##### 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 September 30, 2006
 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 þ o
  o þ




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##### 



MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
 FORM 10-Q
FOR THE PERIOD ENDED SEPTEMBER 30, 2006
 TABLE OF CONTENTS
 PagePART IItem 1.
    
    Financial StatementsConsolidated Balance Sheets (unaudited) September 30, 2006 and December 31, 2005
    
    
    4Consolidated Statements of Operations (unaudited) Three and Nine Months Ended September 30, 2006 and 2005
    
    
    5Consolidated Statements of Cash Flows (unaudited) Nine Months Ended September 30, 2006 and 2005
    
    
    6Notes to Consolidated Financial Statements (unaudited)
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    29Item 4.
    
    Controls and Procedures
    
    
    29PART IIItem 1.
    
    Legal Proceedings
    
    
    30Item 1A.
    
    Risk Factors
    
    
    30Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    30Item 3.
    
    Defaults upon Senior Securities
    
    
    30Item 4.
    
    Submission of Matters to a Vote of Security HoldersItem 5.
    
    Other Information
    
    
    30Item 6.
    
    Exhibits
    
    
    30Exhibit 31.1Exhibit 32.1
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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)
 September 30,
    
    
    December 31,2006
    
    
    2005ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    26,158
    
    
    $
    17,281Accounts receivable, net of allowance for doubtful accounts of $2,407 and $3,078, respectively
    
    
    71,641
    
    
    
    63,845Prepaid expenses and other current assets
    
    
    22,066
    
    
    
    23,046Deferred tax assets
    
    
    2,547
    
    
    
    2,782Total current assets
    
    
    122,412
    
    
    
    106,954Investment in cable television systems:Property, plant and equipment, net of accumulated depreciation of $1,374,837 and $1,229,738, respectively
    
    
    1,451,702
    
    
    
    1,453,588Franchise 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 $159,303 and $157,755,
respectively
    
    
    12,275
    
    
    
    13,823Total investment in cable television systems
    
    
    3,489,330
    
    
    
    3,492,764Other assets, net of accumulated amortization of $21,008 and $24,617, respectively
    
    
    31,139
    
    
    
    49,780Total assets
    
    $
    3,642,881
    
    
    $
    3,649,498LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITYCURRENT LIABILITIESAccounts payable and accrued expenses
    
    $
    252,800
    
    
    $
    270,137Deferred revenue
    
    
    45,807
    
    
    
    41,073Current portion of long-term debt
    
    
    66,628
    
    
    
    222,770Total current liabilities
    
    
    365,235
    
    
    
    533,980Long-term debt, less current portion
    
    
    3,083,934
    
    
    
    2,836,881Deferred tax liabilities
    
    
    261,740
    
    
    
    200,090Other non-current liabilities
    
    
    24,707
    
    
    
    19,440Total liabilities
    
    
    3,735,616
    
    
    
    3,590,391Commitments and contingencies (Note 8)STOCKHOLDERS (DEFICIT) EQUITYClass A common stock, $.01 par value; 300,000,000 shares authorized; 93,781,393 shares issued
and 82,717,781 shares outstanding as of September 30, 2006 and 93,280,535 shares issued
and 88,050,009 shares outstanding as of December 31, 2005
    
    
    937
    
    
    
    933Class B common stock, $.01 par value; 100,000,000 shares authorized; 27,061,237 shares issued
and outstanding as of September 30, 2006 and 27,336,939 shares issued and outstanding
as of December 31, 2005, respectively
    
    
    271
    
    
    
    274Additional paid-in capital
    
    
    989,580
    
    
    
    990,584Deferred compensation
    
    
    
    
    
    
    (4,857
    )Accumulated deficit
    
    
    (1,022,501
    )
    
    
    (901,191
    )Treasury stock, at cost, 11,063,612 and 5,230,526 shares of Class A common stock, as of September 30, 2006
and December 31, 2005, respectively
    
    
    (61,022
    )
    
    
    (26,636
    )Total stockholders (deficit) equity
    
    
    (92,735
    )
    
    
    59,107Total liabilities and stockholders (deficit) equity
    
    $
    3,642,881
    
    
    $
    3,649,498
 
  4




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MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(All amounts in thousands, except per share data)
(Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues
    
    $
    305,556
    
    
    $
    274,959
    
    
    $
    897,326
    
    
    $
    818,535Costs and expenses:Service costs (exclusive of depreciation and amortization
of $53,572, $54,851,
$161,473 and $162,530, respectively, shown separately below)
    
    
    124,427
    
    
    
    111,462
    
    
    
    364,855
    
    
    
    325,911Selling, general and administrative expenses
    
    
    65,317
    
    
    
    58,019
    
    
    
    184,328
    
    
    
    171,763Corporate expenses
    
    
    6,277
    
    
    
    5,466
    
    
    
    18,158
    
    
    
    16,355Depreciation and amortization
    
    
    53,572
    
    
    
    54,851
    
    
    
    161,473
    
    
    
    162,530Operating income
    
    
    55,963
    
    
    
    45,161
    
    
    
    168,512
    
    
    
    141,976Interest expense, net
    
    
    (57,125
    )
    
    
    (52,374
    )
    
    
    (169,667
    )
    
    
    (153,784
    )Loss on early extinguishment of debt
    
    
    (28,298
    )
    
    
    
    
    
    
    (35,831
    )
    
    
    (4,742
    )(Loss) gain on derivatives, net
    
    
    (15,851
    )
    
    
    5,092
    
    
    
    (14,528
    )
    
    
    11,513Gain on sale of assets and investments, net
    
    
    
    
    
    
    1,445
    
    
    
    
    
    
    
    2,628Other expense
    
    
    (2,124
    )
    
    
    (2,047
    )
    
    
    (7,750
    )
    
    
    (7,276
    )Loss before (provision for) benefit from income taxes
    
    
    (47,435
    )
    
    
    (2,723
    )
    
    
    (59,264
    )
    
    
    (9,685
    )(Provision for) benefit from income taxes
    
    
    (42,392
    )
    
    
    (8
    )
    
    
    (62,045
    )
    
    
    124Net loss
    
    $
    (89,827
    )
    
    $
    (2,731
    )
    
    $
    (121,309
    )
    
    $
    (9,561
    )Basic  weighted average shares outstanding
    
    
    109,689
    
    
    
    116,864
    
    
    
    111,366
    
    
    
    117,401Basic  loss per share
    
    $
    (0.82
    )
    
    $
    (0.02
    )
    
    $
    (1.09
    )
    
    $
    (0.08
    )Diluted  weighted average shares outstanding
    
    
    109,689
    
    
    
    116,864
    
    
    
    111,366
    
    
    
    117,401Diluted  loss per share
    
    $
    (0.82
    )
    
    $
    (0.02
    )
    
    
    (1.09
    )
    
    
    (0.08
    )
 
  5




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MEDIACOM COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All dollar amounts in thousands)
(Unaudited)
 Nine Months EndedSeptember 30,2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (121,309
    )
    
    $
    (9,561
    )Adjustments to reconcile net loss to net cash provided by operating
activities:Depreciation and amortization
    
    
    161,473
    
    
    
    162,530Loss (gain) on derivatives, net
    
    
    14,528
    
    
    
    (11,513
    )Gain on sale of assets and investments, net
    
    
    
    
    
    
    (2,628
    )Loss on early extinguishment of debt
    
    
    11,206
    
    
    
    4,742Amortization of deferred financing costs
    
    
    4,718
    
    
    
    4,805Share-based compensation
    
    
    3,280
    
    
    
    937Deferred income taxes
    
    
    61,887
    
    
    
    Changes in assets and liabilities, net of effects from acquisitions:Accounts receivable, net
    
    
    (7,796
    )
    
    
    (798
    )Prepaid expenses and other assets
    
    
    (2,287
    )
    
    
    (4,677
    )Accounts payable and accrued expenses
    
    
    (31,540
    )
    
    
    (17,779
    )Deferred revenue
    
    
    4,734
    
    
    
    1,759Other non-current liabilities
    
    
    (3,087
    )
    
    
    (6,666
    )Net cash flows provided by operating activities
    
    
    95,807
    
    
    
    121,151CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (156,652
    )
    
    
    (179,230
    )Proceeds from sale of assets and investments
    
    
    
    
    
    
    4,616Net cash flows used in investing activities
    
    
    (156,652
    )
    
    
    (174,614
    )CASH FLOWS FROM FINANCING ACTIVITIES:New borrowings
    
    
    2,106,000
    
    
    
    778,750Repayment of debt
    
    
    (1,442,590
    )
    
    
    (720,037
    )Redemption/repayment of senior notes
    
    
    (572,500
    )
    
    
    (202,834
    )Issuance of senior notes
    
    
    
    
    
    
    200,000Repurchases of Class A common stock
    
    
    (34,386
    )
    
    
    (6,335
    )Proceeds from issuance of common stock in employee stock purchase plan
    
    
    910
    
    
    
    954Other financing activities  book overdrafts
    
    
    12,481
    
    
    
    (8,989
    )Financing costs
    
    
    (193
    )
    
    
    (6,330
    )Net cash flows provided by financing activities
    
    
    69,722
    
    
    
    35,179Net increase (decrease) in cash and cash equivalents
    
    
    8,877
    
    
    
    (18,284
    )CASH AND CASH EQUIVALENTS, beginning of period
    
    
    17,281
    
    
    
    23,875CASH AND CASH EQUIVALENTS, end of period
    
    $
    26,158
    
    
    $
    5,591SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid during the period for interest, net of amounts capitalized
    
    $
    200,689
    
    
    $
    184,425
 
  6




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##### Table of Contents



1. STATEMENT OF ACCOUNTING PRESENTATION AND OTHER INFORMATION
 Basis of Preparation of Unaudited Consolidated Financial Statements
 Share-Based Payment
 Allowance for Doubtful Accounts
   Reclassifications
  2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
 Accounting for Certain Hybrid Financial
Instruments, Amendment of FASB Statement No. 133 and 140 Accounting for Derivative Instruments and Hedging Activities Accounting for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities
 Accounting for Servicing of Financial Assets  an
Amendment of FASB Statement No 140
 Accounting for Uncertainty in Income Taxes  an
interpretation of SFAS No. 109(FIN 48) Accounting for Income Taxes.
  7




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3. LOSS PER SHARE
 Earnings per Share
   8




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For the Three Months Ended September 30,2006
    
    
    2005Net
    
    
    
    
    
    
    Amount
    
    
    Net
    
    
    
    
    
    
    AmountLoss
    
    
    Shares
    
    
    Per Share
    
    
    Loss
    
    
    Shares
    
    
    Per ShareBasic loss per share
    
    $
    (89,827
    )
    
    
    109,689
    
    
    $
    (0.82
    )
    
    $
    (2,731
    )
    
    
    116,864
    
    
    $
    (0.02
    )Effect of dilutive securities:Conversion of convertible senior notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Assumed exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted loss per share
    
    $
    (89,827
    )
    
    
    109,689
    
    
    $
    (0.82
    )
    
    $
    (2,731
    )
    
    
    116,864
    
    
    $
    (0.02
    )
 For the Nine Months Ended September 30,2006
    
    
    2005Net
    
    
    
    
    
    
    Amount
    
    
    Net
    
    
    
    
    
    
    AmountLoss
    
    
    Shares
    
    
    Per Share
    
    
    Loss
    
    
    Shares
    
    
    Per ShareBasic loss per share
    
    $
    (121,309
    )
    
    
    111,366
    
    
    $
    (1.09
    )
    
    $
    (9,561
    )
    
    
    117,401
    
    
    $
    (0.08
    )Effect of dilutive securities:Conversion of convertible senior notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Assumed exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted loss per share
    
    $
    (121,309
    )
    
    
    111,366
    
    
    $
    (1.09
    )
    
    $
    (9,561
    )
    
    
    117,401
    
    
    $
    (0.08
    )
 4. PROPERTY, PLANT AND EQUIPMENT
  September 30,
    
    
    December 31,2006
    
    
    2005Cable systems, equipment and subscriber devices
    
    $
    2,665,440
    
    
    $
    2,531,840Vehicles
    
    
    65,594
    
    
    
    64,729Furniture, fixtures and office equipment
    
    
    47,122
    
    
    
    38,955Buildings and leasehold improvements
    
    
    41,020
    
    
    
    40,653Land and land improvements
    
    
    7,363
    
    
    
    7,149Accumulated depreciation
    
    
    (1,374,837
    )
    
    
    (1,229,738
    )Property, plant and equipment, net
    
    $
    1,451,702
    
    
    $
    1,453,588
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5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
  September 30,
    
    
    December 31,2006
    
    
    2005Accrued programming costs
    
    $
    48,827
    
    
    $
    52,807Book overdrafts(1)
    
    
    38,811
    
    
    
    26,330Accrued interest
    
    
    35,049
    
    
    
    65,282Accrued payroll and benefits
    
    
    29,879
    
    
    
    25,824Accrued taxes and fees
    
    
    27,286
    
    
    
    30,617Other accrued expenses
    
    
    20,265
    
    
    
    25,080Accrued property, plant and equipment
    
    
    17,663
    
    
    
    14,839Accrued service costs
    
    
    15,172
    
    
    
    12,933Subscriber advance payments
    
    
    11,334
    
    
    
    10,096Accounts payable
    
    
    8,514
    
    
    
    6,329$
    252,800
    
    
    $
    270,137
 
 (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.
 6. DEBT
  September 30,
    
    
    December 31,2006
    
    
    2005Bank credit facilities
    
    $
    2,323,875
    
    
    $
    1,658,75011% senior notes due 2006
    
    
    
    
    
    
    400,00077/8% senior notes due 2011
    
    
    125,000
    
    
    
    125,00091/2% senior notes due 2013
    
    
    500,000
    
    
    
    500,00081/2% senior notes due 2015
    
    
    200,000
    
    
    
    200,00051/4% convertible senior notes due 2006
    
    
    
    
    
    
    172,500Capital lease obligations
    
    
    1,687
    
    
    
    3,401$
    3,150,562
    
    
    $
    3,059,651Less: Current portion
    
    
    66,628
    
    
    
    222,770Total long-term debt
    
    $
    3,083,934
    
    
    $
    2,836,881
 Bank Credit Facilities
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,
   11




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11% Senior Notes
  5.25% Convertible Senior Notes
  Interest Rate Exchange Agreements
   Loss on Early Extinguishment of Debt
  7. STOCKHOLDERS (DEFICIT) EQUITY
 Stock Repurchase Plans
  Share-based Compensation
 Accounting for Stock-Based Compensation Accounting for Stock
Issued to Employees
  12




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Share-based Payment
 Impact of the Adoption of SFAS No. 123(R)
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2006Share-based compensation expense by type of award:Employee stock options
    
    $
    591
    
    
    $
    1,649Employee stock purchase plan
    
    
    132
    
    
    
    221Restricted stock units
    
    
    504
    
    
    
    1,410Total share-based compensation expense
    
    
    1,227
    
    
    
    3,280Tax effect on stock-based compensation expense
    
    
    
    
    
    
    Net effect on net loss
    
    $
    (1,227
    )
    
    $
    (3,280
    )Effect on loss per share:Basic and diluted
    
    
    (0.01
    )
    
    
    (0.03
    )
    13




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Pro Forma Information for Periods Prior to the Adoption of SFAS No. 123(R)
  Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2005
    
    
    September 30, 2005Net loss as reported
    
    $
    (2,731
    )
    
    $
    (9,561
    )Add:Total share-based compensation expense
included in net loss as reported
    
    
    396
    
    
    
    937Deduct:Total share-based compensation expense determined
under fair value based method for all awards
    
    
    (1,358
    )
    
    
    (3,833
    )Pro forma net loss
    
    $
    (3,693
    )
    
    $
    (12,457
    )Basic and diluted loss per share:As reported
    
    $
    (0.02
    )
    
    $
    (0.08
    )Pro forma
    
    $
    (0.03
    )
    
    $
    (0.11
    )
 Valuation Assumptions
  Employee Stock Option Plans
    
    
    Employee Stock Purchase PlansNine Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected volatility
    
    
    55.3
    %
    
    
    45.0
    %
    
    
    33.0
    %
    
    
    45.0
    %Risk free interest rate
    
    
    4.8
    %
    
    
    4.0
    %
    
    
    4.7
    %
    
    
    4.0
    %Expected option life (in years)
    
    
    4.1
    
    
    
    6.0
    
    
    
    0.5
    
    
    
    0.5Forfeiture rate
    
    
    14.0
    %
    
    
    14.0
    %
    
    
    
    
    
    
    
  Stock Option Plan
   14




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##### Table of Contents



Weighted AverageRemainingContractualWeighted Average
    
    
    TermShares
    
    
    Exercise Price
    
    
    (in years)Outstanding at January 1, 2006
    
    
    4,931,915
    
    
    $
    14.12Granted
    
    
    415,000
    
    
    
    5.73Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (159,175
    )
    
    
    13.95Expired
    
    
    
    
    
    
    Outstanding at September 30, 2006
    
    
    5,187,740
    
    
    $
    13.03
    
    
    
    4.7Exercisable at September 30, 2006
    
    
    3,918,925
    
    
    $
    15.38
    
    
    
    4.4
   Options Outstanding
    
    
    Options ExercisableWeighted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    Weighted
    
    
    Aggregate
    
    
    
    
    
    
    Average
    
    
    Weighted
    
    
    AggregateNumber of
    
    
    Remaining
    
    
    Average
    
    
    Intrinsic
    
    
    Number of
    
    
    Remaining
    
    
    Average
    
    
    IntrinsicRange of
    
    Shares
    
    
    Contractual
    
    
    Exercise
    
    
    Value (in
    
    
    Shares
    
    
    Contractual
    
    
    Exercise
    
    
    Value (inExercise Prices
    
    Outstanding
    
    
    Life
    
    
    Price
    
    
    thousands)
    
    
    Outstanding
    
    
    Life
    
    
    Price
    
    
    thousands)$5.00 - $12.00
    
    
    2,547,080
    
    
    5.9 years
    
    $
    7.80
    
    
    $
    423
    
    
    
    1,291,865
    
    
    6.2 years
    
    $
    8.69
    
    
    $
    59$12.01 - $18.00
    
    
    473,170
    
    
    4.5 years
    
    
    17.09
    
    
    
    
    
    
    
    459,570
    
    
    4.5 years
    
    
    17.11
    
    
    
    $18.01 - $22.00
    
    
    2,167,490
    
    
    3.4 years
    
    
    19.01
    
    
    
    
    
    
    
    2,167,490
    
    
    3.4 years
    
    
    19.01
    
    
    
    5,187,740
    
    
    4.7 years
    
    $
    13.33
    
    
    $
    423
    
    
    
    3,918,925
    
    
    4.4 years
    
    $
    15.38
    
    
    $
    59
  Restricted Stock Units
   15




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##### Table of Contents



WeightedNumber of Non-Vested
    
    
    Average GrantShare Unit Awards
    
    
    Date Fair ValueUnvested Awards at January 1, 2006
    
    
    1,132,300
    
    
    $
    5.46Granted
    
    
    484,700
    
    
    
    5.77Awards Vested
    
    
    (41,250
    )
    
    
    5.78Forfeited
    
    
    (90,150
    )
    
    
    5.52Unvested Awards at September 30, 2006
    
    
    1,485,600
    
    
    $
    5.55
 Employee Stock Purchase Plan
  8. COMMITMENTS AND CONTINGENCIES
 Legal Proceedings
 Gary Ogg and Janice Ogg v. Mediacom, LLC
   16




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##### Table of Contents



9. INCOME TAXES
 Accounting for
Income Taxes. Interim Financial Reporting
  10. RELATED PARTY TRANSACTIONS
   11. SUBSEQUENT EVENTS
   17




---



##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Overview
     Retransmission Consent
    18




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##### Table of Contents



Actual Results of Operations
 Three Months Ended September 30, 2006 compared to Three Months Ended September 30, 2005
  Three Months EndedSeptember 30,2006
    
    
    2005
    
    
    $ Change
    
    
    % ChangeRevenues
    
    $
    305,556
    
    
    $
    274,959
    
    
    $
    30,597
    
    
    
    11.1
    %Costs and expenses:Service costs
    
    
    124,427
    
    
    
    111,462
    
    
    
    12,965
    
    
    
    11.6
    %Selling, general and administrative expenses
    
    
    65,317
    
    
    
    58,019
    
    
    
    7,298
    
    
    
    12.6
    %Corporate expenses
    
    
    6,277
    
    
    
    5,466
    
    
    
    811
    
    
    
    14.8
    %Depreciation and amortization
    
    
    53,572
    
    
    
    54,851
    
    
    
    (1,279
    )
    
    
    (2.3
    %)Operating income
    
    
    55,963
    
    
    
    45,161
    
    
    
    10,802
    
    
    
    23.9
    %Interest expense, net
    
    
    (57,125
    )
    
    
    (52,374
    )
    
    
    (4,751
    )
    
    
    9.1
    %Loss on early extinguishment of debt
    
    
    (28,298
    )
    
    
    
    
    
    
    (28,298
    )
    
    NM(Loss) gain on derivatives, net
    
    
    (15,851
    )
    
    
    5,092
    
    
    
    (20,943
    )
    
    NMGain on sale of assets and investments, net
    
    
    
    
    
    
    1,445
    
    
    
    (1,445
    )
    
    NMOther expense
    
    
    (2,124
    )
    
    
    (2,047
    )
    
    
    (77
    )
    
    
    3.8
    %Loss before provision for income taxes
    
    
    (47,435
    )
    
    
    (2,723
    )
    
    
    (44,712
    )
    
    NMProvision for income taxes
    
    
    (42,392
    )
    
    
    (8
    )
    
    
    (42,384
    )
    
    NMNet loss
    
    $
    (89,827
    )
    
    $
    (2,731
    )
    
    $
    (87,096
    )
    
    NM
  Three Months EndedSeptember 30,2006
    
    
    2005
    
    
    $ Change
    
    
    % ChangeAdjusted OIBDA
    
    $
    110,762
    
    
    $
    100,408
    
    
    
    10,354
    
    
    
    10.3
    %Non-cash, share-based compensation
    
    
    (1,227
    )
    
    
    (396
    )
    
    
    (831
    )
    
    NMDepreciation and amortization
    
    
    (53,572
    )
    
    
    (54,851
    )
    
    
    1,279
    
    
    
    (2.3
    %)Operating income
    
    $
    55,963
    
    
    $
    45,161
    
    
    
    10,802
    
    
    
    23.9
    %
  19




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##### Table of Contents



Revenues
  Three Months EndedSeptember 30,2006
    
    
    2005
    
    
    $ Change
    
    
    % ChangeVideo
    
    $
    221,650
    
    
    $
    211,561
    
    
    $
    10,089
    
    
    
    4.8
    %Data
    
    
    60,698
    
    
    
    49,753
    
    
    
    10,945
    
    
    
    22.0
    %Phone
    
    
    7,696
    
    
    
    77
    
    
    
    7,619
    
    
    NMAdvertising
    
    
    15,512
    
    
    
    13,568
    
    
    
    1,944
    
    
    
    14.3
    %$
    305,556
    
    
    $
    274,959
    
    
    $
    30,597
    
    
    
    11.1
    %
 Three Months EndedSeptember 30,
    
    
    Increase/2006
    
    
    2005
    
    
    (Decrease)
    
    
    % ChangeBasic subscribers
    
    
    1,394,000
    
    
    
    1,429,000
    
    
    
    (35,000
    )
    
    
    (2.4
    %)Data customers
    
    
    544,000
    
    
    
    453,000
    
    
    
    91,000
    
    
    
    20.1
    %Phone customers
    
    
    83,000
    
    
    
    2,000
    
    
    
    81,000
    
    
    NMAverage monthly video revenue per basic subscriber (1)
    
    $
    52.89
    
    
    $
    49.06
    
    
    $
    3.83
    
    
    
    7.8
    %Average monthly data revenue per data customer(2)
    
    $
    38.17
    
    
    $
    37.73
    
    
    $
    0.44
    
    
    
    1.2
    %
 
 (1)
    
    Average monthly video revenue per basic subscriber is calculated based on
monthly video revenue divided by the average number of basic subscribers for the quarter.(2)
    
    Average monthly data revenue per data customer is calculated based on monthly data
revenue divided by the average number of data customers for the quarter.
        20




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##### Table of Contents



Costs and Expenses
        Adjusted OIBDA
  Operating Income
  Interest Expense, Net
   21




---



##### Table of Contents



Gain (Loss) on Derivatives, Net
  Loss on Early Extinguishment of Debt
  Provision for Income Taxes
   Net Loss
   22




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##### Table of Contents



Actual Results of Operations
 Nine Months Ended September 30, 2006 Compared to Nine Months Ended September 30, 2005
  Nine Months EndedSeptember 30,2006
    
    
    2005
    
    
    $ Change
    
    
    % ChangeRevenues
    
    $
    897,326
    
    
    $
    818,535
    
    
    $
    78,791
    
    
    
    9.6
    %Costs and expenses:Service costs
    
    
    364,855
    
    
    
    325,911
    
    
    
    38,944
    
    
    
    11.9
    %Selling, general and administrative expenses
    
    
    184,328
    
    
    
    171,763
    
    
    
    12,565
    
    
    
    7.3
    %Corporate expenses
    
    
    18,158
    
    
    
    16,355
    
    
    
    1,803
    
    
    
    11.0
    %Depreciation and amortization
    
    
    161,473
    
    
    
    162,530
    
    
    
    (1,057
    )
    
    
    (0.7
    %)Operating income
    
    
    168,512
    
    
    
    141,976
    
    
    
    26,536
    
    
    
    18.7
    %Interest expense, net
    
    
    (169,667
    )
    
    
    (153,784
    )
    
    
    (15,883
    )
    
    
    10.3
    %Loss on early extinguishment of debt
    
    
    (35,831
    )
    
    
    (4,742
    )
    
    
    (31,089
    )
    
    NM(Loss) gain on derivatives, net
    
    
    (14,528
    )
    
    
    11,513
    
    
    
    (26,041
    )
    
    NMGain on sale of assets and investments, net
    
    
    
    
    
    
    2,628
    
    
    
    (2,628
    )
    
    NMOther expense
    
    
    (7,750
    )
    
    
    (7,276
    )
    
    
    (474
    )
    
    
    6.5
    %Loss before provision for income taxes
    
    
    (59,264
    )
    
    
    (9,685
    )
    
    
    (49,579
    )
    
    NMProvision for income taxes
    
    
    (62,045
    )
    
    
    124
    
    
    
    (62,169
    )
    
    NMNet loss
    
    $
    (121,309
    )
    
    $
    (9,561
    )
    
    $
    (111,748
    )
    
    NM
  Nine Months EndedSeptember 30,2006
    
    
    2005
    
    
    $ Change
    
    
    % ChangeAdjusted OIBDA
    
    
    333,265
    
    
    
    305,443
    
    
    
    27,822
    
    
    
    9.1
    %Non-cash share-based compensation
    
    
    (3,280
    )
    
    
    (937
    )
    
    
    (2,343
    )
    
    NMDepreciation and amortization
    
    
    (161,473
    )
    
    
    (162,530
    )
    
    
    1,057
    
    
    
    (0.7
    %)Operating income
    
    
    168,512
    
    
    
    141,976
    
    
    
    26,536
    
    
    
    18.7
    %
  23




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##### Table of Contents



Revenues
  Nine Months EndedSeptember 30,2006
    
    
    2005
    
    
    $ Change
    
    
    % ChangeVideo
    
    $
    661,741
    
    
    $
    637,256
    
    
    $
    24,485
    
    
    
    3.8
    %Data
    
    
    173,604
    
    
    
    142,733
    
    
    
    30,871
    
    
    
    21.6
    %Phone
    
    
    17,138
    
    
    
    77
    
    
    
    17,061
    
    
    NMAdvertising
    
    
    44,843
    
    
    
    38,469
    
    
    
    6,374
    
    
    
    16.6
    %$
    897,326
    
    
    $
    818,535
    
    
    $
    78,791
    
    
    
    9.6
    %
 Nine Months EndedSeptember 30,
    
    
    Increase/2006
    
    
    2005
    
    
    (Decrease)
    
    
    % ChangeBasic subscribers
    
    
    1,394,000
    
    
    
    1,429,000
    
    
    
    (35,000
    )
    
    
    (2.4
    %)Data customers
    
    
    544,000
    
    
    
    453,000
    
    
    
    91,000
    
    
    
    20.1
    %Phone customers
    
    
    83,000
    
    
    
    2,000
    
    
    
    81,000
    
    
    NMAverage monthly video revenue per basic
subscriber(1)
    
    $
    52.15
    
    
    $
    48.83
    
    
    $
    3.32
    
    
    
    6.8
    %Average monthly data revenue per data customer(2)
    
    $
    37.79
    
    
    $
    38.29
    
    
    $
    (0.50
    )
    
    
    (1.3
    %)
 
 (1)
    
    Average monthly video revenue per basic subscriber is calculated based on
monthly video revenue divided by the average number of basic subscribers for the quarter.(2)
    
    Average monthly data revenue per data customer is calculated based on monthly data
revenue divided by the average number of data customers for the quarter.
      Costs and Expenses
    24




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##### Table of Contents



Adjusted OIBDA
  Operating Income
  Interest Expense, Net
  Gain on Derivatives, Net
  Loss on Early Extinguishment of Debt
  (Provision for) Benefit from Income Taxes
    25




---



##### Table of Contents



Net Loss
  Liquidity and Capital Resources
 Overview
       26




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##### Table of Contents



Operating Activities
   Investing Activities
  Financing Activities
   
    
    On May 5, 2006, LLC Group refinanced a $543.1 million term loan with a new term loan in
the amount of $650.0 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 that it replaced. The new term
loan matures in January 2015, whereas the term loan it replaced had a maturity of February
2013.
    
    On May 5, 2006, Broadband Group refinanced a $495.0 million term loan with a new term
loan in the amount of $800.0 million. The new term loan consists of two tranches: (i) a
$550.0 million term loan which was funded on May 5, 2006; and (ii) a $250.0 million
delayed-draw term loan (the Delayed-Draw Term Loan). Borrowings under the new term loan
bear interest at a rate that is 0.25% less than the interest rate of the term loan that it
replaced. The new term loan matures in January 2015, whereas the term loan it replaced had
a maturity of February 2013.
    
    On June 29, 2006, borrowings under the Delayed-Draw Term Loan were used as follows: (i)
to repay the Companys 5.25% convertible senior notes due July 1, 2006, plus accrued and
unpaid interest; (ii) to reduce borrowings (but not commitments)
outstanding under the revolving credit portion of our a
subsidiary credit facilities; and (iii) for working capital purposes.
    
    On July 17, 2006, we
redeemed all of our outstanding 11% Notes due 2013. The
redemption price was $422.0 million, consisting of $400.0 million of principal and $22.0
million of redemption premium, the accrued interest paid was $22.0 million.
    
    On October 5, 2006, we issued the 8.5% Notes, and used the proceeds to reduce borrowings
(but not commitments) outstanding under the revolving portion of our subsidiary credit
facilities.
    
    Pursuant to our Board authorized share repurchase program, we repurchased approximately
5.8 million shares of our Class A common stock for approximately $34.4 million during the
nine months ended September 30, 2006.
  27




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##### Table of Contents



Other
   Contractual Obligations and Commercial Commitments
  Critical Accounting Judgments and Estimates
 Use of Estimates
     28




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##### Table of Contents



Share-based Compensation
   Inflation and Changing Prices
  
 ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4.
    
    CONTROLS AND PROCEDURES
    29




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##### Table of Contents



PART II
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
  
 ITEM 1A.
    
    RISK FACTORS
 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) Certifications
 Exhibit 32.1:
    
    Section 1350 Certifications
  30




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##### Table of Contents



SIGNATURES
  MEDIACOM COMMUNICATIONS CORPORATIONNovember 7, 2006
    By:
    /s/ Mark E. StephanMark E. StephanExecutive Vice President and
Chief Financial Officer  31




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    DescriptionExhibit 31.1:
    
    Rule 13a-14(a) CertificationsExhibit 32.1:
    
    Section 1350 Certifications
  32