##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
 FORM 10-Q/A (Amendment No. 1) Quarterly Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934 For the quarterly period ended March 31, 2004 Commission File Numbers:
    
    333-57285-01333-57285
 Mediacom LLC Mediacom Capital Corporation*
 (Exact names of
Registrants as specified in their charters)
 New York
    
    06-1433421New York
    
    06-1513997(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer
Identification Numbers)
 100 Crystal Run Road
Middletown, New York 10941(Address of principal executive offices) (845) 695-2600(Registrants telephone number) Indicate by check mark whether the Registrants (1) have filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes
þ No o Indicate by checkmark whether the registrants are accelerated filers (as
defined in Rule 12b-2 of the Act). Yes
o No þ Indicate the number of shares outstanding of the Registrants common stock: Not
Applicable *Mediacom Capital Corporation meets the conditions set forth in General
Instruction H (1) (a) and (b) of Form 10-Q and is therefore filing this form
with the reduced disclosure format.




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|                                                                                              |  |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|PART I                                                                                       
|ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|PART II                                                                                      
|ITEM 1. LEGAL PROCEEDINGS                                                                    
|ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                                                                                   



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EXPLANATORY NOTE Mediacom LLC and Mediacom Capital Corporation hereby amend their Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 2004, filed on May
13, 2004, as set forth in this Quarterly Report on Form 10-Q/A (Amendment No.
1) (the Form 10-Q/A). This Form 10-Q/A amends the
following sections on the
Form 10-Q: Part I, Item 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations. The second paragraph under Liquidity and Capital Resources 
Investing Activities reflects a typographical correction to delete the last
sentence. Part II, Item 1.
Legal Proceedings. The sentence reflects a typographical correction
to refer to Note 8. 1




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PART I 
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the Companys
unaudited consolidated financial statements as of and for the three months
ended March 31, 2004 and 2003 and with the Companys annual report on Form 10-K
for the year ended December 31, 2003. Overview We are a wholly-owned subsidiary of Mediacom Communications Corporation.
As of March 31, 2004, our cable systems passed approximately 1.3 million homes
and served approximately 722,000 basic subscribers in 22 states. Since
commencement of our operations in March 1996, we have experienced significant
growth by deploying a disciplined strategy of acquiring underperforming cable
systems and improving their operating and financial performance. Many of our
cable systems are located in markets that are contiguous with, or in close
proximity to, cable systems owned and operated by Mediacom Broadband LLC, a
wholly-owned subsidiary of our manager. In 2003, we completed our network upgrade program that significantly
increased bandwidth and enabled interactivity. As of March 31, 2004,
approximately 98% of our cable network was upgraded with 550MHz to 870MHz
bandwidth capacity and about 96% of our homes passed were activated with
two-way communications capability. Expressed in megahertz (MHz), bandwidth
represents a systems capacity to deliver telecommunication services. Our upgraded network allows us to introduce additional programming and
other products and services such as digital video, video-on-demand,
high-definition television and high-speed Internet access. We currently
provide digital video services to approximately 148,000 subscribers,
representing a penetration of approximately 20.5% of our basic subscribers. We
also currently provide high speed Internet services to approximately 133,000
subscribers, representing a penetration of approximately 10.0% of our homes
passed. Beginning in the fourth quarter of 2004, we plan to launch in certain
of our markets Internet protocol telephony service, which is sometimes referred
to as Voice-over-Internet-Protocol, or VoIP telephony. VoIP telephony will
allow us to offer an attractive triple-play bundle of video, data and voice
products and services. Bundled products and services offer our subscribers key
benefits such as a single provider contact for provisioning, billing and
customer care. We face increasing competition for our video programming services, most
notably from direct broadcast satellite service, or DBS service providers. In
the first quarter of 2004, competitive pressure from DBS service providers
intensified when they launched local television channels in additional markets
representing an estimated 31% of our basic subscriber base. Since they have
been permitted to deliver local television broadcast signals beginning in 1999,
DIRECTV, Inc. and Echostar Communications Corporation, the two largest DBS
service providers, have been increasing the number of markets in which they
deliver these local television signals. These local-into-local launches were
usually accompanied by heavy marketing and advertising and were the primary
cause of our loss of basic subscribers in recent periods including the first
quarter of 2004. As of March 31, 2004, competitive local-into-local services
in our markets covered an estimated 79% of our basic subscribers. 2




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Actual Results of Operations Three Months Ended March 31, 2004 Compared to Three Months Ended March 31, 2003 The following table sets forth our unaudited consolidated statements of
operations for the three months ended March 31, 2004 and 2003 (dollars in
thousands and percentage changes that are not meaningful are marked NM): Three Months EndedMarch 31,2004
    
    2003
    
    $ Change
    
    % ChangeRevenues
    
    $
    118,777
    
    
    $
    109,110
    
    
    $
    9,667
    
    
    
    8.9
    %Costs and expenses:Service costs
    
    
    46,335
    
    
    
    40,842
    
    
    
    5,493
    
    
    
    13.4Selling, general and administrative
expenses
    
    
    20,773
    
    
    
    19,218
    
    
    
    1,555
    
    
    
    8.1Management fee expense
    
    
    2,205
    
    
    
    1,663
    
    
    
    542
    
    
    
    32.6Depreciation and amortization
    
    
    26,326
    
    
    
    49,651
    
    
    
    (23,325
    )
    
    
    (47.0
    )Operating income (loss)
    
    
    23,138
    
    
    
    (2,264
    )
    
    
    25,402
    
    
    NMInterest expense, net
    
    
    (23,938
    )
    
    
    (26,153
    )
    
    
    2,215
    
    
    
    (8.5
    )(Loss) gain on derivative instruments, net
    
    
    (3,392
    )
    
    
    542
    
    
    
    (3,934
    )
    
    NMInvestment income
    
    
    4,500
    
    
    
    4,500
    
    
    
    
    
    
    
    Other expense
    
    
    (1,051
    )
    
    
    (1,033
    )
    
    
    (18
    )
    
    
    (1.7
    )Net loss
    
    $
    (743
    )
    
    $
    (24,408
    )
    
    $
    (23,665
    )
    
    
    97.0
    %Operating income before depreciation and
amortization
    
    $
    49,464
    
    
    $
    47,387
    
    
    $
    2,077
    
    
    
    4.4
    %
 Use of Operating Income Before Depreciation and Amortization Operating income before depreciation and amortization, or OIBDA, is not a
financial measure calculated in accordance with generally accepted accounting
principles (GAAP) in the United States. 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 operating income or net
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 table sets forth the reconciliation
of OIBDA to operating income for the three months ended March 31, 2004 and 2003
(dollars in thousands and unaudited): Three Months EndedMarch 31,2004
    
    2003OIBDA
    
    $
    49,464
    
    
    $
    47,387Depreciation and amortization
    
    
    (26,326
    )
    
    
    (49,651
    )Operating income
    
    $
    23,138
    
    
    $
    (2,264
    )
 3




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Revenues Three Months Ended March 31,2004
    
    2003% of
    
    
    
    
    
    % ofAmount
    
    Revenues
    
    Amount
    
    Revenues
    
    $ Change
    
    % ChangeVideo
    
    $
    100,248
    
    
    
    84.4
    %
    
    $
    97,429
    
    
    
    89.3
    %
    
    $
    2,819
    
    
    
    2.9
    %Data
    
    
    15,876
    
    
    
    13.4
    
    
    
    10,246
    
    
    
    9.4
    
    
    
    5,630
    
    
    
    55.0Advertising
    
    
    2,653
    
    
    
    2.2
    
    
    
    1,435
    
    
    
    1.3
    
    
    
    1,218
    
    
    
    84.9$
    118,777
    
    
    
    100.0
    %
    
    $
    109,110
    
    
    
    100.0
    %
    
    $
    9,667
    
    
    
    8.9
    %
 Video revenues represent monthly subscription fees charged to customers
for our core cable television products and services (including basic, expanded
basic and analog premium programming, digital cable television programming
services, wire maintenance, equipment rental and services to commercial
establishments), pay-per-view charges, installation and reconnection fees, late
payment fees, and other ancillary revenues. Data revenues primarily represent
monthly subscription fees charged to customers for our data products and
services and equipment rental fees. Franchise fees charged to customers for
payment to local franchising authorities are included in their corresponding
revenue category. Revenues rose 8.9%, largely attributable to an increase in high-speed data
customers and basic rate increases applied on our video customers, driven in
large part by our own video programming cost increases. Video revenues increased 2.9% as a result of the aforementioned basic rate
increases and a 6.5% increase in digital customers, from 139,000 to 148,000,
partially offset by a 3.7% decline in basic subscribers from 750,000 to
722,000. Our loss in basic subscribers resulted primarily from increased
competitive pressures by DBS service providers, particularly in those markets
where we experienced their local-into-local launches, and to a lesser extent
from our tighter customer credit policies. To reverse this video customer
trend, we are increasing our customer retention efforts and our emphasis on
bundling, enhancing and differentiating our video products and services with
new digital service packages, video-on-demand, high-definition television,
digital video recorders and more local programming. Data revenues rose 55.0%, due primarily to an increase in data customers
from 92,000 to 133,000, as well as a gain in average monthly data revenue per
data subscriber from $39.69 to $41.54. We expect this customer trend in our
data business to continue given anticipated demand for our high-speed data
service. Advertising revenues increased 84.9%, primarily as a result of bringing
in-house certain markets previously managed by third parties. Instead of
receiving advertising revenues net of commissions paid to third parties, we now
record the full revenues from these markets with the related expenses,
including in-house commissions, recorded as selling, general and administrative
expenses. Costs and Expenses Service costs include: fees paid to programming suppliers; expenses
related to wages and salaries of technical personnel, who maintain our cable
network and perform customer installation activities; high-speed Internet
access costs, including costs of bandwidth connectivity, customer provisioning
and technical support for our customers; and plant operating costs, such as
utilities and pole rental expense. Programming costs, which are payments to
programmers for content and are generally paid on a per subscriber basis, have
historically increased due to both increases in the rates charged for existing
programming services and the introduction of new programming services to our
basic subscribers. Service costs increased 13.4% over the prior year. Of this increase,
42.9% was due to higher programming costs related to the expansion of our
service offerings and price increases, 24.9% was due to servicing the growth in
our data customers, 18.4% was due to increased employee headcount and
compensation, and 8.1% was due to increased vehicle and other operating costs
related to servicing our customers. The balance was due to greater expensing
of labor and 4




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overhead costs resulting from the transition from upgrade construction to
maintenance activities. The increase in programming costs, however, was
partially offset by a decline in basic subscribers and analog premium units. We
expect programming costs on a per unit basis to continue to rise in 2004,
primarily due to price increases reflecting both inflation-indexed and
negotiated license fee increases. As a percentage of revenues, service costs
were 39.0% for the three months ended March 31, 2004 and 37.4% for the same
period of the prior year. Selling, general and administrative expenses include: wages and salaries
for our call center, customer service and support and administrative personnel;
franchise fees and taxes; and expenses related to billing, telecommunications,
marketing, bad debt, advertising and office administration. Selling, general and administrative expenses increased 8.1%. Of this
increase, 37.5% was due to higher advertising expense as we now record in-house
advertising costs that were previously managed by third parties as discussed
above, 21.1% was due to an increase in telephone costs, 13.7% was due to
greater expensing of labor and overhead costs resulting from the transition
from upgrade construction to maintenance activities, and 11.8% was due to an
increase in support personnel. As a percentage of revenues, selling, general
and administrative expenses were 17.5% for the three months ended March 31,
2004, as compared with 17.6% for the three months ended March 31, 2003. We
expect the rate of increase in expenses relating to our advertising sales to
moderate as the migration of the work in-house is completed. We expect
continued growth in advanced services, which include digital cable and
high-speed Internet access and, in late 2004, the launch of VoIP telephony
service. As a result, we expect our service costs and selling, general and
administrative expenses to increase. Management fee expense reflects charges incurred under our management
agreements with our parent, Mediacom Communications Corporation (MCC).
Management fee expense increased 32.6% to $2.2 million for the three months
ended March 31, 2004, as compared to $1.7 million for the three months ended
March 31, 2003. The increase was due to greater overhead costs charged by MCC
during the three month period ended March 31, 2004. As a percentage of
revenues, management fee expense was 1.9% for the three months ended March 31,
2004, as compared with 1.5% for the three months ended March 31, 2003. Depreciation and amortization decreased 47.0% to $26.3 million for the
three months ended March 31, 2004, as compared to $49.7 million for the three
months ended March 31, 2003. The decrease was primarily due to changes,
effective July 1, 2003, in the estimated useful lives of our cable systems and
equipment in conjunction with the completion of our network upgrade and rebuild
program. These changes reduced depreciation by $20.8 million for the three
months ended March 31, 2004. This decrease was offset in part by increased
depreciation for investments in our cable network and ongoing investments to
continue the rollout of products and services such as video-on-demand,
high-definition television and high-speed Internet access. See Note 2 to our
consolidated financial statements. Interest Expense, Net Interest expense, net, decreased 8.5% to $23.9 million for the three month
period ended March 31, 2004, as compared to $26.2 million for the three months
ended March 31, 2003. This was primarily due to lower market interest rates on
our variable rate debt for the three months ended March 31, 2004. (Loss) gain on derivative instruments, net We enter into interest rate exchange agreements, or interest rate swaps,
with counterparties to fix the interest rate on a portion of our variable rate
debt in order to reduce the potential volatility in our interest expense that
would otherwise result from changes in market interest rates. As of March 31,
2004 we had interest rate swaps with an aggregate principal amount of $300.0
million. These interest rate swaps are accounted for as fair value hedges of
debt instruments as prescribed by SFAS No. 133. The changes in their
mark-to-market values are derived from changes in market interest rates, the
decrease in their time to maturity and the creditworthiness of the
counterparties. Principally as a result of a downward change during the
quarter in market interest rates that are used to fair value our interest
swaps, loss on derivative instruments, net, was $3.4 million for the three
months ended March 31, 2004, as compared to a gain on derivative instruments,
net of $0.5 million for the three months ended March 31, 2003. Other expense Other expense was $1.1 million for the three months ended March 31, 2004
and $1.0 for the three months ended March 31, 2003. Other expense primarily
represents amortization of deferred financing costs and fees on unused credit
commitments. 5




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Net loss Due to the factors described above, we generated a net loss of $1.7
million for the three months ended March 31, 2004, as compared to a net loss of
$24.4 million for the three months ended March 31, 2003. Operating Income Before Depreciation and Amortization OIBDA increased 4.4% to $49.5 million due to an 8.9% increase in revenues,
partially offset by a 13.4% increase in service costs and 8.1% increase in
selling, general and administrative expenses. OIBDA, expressed as a percentage
of revenues, was 41.6% for the three months ended March 31, 2004, as compared
to 43.4% for the year-ago period. Liquidity and Capital Resources As an integral part of our business plan, we have significantly invested,
and will continue to invest, additional capital in our cable network to enhance
its reliability and capacity, which will allow for the introduction of new
advanced broadband services. We also will continue to pursue a business
strategy that includes selective acquisitions. We expect to fund our capital
requirements through a combination of internally generated funds, and amounts
available under our bank credit facilities. Operating Activities Net cash flows provided by operating activities were $28.1 million and
$14.0 million for the three months ended March 31, 2004 and 2003, respectively.
The change in net operating cash flows was primarily due to a reduction in net
loss, and to a lesser extent, a reduction in the use of cash for certain
working capital accounts, principally prepaid expenses and other non-current
liabilities for the three months ended March 31, 2004. Investing Activities Net cash flows used in investing activities were $24.5 million and $27.2
million for the three months ended March 31, 2004 and 2003, respectively. The
change in net investing cash flows resulted primarily from a reduction in
capital expenditures for the three month period ended March 31, 2004, due to
the completion of our planned network upgrade and rebuild program. Our capital expenditures were $21.1 million for the three months ended
March 31, 2004, as compared to $27.1 million for the three months ended March
31, 2003. We expect prospective capital expenditures to consist primarily of
the costs of new advanced service installations and equipment, new plant
construction and network replacement. We have a $150.0 million preferred equity investment in Mediacom Broadband
LLC. The preferred equity investment has a 12% annual cash dividend, payable
quarterly in cash. For the three months ended March 31, 2004, we received in
aggregate $4.5 million of cash dividends on the preferred equity. Financing Activities For the three months ended March 31, 2004, net cash flows used in
financing activities were $11.0 million, as compared to net cash flows provided
by financing activities of $2.8 million for the same period of the prior year.
The use of net cash flows in the first quarter of 2004 was due principally to
the above-mentioned increase in net cash flows provided by operating activities
and the significant reduction of capital expenditures, which allowed us to make
net repayments of debt, as compared to our net borrowings in the comparable
2003 quarter, which funded capital expenditures in that period. We have two bank credit facilities in the aggregate amount of $995.5
million. These bank credit facilities expire in September 2008 and December
2008, however, their final maturities are subject to earlier repayment on dates
ranging from June 2007 to December 2007 if we do not refinance our $200.0
million 81/2% senior notes due April 2008 prior to March 31, 2007. 6




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We have entered into interest rate exchange agreements with
counterparties, which expire from September 2006 through March 2007, to hedge
$300.0 million of floating rate debt. Under the terms of all of our interest
rate exchange agreements, we are exposed to credit loss in the event of
nonperformance by the other parties of the agreements. However, due to the
high creditworthiness of our counterparties, which are major banking firms
rated investment grade or better, we do not anticipate their nonperformance.
As of March 31, 2004, about 74% of our outstanding indebtedness was at fixed
interest rates or subject to interest rate protection. As of March 31, 2004, our total debt was approximately $1.51 billion, we
had unused credit commitments of about $303.8 million under our bank credit
facilities and our annualized cost of debt capital was approximately 6.5%. On
such date, approximately $291.8 million could be borrowed and used for general
corporate purposes based on the terms and conditions of our debt arrangements.
As of March 31, 2004, we were in compliance with all covenants under our debt
arrangements. As of March 31, 2004, approximately $6.2 million of letters of credit were
issued to various parties to secure our performance relating to insurance and
franchise requirements. Although we have not generated earnings sufficient to cover fixed charges,
we have generated cash and obtained financing sufficient to meet our short-term
requirements, including our debt service, working capital and capital
expenditures. We expect that we will continue to be able to generate funds and
obtain financing sufficient to service our long-term business plan, service our
debt obligations and complete any future acquisitions. However, there can be
no assurance that we will be able to obtain sufficient financing, or, if we
were able to do so, that the terms would be favorable to us. Critical Accounting Policies The foregoing discussion and analysis of our financial condition and
results of operations is based upon our consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these financial statements
requires us to make estimates and assumptions that affect the reported amounts
of assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. Periodically we evaluate our estimates,
including those related to doubtful accounts, long-lived assets, capitalized
costs and accruals. We base our estimates on historical experience and on
various other assumptions that we believe are reasonable. Actual results may
differ from these estimates under different assumptions or conditions. We believe the following represent the most significant and subjective
estimates used in the preparation of our consolidated financial statements: Property, Plant and Equipment In accordance with Statement of Financial Accounting Standards (SFAS)
No. 51, Financial Reporting by Cable Television Companies, we capitalized a
portion of direct and indirect costs related to the construction, replacement
and installation of property, plant and equipment. Capitalized costs are
recorded as additions to property, plant and equipment and depreciated over the
life of the related assets. We perform periodic evaluations of the estimates
used to determine the amount of costs that are capitalized. Any changes to
these estimates, which may be significant, are applied in the period in which
the evaluations were completed. Goodwill and Other Intangible Assets In accordance with SFAS No. 142, Goodwill and Other Intangible Assets,
the amortization of goodwill and indefinite-lived intangible assets is
prohibited and requires such assets to be tested annually for impairment, or
more frequently if impairment indicators arise. We have determined that our
cable franchise costs are indefinite-lived assets. Our annual impairment
tests, performed as of March 31, 2004, determined that there was no impairment
of goodwill or indefinite-lived intangible assets. There have been no events
since then that would require an analysis to be completed before the annual
test date. 7




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Inflation and Changing Prices Our systems costs and expenses are subject to inflation and price
fluctuations. Such changes in costs and expenses can generally be passed
through to subscribers. Programming costs have historically increased at rates
in excess of inflation and are expected to continue to do so. We believe that
under the Federal Communications Commissions existing cable rate regulations,
we may increase rates for cable television services to more than cover any
increases in programming. However, competitive conditions and other factors in
the marketplace may limit our ability to increase its rates. 8




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PART II







ITEM 2.
LEGAL PROCEEDINGS

See
Note 8 to our consolidated financial statements.







ITEM 6.
EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

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


(b) Reports on Form 8-K

None.

9



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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized. MEDIACOM LLCMay 21, 2004
    
    By:
    
    /s/ MARK E. STEPHANMark E. StephanExecutive Vice President andChief Financial Officer




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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized. MEDIACOM CAPITAL CORPORATIONMay 21, 2004
    
    By:
    
    /s/ MARK E. STEPHANMark E. StephanExecutive Vice President andChief Financial Officer