##### Table of Contents



UNITED STATES
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 March 31, 2009
 Commission File Numbers: 333-57285-01
 333-57285
 Mediacom LLC
Mediacom Capital Corporation*
 (Exact names of Registrants as specified in their charters)
 New York
    
    06-1433421New York
    
    06-1513997(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Numbers)
 100 Crystal Run Road
Middletown, New York 10941  (Address of principal executive offices)
 (845) 695-2600  (Registrants telephone number)
 o þ
  o Yes o No
  o Large accelerated filers
    
    o Accelerated filers
    
    þ Non-accelerated filers
    

o
Smaller reporting companies
 o Yes þ No
  *
    
    Mediacom Capital Corporation meets the conditions set forth in General Instruction H (1) (a)
and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format.




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##### 



MEDIACOM LLC AND SUBSIDIARIES
 FORM 10-Q
FOR THE PERIOD ENDED MARCH 31, 2009
 TABLE OF CONTENTS
 PagePART IItem 1. Financial Statements
    
    
    4Consolidated Balance Sheets (unaudited) March 31, 2009 and December 31, 2008
    
    
    4Consolidated Statements of Operations (unaudited) Three Months Ended March 31, 2009 and 2008
    
    
    5Consolidated Statements of Cash Flows (unaudited) Three Months Ended March 31, 2009 and 2008
    
    
    6Notes to Consolidated Financial Statements (unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    24Item 4. Controls and Procedures
    
    
    24PART IIItem 1. Legal Proceedings
    
    
    25Item 1A. Risk Factors
    
    
    25Item 6. Exhibits
    
    
    25Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
    2




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Cautionary Statement Regarding Forward-Looking Statements
    3




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##### Table of Contents



PART I
 
 ITEM 1. FINANCIAL STATEMENTS
 MEDIACOM LLC AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 
 March 31,
    
    
    December 31,2009
    
    
    2008ASSETSCURRENT ASSETSCash
    
    $
    13,929
    
    
    $
    10,060Accounts receivable, net of allowance for doubtful accounts of $798 and $1,127
    
    
    33,589
    
    
    
    36,033Prepaid expenses and other current assets
    
    
    8,570
    
    
    
    7,575Total current assets
    
    
    56,088
    
    
    
    53,668Preferred equity investment in affiliated company
    
    
    150,000
    
    
    
    150,000Investment in cable television systems:Property, plant and equipment, net of accumulated depreciation of $1,026,718 and $1,102,831
    
    
    703,552
    
    
    
    718,467Franchise rights
    
    
    616,807
    
    
    
    550,709Goodwill
    
    
    37,067
    
    
    
    16,642Subscriber lists, net of accumulated amortization of $117,029 and $132,305
    
    
    1,248
    
    
    
    761Total investment in cable television systems
    
    
    1,358,674
    
    
    
    1,286,579Other assets, net of accumulated amortization of $14,849 and $14,440
    
    
    8,096
    
    
    
    8,878Total assets
    
    $
    1,572,858
    
    
    $
    1,499,125LIABILITIES AND MEMBERS DEFICITCURRENT LIABILITIESAccounts payable, accrued expenses and other current liabilities
    
    $
    229,230
    
    
    $
    238,337Deferred revenue
    
    
    24,208
    
    
    
    24,828Current portion of long-term debt
    
    
    37,000
    
    
    
    30,500Total current liabilities
    
    
    290,438
    
    
    
    293,665Long-term debt, less current portion
    
    
    1,506,000
    
    
    
    1,489,500Other non-current liabilities
    
    
    22,335
    
    
    
    20,221Total liabilities
    
    
    1,818,773
    
    
    
    1,803,386Commitments and contingencies (Note 8)MEMBERS DEFICITCapital contributions
    
    
    441,274
    
    
    
    394,517Accumulated deficit
    
    
    (687,189
    )
    
    
    (698,778
    )Total members deficit
    
    
    (245,915
    )
    
    
    (304,261
    )Total liabilities and members deficit
    
    $
    1,572,858
    
    
    $
    1,499,125
 
  4




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MEDIACOM LLC AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 
 Three Months EndedMarch 31,2009
    
    
    2008Revenues
    
    $
    161,816
    
    
    $
    148,939Costs and expenses:Service costs (exclusive of depreciation and amortization)
    
    
    72,180
    
    
    
    63,503Selling, general and administrative expenses
    
    
    27,233
    
    
    
    26,565Management fee expense
    
    
    2,984
    
    
    
    2,929Depreciation and amortization
    
    
    28,593
    
    
    
    29,069Operating income
    
    
    30,826
    
    
    
    26,873Interest expense, net
    
    
    (22,046
    )
    
    
    (26,702
    )Loss on derivatives, net
    
    
    (519
    )
    
    
    (8,898
    )Loss on sale of cable systems, net
    
    
    (311
    )
    
    
    (170
    )Investment income from affiliate
    
    
    4,500
    
    
    
    4,500Other expense, net
    
    
    (861
    )
    
    
    (984
    )Net income (loss)
    
    $
    11,589
    
    
    $
    (5,381
    )
 
  5




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##### Table of Contents



MEDIACOM LLC AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 Three Months EndedMarch 31,2009
    
    
    2008OPERATING ACTIVITIES:Net income (loss)
    
    $
    11,589
    
    
    $
    (5,381
    )Adjustments to reconcile net loss to net cash flows provided by operating activities:Depreciation and amortization
    
    
    28,593
    
    
    
    29,069Loss on derivatives, net
    
    
    519
    
    
    
    8,898Loss on sale of cable systems, net
    
    
    310
    
    
    
    170Amortization of deferred financing costs
    
    
    409
    
    
    
    526Share-based compensation
    
    
    138
    
    
    
    136Changes in assets and liabilities, net of effects from acquisitions:Accounts receivable, net
    
    
    2,134
    
    
    
    1,178Prepaid expenses and other assets
    
    
    900
    
    
    
    (155
    )Accounts payable, accrued expenses and other current liabilities
    
    
    (8,665
    )
    
    
    3,768Deferred revenue
    
    
    (620
    )
    
    
    960Other non-current liabilities
    
    
    (63
    )
    
    
    (381
    )Net cash flows provided by operating activities
    
    $
    35,244
    
    
    $
    38,788INVESTING ACTIVITIES:Capital expenditures
    
    $
    (23,925
    )
    
    $
    (27,879
    )Net cash flows used in investing activities
    
    $
    (23,925
    )
    
    $
    (27,879
    )FINANCING ACTIVITIES:New borrowings
    
    $
    131,625
    
    
    $
    31,000Repayment of debt
    
    
    (108,625
    )
    
    
    (32,625
    )Capital distributions from parent (Notes 2, 9)
    
    
    80,498
    
    
    
    Capital contributions to parent
    
    
    (110,000
    )
    
    
    Other financing activities  book overdrafts
    
    
    (948
    )
    
    
    (9,208
    )Net cash flows used in financing activities
    
    $
    (7,450
    )
    
    $
    (10,833
    )Net increase in cash
    
    
    3,869
    
    
    
    76CASH, beginning of period
    
    
    10,060
    
    
    
    9,585CASH, end of period
    
    $
    13,929
    
    
    $
    9,661SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid during the period for interest, net of amounts capitalized
    
    $
    38,190
    
    
    $
    41,004NON-CASH TRANSACTIONS  FINANCING:Exchange of cable systems with affiliate (Note 9)
    
    $
    108,643
    
    
    $
    
 
  6




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MEDIACOM LLC AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. ORGANIZATION
 Basis of Preparation of Unaudited Consolidated Financial Statements
  Fair Value
Measurements.
   Reclassifications
  2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
 Fair
Value Measurements.
  
    
    Level 1  Quoted market prices in active markets for identical assets or liabilities.
    
    Level 2  Observable market based inputs or unobservable inputs that are corroborated by
market data.
    
    Level 3  Unobservable inputs that are not corroborated by market data.
  7




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##### Table of Contents



Fair Value as of March 31, 2009Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Level 4
    
    
    TotalLiabilitiesInterest rate exchange agreements
    
    $
    
    
    
    $
    33,345
    
    
    $
    
    
    
    $
    
    
    
    $
    33,345$
    
    
    
    $
    33,345
    
    
    $
    
    
    
    $
    
    
    
    $
    33,345
 The Fair Value Option for Financial Assets and
Financial Liabilities 
Including an amendment of FASB Statement No. 115.
 Business Combinations,
 Disclosures about Derivative Instruments and Hedging
Activities  an
amendment of FASB Statement No. 133.
 3. PROPERTY, PLANT AND EQUIPMENT
  March 31,
    
    
    December 31,2009
    
    
    2008Cable systems, equipment and subscriber devices
    
    $
    1,657,674
    
    
    $
    1,743,864Vehicles
    
    
    35,255
    
    
    
    36,295Furniture, fixtures and office equipment
    
    
    21,010
    
    
    
    22,889Buildings and leasehold improvements
    
    
    14,812
    
    
    
    16,706Land and land improvements
    
    
    1,519
    
    
    
    1,5441,730,270
    
    
    
    1,821,298Accumulated depreciation
    
    
    (1,026,718
    )
    
    
    (1,102,831
    )Property, plant and equipment, net
    
    $
    703,552
    
    
    $
    718,467
  8




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##### Table of Contents



Change in Estimate Useful lives
  Useful lives (in years)From
    
    
    ToPlant and equipment
    
    
    12
    
    
    
    16Customer premise equipment
    
    
    5
    
    
    
    7
  4. ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
  March 31,
    
    
    December 31,2009
    
    
    2008Accounts payable  affiliates
    
    $
    119,762
    
    
    $
    111,070Accrued programming costs
    
    
    17,634
    
    
    
    17,175Liability under interest rate exchange agreements
    
    
    16,861
    
    
    
    18,519Accrued interest
    
    
    12,762
    
    
    
    28,377Accrued payroll and benefits
    
    
    11,701
    
    
    
    10,706Accrued service costs
    
    
    9,188
    
    
    
    8,241Accrued taxes and fees
    
    
    8,817
    
    
    
    13,224Accrued property, plant and equipment
    
    
    7,571
    
    
    
    8,037Book overdrafts (1)
    
    
    6,827
    
    
    
    7,782Subscriber advance payments
    
    
    6,153
    
    
    
    5,523Accrued telecommunications costs
    
    
    2,996
    
    
    
    2,788Accounts payable
    
    
    1,290
    
    
    
    416Other accrued expenses
    
    
    7,668
    
    
    
    6,479Accounts payable, accrued expenses and other current liabilities
    
    $
    229,230
    
    
    $
    238,337
 (1)
    
    Book overdrafts represent outstanding checks in excess of funds on deposit at our
disbursement accounts. We transfer funds from our depository accounts to our disbursement
accounts upon daily notification of checks presented for payment. Changes in book overdrafts
are reported as part of cash flows from financing activities in our consolidated statement of
cash flows. 5. DEBT
  March 31,
    
    
    December 31,2009
    
    
    2008Bank credit
facility
    
    $
    918,000
    
    
    $
    895,00077/8% senior notes due 2011
    
    
    125,000
    
    
    
    125,00091/2% senior notes due 2013
    
    
    500,000
    
    
    
    500,000$
    1,543,000
    
    
    $
    1,520,000Less: Current portion
    
    
    37,000
    
    
    
    30,500Total long-term debt
    
    $
    1,506,000
    
    
    $
    1,489,500
  9




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Bank
Credit Facility
    Interest Rate Swaps
     Senior Notes
  Covenant Compliance and Debt Ratings
   10




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##### Table of Contents



6.
MEMBERS DEFICIT
 Share-based Compensation
  Three Months EndedMarch 31,2008
    
    
    2007Share-based compensation expense by type of award:Employee stock options
    
    $
    8
    
    
    $
    21Employee stock purchase plan
    
    
    27
    
    
    
    12Restricted stock units
    
    
    103
    
    
    
    103Total share-based compensation expense
    
    $
    138
    
    
    $
    136
  Employee Stock Purchase Plan
  7. INVESTMENT IN AFFILIATED COMPANY
  8. COMMITMENTS AND CONTINGENCIES
 Legal Proceedings
 Gary Ogg and Janice Ogg v.
Mediacom LLC
   11




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##### Table of Contents



9. RELATED PARTY TRANSACTION
 Share Exchange Agreement between MCC and an affiliate of Morris Communications
   Asset Transfer Agreement with MCC and Mediacom Broadband
         12




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10. GOODWILL AND OTHER INTANGIBLE ASSETS
 Goodwill and Other Intangible Assets,
      13




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Overview
    Recent Developments
 Share Exchange Agreement between MCC and an affiliate of Morris Communications
   Asset Transfer Agreement with MCC and Mediacom Broadband
      14




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##### Table of Contents



Recently
Issued Accounting Pronouncements  Business Combinations
 Business Combinations,
   Revenues, Costs and Expenses
      15




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Adjusted OIBDA
   16




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Actual Results of Operations
 Three Months Ended March 31, 2009 compared to Three Months Ended March 31, 2008
  Three Months EndedMarch 31,2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeRevenues
    
    $
    161,816
    
    
    $
    148,939
    
    
    $
    12,877
    
    
    
    8.6
    %Costs and expenses:Service costs (exclusive of depreciation and amortization)
    
    
    72,180
    
    
    
    63,503
    
    
    
    8,677
    
    
    
    13.7
    %Selling, general and administrative expenses
    
    
    27,233
    
    
    
    26,565
    
    
    
    668
    
    
    
    2.5
    %Management fee expense
    
    
    2,984
    
    
    
    2,929
    
    
    
    55
    
    
    
    1.9
    %Depreciation and amortization
    
    
    28,593
    
    
    
    29,069
    
    
    
    (476
    )
    
    
    (1.6
    %)Operating income
    
    
    30,826
    
    
    
    26,873
    
    
    
    3,953
    
    
    
    14.7
    %Interest expense, net
    
    
    (22,046
    )
    
    
    (26,702
    )
    
    
    4,656
    
    
    
    (17.4
    %)Loss on derivatives, net
    
    
    (519
    )
    
    
    (8,898
    )
    
    
    8,379
    
    
    
    (94.2
    %)Loss on sale of cable systems
    
    
    (311
    )
    
    
    (170
    )
    
    
    (141
    )
    
    
    82.9
    %Investment income from affiliate
    
    
    4,500
    
    
    
    4,500
    
    
    
    
    
    
    NMOther expense, net
    
    
    (861
    )
    
    
    (984
    )
    
    
    123
    
    
    
    (12.5
    %)Net income (loss)
    
    $
    11,589
    
    
    $
    (5,381
    )
    
    $
    16,970
    
    
    NMAdjusted OIBDA
    
    $
    59,557
    
    
    $
    56,078
    
    
    $
    3,479
    
    
    
    6.2
    %
  Three Months EndedMarch 31,2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeAdjusted OIBDA
    
    $
    59,557
    
    
    $
    56,078
    
    
    $
    3,479
    
    
    
    6.2
    %Non-cash, share-based compensation
    
    
    (138
    )
    
    
    (136
    )
    
    
    (2
    )
    
    
    1.5
    %Depreciation and amortization
    
    
    (28,593
    )
    
    
    (29,069
    )
    
    
    476
    
    
    
    (1.6
    %)Operating income
    
    $
    30,826
    
    
    $
    26,873
    
    
    $
    3,953
    
    
    
    14.7
    %
  17




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Revenues
  Three Months EndedMarch 31,2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeVideo
    
    $
    105,281
    
    
    $
    101,229
    
    
    
    4,052
    
    
    
    4.0
    %HSD
    
    
    40,403
    
    
    
    34,708
    
    
    
    5,695
    
    
    
    16.4
    %Phone
    
    
    12,324
    
    
    
    8,434
    
    
    
    3,890
    
    
    
    46.1
    %Advertising
    
    
    3,808
    
    
    
    4,568
    
    
    
    (760
    )
    
    
    (16.6
    %)Total Revenues
    
    $
    161,816
    
    
    $
    148,939
    
    
    
    12,877
    
    
    
    8.6
    %
 Three Months EndedMarch 31,
    
    
    Increase/2009
    
    
    2008
    
    
    (Decrease)
    
    
    % ChangeBasic subscribers
    
    
    573,000
    
    
    
    604,000
    
    
    
    (31,000
    )
    
    
    (5.1
    %)Digital customers
    
    
    288,000
    
    
    
    253,000
    
    
    
    35,000
    
    
    
    13.8
    %HSD customers
    
    
    335,000
    
    
    
    314,000
    
    
    
    21,000
    
    
    
    6.7
    %Phone customers
    
    
    119,000
    
    
    
    90,000
    
    
    
    29,000
    
    
    
    32.2
    %RGUs(1)
    
    
    1,315,000
    
    
    
    1,261,000
    
    
    
    54,000
    
    
    
    4.3
    %Average total monthly revenue
per basic subscriber (2)
    
    $
    91.89
    
    
    $
    82.20
    
    
    $
    9.69
    
    
    
    11.8
    %
 (1)
    
    RGUs represent the total of basic subscribers and digital, HSD and phone customers.(2)
    
    Represents total average monthly revenues for the quarter divided by total average basic
subscribers for such period. Recently Issued Accounting Pronouncements  Business Combinations.
      18




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Costs and Expenses
     Adjusted OIBDA
  Operating Income
  Interest Expense, Net
  Loss on Derivatives, Net
   19




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Investment Income from Affiliate
  Other
Expense, Net
  Net Income (Loss)
  Liquidity and Capital Resources
 Overview
   Recent Developments in the Credit Markets
    Operating Activities
    20




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##### Table of Contents



Investing Activities
  Financing Activities
   Bank
Credit Facility
    Interest Rate Swaps
    21




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Senior Notes
  Covenant Compliance and Debt Ratings
  Contractual Obligations and Commercial Commitments
  Critical Accounting Policies
  Goodwill and Other Intangible Assets
 Goodwill and Other Intangible Assets,
  22




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23




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Inflation and Changing Prices
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
 Mediacom LLC
   Mediacom Capital Corporation
    24




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##### Table of Contents



PART II
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 6. EXHIBITS
 ExhibitNumber
    
    Exhibit Description31.1
    
    
    Rule 15d-14(a) Certifications of Mediacom LLC31.2
    
    
    Rule 15d-14(a) Certifications of Mediacom Capital Corporation32.1
    
    
    Section 1350 Certifications of Mediacom LLC32.2
    
    
    Section 1350 Certifications of Mediacom Capital Corporation
  25




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##### Table of Contents



SIGNATURES
  MEDIACOM LLCMay 15, 2009
    By:
    /s/ Mark E. StephanMark E. StephanExecutive Vice President and Chief Financial Officer  26




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##### Table of Contents



SIGNATURES
  MEDIACOM CAPITAL CORPORATIONMay 15, 2009
    By:
    /s/ Mark E. StephanMark E. StephanExecutive Vice President and Chief Financial Officer  27




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Exhibit Description31.1
    
    
    Rule 15d-14(a) Certifications of Mediacom LLC31.2
    
    
    Rule 15d-14(a) Certifications of Mediacom Capital Corporation32.1
    
    
    Section 1350 Certifications of Mediacom LLC32.2
    
    
    Section 1350 Certifications of Mediacom Capital Corporation
  28