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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-K
 
 Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 For the fiscal year ended December 31, 2005
 Commission File Number: 0-29227
 Mediacom Communications Corporation
 (Exact name of Registrant as specified in its charter)
 Delaware(State of incorporation)
    
    06-1566067(I.R.S. Employer
Identification Number)
 100 Crystal Run Road
Middletown, New York 10941  (Address of principal executive offices)
 (845) 695-2600  (Registrants telephone number)
 Securities registered pursuant to Section 12(b) of the Exchange Act:
 Securities registered pursuant to Section 12(g) of the Exchange Act:
 o þ
 o þ
 þ o
 þ
  o Large accelerated filer
    
    þ Accelerated filer
    
    o Non-accelerated filer
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



MEDIACOM COMMUNICATIONS CORPORATION
2005 FORM 10-K ANNUAL REPORT
 TABLE OF CONTENTS
 PageItem 1.
    
    Business
    
    
    4Item 1A.
    
    Risk FactorsRisks Related to our Business
    
    
    26Risks Related to Indebtedness of us and our Operating Subsidiaries
    
    
    29Risks Related to Legislative and Regulatory Matters
    
    
    31Risks Related to our Chairman and Chief Executive Officers
Controlling Position
    
    
    35Item 1B.
    
    Unresolved Staff Comments
    
    
    35Item 2.
    
    Properties
    
    
    35Item 3.
    
    Legal Proceedings
    
    
    36Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    36Item 4A.
    
    Directors and Executive Officers of the Registrant
    
    
    36PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
    
    
    39Item 6.
    
    Selected Financial Data
    
    
    40Item 7.
    
    Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    43Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    58Item 8.
    
    Financial Statements and Supplementary Data
    
    
    59Item 9
    
    Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
    
    
    85Item 9A.
    
    Controls and Procedures
    
    
    85Item 9B.
    
    Other Information
    
    
    85PART IIIItem 10.
    
    Directors and Executive Officers of the Registrant
    
    
    86Item 11.
    
    Executive Compensation
    
    
    86Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
    
    
    86Item 13.
    
    Certain Relationships and Related Transactions
    
    
    86Item 14.
    
    Principal Accounting Fees and Services
    
    
    86PART IVItem 15.
    
    Exhibits, Financial Statement Schedules
    
    
    87EX-12.1: SCHEDULE OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGESEX-23.1: CONSENT OF PRICEWATERHOUSECOOPERS LLPEX-31.1: CERTIFICATIONEX-32.1: CERTIFICATION
  2




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Cautionary Statement Regarding Forward-Looking Statements
  3




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PART I
 
 ITEM 1. BUSINESS
 Introduction
     Business Strategy
  Expanding Reach and Enhancing Quality of Products and Services
  Bundling of Broadband Products and Services
  4




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Customer Service
  Community Presence
  Products and Services
 Video
  Basic Service.
 Expanded Basic Service.
 Digital Cable Service.
 Pay-Per-View Service.
 Video-On-Demand.
 High-Definition
Television.
 5




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Digital Video Recorders.
 Mediacom
Online
   Mediacom
Phone
    Advertising
  6




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Description of Our Cable Systems
 Overview
  2005
    
    2004
    
    2003
    
    2002
    
    2001Operating Data:Core VideoEstimated homes passed(1)
    
    
    2,807,000
    
    
    
    2,785,000
    
    
    
    2,755,000
    
    
    
    2,715,000
    
    
    
    2,630,000Basic subscribers(2)
    
    
    1,423,000
    
    
    
    1,458,000
    
    
    
    1,543,000
    
    
    
    1,592,000
    
    
    
    1,595,000Basic penetration(3)
    
    
    50.7
    %
    
    
    52.4
    %
    
    
    56.0
    %
    
    
    58.6
    %
    
    
    60.6
    %Digital CableDigital customers(4)
    
    
    494,000
    
    
    
    396,000
    
    
    
    383,000
    
    
    
    371,000
    
    
    
    321,000Digital penetration(5)
    
    
    34.7
    %
    
    
    27.2
    %
    
    
    24.8
    %
    
    
    23.3
    %
    
    
    20.1
    %High Speed DataHSD customers(6)
    
    
    478,000
    
    
    
    367,000
    
    
    
    280,000
    
    
    
    191,000
    
    
    
    115,000HSD penetration(7)
    
    
    17.0
    %
    
    
    13.2
    %
    
    
    10.2
    %
    
    
    7.0
    %
    
    
    4.4
    %PhoneEstimated marketable phone
homes(8)
    
    
    1,450,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Phone customers(9)
    
    
    22,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Revenue Generating Units(10)
    
    
    2,417,000
    
    
    
    2,221,000
    
    
    
    2,206,000
    
    
    
    2,154,000
    
    
    
    2,031,000Cable Network Data:Miles of plant
    
    
    47,400
    
    
    
    46,900
    
    
    
    45,900
    
    
    
    45,000
    
    
    
    44,100Density(11)
    
    
    59
    
    
    
    59
    
    
    
    60
    
    
    
    60
    
    
    
    60
 
 (1)
    
    Represents the estimated number of single residence homes, apartments and
condominium units passed by the cable distribution network in a cable systems service area.(2)
    
    Represents a dwelling with one or more television sets that receives a package of
over-the-air broadcast stations, local access channels or certain satellite-delivered cable
television services. Accounts that are billed on a bulk basis, which typically receive
discounted rates, are converted into full-price equivalent basic subscribers by dividing total
bulk billed basic revenues of a particular system by average cable rate charged to basic
subscribers in that system. Basic subscribers include connections to schools, libraries,
local government offices and employee households that may not be charged for limited and
expanded cable services, but may be charged for digital cable, VOD, HDTV, DVR or HSD service.
Customers who exclusively purchase high-speed Internet or
phone service are not counted as basic
subscribers. Our methodology of calculating the number of basic subscribers may not be
identical to those used by other companies offering similar services.(3)
    
    Represents basic subscribers as a percentage of estimated homes passed.(4)
    
    Represents customers receiving digital cable services.(5)
    
    Represents digital customers as a percentage of basic subscribers.(6)
    
    Represents residential HSD customers and small to medium-sized commercial cable
modem accounts billed at higher rates than residential customers. Small to medium-sized
commercial accounts generally represent customers with bandwidth
requirements of up to 5Mbps, and are converted to equivalent residential HSD customers by dividing
their associated revenues by the applicable residential rate. Our HSD customers exclude large
commercial accounts and include an insignificant number of dial-up customers. Our methodology
of calculating HSD customers may not be identical to those used by other companies offering
similar services.(7)
    
    Represents the number of total HSD customers as a percentage of estimated homes
passed.(8)
    
    Represents estimated number of homes to which the Company is currently marketing
phone service(9)
    
    Represents customers receiving phone service.(10)
    
    Represents the sum of basic subscribers, digital customers, HSD customers and phone customers.(11)
    
    Represents estimated homes passed divided by miles of plant. 7




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Selected Operating Data
  Basic
    
    Digital
    
    Data
    
    PhoneDivision
    
    States
    
    Subscribers
    
    Customers
    
    Customers
    
    CustomersNorth Central
    
    Illinois, Iowa, Minnesota, South Dakota
    
    
    698,000
    
    
    
    227,000
    
    
    
    248,000
    
    
    
    8,000South Central
    
    Alabama, California, Delaware, Florida, Georgia,
Illinois, Indiana, Kentucky, Missouri, North Carolina
    
    
    725,000
    
    
    
    267,000
    
    
    
    230,000
    


14,000Total
    
    
    1,423,000
    
    
    
    494,000
    
    
    
    478,000
    
    
    
    22,000
  DMA Rank
    
    Designated Market Area2
    
    Los Angeles, CA3
    
    Chicago, IL15
    
    Minneapolis - St. Paul, MN35
    
    Greenville - Spartanburg, SC62
    
    Mobile, AL - Pensacola, FL73
    
    Des Moines - Ames, IA78
    
    Springfield, MO80
    
    Paducah, KY - Cape Girardeau, MO - Harrisburg - Mt. Vernon, IL82
    
    Champaign & Springfield - Decatur, IL88
    
    Cedar Rapids - Waterloo - Iowa City & Dubuque, IA95
    
    Davenport, IA - Rock Island - Moline, IL Technology Overview
  8




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Percentage of Cable NetworkLess than
    
    Standard
    
    Enhanced
    
    Greater Than550MHz
    
    550MHz
    
    550MHz
    
    550MHz1.2%
    
    
    4.7
    %
    
    
    7.3
    %
    
    
    86.8
    %
   Programming Supply
    Customer Service
  9




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Community Relations
   Franchises
    10




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Percentage of
    
    
    Number of
    
    
    Percentage ofNumber of
    
    
    Total
    
    
    Basic
    
    
    Total BasicYear of Franchise Expiration
    
    Franchises
    
    
    Franchises
    
    
    Subscribers
    
    
    Subscribers2006 through 2009
    
    
    469
    
    
    
    34.0
    %
    
    
    684,000
    
    
    
    48.1
    %2010 and thereafter
    
    
    912
    
    
    
    66.0
    %
    
    
    739,000
    
    
    
    51.9
    %Total
    
    
    1,381
    
    
    
    100.0
    %
    
    
    1,423,000
    
    
    
    100.0
    %
  Competition
  Video
 Direct Broadcast Satellite Providers
     11




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Traditional Overbuilds
  Telephone Companies
  Other
  High Speed Data
   12




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Phone
  Other Competition
   Employees
  13




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Legislation and Regulation
 General
  Federal regulation
   
    
    subscriber rates;
    
    the content of the programming we offer to subscribers, as well as the way we sell
our program packages to subscribers;
    
    the use of our cable systems by the local franchising authorities, the public and
other unrelated companies;
    
    our franchise agreements with local governmental authorities;
    
    cable system ownership limitations and prohibitions; and
    
    our use of utility poles and conduit.
  Subscriber rates
  14




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
    
    the lowest level of programming service offered by the cable operator, typically
called basic service, which includes, at a minimum, the local broadcast channels and any
public access or governmental channels that are required by the operators franchise;
    
    the installation of cable service and related service calls; and
    
    the installation, sale and lease of equipment used by subscribers to receive basic
service, such as converter boxes and remote control units.
     
    
    the number of regulated channels;
    
    inflation; and
    
    certain external costs, such as franchise and other governmental fees, copyright and
retransmission consent fees, taxes, programming fees and franchise-imposed obligations.
  
    
    require cable operators to charge uniform rates throughout each franchise area that
is not subject to effective competition;
    
    prohibit regulation of non-predatory bulk discount rates offered by cable operators
to subscribers in multiple dwelling units; and
    
    permit regulated equipment rates to be computed by aggregating costs of broad
categories of equipment at the franchise, system, regional or company level.
  15




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Content requirements
 Must carry and retransmission consent
  
    
    to carry the station, subject to certain exceptions; or
    
    to negotiate the terms by which the cable system may carry the station on its cable
systems, commonly called retransmission consent.
  
    
    all distant commercial television stations, except for certain commercial
satellite-delivered independent superstations such as WGN;
    
    commercial radio stations; and
    
    certain low-power television stations.
    16




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Tier buy through
   Program access
  
    
    preclude any satellite video programmer affiliated with a cable company, or with a common
carrier providing video programming directly to its subscribers, from favoring an affiliated
company over competitors;
    
    require such programmers to sell their programming to other unaffiliated video program distributors; and
    
    limit the ability of such programmers to offer exclusive programming arrangements to cable operators.
 Other programming
  
    
    our use of syndicated and network programs and local sports broadcast programming;
    
    advertising in childrens programming;
    
    political advertising;
    
    origination cablecasting;
    
    adult programming;
    
    sponsorship identification; and
    
    closed captioning of video programming.
 17




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Use of our cable systems by the government and unrelated third parties
  
    
    permits franchising authorities to require cable operators to set aside channels for
public, educational and governmental access programming; and
    
    requires a cable system with 36 or more activated channels to designate a significant
portion of its channel capacity for commercial leased access by third parties to provide
programming that may compete with services offered by the cable operator.
  
    
    the maximum reasonable rate a cable operator may charge for third party commercial use
of the designated channel capacity;
    
    the terms and conditions for commercial use of such channels; and
    
    the procedures for the expedited resolution of disputes concerning rates or commercial
use of the designated channel capacity.
 Franchise matters
    
    
    affirm the right of franchising authorities, which may be state or local, depending on
the practice in individual states, to award one or more franchises within their
jurisdictions;
    
    generally prohibit us from operating in communities without a franchise;
    
    permit local authorities, when granting or renewing our franchises, to establish
requirements for cable-related facilities and equipment, but prohibit franchising
authorities from establishing requirements for specific video programming or information
services other than in broad categories; and
    
    permit us to obtain modification of our franchise requirements from the franchise
authority or by judicial action if warranted by commercial impracticability.
  
    
    imposing requirements during the initial cable franchising process or during franchise
renewal that require, prohibit or restrict us from providing telecommunications services;
    
    imposing franchise fees on revenues we derive from providing telecommunications or
information services over our cable systems;
    
    restricting our use of any type of subscriber equipment or transmission technology; and
    
    requiring payment of franchise fees to the local franchising authority in excess of
5.0% of our gross revenues derived from providing cable services over our cable system.
 18




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
    
    allowing municipalities to operate their own cable systems without franchises; and
    
    preventing franchising authorities from granting exclusive franchises or from
unreasonably refusing to award additional franchises covering an existing cable systems
service area.
  
    
    The Cable Act contains renewal procedures designed to protect us against arbitrary
denials of renewal of our franchises although, under certain circumstances, the
franchising authority could deny us a franchise renewal. Moreover, even if our franchise
is renewed, the franchising authority may seek to impose upon us new and more onerous
requirements, such as significant upgrades in facilities and services or increased
franchise fees as a condition of renewal to the extent permitted by law. Similarly, if a
franchising authoritys consent is required for the purchase or sale of our cable system
or franchise, the franchising authority may attempt to impose more burdensome or onerous
franchise requirements on the purchaser in connection with a request for such consent.
Historically, cable operators providing satisfactory services to their subscribers and
complying with the terms of their franchises have almost always obtained franchise
renewals. We believe that we have generally met the terms of our franchises and have
provided quality levels of service. We anticipate that our future franchise renewal
prospects generally will be favorable.
    
    Various courts have considered whether franchising authorities have the legal right
to limit the number of franchises awarded within a community and to impose substantive
franchise requirements. These decisions have been inconsistent and, until the U.S. Supreme
Court rules definitively on the scope of cable operators First Amendment protections, the
legality of the franchising process generally and of various specific franchise
requirements is likely to be in a state of flux. Furthermore, the FCC recently issued a
Notice of Proposed Rulemaking seeking comment on whether the current local franchising
process constitutes an impediment to widespread issuance of franchises to competitive
cable providers in terms of the sheer number of franchising authorities, the impact of
state-level franchising authorities, the burdens some local franchising authorities seek
to impose as conditions of granting franchises and whether state level-playing field
statutes also create barriers to entry. We cannot determine the outcome of any potential
new rules on our business; however, any change that would lessen the local franchising
burdens and requirements imposed on our competitors relative to those that are or have
been imposed on us could harm our business.
   Ownership limitations
   19




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
    
    eliminated federal legal barriers to competition in the local telephone and cable
communications businesses, including allowing local telephone companies to offer video
services in their local telephone service areas;
    
    preempted legal barriers to telecommunications competition that previously existed in
state and local laws and regulations;
    
    set basic standards for relationships between telecommunications providers; and
    
    generally limited acquisitions and prohibited joint ventures between local telephone
companies and cable operators in the same market.
     Cable equipment
   20




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Pole attachment regulation
    Other regulatory requirements of the Cable Act and the FCC
   
    
    equal employment opportunity;
    
    consumer protection and customer service;
    
    technical standards and testing of cable facilities;
    
    consumer electronics equipment compatibility;
    
    registration of cable systems;
    
    maintenance of various records and public inspection files;
 21




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
    
    microwave frequency usage; and
    
    antenna structure notification, marking and lighting.
  Copyright
     22




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Interactive television
  Privacy
  23




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Cable modem service
     Voice-over-Internet protocol telephony
  24




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State and local regulation
  
    
    franchise fees;
    
    franchise term;
    
    system construction and maintenance obligations;
    
    system channel capacity;
    
    design and technical performance;
    
    customer service standards;
    
    sale or transfer of the franchise; and
    
    territory of the franchise.
 25




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ITEM 1A. RISK FACTORS
 
 Risks Related to our Business
 We have a history of net losses and we may continue to generate net losses in the future.
  Changes to our valuation account for deferred tax assets can cause our net income or net loss
to fluctuate significantly.
     If we are unsuccessful in implementing our growth strategy, our business and results of
operations could be adversely affected.
  26




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Our programming costs are increasing, and our business and results of operations will be
adversely affected if we cannot pass through a sufficient part of the additional costs to
video subscribers.
   We operate in a highly competitive business environment, which affects our ability to attract
and retain customers and can adversely affect our business and operations. We have lost a
significant number of video subscribers to direct broadcast satellite competition, and further loss of
video subscribers could have a material negative impact on our business.
      27




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If we are unable to keep pace with technological change, our business and results of
operations could be adversely affected.
  Our
phone service was launched in 2005, and consequently, we face new
risks and uncertainties as we began to scale this
business.
  The loss of key personnel could have a material adverse effect on our business.
  We may not be able to obtain critical items at a reasonable cost or when required, which could
adversely affect business, financial condition and results of operations.
  28




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Some of our cable systems operate in the Gulf Coast region, which is likely to continue
to experience severe hurricanes and tropical storms.
  
 Risks Related to Indebtedness of us and our Operating Subsidiaries
 We are a holding company with no operations and if our operating subsidiaries are unable to
make funds available to us we may not be able to fund our obligations.
  We have substantial existing debt and have significant interest payment requirements, which
could adversely affect our ability to obtain financing in the future and require our operating
subsidiaries to apply a substantial portion of their cash flow to debt service.
   
    
    our ability to access new sources of financing for working capital, capital
expenditures, acquisitions or other purposes may be limited;
    
    we may need to use a large portion of our revenues to pay interest on borrowings under
our subsidiary credit facilities and our senior notes, which will reduce the amount of
money available to finance our operations, capital expenditures and other activities;
    
    some of our debt has a variable rate of interest, which may expose us to the risk of
increased interest rates;
 29




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
    
    we may be more vulnerable to economic downturns and adverse developments in our
business;
    
    we may be less flexible in responding to changing business and economic conditions,
including increased competition and demand for new products and services;
    
    we may be at a disadvantage when compared to those of our competitors that have less debt; and
    
    we may not be able to fully implement our business strategy.
 A default under our indentures or our subsidiary credit facilities could result in an
acceleration of our indebtedness and other material adverse effects.
  The terms of our indebtedness could materially limit our financial and operating flexibility.
  
    
    incur additional indebtedness;
    
    create liens and other encumbrances;
    
    pay dividends and make other payments, investments, loans and guarantees;
    
    enter into transactions with related parties;
    
    sell or otherwise dispose of assets and merge or consolidate with another entity;
    
    repurchase or redeem capital stock, other equity interests or debt;
    
    pledge assets; and
    
    issue capital stock or other equity interests.
  We may not be able to obtain additional capital to continue the development of our business.
  30




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Risks Related to Legislative and Regulatory Matters
 Changes in cable television regulations could adversely impact our business.
    Changes in channel carriage regulations could impose significant additional costs on us.
  31




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per se
 Our franchises are non-exclusive and local franchising authorities may grant competing
franchises in our markets, which could adversely affect our business.
    32




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Pending FCC and court proceedings could adversely affect our HSD service.
  We may be subject to legal liability because of the acts of our HSD customers or because of
our own negligence.
     33




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We may be required to provide access to our networks to other Internet service providers,
which could significantly increase our competition and adversely affect our ability to provide new
products and services.
  We may become subject to additional regulatory burdens when we offer cable telephony service.
  Actions by pole owners might subject us to significantly increased pole attachment costs.
 th
  34




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Changes in compulsory copyright regulations might significantly increase our license fees.
  
 Risks related to our Chairman and Chief Executive Officers Controlling Position
 Our Chairman and Chief Executive Officer has the ability to control all major corporate
decisions, and a sale of his stock could result in a change of control that would have
unpredictable effects.
   
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
   35




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ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 4A. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 Rocco B. Commisso
    
    
    56
    
    
    Chairman and Chief Executive OfficerMark E. Stephan
    
    
    49
    
    
    Executive Vice President, Chief
Financial Officer & DirectorJohn G. Pascarelli
    
    
    44
    
    
    Executive Vice President, OperationsItalia Commisso Weinand
    
    
    52
    
    
    Senior Vice President, Programming & Human ResourcesJoseph E. Young
    
    
    57
    
    
    Senior Vice President, General Counsel & SecretaryCharles J. Bartolotta
    
    
    51
    
    
    Senior Vice President, Customer OperationsCalvin G. Craib
    
    
    51
    
    
    Senior Vice President, Business DevelopmentBrian M. Walsh
    
    
    40
    
    
    Senior Vice President & Corporate ControllerCraig S. Mitchell
    
    
    47
    
    
    DirectorWilliam S. Morris III
    
    
    71
    
    
    DirectorThomas V. Reifenheiser
    
    
    70
    
    
    DirectorNatale S. Ricciardi
    
    
    57
    
    
    DirectorRobert L. Winikoff
    
    
    59
    
    
    Director
 Rocco B. Commisso
 Mark E. Stephan
 36




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John G. Pascarelli
 Italia Commisso Weinand
 Joseph E. Young
 Charles J. Bartolotta
 Calvin G. Craib
 Brian M. Walsh
 Craig S. Mitchell
 William S. Morris III
 Thomas V. Reifenheiser
 37




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Natale S. Ricciardi
 Robert L. Winikoff
 38




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PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
  2005
    
    
    2004High
    
    
    Low
    
    
    High
    
    
    LowFirst Quarter
    
    $
    6.72
    
    
    $
    5.30
    
    
    $
    9.99
    
    
    $
    7.40Second Quarter
    
    $
    7.06
    
    
    $
    5.44
    
    
    $
    8.23
    
    
    $
    6.95Third Quarter
    
    $
    7.51
    
    
    $
    6.71
    
    
    $
    7.85
    
    
    $
    5.86Fourth Quarter
    
    $
    7.47
    
    
    $
    4.79
    
    
    $
    7.11
    
    
    $
    5.10
    Approximate DollarTotal Number of
    
    
    Value of Shares thatTotal Number
    
    
    
    
    
    
    Shares Purchased
    
    
    May Yet Beof Shares
    
    
    Average Price
    
    
    as Part of Publicly
    
    
    Purchased UnderPeriod
    
    Purchased
    
    
    Per Share
    
    
    Announced Program
    
    
    the ProgramOctober
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    31,519,092November
    
    
    846,208
    
    
    
    5.06
    
    
    
    846,208
    
    
    
    27,238,198December
    
    
    723,000
    
    
    
    5.36
    
    
    
    723,000
    
    
    
    23,363,867Fourth Quarter 2005
    
    
    1,569,208
    
    
    $
    5.20
    
    
    
    1,569,208
    
    
    $
    23,363,867
 39




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##### Table of Contents



ITEM 6. SELECTED FINANCIAL DATA
   Year Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(dollars in thousands, except per share data)(unaudited)Statement of Operations Data:Revenues
    
    $
    1,098,822
    
    
    $
    1,057,226
    
    
    $
    1,004,889
    
    
    $
    923,033
    
    
    $
    585,175Costs and expenses:Service costs
    
    
    438,768
    
    
    
    407,875
    
    
    
    383,012
    
    
    
    359,737
    
    
    
    219,479Selling, general and administrative
expenses
    
    
    232,514
    
    
    
    216,394
    
    
    
    198,943
    
    
    
    173,970
    
    
    
    105,794Corporate expenses
    
    
    22,287
    
    
    
    19,276
    
    
    
    17,237
    
    
    
    18,075
    
    
    
    11,609Depreciation and amortization
    
    
    220,567
    
    
    
    217,262
    
    
    
    273,307
    
    
    
    319,435
    
    
    
    310,785Operating income (loss)
    
    
    184,686
    
    
    
    196,419
    
    
    
    132,390
    
    
    
    51,816
    
    
    
    (62,492
    )Interest expense, net
    
    
    (208,264
    )
    
    
    (192,740
    )
    
    
    (190,199
    )
    
    
    (188,304
    )
    
    
    (139,867
    )Loss on early extinguishment of debt
    
    
    (4,742
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gain (loss) on derivative
instruments, net
    
    
    12,555
    
    
    
    16,125
    
    
    
    9,057
    
    
    
    (13,877
    )
    
    
    (8,441
    )Gain (loss) on sale of assets and
investments, net
    
    
    2,628
    
    
    
    5,885
    
    
    
    (1,839
    )
    
    
    
    
    
    
    Other (expense) income, net
    
    
    (11,829
    )
    
    
    (12,061
    )
    
    
    (11,460
    )
    
    
    (11,093
    )
    
    
    21,653(Loss) income before income taxes
    
    
    (24,966
    )
    
    
    13,628
    
    
    
    (62,051
    )
    
    
    (161,458
    )
    
    
    (189,147
    )Provision for income taxes
    
    
    (197,262
    )
    
    
    (76
    )
    
    
    (424
    )
    
    
    (200
    )
    
    
    (87
    )Net (loss) income before cumulative
effect
of accounting change
    
    
    (222,228
    )
    
    
    13,552
    
    
    
    (62,475
    )
    
    
    (161,658
    )
    
    
    (189,234
    )Cumulative effect of accounting
change(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,642
    )Net (loss) income
    
    $
    (222,228
    )
    
    $
    13,552
    
    
    $
    (62,475
    )
    
    $
    (161,658
    )
    
    $
    (190,876
    )Basic and diluted (loss) earnings
per share:(2)Before cumulative effect of
accounting
change
    
    $
    (1.90
    )
    
    $
    0.11
    
    
    $
    (0.53
    )
    
    $
    (1.35
    )
    
    $
    (1.78
    )Cumulative effect of accounting
change
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.02
    )Basic and diluted (loss) earnings
per share:
    
    $
    (1.90
    )
    
    $
    0.11
    
    
    $
    (0.53
    )
    
    $
    (1.35
    )
    
    $
    (1.80
    )Weighted average common shares
outstanding (2)Basic weighted average shares
outstanding
    
    
    117,193,841
    
    
    
    118,533,513
    
    
    
    118,627,262
    
    
    
    119,607,605
    
    
    
    105,779,737Diluted weighted average share
outstanding
    
    
    117,193,841
    
    
    
    118,543,126
    
    
    
    118,627,262
    
    
    
    119,607,605
    
    
    
    105,779,737Balance Sheet Data (end of period):Total assets
    
    $
    3,649,498
    
    
    $
    3,635,655
    
    
    $
    3,662,763
    
    
    $
    3,703,974
    
    
    $
    3,664,848Total debt
    
    
    3,059,651
    
    
    
    3,009,632
    
    
    
    3,051,493
    
    
    
    3,019,211
    
    
    
    2,798,000Total stockholders equity
    
    $
    59,107
    
    
    $
    293,512
    
    
    $
    285,114
    
    
    $
    346,541
    
    
    $
    507,576
 (Continued on next page)
 40




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Year Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(dollars in thousands, except ratio amounts)(unaudited)Other Data:Operating income before depreciation
and amortization(3)
    
    $
    405,253
    
    
    $
    413,681
    
    
    $
    405,697
    
    
    $
    371,251
    
    
    $
    248,293OIBDA margin(4)
    
    
    36.9
    %
    
    
    39.1
    %
    
    
    40.4
    %
    
    
    40.2
    %
    
    
    42.4
    %Ratio of earnings to fixed charges
    
    
    
    (5)
    
    
    1.06
    
    
    
    
    (5)
    
    
    
    (5)
   


    



    (5)Net cash flows provided by (used in):Operating activities
    
    $
    179,095
    
    
    $
    224,611
    
    
    $
    206,900
    
    
    $
    172,596
    
    
    $
    258,625Investing activities
    
    
    (223,600
    )
    
    
    (177,424
    )
    
    
    (221,444
    )
    
    
    (421,602
    )
    
    
    (2,402,947
    )Financing activities
    
    
    37,911
    
    
    
    (49,127
    )
    
    
    9,135
    
    
    
    216,923
    
    
    
    2,203,477Operating Data: (end of period)Estimated homes passed(6)
    
    
    2,807,000
    
    
    
    2,785,000
    
    
    
    2,755,000
    
    
    
    2,715,000
    
    
    
    2,630,000Basic subscribers(7)
    
    
    1,423,000
    
    
    
    1,458,000
    
    
    
    1,543,000
    
    
    
    1,592,000
    
    
    
    1,595,000Digital customers(8)
    
    
    494,000
    
    
    
    396,000
    
    
    
    383,000
    
    
    
    371,000
    
    
    
    321,000Data customers(9)
    
    
    478,000
    
    
    
    367,000
    
    
    
    280,000
    
    
    
    191,000
    
    
    
    115,000Phone customers(10)
    
    
    22,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Relates to our adoption of Statements of Financial Accounting Standards No.
133, Accounting for Derivative Instruments and Hedging Activities.(2)
    
    Basic and diluted (loss) earnings per share is calculated based on the basic and
diluted weighted average shares outstanding, respectively.(3)
    
    Operating income before depreciation and amortization (OIBDA) is not a financial
measure calculated in accordance with generally accepted accounting principles (GAAP) in the
United States of America. However, OIBDA is one of the primary measures used by management to
evaluate our performance and to forecast future results. We believe OIBDA is useful for
investors because it enables them to assess our 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 our business. Management
utilizes a separate process to budget, measure and evaluate capital expenditures.OIBDA should not be regarded as an alternative to either operating income or net income (loss)
as an indicator of operating performance nor should it be considered in isolation or as a
substitute for financial measures prepared in accordance with GAAP. We believe that operating
income is the most directly comparable GAAP financial measure to OIBDA.The following represents a reconciliation of OIBDA to operating income (loss), which is the most
directly comparable GAAP measure (dollars in thousands): Year Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(unaudited)OIBDA
    
    $
    405,253
    
    
    $
    413,681
    
    
    $
    405,697
    
    
    $
    371,251
    
    
    $
    248,293Depreciation and
amortization
    
    
    (220,567
    )
    
    
    (217,262
    )
    
    
    (273,307
    )
    
    
    (319,435
    )
    
    
    (310,785
    )Operating income (loss)
    
    $
    184,686
    
    
    $
    196,419
    
    
    $
    132,390
    
    
    $
    51,816
    
    
    $
    (62,492
    )
 
 (4)
    
    Represents OIBDA as a percentage of revenues. See note 3 above. 41




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##### Table of Contents



(5)
    
    Earnings were insufficient to cover fixed charges by $26.4 million, $66.9 million,
$167.6 million and $192.0 million for the years ended December, 31 2005, 2003, 2002 and 2001,
respectively. Refer to Exhibit 12.1.(6)
    
    Represents an estimate of the number of single residence homes, apartments and
condominium units passed by the cable distribution network in a cable systems service area.(7)
    
    Represents a dwelling with one or more television sets that receives a package of
over-the-air broadcast stations, local access channels or certain satellite-delivered cable
television services. Accounts that are billed on a bulk basis, which typically receive
discounted rates, are converted into full-price equivalent basic subscribers by dividing total
bulk billed basic revenues of a particular system by the average cable rate charged to basic
subscribers in that system. Basic subscribers include connections to schools, libraries,
local government offices and employee households that may not be charged for limited and
expanded cable services, but may be charged for digital cable, VOD, HDTV, DVR or
high-speed Internet service. Customers who exclusively purchase high-speed Internet or phone service
are not counted as basic subscribers. Our methodology of calculating the number of basic
subscribers may not be identical to those used by other companies offering similar services.(8)
    
    Represents customers that receive digital cable services.(9)
    
    Represents residential HSD customers and small to medium-sized commercial cable
modem accounts billed at higher rates than residential customers. Small to medium-sized
commercial accounts generally represent customers with bandwidth requirements of up to 5Mbps.
These commercial accounts are converted to equivalent residential data customers by dividing
their associated revenues by the applicable residential rate. Our data customers exclude
large commercial accounts and include an insignificant number of dial-up customers. Our
methodology of calculating data customers may not be identical to those used by other
companies offering similar services.(10)
    
    Represents customers that receive phone service. 42




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##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Overview
    Hurricane Losses in 2004 and 2005
   43




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44




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Actual Results of Operations
 Year Ended December 31, 2005 Compared to Year Ended December 31, 2004
  Year Ended December 31,2005
    
    
    2004
    
    
    $ Change
    
    
    % ChangeRevenues
    
    $
    1,098,822
    
    
    
    1,057,226
    
    
    $
    41,596
    
    
    
    3.9
    %Costs and expenses:Service costs
    
    
    438,768
    
    
    
    407,875
    
    
    
    30,893
    
    
    
    7.6
    %Selling, general and administrative expenses
    
    
    232,514
    
    
    
    216,394
    
    
    
    16,120
    
    
    
    7.4
    %Corporate expenses
    
    
    22,287
    
    
    
    19,276
    
    
    
    3,011
    
    
    
    15.6
    %Depreciation and amortization
    
    
    220,567
    
    
    
    217,262
    
    
    
    3,305
    
    
    
    1.5
    %Operating income
    
    
    184,686
    
    
    
    196,419
    
    
    
    (11,733
    )
    
    
    (6.0
    %)Interest expense, net
    
    
    (208,264
    )
    
    
    (192,740
    )
    
    
    (15,524
    )
    
    
    8.1
    %Loss on early extinguishment of debt
    
    
    (4,742
    )
    
    
    
    
    
    
    (4,742
    )
    
    NMGain on derivatives, net
    
    
    12,555
    
    
    
    16,125
    
    
    
    (3,570
    )
    
    NMGain on sale of assets and investments, net
    
    
    2,628
    
    
    
    5,885
    
    
    
    (3,257
    )
    
    NMOther expense, net
    
    
    (11,829
    )
    
    
    (12,061
    )
    
    
    232
    
    
    
    (1.9
    %)(Loss) income before provision for income taxes
    
    
    (24,966
    )
    
    
    13,628
    
    
    
    (38,594
    )
    
    NMProvision for income taxes
    
    
    (197,262
    )
    
    
    (76
    )
    
    
    (197,186
    )
    
    NMNet (loss) income
    
    $
    (222,228
    )
    
    $
    13,552
    
    
    $
    (235,780
    )
    
    NM
 45




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##### Table of Contents



Revenues
  Year Ended December 31,2005
    
    
    2004
    
    
    $ Change
    
    
    % ChangeVideo
    
    $
    849,760
    
    
    $
    848,864
    
    
    $
    896
    
    
    
    0.1
    %Data
    
    
    194,835
    
    
    
    156,284
    
    
    
    38,551
    
    
    
    24.7
    %Advertising
    
    
    53,118
    
    
    
    52,078
    
    
    
    1,040
    
    
    
    2.0
    %Telephone
    
    
    1,109
    
    
    
    
    
    
    
    1,109
    
    
    NM$
    1,098,822
    
    
    $
    1,057,226
    
    
    $
    41,596
    
    
    
    3.9
    %
 Year Ended December 31,2005
    
    
    2004
    
    
    Increase/(Decrease)Basic subscribers
    
    
    1,423,000
    
    
    
    1,458,000
    
    
    
    (35,000
    )
    
    
    (2.4
    %)Data customers
    
    
    478,000
    
    
    
    367,000
    
    
    
    111,000
    
    
    
    30.2
    %Phone customers
    
    
    22,000
    
    
    
    
    
    
    
    22,000
    
    
    NMAverage monthly video revenue per basic subscriber(1)
    
    $
    49.01
    
    
    $
    47.57
    
    
    $
    1.44
    
    
    
    3.0
    %Average monthly data revenue per data subscriber(2)
    
    $
    37.18
    
    
    $
    39.35
    
    
    $
    (2.17
    )
    
    
    (5.5
    %)
 
 (1)
    
    Average monthly video revenue per basic subscriber is calculated based on
monthly revenue divided by the average number of basic subscribers for each of the twelve months.(2)
    
    Average monthly date revenue per data subscriber is calculated based on monthly data
revenue divided by the average number of data subscribers for each of the twelve months.     46




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Costs and Expenses
        47




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##### Table of Contents



Interest Expense, net
 ,
 Gain on Derivatives, net
  Gain on Sale of Assets and Investments, net
  Other Expense
  Provision for Income Taxes
    Net (loss) Income
  48




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Year Ended December 31, 2004 Compared to Year Ended December 31, 2003
  Year Ended December 31,2004
    
    
    2003
    
    
    $ Change
    
    
    % ChangeRevenues
    
    $
    1,057,226
    
    
    $
    1,004,889
    
    
    $
    52,337
    
    
    
    5.2
    %Costs and expenses:Service costs
    
    
    407,875
    
    
    
    383,012
    
    
    
    24,863
    
    
    
    6.5
    %Selling, general and administrative expenses
    
    
    216,394
    
    
    
    198,943
    
    
    
    17,451
    
    
    
    8.8
    %Corporate expenses
    
    
    19,276
    
    
    
    17,237
    
    
    
    2,039
    
    
    
    11.8
    %Depreciation and amortization
    
    
    217,262
    
    
    
    273,307
    
    
    
    (56,045
    )
    
    
    (20.5
    %)Operating income
    
    
    196,419
    
    
    
    132,390
    
    
    
    64,029
    
    
    
    48.4
    %Interest expense, net
    
    
    (192,740
    )
    
    
    (190,199
    )
    
    
    (2,541
    )
    
    
    1.3
    %Gain on derivatives, net
    
    
    16,125
    
    
    
    9,057
    
    
    
    7,068
    
    
    NMGain (loss) on sale of assets and investments, net
    
    
    5,885
    
    
    
    (1,839
    )
    
    
    7,724
    
    
    NMOther expense, net
    
    
    (12,061
    )
    
    
    (11,460
    )
    
    
    (601
    )
    
    
    5.2
    %Income (loss) before provision for income taxes
    
    
    13,628
    
    
    
    (62,051
    )
    
    
    75,679
    
    
    NMProvision for income taxes
    
    
    (76
    )
    
    
    (424
    )
    
    
    348
    
    
    
    (82.1
    %)Net income (loss)
    
    $
    13,552
    
    
    $
    (62,475
    )
    
    $
    75,331
    
    
    NM
 49




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##### Table of Contents



Revenues
  Year Ended December 31,2004
    
    
    2003
    
    
    $ Change
    
    
    % ChangeVideo
    
    $
    848,864
    
    
    $
    845,899
    
    
    $
    2,965
    
    
    
    0.4
    %Data
    
    
    156,284
    
    
    
    116,237
    
    
    
    40,047
    
    
    
    34.5
    %Advertising
    
    
    52,078
    
    
    
    42,753
    
    
    
    9,325
    
    
    
    21.8
    %$
    1,057,226
    
    
    $
    1,004,889
    
    
    $
    52,337
    
    
    
    5.2
    %
 Year Ended December 31,2004
    
    
    2003
    
    
    Increase/(Decrease)Basic subscribers
    
    
    1,458,000
    
    
    
    1,543,000
    
    
    
    (85,000
    )
    
    
    (5.5
    %)Data customers
    
    
    367,000
    
    
    
    280,000
    
    
    
    87,000
    
    
    
    31.1
    %Average monthly video revenue per basic subscriber(1)
    
    $
    47.57
    
    
    $
    45.21
    
    
    $
    2.36
    
    
    
    5.2
    %Average monthly data revenue per data subscriber(2)
    
    $
    39.35
    
    
    $
    39.11
    
    
    $
    0.24
    
    
    
    0.6
    %
 
 (1)
    
    Average monthly video revenue per basic subscriber is calculated based on
monthly revenue divided by the average number of basic subscribers for each of the twelve months.(2)
    
    Average monthly date revenue per data subscriber is calculated based on monthly data
revenue divided by the average number of data subscribers for each of the twelve months.     Costs and Expenses
  50




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Interest Expense, net
  Gain on Derivatives, net
  Gain (loss) on Sale of Assets and Investments, net
  Other Expense
  Provision for Income Taxes
  51




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##### Table of Contents



Net Income (loss)
  Liquidity and Capital Resources
    Description of Our Credit Facilities
    52




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##### Table of Contents



Operating Activities
   Investing Activities
  Financing Activities
  
    
    In January 2005, LLC Group borrowed the full amount of
its $200.0 million delayed-draw term
loan facility and used the proceeds to reduce outstanding balances
under its revolving
credit facility.
    
    In April 2005, we redeemed all of our 8 1/2% Senior Notes due April 2008. The
redemption price was equal to 101.417% of the outstanding principal amount of the
Notes, plus accrued interest. We funded the redemption with a combination of cash on
hand and borrowings under LLC Groups revolving credit facility.
    
    In May 2005, Broadband Group refinanced its $496.3 term loan with a new term loan in the amount of
$500.0 million. Borrowings under the new term loan bear interest at a rate that is
0.5% less than the interest rate of the term loan it replaced. The new term loan
matures in February 2014, whereas the term loan it replaced had a maturity of September
2010.
    
    In August 2005, we issued $200.0 million aggregate principal amount of 8 1/2% senior
notes due October 2015 (the 8 1/2% Senior Notes due 2015). The 8 1/2% Senior Notes due
2015 are unsecured obligations of Mediacom Broadband LLC, and the indenture governing
the 8 1/2% Senior Notes due 2015 stipulates, among other things, restrictions on
incurrence of indebtedness, distributions, mergers
and asset sales and has cross-default provisions related to other debt of Mediacom
Broadband LLC. The proceeds from this offering were used to reduce the outstanding
balances under Broadband Groups revolving credit facility.
    
In October 2005, the Broadband Credit Facility was
amended: (i) to increase the revolving credit commitment portion from approximately $543.0 million
to approximately $650.5 million, of which approximately $430.3 million is not subject to scheduled
reductions prior to the termination date; and (ii) to extend the termination date of the
commitments not subject to reductions from March 2010 to December 2012.
 53




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##### Table of Contents




    
    Pursuant to our Board authorized repurchase program, we repurchased approximately
2.7 million shares of our Class A Common Stock for approximately $14.5 million during
the year ended December 31, 2005.
 Contractual Obligations and Commercial Commitments
  Capital
    
    
    Operating
    
    
    InterestDebt
    
    
    Leases
    
    
    Leases
    
    
    Expense(2)
    
    
    Total2006
    
    $
    220,500
    
    
    $
    2,270
    
    
    $
    3,841
    
    
    $
    219,079
    
    
    $
    445,690
    (1)2007
    
    
    70,500
    
    
    
    1,092
    
    
    
    3,190
    
    
    
    215,780
    
    
    
    290,5622008
    
    
    90,500
    
    
    
    39
    
    
    
    2,263
    
    
    
    208,993
    
    
    
    301,7952009
    
    
    117,000
    
    
    
    
    
    
    
    1,774
    
    
    
    200,573
    
    
    
    319,3472010
    
    
    84,500
    
    
    
    
    
    
    
    1,443
    
    
    
    189,363
    
    
    
    275,306Thereafter
    
    
    2,473,250
    
    
    
    
    
    
    
    3,955
    
    
    
    474,076
    
    
    
    2,951,281Total cash obligations
    
    $
    3,056,250
    
    
    $
    3,401
    
    
    $
    16,466
    
    
    $
    1,507,864
    
    
    $
    4,583,981
  
 (1)
    
    Includes $172.5 million of convertible senior notes due 2006.(2)
    
    Interest payments on floating rate debt and interest rate swaps are estimated using
amounts outstanding as of December 31, 2005 and the average interest rates applicable under
such debt obligations. Critical Accounting Policies
  Property, Plant and Equipment
  Income Taxes
  54




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##### Table of Contents






Indefinite-lived Intangibles


Goodwill and Other Intangible Assets


Unit of Accounting for Testing Impairment of
Indefinite-Lived Intangible Assets,










55



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##### Table of Contents



Derivatives
 Accounting for
Derivative Instruments and Hedging Activities, Accounting for Certain Derivative
Instruments and Certain Hedging Activities  an amendment of FASB Statement No. 133, Amendment of Statement 133 on Derivative Instruments and Hedging Activities.
 Programming Costs
  Recent Accounting Pronouncements
 , Amendment of Statement 123 on Share-Based
Payment. Share-Based Payment
 Accounting for
Asset Retirement Obligations
 Accounting Changes and Error Corrections Accounting Changes Reporting Accounting Changes in
Interim
Financial Statements.
 56




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##### Table of Contents



Inflation and Changing Prices
  57




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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   Bank Credit
    
    
    Capital LeaseSenior Notes
    
    
    Facilities
    
    
    Obligations
    
    
    TotalExpected Maturity:January 1, 2006 to December 31, 2006
    
    $
    172,500
    (1)
    
    $
    48,000
    
    
    $
    2,270
    
    
    $
    222,770January 1, 2007 to December 31, 2007
    
    
    
    
    
    
    70,500
    
    
    
    1,092
    
    
    
    71,592January 1, 2008 to December 31, 2008
    
    
    
    
    
    
    90,500
    
    
    
    39
    
    
    
    90,539January 1, 2009 to December 31, 2009
    
    
    
    
    
    
    117,000
    
    
    
    
    
    
    
    117,000January 1, 2010 to December 31, 2010
    
    
    
    
    
    
    84,500
    
    
    
    
    
    
    
    84,500Thereafter
    
    
    1,225,000
    
    
    
    1,248,250
    
    
    
    
    
    
    
    2,473,250Total
    
    $
    1,397,500
    
    
    $
    1,658,750
    
    
    $
    3,401
    
    
    $
    3,059,651Fair Value
    
    $
    1,389,713
    
    
    $
    1,658,750
    
    
    $
    3,401
    
    
    $
    3,051,864Weighted Average Interest Rate
    
    
    9.1
    %
    
    
    6.2
    %
    
    
    3.1
    %
    
    
    7.5
    %
 
 (1)
    
    Represents convertible senior notes due July 2006. 58




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 Contents
 PageReport of Independent Registered Public Accounting Firm
    
    
    60Consolidated Balance Sheets as of December 31, 2005 and 2004
    
    
    62Consolidated Statements of Operations for the Years Ended December 31, 2005, 2004 and 2003
    
    
    63Consolidated Statements of Changes in Stockholders Equity for the Years Ended
December 31, 2005, 2004 and 2003
    
    
    64Consolidated Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003
    
    
    65Notes to Consolidated Financial Statements
    
    
    66Financial Statement Schedule: Schedule II-Valuation and Qualifying Accounts
    
    
    84
 59




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
   Consolidated financial statements and financial statement schedule
 s
 Internal control over financial reporting
 Internal Control  Integrated Framework Internal Control  Integrated Framework
  60




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61




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##### Table of Contents



MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
(All dollar amounts in thousands)
 December 31,2005
    
    
    2004ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    17,281
    
    
    $
    23,875Investments
    
    
    
    
    
    
    1,987Accounts receivable, net of allowance for doubtful accounts of
$3,078 and $3,659, respectively
    
    
    63,845
    
    
    
    58,253Prepaid expenses and other current assets
    
    
    23,046
    
    
    
    12,757Deferred tax asset
    
    
    2,782
    
    
    
    7,024Total current assets
    
    
    106,954
    
    
    
    103,896Investment in cable television systems:Property, plant and equipment, net of accumulated depreciation of
$1,229,738 and $1,040,289, respectively
    
    
    1,453,588
    
    
    
    1,443,090Franchise rights, net of accumulated amortization of $140,947
    
    
    1,803,971
    
    
    
    1,803,971Goodwill, net of accumulated amortization of $3,232
    
    
    221,382
    
    
    
    221,382Subscriber lists and other intangible assets, net of accumulated
amortization of $157,755 and $154,919, respectively
    
    
    13,823
    
    
    
    16,757Total investment in cable television systems
    
    
    3,492,764
    
    
    
    3,485,200Other assets, net of accumulated amortization of $24,617 and $25,266,
respectively
    
    
    49,780
    
    
    
    46,559Total assets
    
    $
    3,649,498
    
    
    $
    3,635,655LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESAccounts payable and accrued expenses
    
    $
    270,137
    
    
    $
    261,223Deferred revenue
    
    
    41,073
    
    
    
    38,707Current portion of long-term debt
    
    
    222,770
    
    
    
    42,700Total current liabilities
    
    
    533,980
    
    
    
    342,630Long-term debt, less current portion
    
    
    2,836,881
    
    
    
    2,966,932Deferred tax liabilities
    
    
    200,090
    
    
    
    7,024Other non-current liabilities
    
    
    19,440
    
    
    
    25,557Total liabilities
    
    
    3,590,391
    
    
    
    3,342,143Commitments and contingencies (Note 12)STOCKHOLDERS EQUITYClass A common stock, $.01 par value; 300,000,000 shares authorized;
93,280,535 shares issued and 88,050,009 shares outstanding as of
December 31, 2005 and 92,978,134 shares issued and 90,399,198
shares outstanding as of December 31, 2004
    
    
    933
    
    
    
    930Class B common stock, $.01 par value; 100,000,000 shares authorized;
27,336,939 and 27,336,939 shares issued and outstanding as of
December 31, 2005 and December 31, 2004, respectively
    
    
    274
    
    
    
    274Deferred compensation
    
    
    (4,857
    )
    
    
Additional paid-in capital
    
    
    990,584
    
    
    
    983,417Accumulated deficit
    
    
    (901,191
    )
    
    
    (678,963
    )Treasury stock, at cost, 5,230,526 and 2,578,936 shares of Class A common
stock, as of December 31, 2005 and December 31, 2004, respectively
    
    
    (26,636
    )
    
    
    (12,146
    )Total stockholders equity
    
    
    59,107
    
    
    
    293,512Total liabilities and stockholders equity
    
    $
    3,649,498
    
    
    $
    3,635,655
  62




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##### Table of Contents



MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF OPERATIONS
(All dollar amounts in thousands, except per share amounts)
 Year Ended December 31,2005
    
    
    2004
    
    
    2003Revenues
    
    $
    1,098,822
    
    
    $
    1,057,226
    
    
    $
    1,004,889Costs and expenses:Service costs (exclusive of depreciation and amortization
of $220,567, $217,262 and
$273,307, respectively,
shown
Separately below)
    
    
    438,768
    
    
    
    407,875
    
    
    
    383,012Selling, general and administrative expenses
    
    
    232,514
    
    
    
    216,394
    
    
    
    198,943Corporate expenses
    
    
    22,287
    
    
    
    19,276
    
    
    
    17,237Depreciation and amortization
    
    
    220,567
    
    
    
    217,262
    
    
    
    273,307Operating income
    
    
    184,686
    
    
    
    196,419
    
    
    
    132,390Interest expense, net
    
    
    (208,264
    )
    
    
    (192,740
    )
    
    
    (190,199
    )Loss on early extinguishment of debt
    
    
    (4,742
    )
    
    
    
    
    
    
    Gain on derivatives, net
    
    
    12,555
    
    
    
    16,125
    
    
    
    9,057Gain (loss) on sale of assets and investments, net
    
    
    2,628
    
    
    
    5,885
    
    
    
    (1,839
    )Other expense, net
    
    
    (11,829
    )
    
    
    (12,061
    )
    
    
    (11,460
    )(Loss) income before provision for income taxes
    
    
    (24,966
    )
    
    
    13,628
    
    
    
    (62,051
    )Provision for income taxes
    
    
    (197,262
    )
    
    
    (76
    )
    
    
    (424
    )Net (loss) income
    
    $
    (222,228
    )
    
    $
    13,552
    
    
    $
    (62,475
    )Basic weighted average shares outstanding
    
    
    117,194
    
    
    
    118,534
    
    
    
    118,627Basic (loss) earnings per share
    
    $
    (1.90
    )
    
    $
    0.11
    
    
    $
    (0.53
    )Diluted weighted average shares outstanding
    
    
    117,194
    
    
    
    118,543
    
    
    
    118,627Diluted (loss) earnings per share
    
    $
    (1.90
    )
    
    $
    0.11
    
    
    $
    (0.53
    )
  63




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##### Table of Contents



MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS EQUITY
(All dollar amounts in thousands)
 Class A
    
    
    Class B
    
    
    AdditionalCommon
    
    
    Common
    
    
    Paid-In
    
    
    Accumulated
    
    
    Treasury
    
    
    DeferredStock
    
    
    Stock
    
    
    Capital
    
    
    Deficit
    
    
    Stock
    
    
    Compensation
    
    
    TotalBalance, December 31, 2002
    
    $
    911
    
    
    $
    290
    
    
    $
    981,343
    
    
    $
    (630,040
    )
    
    $
    (5,963
    )
    
    $
    
    
    
    $
    346,541Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (62,475
    )
    
    
    
    
    
    
    
    
    
    
    (62,475
    )Issuance of common stock in employee
stock purchase plan
    
    
    1
    
    
    
    
    
    
    
    1,047
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,048Transfer of stock
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance, December 31, 2003
    
    $
    913
    
    
    $
    289
    
    
    $
    982,390
    
    
    $
    (692,515
    )
    
    $
    (5,963
    )
    
    $
    
    
    
    $
    285,114Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,552
    
    
    
    
    
    
    
    
    
    
    
    13,552Issuance of common stock in employee
stock purchase plan
    
    
    2
    
    
    
    
    
    
    
    1,027
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,029Transfer of stock
    
    
    15
    
    
    
    (15
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Treasury stock, at cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,183
    )
    
    
    
    
    
    
    (6,183
    )Balance, December 31, 2004
    
    $
    930
    
    
    $
    274
    
    
    $
    983,417
    
    
    $
    (678,963
    )
    
    $
    (12,146
    )
    
    $
    
    
    
    $
    293,512Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (222,228
    )
    
    
    
    
    
    
    
    
    
    
    (222,228
    )Issuance of common stock in employee
stock purchase plan
    
    
    3
    
    
    
    
    
    
    
    977
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    980Issuance of restricted stock units,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    net of forfeitures
    
    
    
    
    
    
    
    
    
    
    6,190
    
    
    
    
    
    
    
    
    
    
    
    (6,190
    )
    
    
    Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,333
    
    
    
    1,333Treasury stock, at cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,490
    )
    
    
    
    
    
    
    (14,490
    )Balance, December 31, 2005
    
    $
    933
    
    
    $
    274
    
    
    $
    990,584
    
    
    $
    (901,191
    )
    
    $
    (26,636
    )
    
    $
    (4,857
    )
    
    $
    59,107
  64




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##### Table of Contents



MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(All dollar amounts in thousands)
 Year Ended December 31,2005
    
    
    2004
    
    
    2003CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:Net (loss) income
    
    $
    (222,228
    )
    
    $
    13,552
    
    
    $
    (62,475
    )Adjustments to reconcile net (loss) income to net cash provided by
operating activities:Depreciation and amortization
    
    
    220,567
    
    
    
    217,262
    
    
    
    273,307Gain on derivatives, net
    
    
    (12,555
    )
    
    
    (16,125
    )
    
    
    (9,057
    )(Gain) loss on sale of assets and investments, net
    
    
    (2,628
    )
    
    
    (5,885
    )
    
    
    1,839Loss on early extinguishment of debt
    
    
    4,742
    
    
    
    
    
    
    
    Amortization of deferred financing costs
    
    
    8,613
    
    
    
    8,725
    
    
    
    6,696Amortization of deferred compensation
    
    
    1,333
    
    
    
    
    
    
    
    Deferred income taxes
    
    
    197,306
    
    
    
    780
    
    
    
    748Changes in assets and liabilities, net of effects from acquisitions:Subscriber accounts receivable, net
    
    
    (5,592
    )
    
    
    (1,043
    )
    
    
    (501
    )Prepaid expenses and other current assets
    
    
    (3,053
    )
    
    
    457
    
    
    
    (3,951
    )Accounts payable and accrued expenses
    
    
    (6,722
    )
    
    
    6,961
    
    
    
    (2,620
    )Deferred revenue
    
    
    2,366
    
    
    
    2,073
    
    
    
    10,372Other non-current liabilities
    
    
    (3,054
    )
    
    
    (2,146
    )
    
    
    (7,458
    )Net cash flows provided by operating activities
    
    
    179,095
    
    
    
    224,611
    
    
    
    206,900CASH FLOWS USED IN INVESTING ACTIVITIES:Capital expenditures
    
    
    (228,216
    )
    
    
    (181,362
    )
    
    
    (231,505
    )Acquisition of cable television systems
    
    
    
    
    
    
    (3,372
    )
    
    
    (7,374
    )Proceeds from sale of assets and investments
    
    
    4,616
    
    
    
    10,556
    
    
    
    15,409Other investing activities
    
    
    
    
    
    
    (3,246
    )
    
    
    2,026Net cash flows used in investing activities
    
    
    (223,600
    )
    
    
    (177,424
    )
    
    
    (221,444
    )CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:New borrowings
    
    
    849,750
    
    
    
    247,872
    
    
    
    302,594Repayment of debt
    
    
    (799,731
    )
    
    
    (289,732
    )
    
    
    (279,348
    )Redemption of senior notes
    
    
    (202,834
    )
    
    
    
    
    
    
    Issuance of senior notes
    
    
    200,000
    
    
    
    
    
    
    
    Repurchases of Class A common stock
    
    
    (14,490
    )
    
    
    (6,183
    )
    
    
    Proceeds from issuance of common stock in employee stock purchase plan
    
    
    954
    
    
    
    1,029
    
    
    
    1,048Financing costs
    
    
    (11,845
    )
    
    
    (8,147
    )
    
    
    (520
    )Other financing activities  book overdrafts
    
    
    16,107
    
    
    
    6,034
    
    
    
    (14,639
    )Net cash flows provided by (used in) financing activities
    
    
    37,911
    
    
    
    (49,127
    )
    
    
    9,135Net decrease in cash and cash equivalents
    
    
    (6,594
    )
    
    
    (1,940
    )
    
    
    (5,409
    )CASH AND CASH EQUIVALENTS, beginning of period
    
    
    23,875
    
    
    
    25,815
    
    
    
    31,224CASH AND CASH EQUIVALENTS, end of period
    
    $
    17,281
    
    
    $
    23,875
    
    
    $
    25,815SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid during the period for interest, net of amounts capitalized
    
    
    205,411
    
    
    
    186,835
    
    
    
    196,253SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING
AND FINANCING ACTIVITIES:Capital expenditures financed through capital leases
    
    $
    
    
    
    $
    
    
    
    $
    9,036
  65




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##### Table of Contents



MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (1) Organization
  (2) Liquidity and Capital Resources
  (3) Summary of Significant Accounting Policies
 Basis of Preparation of Consolidated Financial Statements
  Revenue Recognition
  Allowance for Doubtful Accounts
  66
    Table of Contents   MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Cash and Cash Equivalents
  Concentration of Credit Risk
  Property, Plant and Equipment
  Buildings
    
    40 yearsLeasehold improvements
    
    Life of respective leaseCable systems and equipment and subscriber devices
    
    4 to 20 yearsVehicles
    
    5 yearsFurniture, fixtures and office equipment
    
    5 years
    Capitalized Software Costs
 Accounting for the Costs of Computer Software Developed
or Obtained for
Internal Use 67
    Table of Contents   MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Marketing and Promotional Costs
  Intangible Assets
 Goodwill and Other Intangible Assets
   Unit of
Accounting for Testing Impairment of Indefinite-Lived Intangible Assets,
  Other Assets
  68    Table of Contents  MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Segment Reporting
 Disclosure about Segments of an Enterprise and Related Information
 Accounting for Derivative Instruments
 Accounting
for Derivative Instruments and Hedging Activities, Accounting for Certain
Derivative Instruments and Certain Hedging Activities-an amendment of FASB Statement No. 133, Amendment of Statement 133 on Derivative Instruments and Hedging Activities.
 Accounting for Asset Retirement
 Accounting for Asset Retirement Obligations,
  Accounting for Long-Lived Assets
 Accounting for the Impairment or Disposal of Long-Lived
Assets,
 69
    Table of Contents  MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Programming Costs
  Income Taxes
   Comprehensive Income
 Reporting Comprehensive Income,
 Reclassifications
  Recent Accounting Pronouncements
 , Amendment of Statement 123 on Share-Based
Payment. Share-Based Payment
 70
    Table of Contents  MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Accounting Changes and Error Corrections Accounting Changes, Reporting Accounting Changes in
Interim Financial Statements
 (4) Earnings per Share
 Earnings per
Share
    71
    Table of Contents  MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  2005
    
    
    2004
    
    
    2003Net
    
    
    
    
    
    
    Loss
    
    
    Net
    
    
    
    
    
    
    Earnings
    
    
    Net
    
    
    
    
    
    
    LossLoss
    
    
    Shares
    
    
    Per Share
    
    
    Income
    
    
    Shares
    
    
    Per Share
    
    
    Loss
    
    
    Shares
    
    
    Per ShareBasic (loss) earnings per share
    
    $
    (222,228
    )
    
    
    117,194
    
    
    $
    (1.90
    )
    
    $
    13,552
    
    
    
    118,534
    
    
    $
    0.11
    
    
    $
    (62,475
    )
    
    
    118,627
    
    
    $
    (0.53
    )Effect of dilutive securities:Conversion of convertible
senior notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Assumed exercise of stock
options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted (loss) earnings per share
    
    $
    (222,228
    )
    
    
    117,194
    
    
    $
    (1.90
    )
    
    $
    13,552
    
    
    
    118,543
    
    
    $
    0.11
    
    
    $
    (62,475
    )
    
    
    118,627
    
    
    $
    (0.53
    )
 (5) Property, Plant and Equipment
  2005
    
    
    2004Land and land improvements
    
    $
    7,149
    
    
    $
    7,089Buildings and leasehold improvements
    
    
    40,653
    
    
    
    39,898Cable systems, equipment and subscriber devices
    
    
    2,531,840
    
    
    
    2,342,220Vehicles
    
    
    64,729
    
    
    
    60,754Furniture,
fixtures and office equipment
    
    
    38,955
    
    
    
    33,4172,683,326
    
    
    
    2,483,379Accumulated depreciation
    
    
    (1,229,738
    )
    
    
    (1,040,289
    )Property, plant and equipment, net
    
    $
    1,453,588
    
    
    $
    1,443,090
  72
    Table of Contents  MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (6) Accounts Payable and Accrued Expenses
  December 31,
    
    
    December 31,2005
    
    
    2004Accounts payable
    
    $
    6,329
    
    
    $
    14,097Book overdrafts (1)
    
    
    26,330
    
    
    
    10,223Accrued interest
    
    
    65,282
    
    
    
    61,910Accrued payroll and benefits
    
    
    25,824
    
    
    
    24,314Accrued programming costs
    
    
    52,807
    
    
    
    62,049Accrued property, plant and equipment
    
    
    14,839
    
    
    
    18,261Accrued taxes and fees
    
    
    30,617
    
    
    
    27,777Other accrued expenses
    
    
    48,109
    
    
    
    42,592$
    270,137
    
    
    $
    261,223
  (1)
    
    Book overdrafts represent outstanding checks in excess of funds on deposit at the
Companys disbursement accounts.
 (7) Debt
  2005
    
    
    2004Bank credit facilities
    
    $
    1,658,750
    
    
    $
    1,606,50081/2% senior notes due 2008
    
    
    
    
    
    
    200,00077/8% senior notes due 2011
    
    
    125,000
    
    
    
    125,00091/2% senior notes due 2013
    
    
    500,000
    
    
    
    500,00011% senior notes due 2013
    
    
    400,000
    
    
    
    400,00081/2% senior notes due 2015
    
    
    200,000
    
    
    
    51/4% convertible senior notes due 2006
    
    
    172,500
    
    
    
    172,500Capital lease obligations
    
    
    3,401
    
    
    
    5,6323,059,651
    
    
    
    3,009,632Less: Current portion
    
    
    222,770
    
    
    
    42,700Total long-term debt
    
    $
    2,836,881
    
    
    $
    2,966,932
 Bank Credit Facilities
  73
    Table of Contents  MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  1 2 5 8
  3 8 5 8
    74
    Table of Contents  MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Interest Rate Exchange Agreements
    Senior Notes
 1 2 1 2 1 2 1 2 1 2
 7 8 7 8 7 8 7 8
 1 2 1 2 1 2 1 2
  75
    Table of Contents  MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  1 2
 1 2 1 2 1 2 1 2 1 2
  Convertible Senior Notes
 1 4
 Fair Value and Debt Maturities
  77/8% senior notes due 2011
    
    $
    119,68791/2% senior notes due 2013
    
    
    482,50011% senior notes due 2013
    
    
    430,50081/2% senior notes due 2015
    
    
    186,25051/4% convertible senior notes due 2006
    
    
    170,775$
    1,389,712
  2006
    
    $
    222,770
    (1)2007
    
    
    71,5922008
    
    
    90,5392009
    
    
    117,0002010
    
    
    84,500Thereafter
    
    
    2,473,249$
    3,059,650
 
 (1)
    
    Includes the maturity of the Companys 5 1/4 % convertible senior notes due July
2006. 76
    Table of Contents  MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (8) Stockholders Equity
  Stock Repurchase Plans
  Stock Option Plans
   Weighted AverageShares
    
    
    Exercise PriceOutstanding at December 31, 2002
    
    
    10,896,555
    
    
    $
    18.47Granted
    
    
    1,009,000
    
    
    
    7.93Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (162,240
    )
    
    
    15.77Outstanding at December 31, 2003
    
    
    11,743,315
    
    
    $
    18.12Granted
    
    
    217,000
    
    
    
    8.12Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (306,185
    )
    
    
    16.93Outstanding at December 31, 2004
    
    
    11,654,130
    
    
    $
    17.92Granted
    
    
    580,000
    
    
    
    5.91Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (7,322,615
    )
    
    
    18.85Outstanding at December 31, 2005
    
    
    4,911,515
    
    
    $
    15.03
  77
    Table of Contents  MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Options Outstanding
    
    
    Options ExercisableNumber
    
    
    Weighted
    
    
    
    
    
    
    NumberRange of
    
    Outstanding at
    
    
    Average
    
    
    Weighted
    
    
    Exercisable at
    
    
    WeightedExercise
    
    December 31,
    
    
    Remaining
    
    
    Average
    
    
    December 31,
    
    
    AveragePrices
    
    2005
    
    
    Contractual Life
    
    
    Exercise Price
    
    
    2005
    
    
    Exercise Price$5.00 to $12.00
    
    
    2,191,560
    
    
    6.79 years
    
    $
    8.18
    
    
    
    923,069
    
    
    $
    9.10$12.01 to $18.00
    
    
    497,405
    
    
    5.27 years
    
    
    17.06
    
    
    
    406,724
    
    
    
    17.0818.01 to $22.00
    
    
    2,222,550
    
    
    4.09 years
    
    
    19.01
    
    
    
    2,215,100
    
    
    
    19.004,911,515
    
    
    5.41 years
    
    $
    13.98
    
    
    
    3,544,893
    
    
    $
    16.20
  Employee Stock Purchase Plan
  Other Stock-based Compensation
  78
    Table of Contents  MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  For the years ended December 31,2005
    
    
    2004
    
    
    2003Net (loss) income, as reported
    
    $
    (222,228
    )
    
    $
    13,552
    
    
    $
    (62,475
    )Add: Total stock-based compensation expense included in
net loss (income) as reported above
    
    
    1,333Deduct: Total stock based compensation expense determined
under fair value based method of all awards
    
    
    (5,024
    )
    
    
    (5,459
    )
    
    
    (4,938
    )Pro forma, net (loss) income
    
    $
    (225,919
    )
    
    $
    8,093
    
    
    $
    (67,413
    )Basic and diluted (loss) earnings per share:As reported
    
    $
    (1.90
    )
    
    $
    0.11
    
    
    $
    (0.53
    )Pro forma
    
    $
    (1.93
    )
    
    $
    0.07
    
    
    $
    (0.57
    )
 (9) Income Tax
  2005
    
    
    2004
    
    
    2003Tax (benefit) provision at the United States
statutory rate
    
    $
    (8,738
    )
    
    $
    4,770
    
    
    $
    (21,718
    )State taxes, net of federal tax benefit
    
    
    9,836
    
    
    
    49
    
    
    
    276Valuation allowance
    
    
    195,667
    
    
    
    (4,750
    )
    
    
    21,697Permanent items and other
    
    
    497
    
    
    
    7
    
    
    
    169Total income tax expense
    
    $
    197,262
    
    
    $
    76
    
    
    $
    424
  79
    Table of Contents  MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  2005
    
    
    2004Current deferred tax assets:Unrealized loss on investments
    
    $
    
    
    
    $
    5,600Accrued liabilities
    
    
    5,999
    
    
    
    3,891Allowance for doubtful accounts
    
    
    1,204
    
    
    
    1,442Total current deferred tax assets
    
    
    7,203
    
    
    
    10,933Less: Valuation allowance
    
    
    (4,421
    )
    
    
    (3,909
    )Current deferred tax assets, net
    
    $
    2,782
    
    
    $
    7,024Long-term deferred tax assets:Net operating losses
    
    
    671,955
    
    
    
    595,293Capital loss
    
    
    11,254
    
    
    
    5,653Other assets
    
    
    9,384
    
    
    
    11,171Valuation allowance
    
    
    (425,059
    )
    
    
    (218,863
    )Long-term deferred tax assets, net
    
    $
    267,534
    
    
    $
    393,254Long-term deferred tax liabilities:Investment in cable television systems
    
    
    467,624
    
    
    
    400,278Long-term deferred tax liabilities, net
    
    $
    200,090
    
    
    $
    7,024
     80
    Table of Contents  MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (10) Related Party Transactions
   (11) Employee Benefit Plans
  (12) Commitments and Contingencies
 Lease and Rental Agreements
  2006
    
    $
    3,8412007
    
    
    3,1902008
    
    
    2,2632009
    
    
    1,7742010
    
    
    1,443Thereafter
    
    
    3,955$
    16,466
  Letters of Credit
  81
    Table of Contents  MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Legal Proceedings
  (13) Hurricane Losses in 2004 and 2005
     (16) Sale of Assets and Investments
  (17) Subsequent Events
  82
    Table of Contents  MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (18) Selected Quarterly Financial Data (all dollar amounts in thousands, except per share data):
 First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter(unaudited)2005Revenues
    
    $
    266,244
    
    
    $
    277,332
    
    
    $
    274,959
    
    
    $
    280,287Operating income
    
    
    45,049
    
    
    
    51,766
    
    
    
    45,161
    
    
    
    42,710Net loss income
    
    
    (841
    )
    
    
    (5,989
    )
    
    
    (2,731
    )
    
    
    (212,667
    )Basic and diluted net loss
per share
    
    $
    (0.01
    )
    
    $
    (0.05
    )
    
    $
    (0.02
    )
    
    $
    (1.82
    )Basic weighted average common
shares outstanding
    
    
    117,861
    
    
    
    117,488
    
    
    
    116,864
    
    
    
    116,580Diluted weighted average common
shares outstanding
    
    
    117,861
    
    
    
    117,488
    
    
    
    116,864
    
    
    
    116,5802004Revenues
    
    $
    263,439
    
    
    $
    267,599
    
    
    $
    261,025
    
    
    $
    265,163Operating income
    
    
    51,564
    
    
    
    52,932
    
    
    
    42,876
    
    
    
    49,047Net (loss) income
    
    
    (5,739
    )
    
    
    30,129
    
    
    
    (12,807
    )
    
    
    1,969Basic and diluted net (loss) income
per share
    
    $
    (0.05
    )
    
    $
    0.25
    
    
    $
    (0.11
    )
    
    $
    0.02Basic weighted average common
shares outstanding
    
    
    118,723
    
    
    
    118,806
    
    
    
    118,523
    
    
    
    118,088Diluted weighted average common
shares outstanding
    
    
    118,723
    
    
    
    128,065
    
    
    
    118,523
    
    
    
    118,0882003Revenues
    
    $
    242,775
    
    
    $
    252,194
    
    
    $
    251,107
    
    
    $
    258,813Operating income
    
    
    19,029
    
    
    
    21,400
    
    
    
    44,134
    
    
    
    47,827Net (loss) income
    
    
    (33,366
    )
    
    
    (38,158
    )
    
    
    1,937
    
    
    
    7,112Basic and diluted net (loss) income
per share
    
    $
    (0.28
    )
    
    $
    (0.32
    )
    
    $
    0.02
    
    
    $
    0.06Basic weighted average common
shares outstanding
    
    
    118,525
    
    
    
    118,632
    
    
    
    118,633
    
    
    
    118,717Diluted weighted average common
shares outstanding
    
    
    118,525
    
    
    
    118,632
    
    
    
    118,698
    
    
    
    118,753
 83
    Table of Contents  Schedule II
 MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 VALUATION AND QUALIFYING ACCOUNTS
(All dollar amounts in thousands)
 Additions
    
    
    DeductionsBalance at
    
    
    Charged to
    
    
    Charged to
    
    
    Charged to
    
    
    Charged tobeginning of
    
    
    costs
    
    
    other
    
    
    costs
    
    
    other
    
    
    Balance atperiod
    
    
    and expenses
    
    
    accounts
    
    
    and expenses
    
    
    accounts
    
    
    end of periodDecember 31, 2003Allowance for
doubtful accountsCurrent receivables
    
    $
    3,789
    
    
    $
    6,477
    
    
    $
    
    
    
    $
    6,742
    
    
    $
    
    
    
    $
    3,524Valuation allowanceDeferred tax assets
    
    $
    224,101
    
    
    $
    4,100
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    228,201December 31, 2004Allowance
for doubtful accountsCurrent receivables
    
    $
    3,524
    
    
    $
    1,658
    
    
    $
    347
    
    
    $
    1,870
    
    
    $
    
    
    
    $
    3,659Valuation allowanceDeferred tax assets
    
    $
    228,201
    
    
    $
    
    
    
    $
    
    
    
    $
    5,429
    
    
    $
    
    
    
    $
    222,772December 31, 2005Allowance for
doubtful accountsCurrent receivables
    
    $
    3,659
    
    
    $
    1,622
    
    
    $
    
    
    
    $
    1,831
    
    
    $
    372
    
    
    $
    3,078Valuation allowanceDeferred tax assets
    
    $
    222,772
    
    
    $
    206,708
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    429,480
 
  84
    Table of Contents  ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
   Managements Report on Internal Control Over Financial Reporting
  
    
    pertain to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the company;
    
    provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and
    
    provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the companys assets that could have a material effect
on the financial statements.
    
 ITEM 9B. OTHER INFORMATION
  85
    Table of Contents  PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
  
 ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  
 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
  86
    Table of Contents  PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 (a) Financial Statements
  (b) Exhibits
  87
    Table of Contents  ExhibitNumber
    
    Exhibit Description3.1
    
    Restated Certificate of Incorporation of Mediacom Communications Corporation (1)3.2
    
    By-laws of Mediacom Communications Corporation (1)4.1
    
    Form of certificate evidencing share of Class A common stock(1)4.2
    
    Indenture relating to
77/8% senior notes due 2011 of Mediacom
LLC and Mediacom Capital Corporation (2)4.3
    
    Indenture relating to 91/2% senior notes due 2013 of Mediacom LLC and Mediacom Capital
Corporation (3)4.4 (a)
    
    Indenture relating to 11% senior notes due 2013 of Mediacom Broadband LLC and Mediacom
Broadband Corporation (4)4.4 (b)
    
    Indenture Supplement No. 1, dated as of August 6, 2002, to the Indenture relating to 11%
senior notes due 2013 of Mediacom Broadband LLC and Mediacom Broadband Corporation.(5)4.5 (a)
    
    Indenture relating to 5.25% Convertible Senior Note due 2006 (6)4.5 (b)
    
    Indenture Supplement No. 1, dated as of August 6, 2002, to the Indenture relating to 5.25%
convertible senior notes due 2006 of the Company.(5)4.6
    
    Indenture relating to 81/2% senior notes due 2015 of Mediacom LLC and Mediacom Capital
Corporation (6)10.1
    
    Credit Agreement, dated as of October 21, 2004, among the operating subsidiaries of
Mediacom LLC, the lenders thereto and JPMorgan Chase Bank, as administrative agent for the
lenders.(8)10.2 (a)
    
    Amendment and Restatement, dated December 16, 2004, of Credit Agreement, dated as of July
18, 2001, among the operating subsidiaries of Mediacom Broadband LLC, the lenders thereto
and JPMorgan Chase Bank, as administrative agent for the lenders.(9)10.2 (b)
    
    Amendment No. 1, dated as of October 11, 2005, to the Amendment and Restatement, dated as
of December 16, 2004, of Credit Agreement, dated as of July 18, 2001, among the operating
subsidiaries of Mediacom Broadband LLC, the lenders thereto and JP Morgan Chase Bank, as
administrative agent for the lenders.(10)10.3*
    
    Form of Amended and Restated Registration Rights Agreement by and among Mediacom
Communications Corporation, Rocco B. Commisso, BMO Financial, Inc., CB Capital Investors,
L.P., Chase Manhattan Capital, L.P., Morris Communications Corporation, Private Market
Fund, L.P. and U.S. Investor, Inc. (1)10.4
    
    Fifth Amended and Restated Operating Agreement of Mediacom LLC (11)10.5
    
    Amended and Restated Limited Liability Company Operating Agreement of Mediacom Broadband
LLC (4)10.6
    
    2001 Employee Stock Purchase Plan (12)10.7*
    
    2003 Incentive Plan (13)12.1
    
    Schedule of Computation of Ratio of Earnings to Fixed Charges21.1
    
    Subsidiaries of Mediacom Communications Corporation(14)23.1
    
    Consent of PricewaterhouseCoopers LLP31.1
    
    Rule 13a-14(a) Certifications32.1
    
    Section 1350 Certifications
 88
    Table of Contents  (c) Financial Statement Schedule
  
 *
    
    Compensatory Plan(1)
    
    Filed as an exhibit to the Registration Statement on Form S-1 (File No. 333-90879)
of Mediacom Communications Corporation and incorporated herein by reference.(2)
    
    Filed as an exhibit to the Registration Statement on Form S-4 (File No. 333-85893)
of Mediacom LLC and Mediacom Capital Corporation and incorporated herein by reference.(3)
    
    Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year ended
December 31, 2000 of Mediacom Communications Corporation and incorporated herein by reference.(4)
    
    Filed as an exhibit to the Registration Statement on Form S-4 (File No. 333-72440)
of Mediacom Broadband LLC and Mediacom Broadband Corporation and incorporated herein by
reference.(5)
    
    Filed as an exhibit to the Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 2002 of Mediacom Communications Corporation and incorporated herein by
reference.(6)
    
    Filed as an exhibit to Amendment No. 1 of the Current Report on Form 8-K, dated June
22, 2001, of Mediacom Communications Corporation and incorporated herein by reference.(7)
    
    Filed as an exhibit to the Current Report on Form 8-K, dated August 30, 2005, of
Mediacom Broadband LLC and Mediacom Broadband Corporation and incorporated herein by
reference.(8)
    
    Filed as an exhibit to the Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 2004 of Mediacom Communications Corporation and incorporated herein by
reference.(9)
    
    Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year ended
December 31, 2004 of Mediacom Communications Corporation and incorporated herein by reference.(10)
    
    Filed as an exhibit to the Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 2005 and incorporated herein by reference.(11)
    
    Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 of Mediacom Communications Corporation and incorporated herein by reference.(12)
    
    Filed as an exhibit to the Registration Statement on Form S-8 (File No. 333-68306)
of Mediacom Communications Corporation and incorporated herein by reference.(13)
    
    Filed as Exhibit A to the definitive Proxy Statement of Mediacom Communications
Corporation filed with the SEC on April 30, 2003 and incorporated herein by reference.(14)
    
    Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year ended
December 31, 2001 of Mediacom Communications Corporation and incorporated herein by reference. 89
    Table of Contents  SIGNATURES
  Mediacom Communications CorporationMarch 15, 2006
    By:
    /s/ Rocco B. CommissoRocco B. CommissoChairman and Chief
     Executive Officer  Signature
    
    Title
    
    Date/s/ Rocco B. Commisso

Rocco B. Commisso
    

Chairman and Chief Executive Officer
(principal executive officer)
    
    March 15, 2006/s/ Mark E. Stephan

Mark E. Stephan
    
Executive Vice
President, Chief
Financial Officer,
and Director
     (principal
financial officer
and principal
accounting officer)
    
    March 15, 2006/s/ William S. Morris III

William S. Morris III
    
    Director
    
    March 15, 2006/s/ Craig S. Mitchell

Craig S. Mitchell
    
    Director
    
    March 15, 2006/s/ Thomas V. Reifenheiser

Thomas V. Reifenheiser
    
    Director
    
    March 15, 2006/s/ Natale S. Ricciardi

Natale S. Ricciardi
    
    Director
    
    March 15, 2006/s/ Robert L. Winikoff

Robert L. Winikoff
    
    Director
    
    March 15, 2006
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