Smith Barney Citigroup
14th Annual Entertainment,
Media & Telecommunications
Conference
January 7, 2004
Rocco B. Commisso
Chairman and
Chief Executive Officer
Safe Harbor Statement
Any statements in this presentation that are not historical facts are forwardlooking statements. The words “plan”, “believe”, “expect”, “anticipate”,
“estimate” and other expressions that indicate future events and trends
identify forward-looking statements. These forward-looking statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from historical results or those anticipated. Factors that
could have a material and adverse impact on actual results are described in
the reports and documents Mediacom files from time to time with the
Securities and Exchange Commission. Mediacom undertakes no obligation
to publicly release the results of any revisions to these forward-looking
statements to reflect events or circumstances after today or to reflect the
occurrence of unanticipated events.
Company Overview
 Network upgrades complete
 Redefining our market opportunity
 Launching enhanced broadband products
 Strong 2004 financial guidance
 Dramatic improvement in unlevered FCF
Powerful Broadband Network
Network Capacity
98%
98% of network
upgraded
Network Scale
95%
95% of customers
served by 50 largest
headends
Our Network – Built for Years to Come
 $1.2 billion invested in cable network
 Network capacity can be expanded at
reasonable costs and is success-based
Dark fiber – node splitting
DWDM
Statistical multiplexing
Digital transition
MPEG-4
DOCSIS 2.0
Redefining Market Opportunity
Total Market
Potential:
$8.0 Bln
12.5%
$10.0 Bln
15.0%
Mediacom’s
Market Share
Mediacom’s Rev.:
2003
2007
$1.0 Bln
$1.5 Bln
Revenue diversification to accelerate
Growth Propelled by New RGU’s
Rev/Basic Sub:
$35
$53
$80
98%
84%
67%
Video
Data
Voice
Ad Sales
RGU/HP
Rev/RGU
18%
12%
10%
4%
5%
1999
Q3 2003
2007
68%
$34
81%
$38
105%
$41
John G. Pascarelli
Executive Vice President,
Operations
2004 Operational Objectives
 Enhance video offerings
 Continued investments in customer care
 Strengthen HSD product line
 Expand commercial data business
 Launch VoIP telephony
Core Video Strategy
 Competitive response to DBS
 Leverage our broadband network’s
strengths via product enhancements
 Intensify retention and customer care efforts
 Re-qualify customer base/market footprint
Enhance Video Offering
 Transform the core video product from
family cable to entry-level digital
 Drive incremental digital penetration with
value-added product enhancements
% of digital customers
VOD
DVR
HDTV
Availability
YE03
YE04
50%
65%
70%
60%
80%
Product Differentiation
Customer Care: Priority #1
 Virtual Contact Center initiative enables rerouting of calls among call centers
Instant access to customer records and
company product information
 Transitioned away from external contractors
to in-house trained technicians
 Improves quality of customer service and
productivity of customer care personnel
Residential Data Customer Growth
261,000
191,000
115,000
65,000
Homes
Marketed:
Penetration %:
12/00PF
12/01
12/02
9/03
1,057,000
1,420,000
2,320,000
2,635,000
6.1%
8.1%
8.2%
9.9%
Strengthen HSD Product Line
 Increase flagship product speeds to 3MB
 5MB residential product for heavy users
 Testing “lite” product - slower speeds/no
ISP
 Capitalize on comparative advantages
Core product available to over 95% of
footprint
Limited DSL availability
Expand Commercial Data Business
 Dedicated in-house division
 Naturally positioned with dark fiber and
“One Network”
 Over 500,000 small- and medium-sized
businesses in our markets
 Custom/turnkey high-speed Internet/data
 Enterprise Networks Powered by Mediacom
The Future – VoIP Telephony
 VoIP: next layer of revenue growth
 Complete the “triple play” bundle
 Cash flow accretive business model
 Favorable ROIC
 Positioning to launch service in 2H 2004
Financial
Overview
Flexible Capital Structure
Mediacom Communications
Corporation
Total Debt:
$3.05 Billion
Convertible Notes
Total Debt/OCF
Total Debt (excl cnvt)/OCF
Cost of Debt:
6.4%
Mediacom Broadband LLC
Mediacom LLC
Senior Notes
Total Debt/OCF
$173
7.5x
7.1x
$825
7.1x
Mediacom LLC
Subsidiaries
Senior Secured Debt
$696
Unused Credit Commitments $340
Senior Debt/SCF
3.1x
Senior Notes
Total Debt/OCF
$400
6.5x
Mediacom Broadband LLC
Subsidiaries
Senior Secured Debt
$946
Unused Credit Commitments $446
Senior Debt/SCF
4.4x
Notes: Mediacom LLC bank and bond covenants include the $4.5 million of 3Q03 investment income paid
by Mediacom Broadband LLC as SCF and/or OCF.
Based on 3Q03 data.
Dollars in millions.
Strong Credit Profile – Debt Maturities
Convert
(Q3 2003)
Bank Debt
Note: Dollars in millions. Excludes $7.2 million of capital leases.
20
13
20
12
20
11
20
10
20
09
20
08
20
07
20
06
20
05
Fixed/Floating:
73%/27%
20
04
20
03
$1,000
$900
$800
$700
$600
$500
$400
$300
$200
$100
$0
Senior Notes
Excellent Liquidity Position
Borrowing Groups
(Q3 2003)
USA
Annualized Bank Cash Flow
(1)
$
Bank Debt Outstanding
(2)
Potential Availability
$
4.75x
217.3
5.75x
571.9
$
491.2
$
$
(334.7)
$
(369.5)
$
(953.8)
$
237.2
$
121.7
$
295.9
187.6
(3)
103.4
Broadband
$
Unused Bank Lines
Actual Availability
$
4.75x
Maximum Leverage Ratio
Maximum Availability
120.4
Midwest
$
187.6
152.7
$
121.7
1,249.7
446.2
$
295.9
Total borrowing availability of $605 million
Notes: Dollars in millions. As of 9/30/03.
(1)
USA and Midwest Annualized Bank Cash Flow each includes $9.0 million of annualized investment
income on the combined 12% $150 million preferred equity investment in Mediacom Broadband LLC.
(2)
Includes letters of credit and capital lease obligations (net of carve-outs) for bank covenant purposes.
(3)
Actual Availability is the lower of Potential Availability and Unused Bank Lines.
2004 Financial Guidance
 Revenue of $1.075 billion to $1.085 billion
 OIBDA of $425 million to $435 million
 CAPEX of $165 million to $175 million
 Unlevered FCF of at least $250 million
 Interest expense of $194 million to $200 million
 FCF of at least $50 million
Significant Decline in CAPEX
$408
$400
Q1-Q3 03 $193
Q4 03
47
2003
$240
$350
$300
$240
$250
$200
Upgrades $150
$170
$200
$100
$50
$55
$0
CAPEX per Sub:
2002
2003
2004
$256
$155
$110
Note: Dollars in millions except per sub figures. 2004 cap ex represents midpoint of guidance.
Dramatic Improvement in Unlevered FCF
$250
 $1 billion of NOLs
 New valuation metrics
$165
($56)
($37)
($37)
2000
2001
2002
2003
2004
(6.3%)
(4.0%)
16.4%
23.1%
% of
Revenue: (17.0%)
Notes: Dollars in millions. 2004 revenue figure based on mid-point of revenue guidance.
NOLs – Real “Unrecognized” Value
 Net operating loss carry forwards projected
to exceed $1.0 billion at YE03
 Taxable income not expected until 2009, so
NOLs will continue to grow
 NOLs represent real “future” value as a tax
shield and hundreds of millions of dollars in
“present” value
Putting Mediacom Into Perspective
Monthly Rev/Sub
$69
$54
OCF Margin
40%
37%
MCCC
INDUSTRY
Unlevered FCF/Revenues
MCCC
Annual Unlevered FCF/Sub
$124
19%
$120
15%
MCCC
Note: Data for the Q3 2003 period.
INDUSTRY
INDUSTRY
MCCC
INDUSTRY
Summary
 Leverage broadband network
 Strengthen competitive video position
 Broaden data business
 Seize VoIP opportunity
 Accelerate FCF growth and deliver superior
ROIC
Use of Non-GAAP Financial Measures
This presentation includes the financial measures “operating income before
depreciation and amortization,” “unlevered free cash flow” and “free cash flow”,
which are not determined in accordance with generally accepted accounting
principles (GAAP) in the United States. The Company defines unlevered free cash
flow as operating income before depreciation and amortization less capital
expenditures, and free cash flow as operating income before depreciation and
amortization less interest expense, net and capital expenditures.
Operating income before depreciation and amortization is one of the primary
measures used by management to evaluate the Company’s performance and to
forecast future results. The Company believes this measure is useful for investors
because it enables them to assess the Company’s performance in a manner similar
to the method used by management, and provides a measure that can be used to
analyze, value and compare the companies in the cable television industry, which
may have different depreciation and amortization policies. A limitation of this
measure, however, is that it excludes depreciation and amortization, which
represents the periodic costs of certain capitalized tangible and intangible assets
used in generating revenues in the Company’s business. Management uses a
separate process to budget, measure and evaluate capital expenditures.
Use of Non-GAAP Financial Measures
Free cash flow is used by management to evaluate the Company’s ability to service
its debt and to fund continued growth with internally generated funds. The
Company believes this measure is useful for investors because it enables them to
assess the Company’s ability to service its debt and to fund continued growth with
internally generated funds in a manner similar to the method used by management,
and provides a measure that can be used to analyze, value and compare
companies in the cable television industry. The Company’s definition of free cash
flow eliminates the impact of quarterly working capital fluctuations, most notably the
timing of semi-annual cash interest payments on the Company’s senior notes. The
only difference between the terms free cash flow and unlevered free cash flow is
that unlevered free cash flow does not subtract interest expense, net. The
Company’s definitions of free cash flow and unlevered free cash flow may not be
comparable to similarly titled measures used by other companies.
Operating income before depreciation and amortization, unlevered free cash flow
and free cash flow should not be regarded as alternatives to either operating
income or net loss as indicators of operating performance or to the statement of
cash flows as measures of liquidity, nor should they be considered in isolation or as
substitutes for financial measures prepared in accordance with GAAP.
Use of Non-GAAP Financial Measures
The Company believes that operating income is the most directly comparable
GAAP financial measure to operating income before depreciation and amortization,
and that net cash flows provided by operating activities is the most directly
comparable GAAP measure to unlevered free cash flow and free cash flow.
Any applicable reconciliation of historical non-GAAP financial measures included in
this presentation to the most directly comparable GAAP financial measures is
available at the Press Releases link in the Investor Relations section of the
Company’s website at www.mediacomcc.com. The Company is unable to reconcile
operating income before depreciation and amortization, unlevered free cash flow
and free cash flow to their most directly comparable GAAP measures on a forwardlooking basis primarily because it is impractical to project the timing of certain items,
such as the initiation of depreciation relative to network construction projects, or
changes in working capital.