (as defined) used in the CSC Holdings notes and debentures
leverage ratio was $1.718 billion. (g) Adjusts the debt to cash
flow ratio as calculated under the CSC Holdings notes and
debentures leverage ratio to include approximately $2.8 billion of
Cablevision’s senior notes plus $611 million of Cablevision’s
senior notes that were contributed to Newsday Holdings LLC.
CABLEVISION SYSTEMS CORPORATION CAPITAL
EXPENDITURES (Dollars in thousands) (Unaudited)
Three Months Ended September 30,
2015 2014 Customer premise
equipment $ 74,401 $ 63,895 Scalable infrastructure 58,535 48,259
Line extensions 7,052 3,604 Upgrade/rebuild 12,162 12,737 Support
39,467 39,951 Cable 191,617 168,446 Lightpath 24,083 28,434
Other(a) 6,964 7,872
Total Cablevision $
222,664 $ 204,752 Nine
Months Ended September 30, 2015 2014 Customer premise
equipment $ 177,209 $ 188,890 Scalable infrastructure 160,099
167,118 Line extensions 19,777 12,268 Upgrade/rebuild 43,162 32,128
Support 110,938 120,622 Cable 511,185 521,026 Lightpath
70,877 81,401 Other(a) 21,907 27,518
Total
Cablevision $ 603,969 $
629,945 (a) Other primarily includes Newsday,
News 12 Networks, Cablevision Media Sales Corporation and
Corporate.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151103006820/en/
Cablevision Systems CorporationMedia and Community
RelationsCharles Schueler, 516-803-1013Executive Vice
PresidentorInvestor RelationsCindi Buckwalter, 516-803-2264Senior
Vice President
Cablevision System (NYSE:CVC)
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