Cablevision Systems Corporation (NYSE: CVC) today reported financial
results for the fourth quarter and full year ended December 31, 2012.
Fourth quarter consolidated net revenues decreased 1.6% to
$1.664 billion, consolidated adjusted operating cash flow ("AOCF")1
decreased 44.2% to $349.6 million and consolidated operating income
decreased 91.5% to $29.3 million, all compared to the prior year period.
Footnote 2 on page 4 of this release details certain items affecting the
comparability of our results for 2012 and 2011. Excluding these items,
consolidated net revenues would have increased 0.3% while AOCF and
operating income would have decreased 18.4% and 48.7%, respectively, all
compared to the prior year period.
For full year 2012, consolidated net revenues increased 0.1% to
$6.705 billion, consolidated AOCF decreased 17.2% to $1.899 billion and
consolidated operating income decreased 38.2% to $759.5 million, all
compared to 2011. Footnote 2 on page 4 of this release details certain
items affecting the comparability of our results for 2012 and 2011.
Excluding these items, net revenue would have grown 0.4%, consolidated
AOCF would have decreased 11.7% and operating income would have
decreased 27.9%, compared to the prior full year period.
Operating highlights for the fourth quarter and full year 2012 include:
Cablevision President and CEO James L. Dolan said, "2012 was a year of
investment at Cablevision - investment in our network, in our products
and services, and in our employees to ensure that we were providing our
customers with the very best experience with their television, internet
and phone services. The enormous challenges of Superstorm Sandy had a
strong negative impact on our fourth quarter results. Ever resilient,
our employees met those challenges, restored our system and now are
focused on continuing to enhance our product portfolio to meet our
customers' evolving needs and expectations."
See notes on page 4.
Telecommunications Services - Cable Television and Lightpath
Telecommunications Services includes Cable Television - Cablevision's
video, high-speed data, and voice residential and commercial services
offered over its cable infrastructure -- and its "Lightpath" branded
commercial data and voice services.
Telecommunications Services net revenues for the fourth quarter 2012
decreased 1.9% to $1.550 billion, AOCF decreased 40.3% to $401.2 million
and operating income decreased 73.2% to $114.3 million, all compared
with the prior year period. Excluding the impact of the items
highlighted in footnote 2 on page 4 of this release, revenue would have
increased 0.1%, AOCF would have decreased 15.9% and operating income
would have decreased 37.1%, compared to the prior year period.
Full year 2012 net revenues rose 0.2% to $6.292 billion, AOCF decreased
15.7% to $2.103 billion, and operating income decreased 30.4% to
$1.059 billion, all as compared to the prior year period. Excluding the
impact of the items highlighted in footnote 2 on page 4 of this release,
revenue would have increased 0.5% while AOCF would have decreased 10.5%
and operating income would have decreased 21.8%, compared to the prior
Cable Television fourth quarter 2012 net revenues decreased 2.2% to
$1.473 billion principally due to the impact of Superstorm Sandy as well
as fewer video customers than the prior year period, offset by the
continued growth of high-speed data and voice customers. AOCF decreased
42.0% to $368.9 million and operating income decreased 73.6% to
$108.6 million, all compared with the prior year period. Excluding the
impact of the items highlighted in footnote 2 on page 4 of this release,
revenue would have been flat, AOCF would have decreased 17.1% and
operating income would have decreased 37.2%, all compared to the prior
year period. Fourth quarter 2012 AOCF results reflect higher operating
expenses, primarily programming and non-executive employee related costs.
The following table illustrates the change in the Cable Television
customer base during the fourth quarter of 2012, including the impact of
(Data in table rounded to nearest thousand)
September 30, 2012
December 31, 2012
Includes the addition of approximately 4 thousand customer
relationships, 7 thousand high-speed data customers, 1 thousand
voice customers, and 1 thousand serviceable passings from Bresnan
in the fourth quarter of 2012. Video customers remained flat in
Includes a net reduction of approximately 11 thousand customer
relationships, 10 thousand video, 9 thousand high-speed data and 7
thousand voice customers that were located in the areas most
severely impacted by Superstorm Sandy who we have been unable to
contact and those whose billing we have decided to suspend
temporarily during restoration of their homes. In addition, we
suspended our normal collection efforts and non-pay disconnect
policy during the storm and estimated the number of accounts that
we believe would have been disconnected had we not suspended our
policy. Our customer counts as of December 31, 2012 have been
reduced accordingly (27 thousand customer relationships, 24
thousand video, 23 thousand high-speed data and 19 thousand voice).
Represents the number of households/businesses that receive at
least one of the Company's services.
For fourth quarter 2012, Lightpath net revenues increased 3.4% to
$81.8 million, AOCF decreased 11.6% to $32.3 million and operating
income decreased 64.4% to $5.7 million, each as compared to the prior
year period. Fourth quarter results reflect a 13.2% increase in revenue
from Ethernet services offset by higher operating expenses. Excluding
certain items referenced in footnote 2 on page 4 of this release, AOCF
would have increased 5.6% and operating income would have declined
Other principally consists of Newsday, Clearview Cinemas, News 12
Networks, MSG Varsity, Cablevision Media Sales Corporation and certain
other businesses and unallocated corporate costs.
Fourth quarter 2012 net revenues increased 2.3% to $119.7 million, AOCF
deficit increased 12.3% to a deficit of $51.5 million and operating loss
increased 5.1% to a loss of $85.0 million all compared with the prior
year period. Excluding the impact of certain items highlighted in
footnote 2 on page 4 of this release, revenue would have increased 2.4%
while the AOCF deficit and operating loss would have increased 19.0% and
6.7%, respectively. The increase in AOCF deficit was due primarily to
higher costs at Newsday and News 12 Networks offset by lower corporate
Full year 2012 net revenues decreased 2.0% to $435.2 million, AOCF
deficit increased 1.2% to a deficit of $203.8 million and operating loss
increased 2.5% to a loss of $299.3 million. Excluding the impact of
certain items highlighted in footnote 2 on page 4 of this release, the
AOCF deficit and operating loss would have both increased 4.1%.
On February 26, 2013, the Board of Directors of Cablevision declared a
quarterly dividend of $0.15 per share on each outstanding share of both
its Cablevision NY Group Class A Stock and its Cablevision NY Group
Class B Stock. This quarterly dividend is payable on April 3, 2013 to
shareholders of record at the close of business on March 15, 2013.
During 2012, Cablevision repurchased approximately 13.6 million shares
of its Class A common stock for approximately $188.6 million. There were
no repurchases during the fourth quarter of 2012. As of December 31,
2012, the Company had approximately $455 million available under its
stock repurchase authorization.
All values in charts above represent dollars in millions unless
otherwise labeled. Certain amounts may not recalculate due to
intersegment eliminations and rounding.
Non-GAAP Financial Measures
We define adjusted operating cash flow ("AOCF"), which is a non-GAAP
financial measure, as operating income (loss) before depreciation and
amortization (including impairments), excluding share-based compensation
expense or benefit and restructuring charges or credits. Because
it is based upon operating income (loss), AOCF also excludes interest
expense (including cash interest expense) and other non-operating income
and expense items. We believe that the exclusion of share-based
compensation expense or benefit allows investors to better track the
performance of the various operating units of our business without
regard to the distortive effects of fluctuating stock prices in the case
of stock appreciation rights and, in the case of restricted shares,
restricted stock units and stock options, the expense associated with an
award that is not expected to be made in cash.
We present AOCF as a measure of our ability to service our debt and
make continuing investments, including in our capital infrastructure.
We believe AOCF is an appropriate measure for evaluating the
operating performance of our business segments and the company on a
consolidated basis. AOCF and similar measures with similar titles
are common performance measures used by investors, analysts and peers to
compare performance in our industry. Internally, we use net
revenues and AOCF measures as the most important indicators of our
business performance, and evaluate management's effectiveness with
specific reference to these indicators. AOCF should be viewed as
a supplement to and not a substitute for operating income (loss), net
income (loss), cash flows from operating activities, and other measures
of performance and/or liquidity presented in accordance with U.S.
generally accepted accounting principles ("GAAP"). Since
AOCF is not a measure of performance calculated in accordance with GAAP,
this measure may not be comparable to similar measures with similar
titles used by other companies. For a reconciliation of AOCF to
operating income (loss), please see page 7 of this release.
We define Consolidated Free Cash Flow from Continuing Operations
("Free Cash Flow"), which is a non-GAAP financial measure, as net cash
from operating activities (continuing operations) less capital
expenditures (continuing operations), both of which are reported in our
Consolidated Statement of Cash Flows. Net cash from operating
activities excludes net cash from operating activities of our
discontinued operations. We believe the most comparable GAAP
financial measure of our liquidity is net cash from operating activities.
We believe that Free Cash Flow is useful as an indicator of our
overall liquidity, as the amount of Free Cash Flow generated in any
period is representative of cash that is available for debt repayment
and other discretionary and non-discretionary cash uses. It is
also one of several indicators of our ability to make investments and/or
return capital to our shareholders. We also believe that Free Cash Flow
is one of several benchmarks used by analysts and investors who follow
our industry for comparison of our liquidity with other companies in our
industry, although our measure of Free Cash Flow may not be directly
comparable to similar measures reported by other companies.
In addition, in the chart on page 4, the Company has provided details
of certain items affecting the comparability of Revenue, net, AOCF and
operating income for the three months and year ended December 31, 2012
to that of the comparable periods in 2011. Management believes
that this additional information, like AOCF representing non-GAAP
financial measures, will assist analysts, investors and others in
evaluating the Company's performance.
Cablevision Systems Corporation is one of the nation's leading media and
telecommunications companies. In addition to delivering its
Optimum-branded cable, Internet, and voice offerings throughout the New
York area, the Company owns and operates cable systems serving homes in
four Western states. Cablevision's local media properties include News
12 Networks, MSG Varsity and Newsday Media Group. Cablevision also owns
and operates Clearview Cinemas. Additional information about Cablevision
is available on the Web at www.cablevision.com.
This earnings release may contain statements that constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Investors are cautioned
that any such forward-looking statements are not guarantees of future
performance or results and involve risks and uncertainties, and that
actual results or developments may differ materially from those in the
forward-looking statements as a result of various factors, including
financial community and rating agency perceptions of the company and its
business, operations, financial condition and the industries in which it
operates and the factors described in the company's filings with the
Securities and Exchange Commission, including the sections entitled
"Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contained therein. The
company disclaims any obligation to update any forward-looking
statements contained herein.
Cablevision's Website: www.cablevision.com
The conference call will be webcast live today at 10:00 a.m. ET
Conference call dial-in number is (888) 694-4641/ Conference ID
Number 96237881/ Conference call replay number (855) 859-2056/
Conference ID Number 96237881 until March 7, 2013.
CABLEVISION SYSTEMS CORPORATION
CONDENSED CONSOLIDATED OPERATIONS DATA AND RECONCILIATION
(Dollars in thousands, except per share data)
Three Months Ended
Twelve Months Ended
CONDENSED CONSOLIDATED OPERATIONS DATA AND RECONCILIATION (Cont'd)
ADJUSTMENTS TO RECONCILE ADJUSTED OPERATING
CASH FLOW TO OPERATING INCOME (LOSS)
The following is a description of the adjustments to operating income
(loss) in arriving at adjusted operating cash flow included in this
CONSOLIDATED FREE CASH FLOW FROM
CONSOLIDATED RESULTS FROM CONTINUING OPERATIONS
(Dollars in thousands)
CONSOLIDATED RESULTS FROM CONTINUING OPERATIONS (cont'd)
ADJUSTED OPERATING CASH FLOW AND
OPERATING INCOME (LOSS)
SUMMARY OF CABLE TELEVISION OPERATING STATISTICS
Customer Relationships (b)
(dollars in millions)
Average Monthly Cable Television Revenue per Customer
Average Monthly Cable Television Revenue per Video Customer
CAPITALIZATION AND LEVERAGE
Capital lease obligations and other
Collateralized indebtedness of unrestricted subsidiaries(a)
(a) Other includes Newsday, Clearview Cinemas, News 12 Networks, MSG
Varsity, Cablevision Media Sales Corporation and Corporate.
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