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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 September 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 October 25, 2002
Class A Common Stock, $.01 Par Value
  
50,596,878
Class B Common Stock, $.01 Par Value
  
  9,717,537
 

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)
 
    
September 30, 2002
     
December 31, 2001
  
Assets
   
 
(unaudited
)
         
Cash and cash equivalents
   
$
92,164
 
   
$
198,548
 
Investments
   
 
8,929
 
   
 
18,080
 
Trade accounts receivable, net of allowance for doubtful accounts of $1,661 and $2,818 as of September 30, 2002 and December 31, 2001
   
 
17,806
 
   
 
22,918
 
Launch funds receivable
   
 
7,173
 
   
 
12,980
 
Prepaid expenses and other assets
   
 
15,453
 
   
 
18,363
 
    
  
Total current assets
   
 
141,525
 
   
 
270,889
 
Fixed assets, net
   
 
1,185,916
 
   
 
1,151,709
 
Goodwill
   
 
72,965
 
   
 
72,675
 
Franchise costs
   
 
2,330,427
 
   
 
2,323,846
 
Deferred financing costs, net of accumulated amortization of $8,146 and $5,259 as of September 30, 2002 and December 31, 2001
   
 
31,359
 
   
 
32,294
 
Other non-current assets
   
 
15,213
 
   
 
15,979
 
    
  
Total assets
   
$
3,777,405
 
   
$
3,867,392
 
    
  
Liabilities and stockholders’ equity
                  
Accounts payable
   
$
22,142
 
   
$
67,095
 
Accrued expenses and other liabilities
   
 
21,211
 
   
 
23,793
 
Accrued property taxes
   
 
17,901
 
   
 
11,030
 
Accrued programming costs
   
 
25,568
 
   
 
24,287
 
Deferred revenue
   
 
6,713
 
   
 
8,673
 
Interest payable
   
 
39,240
 
   
 
21,940
 
Debt, current portion
   
 
3,750
 
   
 
—
 
Preferred interest distribution payable
   
 
1,750
 
   
 
5,250
 
    
  
Total current liabilities
   
 
138,275
 
   
 
162,068
 
Deferred revenue
   
 
7,092
 
   
 
12,262
 
Debt
   
 
2,552,951
 
   
 
2,542,476
 
Other non-current liabilities
   
 
59,731
 
   
 
62,964
 
Minority interest
   
 
230,180
 
   
 
255,879
 
Preferred interests
   
 
190,220
 
   
 
185,713
 
Stockholders’ equity:
                  
Preferred stock; $.01 par value; 100,000,000 shares authorized; no shares issued and outstanding as of September 30, 2002 and December 31, 2001
   
 
—
 
   
 
—
 
Common stock; $.01 par value:
                  
Class A—300,000,000 shares authorized; 50,596,878 and 50,266,162 shares issued and outstanding as of September 30, 2002 and December 31, 2001
   
 
506
 
   
 
502
 
Class B—100,000,000 shares authorized; 9,717,537 and 9,977,537 shares issued and outstanding as of September 30, 2002 and December 31, 2001
   
 
97
 
   
 
100
 
Additional paid-in-capital
   
 
838,397
 
   
 
851,936
 
Accumulated deficit
   
 
(217,787
)
   
 
(189,964
)
Accumulated other comprehensive loss
   
 
(22,257
)
   
 
(16,544
)
    
  
Total stockholders’ equity
   
 
598,956
 
   
 
646,030
 
    
  
Total liabilities and stockholders’ equity
   
$
3,777,405
 
   
$
3,867,392
 
    
  
 
See accompanying notes

2

 
INSIGHT COMMUNICATIONS COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts)
 
    
Three months ended September 30,
     
Nine months ended September 30,
  
    
2002
     
2001
     
2002
     
2001
  
Revenue
   
$
204,936
 
   
$
183,466
 
   
$
597,147
 
   
$
538,939
 
Operating costs and expenses:
                                    
Programming and other operating costs
   
 
69,731
 
   
 
65,927
 
   
 
208,478
 
   
 
194,068
 
Selling, general and administrative
   
 
42,703
 
   
 
37,427
 
   
 
125,117
 
   
 
112,623
 
Non-recurring high-speed data charges
   
 
—
 
   
 
—
 
   
 
4,116
 
   
 
—
 
Depreciation and amortization
   
 
62,450
 
   
 
94,234
 
   
 
160,375
 
   
 
274,576
 
    
  
  
  
Total operating costs and expenses
   
 
174,884
 
   
 
197,588
 
   
 
498,086
 
   
 
581,267
 
    
  
  
  
Operating income (loss)
   
 
30,052
 
   
 
(14,122
)
   
 
99,061
 
   
 
(42,328
)
Other income (expense):
                                    
Gain on cable systems exchange
   
 
—
 
   
 
—
 
   
 
—
 
   
 
34,178
 
Interest expense
   
 
(50,947
)
   
 
(52,591
)
   
 
(153,713
)
   
 
(157,609
)
Interest income
   
 
422
 
   
 
1,409
 
   
 
1,760
 
   
 
5,775
 
Other
   
 
(25
)
   
 
(117
)
   
 
(50
)
   
 
(634
)
    
  
  
  
Total other expense, net
   
 
(50,550
)
   
 
(51,299
)
   
 
(152,003
)
   
 
(118,290
)
Loss before minority interest, investment activity, income taxes and extraordinary item
   
 
(20,498
)
   
 
(65,421
)
   
 
(52,942
)
   
 
(160,618
)
Minority interest
   
 
11,610
 
   
 
31,600
 
   
 
25,699
 
   
 
101,265
 
Equity in losses of investees
   
 
—
 
   
 
(455
)
   
 
—
 
   
 
(1,824
)
Impairment write-down of investments
   
 
—
 
   
 
—
 
   
 
(205
)
   
 
(2,069
)
    
  
  
  
Loss before income taxes and extraordinary item
   
 
(8,888
)
   
 
(34,276
)
   
 
(27,448
)
   
 
(63,246
)
Benefit (provision) for income taxes
   
 
(125
)
   
 
14,126
 
   
 
(375
)
   
 
25,331
 
    
  
  
  
Loss before extraordinary item
   
 
(9,013
)
   
 
(20,150
)
   
 
(27,823
)
   
 
(37,915
)
Extraordinary loss from early extinguishment of debt, net of tax
   
 
—
 
   
 
—
 
   
 
—
 
   
 
(6,086
)
    
  
  
  
Net loss
   
 
(9,013
)
   
 
(20,150
)
   
 
(27,823
)
   
 
(44,001
)
Accrual of preferred interests
   
 
(5,050
)
   
 
(4,848
)
   
 
(15,007
)
   
 
(14,421
)
    
  
  
  
Net loss applicable to common stockholders
   
$
(14,063
)
   
$
(24,998
)
   
$
(42,830
)
   
$
(58,422
)
    
  
  
  
Basic and diluted loss per share before extraordinary item
   
$
(.15
)
   
$
(.33
)
   
$
(.46
)
   
$
(.63
)
Basic and diluted loss per share related to extraordinary item
   
$
—
 
   
$
—
 
   
$
—
 
   
$
(.10
)
Basic and diluted loss per share attributable to common stockholders
   
$
(.23
)
   
$
(.42
)
   
$
(.71
)
   
$
(.97
)
Basic and diluted weighted-average shares outstanding
   
 
60,293,832
 
   
 
60,207,656
 
   
 
60,272,946
 
   
 
60,192,627
 
 
See accompanying notes

3

 
INSIGHT COMMUNICATIONS COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
 
    
Nine months ended September 30,
  
    
2002
     
2001
  
Operating activities:
                  
Net loss
   
$
(27,823
)
   
$
(44,001
)
Adjustments to reconcile net loss to net cash provided by operating activities:
                  
Depreciation and amortization
   
 
160,375
 
   
 
274,576
 
Equity in losses of investees
   
 
—
 
   
 
1,824
 
Impairment of investments
   
 
205
 
   
 
2,069
 
Gain on cable systems exchange
   
 
—
 
   
 
(34,178
)
Extraordinary loss from early extinguishment of debt, net of tax