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Insight Communications Announces Fourth Quarter & Year-End 2002 Results

New York – February 25, 2003 –

Insight Communications Company (Nasdaq: ICCI) today announced financial results for the three months and year ended December 31, 2002. Revenue for the year ended December 31, 2002 totaled $807.9 million, an increase of 11% over the prior year, due primarily to customer gains in high-speed data and digital services and increased basic rates. Operating cash flow (a non-GAAP measure calculated as operating income or loss before depreciation, amortization and non-recurring high-speed data charges) increased to $359.6 million in 2002 from $316.4 million in 2001, an increase of 14%. Excluding the operating results of SourceSuite, which was consolidated effective January 1, 2002, operating cash flow for the year ended December 31, 2002 totaled $360.6 million, in line with expectations. A reconciliation of operating cash flow to operating income or loss appears below in the discussion on operating data results.

"We are very pleased with our 2002 performance. Our focus on offering superior customer service has helped us deliver strong growth in new product additions, more and more of which are coming from bundled sales," said Michael S. Willner, Vice Chairman and Chief Executive Officer. "I am particularly excited about our strong Revenue Generating Unit growth. I believe these results reflect our strategic success in bundling voice, video and data over one network."

For the three months ended December 31, 2002, revenue and operating cash flow totaled $210.7 million and $96.1 million, respectively, representing increases of 11% and 14% over the prior year. Excluding SourceSuite, operating cash flow totaled $96.2 million.

As of December 31, 2002, Revenue Generating Units (RGUs), representing the sum of basic, digital, high-speed data and telephone customers, as defined by the NCTA Standard Reporting Categories, totaled 1,798,900 compared to 1,640,200 as of December 31, 2001, representing a 10% growth rate. Excluding the Illinois systems, which are currently winding up their rebuilds, the growth rate was 12%.

Net basic additions increased slightly, resulting in 1,288,800 basic customers as of December 31, 2002. Excluding Illinois, net basic additions totaled 4,200, reflecting a growth rate of .5%. Net digital additions totaled 76,900, reflecting a growth rate of 30%, resulting in 334,700 digital customers as of December 31, 2002. Excluding Illinois, net digital additions totaled 58,900, reflecting a growth rate of 31%. Net high-speed data additions totaled 56,700 (including an upward bulk adjustment of 3,200), reflecting a growth rate of 64%, resulting in 144,800 high-speed data customers as of December 31, 2002. Excluding Illinois, net high-speed data additions totaled 46,400, reflecting a growth rate of 78%. Net telephone additions totaled 24,800, resulting in 30,600 telephone customers as of December 31, 2002.

RGU growth for the quarter was 45,300, up over the prior year's quarter growth of 42,600. Penetration of new services continues to increase, with digital customer penetration at 27% as of December 31, 2002, up from 23% as of December 31, 2001; modem penetration at 7% as of December 31, 2002, up from 5% as of December 31, 2001; and telephone penetration at 7% as of December 31, 2002, up from 4% as of December 31, 2001.

Fourth quarter average monthly revenue per basic customer totaled approximately $54.50, a $5.16 or 10% increase over the prior year quarter, driven by basic rate increases and growth in new services. Basic rates increased $2.18 on average, up 7% over the prior year's quarter. New services caused substantial increases in average monthly revenue per basic customer, with average monthly digital revenue per basic customer up $0.93 or 26%, and average monthly high-speed data revenue per basic customer up $1.72 or 60% over the prior year's quarter.

Capital expenditures totaled $283.0 million for the year ended December 31, 2002. Of the total, approximately 37% was for Customer Premise Equipment and 31% was for Upgrade/Rebuild costs as defined by the NCTA Standard Reporting Categories. For the year ended December 31, 2002, capital expenditures per customer totaled approximately $220. As of December 31, 2002, including Illinois, 89% of plant mileage was 750 MHz or greater, and 92% of plant mileage was two-way active. Capital was funded through cash generated from operations as well as through bank borrowings.

"Our bundling strategy is resulting in solid cash flow growth and higher cash flow margins. In addition, our Illinois rebuilds are nearing completion during the first half of this year, resulting in a significant decrease in our capital spending. The result of all this will make us free cash flow positive for the second half of 2003 and will reduce our leverage by one turn," said Dinesh C. Jain, Senior Vice President and Chief Financial Officer. "Additionally, we added to our overall liquidity by completing a $185 million tack-on to our 9.75% Midwest Senior Notes which demonstrated our continued excellent ability to access the capital markets."

Monthly operating cash flow margin per basic customer increased to 46% for the quarter ended December 31, 2002, up from 44% over the prior year's quarter. Excluding the results from SourceSuite, for the three months ended December 31, 2002, operating cash flow per customer totaled $24.87, up $2.95 or 13% from $21.92 in the prior year.


2003 Guidance

In 2003, we expect operating cash flow to grow by approximately 11.5% to 13.5%. Additionally, we expect to spend approximately $220.0 million on capital expenditures.


Operating Data Results

Revenue increased $79.5 million or 11% to $807.9 million for the year ended December 31, 2002, from $728.3 million for the year ended December 31, 2001. The increase in revenue was primarily the result of gains in our high-speed data and digital services with revenue increases over the prior year's period of 65% and 40%. In addition, our basic cable service revenue increased primarily due to basic cable rate increases.

Average monthly revenue per basic customer, including management fee income and SourceSuite revenue, was $52.11 for the year ended December 31, 2002 compared to $47.49 for the year ended December 31, 2001, primarily reflecting the continued successful rollout of new product offerings in all markets. Average monthly revenue per basic customer for high-speed data and interactive digital video increased to $8.07 for the year ended December 31, 2002 from $5.41 for the year ended December 31, 2001.

Programming and other operating costs increased $15.9 million or 6% to $274.8 million for the year ended December 31, 2002, from $258.9 million for the year ended December 31, 2001. The increase in programming and other operating costs was primarily the result of increased programming rates for our classic and digital service as well as for additional programming added in rebuilt systems offset by decreases in high-speed data costs. Programming costs increased 11% for the year ended December 31, 2002 as compared to the year ended December 31, 2001.

Selling, general and administrative expenses increased $20.5 million or 13% to $173.5 million for the year ended December 31, 2002, from $153.0 million for the year ended December 31, 2001. The increase in selling, general and administrative expenses was primarily the result of increased customer service and insurance costs partially offset by a decrease in marketing costs.

On September 28, 2001, At Home Corporation ("@Home"), the former provider of high-speed data services for all of our systems except for those located in Ohio, filed for protection under Chapter 11 of the Bankruptcy Code. For the purpose of continuing service to existing customers and to resume the provisioning of service to new customers, we entered into an interim agreement with @Home to extend service through

November 30, 2001. Further, in December 2001, we entered into an additional interim service arrangement whereby we paid $10.0 million to @Home to extend service for three months through February 28, 2002, which was recorded as expense ratably over this three-month period.

As a result of these interim arrangements, we incurred approximately $2.8 million in excess of our original agreed-to cost for such services rendered during the year ended December 31, 2001. Additionally, as of December 31, 2001, we recorded an allowance for bad debt of $1.0 million for a net receivable from @Home in connection with monies @Home collected from our high-speed data customers on our behalf prior to September 28, 2001. Additionally, we incurred approximately $4.1 million in excess of our original agreed-to cost for such services rendered during the three months ended March 31, 2002. These additional costs are included in non-recurring high-speed data service charges in our statement of operations.

Depreciation and amortization expense decreased $166.9 million or 44% to $216.5 million for the year ended December 31, 2002, from $383.4 million for the year ended December 31, 2001. The decrease in depreciation and amortization expense was primarily the result of ceasing the amortization of goodwill and indefinite lived intangible assets associated with the adoption of SFAS No. 142, effective January 1, 2002. This was partially offset by an $11.1 million write-down of the carrying value of current video-on-demand equipment, which was replaced as of December 31, 2002 in connection with our transition to a new video-on-demand service provider.

Operating cash flow increased $43.2 million or 14% to $359.6 million for the year ended December 31, 2002, from $316.4 million for the year ended December 31, 2001. This increase was primarily due to increased digital and high-speed data revenue, partially offset by increases in programming and other operating costs and selling, general and administrative costs. Excluding SourceSuite, operating cash flow for the year ended December 31, 2002 totaled $360.6 million. The following is a reconciliation of operating income or loss to OCF:

Year ended December 31,
	2002	2001
(in thousands)
Operating income (loss)	$ 139,002	$ (70,833)
Adjustments:
Depreciation and amortization	216,506	383,449
Non-recurring high-speed data costs	4,116	3,785
Operating Cash Flow	$ 359,624	$ 316,401

Interest expense decreased $8.3 million or 4% to $204.7 million for the year ended December 31, 2002 from $213.0 million for the year ended December 31, 2001. This decrease was the result of lower interest rates, which averaged 7.9% for the year ended December 31, 2002, compared to 8.7% for the year ended December 31, 2001. Partially offsetting this decrease was higher outstanding debt, which averaged $2.5 billion for the year ended December 31, 2002, compared to $2.1 billion for the year ended December 31, 2001.

For the year ended December 31, 2002, the net loss was $48.0 million, primarily for the reasons set forth above.


Insight Communications (NASDAQ: ICCI) is the 9th largest cable operator in the United States, serving approximately 1.4 million customers highly concentrated in the four contiguous states of Illinois, Kentucky, Indiana and Ohio. Insight specializes in offering bundled, state-of-the-art services in mid-sized communities, delivering basic and digital video, high-speed data and the recent deployment of voice telephony in selected markets to its customers.


Any statements in this press release that are not historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. The words "estimate," "expect," "anticipate" and other expressions that indicate future events and trends identify forward-looking statements. The above forward-looking statements are subject to risks and uncertainties and are subject to change based upon a variety of factors that could cause actual results to differ materially from those Insight Communications anticipates. Factors that could have a material and adverse impact on actual results include competition, increasing programming costs, changes in laws and regulations, our substantial debt and the other risk factors described in Insight Communications' annual report on Form 10-K for the year ended December 31, 2001. All forward-looking statements in this press release are qualified by reference to the cautionary statements included in Insight Communications' Form 10-K.

Supplemental Information & Quarterly Operating Statistics (MS Word)