##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
 
 Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 For the quarterly period ended March 31, 2007
 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, NY 10941  (Address of principal executive offices)
 (845) 695-2600  (Registrants telephone number)
  þ o
  o Large accelerated filer
    
    þ Accelerated filer
    
    o Non-accelerated filer
  o þ




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##### 



MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 FORM 10-Q
FOR THE PERIOD ENDED MARCH 31, 2007
 TABLE OF CONTENTS
 PagePART IItem 1.
    
    Financial StatementsConsolidated Balance Sheets (unaudited)March 31, 2007 and December 31, 2006
    
    
    4Consolidated Statements of Operations (unaudited)Three Months Ended March 31, 2007 and 2006
    
    
    5Consolidated Statements of Cash Flows (unaudited)Three Months Ended March 31, 2007 and 2006
    
    
    6Notes to Consolidated Financial Statements (unaudited)
    
    
    7Item 2.
    
    Managements Discussion and Analysis ofFinancial Condition and Results of Operations
    
    
    12Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    18Item 4.
    
    Controls and Procedures
    
    
    18PART IIItem 1.
    
    Legal Proceedings
    
    
    19Item 1A.
    
    Risk Factors
    
    
    19Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19Item 3.
    
    Defaults upon Senior Securities
    
    
    19Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    19Item 5.
    
    Other Information
    
    
    19Item 6.
    
    Exhibits
    
    
    19Exhibit 31.1Exhibit 32.1
   2




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Cautionary Statement Regarding Forward-Looking Statements
    3




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##### Table of Contents



PART I
 
 ITEM 1. FINANCIAL STATEMENTS
 
 MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(All dollar amounts in thousands)
(Unaudited)
 March 31,
    
    
    December 31,2007
    
    
    2006ASSETSCURRENT ASSETSCash
    
    $
    23,815
    
    
    $
    36,385Accounts receivable, net of allowance for doubtful accounts of $1,726 and $2,173
    
    
    67,627
    
    
    
    75,722Prepaid expenses and other current assets
    
    
    17,704
    
    
    
    17,248Deferred tax assets
    
    
    1,956
    
    
    
    2,467Total current assets
    
    
    111,102
    
    
    
    131,822Investment in cable television systems:Property, plant and equipment, net of accumulated depreciation of $1,466,652 and $1,423,911
    
    
    1,442,124
    
    
    
    1,451,134Franchise rights
    
    
    1,803,102
    
    
    
    1,803,898Goodwill
    
    
    221,232
    
    
    
    221,382Subscriber lists and other intangible assets, net of accumulated amortization of$159,551 and $159,848
    
    
    12,461
    
    
    
    11,827Total investment in cable television systems
    
    
    3,478,919
    
    
    
    3,488,241Other assets, net of accumulated amortization of $23,686 and $22,288
    
    
    30,177
    
    
    
    32,287Total assets
    
    $
    3,620,198
    
    
    $
    3,652,350LIABILITIES AND STOCKHOLDERS DEFICITCURRENT LIABILITIESAccounts payable and accrued expenses
    
    $
    252,956
    
    
    $
    275,611Deferred revenue
    
    
    47,577
    
    
    
    46,293Current portion of long-term debt
    
    
    80,021
    
    
    
    75,563Total current liabilities
    
    
    380,554
    
    
    
    397,467Long-term debt, less current portion
    
    
    3,054,375
    
    
    
    3,069,036Deferred tax liabilities
    
    
    272,627
    
    
    
    259,300Other non-current liabilities
    
    
    22,849
    
    
    
    21,361Total liabilities
    
    
    3,730,405
    
    
    
    3,747,164Commitments and contingencies (Note 8)STOCKHOLDERS DEFICITClass A common stock, $.01 par value; 300,000,000 shares authorized; 93,953,318 shares
issued and 82,848,961 shares outstanding and 93,825,218 shares issued
and 82,761,606 shares outstanding
    
    
    940
    
    
    
    938Class B common stock, $.01 par value; 100,000,000 shares authorized; 27,061,237 shares
issued and outstanding
    
    
    271
    
    
    
    271Additional paid-in capital
    
    
    992,924
    
    
    
    991,113Accumulated deficit
    
    
    (1,042,993
    )
    
    
    (1,026,113
    )Treasury stock, at cost, 11,104,357 and 11,063,612 shares of Class A common stock
    
    
    (61,349
    )
    
    
    (61,023
    )Total stockholders deficit
    
    
    (110,207
    )
    
    
    (94,814
    )Total liabilities and stockholders deficit
    
    $
    3,620,198
    
    
    $
    3,652,350
 
  4




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##### Table of Contents



MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF OPERATIONS
(All amounts in thousands, except per share data)
(Unaudited)
 Three Months EndedMarch 31,2007
    
    
    2006Revenues
    
    $
    307,876
    
    
    $
    289,348Costs and expenses:Service costs (exclusive of depreciation and
amortization shown below)
    
    
    132,392
    
    
    
    118,523Selling, general and administrative expenses
    
    
    62,565
    
    
    
    58,428Corporate expenses
    
    
    6,791
    
    
    
    5,984Depreciation and amortization
    
    
    53,801
    
    
    
    53,717Operating income
    
    
    52,327
    
    
    
    52,696Interest expense, net
    
    
    (58,990
    )
    
    
    (55,652
    )(Loss) gain on derivatives, net
    
    
    (4,395
    )
    
    
    515Gain on sale of cable systems
    
    
    10,781
    
    
    
    Other expense, net
    
    
    (2,708
    )
    
    
    (2,641
    )Loss before provision for income taxes
    
    
    (2,985
    )
    
    
    (5,082
    )Provision for income taxes
    
    
    (13,895
    )
    
    
    (32,126
    )Net loss
    
    $
    (16,880
    )
    
    $
    (37,208
    )Basic and diluted weighted average shares outstanding
    
    
    109,890
    
    
    
    113,529Basic and diluted loss per share
    
    $
    (0.15
    )
    
    $
    (0.33
    )
 
  5




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##### Table of Contents



MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three Months EndedMarch 31,2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (16,880
    )
    
    $
    (37,208
    )Adjustments to reconcile net loss to net cash provided by operating activitiesDepreciation and amortization
    
    
    53,801
    
    
    
    53,717Loss (gain) on derivatives, net
    
    
    4,395
    
    
    
    (515
    )Gain on sale of cable systems
    
    
    (10,781
    )
    
    
    Amortization of deferred financing costs
    
    
    1,398
    
    
    
    1,690Share-based compensation
    
    
    1,321
    
    
    
    1,155Deferred income taxes
    
    
    13,838
    
    
    
    32,067Changes in assets and liabilities, net of effects from acquisitions:Accounts receivable, net
    
    
    8,222
    
    
    
    5,536Prepaid expenses and other assets
    
    
    (1,613
    )
    
    
    (519
    )Accounts payable and accrued expenses
    
    
    (14,914
    )
    
    
    (25,764
    )Deferred revenue
    
    
    1,284
    
    
    
    2,641Other non-current liabilities
    
    
    (910
    )
    
    
    15Net cash flows provided by operating activities
    
    $
    39,161
    
    
    $
    32,815CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (49,857
    )
    
    
    (47,619
    )Acquisition of cable system
    
    
    (7,274
    )
    
    
    Proceeds from sale of cable systems
    
    
    22,948
    
    
    
    Net cash flows used in investing activities
    
    $
    (34,183
    )
    
    $
    (47,619
    )CASH FLOWS FROM FINANCING ACTIVITIES:New borrowings
    
    
    52,000
    
    
    
    105,000Repayment of debt
    
    
    (62,203
    )
    
    
    (70,561
    )Repurchase of Class A common stock
    
    
    
    
    
    
    (21,950
    )Net
settlement of restricted stock units
    
    
    (326
    )
    
    
    (59
    )Proceeds from issuance of common stock in employee stock purchase plan
    
    
    461
    
    
    
    461Other financing activities  book overdrafts
    
    
    (7,480
    )
    
    
    5,658Financing costs
    
    
    
    
    
    
    (145
    )Net cash flows (used in) provided by financing activities
    
    $
    (17,548
    )
    
    $
    18,404Net (decrease) increase in cash
    
    
    (12,570
    )
    
    
    3,600CASH, beginning of period
    
    
    36,385
    
    
    
    17,281CASH, end of period
    
    $
    23,815
    
    
    $
    20,881SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid during the period for interest, net of amounts capitalized
    
    $
    65,047
    
    
    $
    78,620
 
  6




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1. STATEMENT OF ACCOUNTING PRESENTATION AND OTHER INFORMATION
 Basis of Preparation of Unaudited Consolidated Financial Statements
  Reclassifications
  2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115
 3. LOSS PER SHARE
 Earnings per Share
   7




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4. PROPERTY, PLANT AND EQUIPMENT
  March 31,
    
    
    December 31,2007
    
    
    2006Cable systems, equipment and subscriber devices
    
    $
    2,740,408
    
    
    $
    2,711,273Vehicles
    
    
    69,063
    
    
    
    65,554Furniture, fixtures and office equipment
    
    
    50,884
    
    
    
    49,716Buildings and leasehold improvements
    
    
    41,233
    
    
    
    41,140Land and land improvements
    
    
    7,188
    
    
    
    7,3622,908,776
    
    
    
    2,875,045Accumulated depreciation
    
    
    (1,466,652
    )
    
    
    (1,423,911
    )Property, plant and equipment, net
    
    $
    1,442,124
    
    
    $
    1,451,134
 5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
  March 31,
    
    
    December 31,2007
    
    
    2006Accrued programming costs
    
    $
    49,218
    
    
    $
    49,537Accrued interest
    
    
    39,765
    
    
    
    44,741Accounts payable
    
    
    37,077
    
    
    
    32,146Accrued payroll and benefits
    
    
    27,147
    
    
    
    27,220Accrued taxes and fees
    
    
    23,100
    
    
    
    30,502Accrued service costs
    
    
    17,177
    
    
    
    16,062Book overdrafts(1)
    
    
    14,903
    
    
    
    22,414Subscriber advance payments
    
    
    11,907
    
    
    
    10,611Accrued property, plant and equipment
    
    
    10,808
    
    
    
    18,542Other accrued expenses
    
    
    21,854
    
    
    
    23,836$
    252,956
    
    
    $
    275,611
 (1)
    
    Book overdrafts represent outstanding checks in excess of funds on deposit at
the Companys disbursement accounts. The Company transfers funds from its depository accounts
to its disbursement accounts upon daily notification of checks presented for payment. Changes
in book overdrafts are reported as part of cash flows from financing activities in the
Companys consolidated statement of cash flows.
  8




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##### Table of Contents



6. DEBT
  March 31,
    
    
    December 31,2007
    
    
    2006Bank credit facilities
    
    $
    2,008,875
    
    
    $
    2,018,50077/8% senior notes due 2011
    
    
    125,000
    
    
    
    125,00091/2% senior notes due 2013
    
    
    500,000
    
    
    
    500,00081/2% senior notes due 2015
    
    
    500,000
    
    
    
    500,000Capital lease obligations
    
    
    521
    
    
    
    1,099$
    3,134,396
    
    
    $
    3,144,599Less: Current portion
    
    
    80,021
    
    
    
    75,563Total long-term debt
    
    $
    3,054,375
    
    
    $
    3,069,036
 Bank Credit Facilities
   Interest Rate Exchange Agreements
  7. STOCKHOLDERS DEFICIT
 Stock Repurchase Plans
  Share-based Compensation
   9




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Three Months Ended March 31,2007
    
    
    2006Share-based compensation expense by type of award:Employee stock options
    
    $
    618
    
    
    $
    575Employee stock purchase plan
    
    
    69
    
    
    
    176Restricted stock units
    
    
    634
    
    
    
    404Total share-based compensation expense
    
    $
    1,321
    
    
    $
    1,155
  Employee Stock Purchase Plan
  8. COMMITMENTS AND CONTINGENCIES
 Legal Proceedings
 Gary Ogg and Janice Ogg v. Mediacom, LLC
   10




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9. INCOME TAXES
 Accounting for Income Taxes Interim
Financial Reporting
   Accounting for Uncertainty in Income Taxes 
An Interpretation of FASB Statement No. 109
   10. RELATED PARTY TRANSACTIONS
    11




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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Overview
     Retransmission Consent
   Adjusted OIBDA
   12




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##### Table of Contents



Actual Results of Operations
 Three Months Ended March 31, 2007 compared to Three Months Ended March 31, 2006
  Three Months EndedMarch 31,2007
    
    
    2006
    
    
    $ Change
    
    
    % ChangeRevenues
    
    $
    307,876
    
    
    $
    289,348
    
    
    $
    18,528
    
    
    
    6.4
    %Costs and expenses:Service costs
    
    
    132,392
    
    
    
    118,523
    
    
    
    13,869
    
    
    
    11.7
    %Selling, general and administrative expenses
    
    
    62,565
    
    
    
    58,428
    
    
    
    4,137
    
    
    
    7.1
    %Corporate expenses
    
    
    6,791
    
    
    
    5,984
    
    
    
    807
    
    
    
    13.5
    %Depreciation and amortization
    
    
    53,801
    
    
    
    53,717
    
    
    
    84
    
    
    
    0.2
    %Operating income
    
    
    52,327
    
    
    
    52,696
    
    
    
    (369
    )
    
    
    (0.7
    %)Interest expense, net
    
    
    (58,990
    )
    
    
    (55,652
    )
    
    
    (3,338
    )
    
    
    6.0
    %(Loss) gain on derivatives, net
    
    
    (4,395
    )
    
    
    515
    
    
    
    (4,910
    )
    
    
    NMGain on sale of cable systems
    
    
    10,781
    
    
    
    
    
    
    
    10,781
    
    
    
    NMOther expense, net
    
    
    (2,708
    )
    
    
    (2,641
    )
    
    
    (67
    )
    
    
    2.5
    %Loss before provision for income taxes
    
    
    (2,985
    )
    
    
    (5,082
    )
    
    
    2,097
    
    
    
    NMProvision for income taxes
    
    
    (13,895
    )
    
    
    (32,126
    )
    
    
    18,231
    
    
    
    NMNet loss
    
    $
    (16,880
    )
    
    $
    (37,208
    )
    
    $
    20,328
    
    
    
    NMAdjusted OIBDA
    
    $
    107,449
    
    
    $
    107,568
    
    
    $
    (119
    )
    
    
    (0.1
    %)
  Three Months EndedMarch 31,2007
    
    
    2006
    
    
    $ Change
    
    
    % ChangeAdjusted OIBDA
    
    $
    107,449
    
    
    $
    107,568
    
    
    
    (119
    )
    
    
    (0.1
    %)Non-cash, share-based compensation
    
    
    (1,321
    )
    
    
    (1,155
    )
    
    
    (166
    )
    
    
    NMDepreciation and amortization
    
    
    (53,801
    )
    
    
    (53,717
    )
    
    
    (84
    )
    
    
    0.2
    %Operating income
    
    $
    52,327
    
    
    $
    52,696
    
    
    
    (369
    )
    
    
    (0.7
    %)
  13




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Revenues
  Three Months EndedMarch 31,2007
    
    
    2006
    
    
    $ Change
    
    
    % ChangeVideo
    
    $
    215,628
    
    
    $
    216,893
    
    
    $
    (1,265
    )
    
    
    (0.6
    %)Data
    
    
    65,548
    
    
    
    55,510
    
    
    
    10,038
    
    
    
    18.1
    %Phone
    
    
    11,546
    
    
    
    3,564
    
    
    
    7,982
    
    
    
    224.0
    %Advertising
    
    
    15,154
    
    
    
    13,381
    
    
    
    1,773
    
    
    
    13.3
    %$
    307,876
    
    
    $
    289,348
    
    
    $
    18,528
    
    
    
    6.4
    %
 Three Months EndedMarch 31,
    
    
    Increase/2007
    
    
    2006
    
    
    (Decrease)
    
    
    % ChangeBasic subscribers
    
    
    1,362,000
    
    
    
    1,422,000
    
    
    
    (60,000
    )
    
    
    (4.2
    %)Digital customers
    
    
    530,000
    
    
    
    497,000
    
    
    
    33,000
    
    
    
    6.6
    %Data customers
    
    
    600,000
    
    
    
    504,000
    
    
    
    96,000
    
    
    
    19.0
    %Phone customers
    
    
    123,000
    
    
    
    46,000
    
    
    
    77,000
    
    
    
    167.4
    %RGUs (1)
    
    
    2,615,000
    
    
    
    2,469,000
    
    
    
    146,000
    
    
    
    5.9
    %Average total monthly revenue per basic
subscriber (2)
    
    $
    74.85
    
    
    $
    67.80
    
    
    $
    7.05
    
    
    
    10.4
    %Average total monthly revenue per RGU(3)
    
    $
    39.43
    
    
    $
    39.48
    
    
    $
    (0.05
    )
    
    
    (0.1
    %)
 (1)
    
    Represents the total of basic subscribers, digital customers, data customers and
phone customers at the end of each period.(2)
    
    Represents revenues for the quarter divided by average basic
subscribers for such period.(3)
    
    Represents revenues for the quarter divided by average
RGUs for such period.
       14




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Costs and Expenses
        Adjusted OIBDA
  Operating Income
   15




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Interest Expense, Net
  (Loss) Gain on Derivatives, Net
  Gain on Sale of Cable Systems
  Provision for Income Taxes
  Net Loss
  Liquidity and Capital Resources
 Overview
     16




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Operating Activities
   Investing Activities
  Financing Activities
  Other
   Contractual Obligations and Commercial Commitments
  Critical Accounting Judgments and Estimates
 Use of Estimates
   17




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Inflation and Changing Prices
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
    18




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PART II
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
 2006 Form 10-K.
 
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULT UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
 Exhibit 31.1:
    
    Rule 13a-14(a) CertificationsExhibit 32.1:
    
    Section 1350 Certifications
  19




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SIGNATURES
  MEDIACOM COMMUNICATIONS CORPORATIONMay 10, 2007
    By:
    /s/ Mark E. StephanMark E. StephanExecutive Vice President and
Chief Financial Officer  20




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EXHIBIT INDEX
 ExhibitNo.
    
    DescriptionExhibit 31.1:
    
    Rule 13a-14(a) CertificationsExhibit 32.1:
    
    Section 1350 Certifications
  21