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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2002
 
Commission file number 0-26677
 
 
INSIGHT COMMUNICATIONS COMPANY, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
  
13-4053502
(State or other jurisdiction of
incorporation or organization)
  
(I.R.S. Employer
Identification No.)
 
     
810 7th Avenue
    
New York, New York
  
10019
(Address of principal executive offices)
  
(Zip code)
 
Registrant’s telephone number, including area code: 917-286-2300
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes  X  No       
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
Class
  
Outstanding at July 26, 2002
Class A Common Stock, $.01 Par Value
  
50,209,006
Class B Common Stock, $.01 Par Value
  
10,067,537
 
 

PART I.    FINANCIAL INFORMATION
 
Item 1.    Financial Statements
 
The accompanying unaudited consolidated financial statements have been prepared in accordance with the requirements of Form 10-Q and, therefore, do not include all information and footnotes required by accounting principles generally accepted in the United States. However, in our opinion, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of operations for the relevant periods have been made. Results for the interim periods are not necessarily indicative of the results to be expected for the year. These financial statements should be read in conjunction with the summary of significant accounting policies and the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2001.
 

1

 
INSIGHT COMMUNICATIONS COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
    
June 30,
2002
     
December 31, 2001
  
Assets
   
(unaudited)
         
Cash and cash equivalents
   
$
88,216
 
   
$
198,548
 
Investments
   
 
9,876
 
   
 
18,080
 
Trade accounts receivable, net of allowance for doubtful accounts of $2,543 and $2,818 as of June 30, 2002 and December 31, 2001
   
 
21,772
 
   
 
22,918
 
Launch funds receivable
   
 
7,263
 
   
 
12,980
 
Prepaid expenses and other assets
   
 
18,259
 
   
 
18,363
 
    
  
Total current assets
   
 
145,386
 
   
 
270,889
 
Fixed assets, net
   
 
1,181,416
 
   
 
1,151,709
 
Goodwill
   
 
72,965
 
   
 
72,675
 
Franchise costs
   
 
2,290,258
 
   
 
2,283,155
 
Other intangible assets, net of accumulated amortization of $3,403 and $2,260 as of June 30, 2002 and December 31, 2001
   
 
40,525
 
   
 
41,223
 
Deferred financing costs, net of accumulated amortization of $7,161 and $5,259 as of June 30, 2002 and December 31, 2001
   
 
32,279
 
   
 
32,294
 
Other non-current assets
   
 
14,657
 
   
 
15,447
 
    
  
Total assets
   
$
3,777,486
 
   
$
3,867,392
 
    
  
Liabilities and stockholders’ equity
                  
Accounts payable
   
$
28,755
 
   
$
67,095
 
Accrued expenses and other liabilities
   
 
21,087
 
   
 
23,793
 
Accrued property taxes
   
 
17,573
 
   
 
11,030
 
Accrued programming costs
   
 
25,532
 
   
 
24,287
 
Deferred revenue
   
 
6,023
 
   
 
8,673
 
Interest payable
   
 
21,279
 
   
 
21,940
 
Debt—current portion
   
 
2,500
 
   
 
—  
 
Preferred interest distribution payable
   
 
5,250
 
   
 
5,250
 
    
  
Total current liabilities
   
 
127,999
 
   
 
162,068
 
Deferred revenue
   
 
9,330
 
   
 
12,262
 
Debt
   
 
2,536,232
 
   
 
2,542,476
 
Other non-current liabilities
   
 
58,122
 
   
 
62,964
 
Minority interest
   
 
241,790
 
   
 
255,879
 
Preferred interests
   
 
188,670
 
   
 
185,713
 
Stockholders’ equity:
                  
Preferred stock; $.01 par value; 100,000,000 shares authorized; no shares issued and outstanding as of June 30, 2002 and December 31, 2001
   
 
—  
 
   
 
—  
 
Common stock; $.01 par value:
                  
Class A – 300,000,000 shares authorized; 50,299,006 and 50,266,162 shares issued and outstanding as of June 30, 2002 and December 31, 2001
   
 
502
 
   
 
502
 
Class B – 100,000,000 shares authorized; 9,977,537 shares issued and outstanding as of June 30, 2002 and December 31, 2001
   
 
101
 
   
 
100
 
Additional paid-in-capital
   
 
842,998
 
   
 
851,936
 
Accumulated deficit
   
 
(208,774
)
   
 
(189,964
)
Accumulated other comprehensive loss
   
 
(19,484
)
   
 
(16,544
)
    
  
Total stockholders’ equity
   
 
615,343
 
   
 
646,030
 
    
  
Total liabilities and stockholders’ equity
   
$
3,777,486
 
   
$
3,867,392
 
    
  
 

See accompanying notes

2

INSIGHT COMMUNICATIONS COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share and per share amounts)
 
    
Three months ended June 30,
     
Six months ended June 30,
  
    
2002
     
2001
     
2002
     
2001
  
Revenue
   
$
200,033
 
   
$
181,247
 
   
$
392,211
 
   
$
355,473
 
 
Operating costs and expenses:
                                    
Programming and other operating costs
   
 
69,194
 
   
 
65,552
 
   
 
138,747
 
   
 
128,140
 
Selling, general and administrative
   
 
41,534
 
   
 
38,595
 
   
 
82,414
 
   
 
75,197
 
Non-recurring high-speed data charges
   
 
—
 
   
 
—
 
   
 
4,116
 
   
 
—
 
Depreciation and amortization
   
 
49,481
 
   
 
92,076
 
   
 
97,925
 
   
 
180,342
 
    
  
  
  
Total operating costs and expenses
   
 
160,209
 
   
 
196,223
 
   
 
323,202
 
   
 
383,679
 
    
  
  
  
Operating income (loss)
   
 
39,824
 
   
 
(14,976
)
   
 
69,009
 
   
 
(28,206
)
Other income (expense):
                                    
Gain on cable systems exchange
   
 
—
 
   
 
—
 
   
 
—
 
   
 
34,178
 
Interest expense
   
 
(50,831
)
   
 
(53,610
)
   
 
(102,766
)
   
 
(105,018
)
Interest income
   
 
441
 
   
 
2,315
 
   
 
1,338
 
   
 
4,366
 
Other
   
 
(28
)
   
 
(290
)
   
 
(25
)
   
 
(517
)
    
  
  
  
Total other expense, net
   
 
(50,418
)
   
 
(51,585
)
   
 
(101,453
)
   
 
(66,991
)
Loss before minority interest, investment activity, income taxes and extraordinary item
   
 
(10,594
)
   
 
(66,561
)
   
 
(32,444
)
   
 
(95,197
)
Minority interest
   
 
4,163
 
   
 
35,227
 
   
 
14,089
 
   
 
69,665
 
Equity in losses of investees
   
 
—
 
   
 
(657
)
   
 
—
 
   
 
(1,369
)
Impairment write-down of investments
   
 
—
 
   
 
(2,069
)
   
 
(205
)
   
 
(2,069
)
    
  
  
  
Loss before income taxes and extraordinary item
   
 
(6,431
)
   
 
(34,060
)
   
 
(18,560
)
   
 
(28,970
)
Benefit (provision) for income taxes
   
 
(125
)
   
 
12,186
 
   
 
(250
)
   
 
11,205
 
    
  
  
  
Loss before extraordinary item
   
 
(6,556
)
   
 
(21,874
)
   
 
(18,810
)
   
 
(17,765
)
Extraordinary loss from early extinguishment of debt, net of tax
   
 
—
 
   
 
—
 
   
 
—
 
   
 
(6,086
)
    
  
  
  
Net loss
   
 
(6,556
)
   
 
(21,874
)
   
 
(18,810
)
   
 
(23,851
)
Accrual of preferred interests
   
 
(5,002
)
   
 
(4,807
)
   
 
(9,957
)
   
 
(9,573
)
    
  
  
  
Net loss applicable to common stockholders
   
$
(11,558
)
   
$
(26,681
)
   
$
(28,767
)
   
$
(33,424
)
    
  
  
  
Basic and diluted loss per share before extraordinary item
   
$
(.19
)
   
$
(.44
)
   
$
(.48
)
   
$
(.46
)
Basic and diluted loss per share related to extraordinary item
   
$
—
 
   
$
—
 
   
$
—
 
   
$
(.10
)
Basic and diluted loss per share attributable to common stockholders
   
$
(.19
)
   
$
(.44
)
   
$
(.48
)
   
$
(.56
)
Basic and diluted weighted-average shares outstanding
   
 
60,272,053
 
   
 
60,186,834
 
   
 
60,259,170
 
   
 
60,185,042
 
 

See accompanying notes

3

INSIGHT COMMUNICATIONS COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
    
Six months ended June 30,
  
    
2002
     
2001
  
Operating activities:
                  
Net loss
   
$
(18,810
)
   
$
(23,851
)
Adjustments to reconcile net loss to net cash provided by operating activities:
                  
Depreciation and amortization
   
 
97,925
 
   
 
180,342
 
Equity in losses of investees
   
 
—  
 
   
 
1,369
 
Impairment of investments
   
 
205
 
   
 
2,069
 
Gain on cable systems exchange
   
 
—  
 
   
 
(34,178
)
Extraordinary loss from early extinguishment of debt, net of tax