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Insight Communications Announces First Quarter 2003 Results

New York – May 06, 2003 –

Insight Communications Company (Nasdaq: ICCI) today announced financial results for the three months ended March 31, 2003.

Revenue for the three months ended March 31, 2003 totaled $215.0 million, an increase of 12% over the prior year, due primarily to customer gains in high-speed data and digital services and increased basic rates. Operating cash flow increased to $90.1 million for the three months ended March 31, 2003 from $77.6 million for the three months ended March 31, 2002, an increase of 16%. The operating cash flow reported for March 31, 2002 excludes a previously reported $4.1 million adjustment related to high-speed data charges, which, if included, would result in 10% operating cash flow growth. A reconciliation of operating cash flow to operating income appears below in the discussion of operating data results.

During the quarter, the company concluded a swap with its partner, Comcast, trading its Griffin, GA system, serving approximately 11,800 customers, plus $25 million, for Comcast's systems in the Louisville ADI, serving approximately 23,400 customers. The company had previously managed the Louisville ADI systems under contract with Comcast. The financial results reported for the quarter reflect the transaction as of its closing date of February 28, 2003.

"I'm excited to report that we have started the year with a strong showing in Revenue Generating Unit (RGU) growth across all of our services," said Michael S. Willner, Vice Chairman and Chief Executive Officer. "Each of our products Ð basic, digital, data, and telephone Ð posted solid gains this quarter, further evidence that customers find our robust product offering to be highly compelling."

As of March 31, 2003, RGUs, representing the sum of basic, digital, high-speed data and telephone customers, as defined by the NCTA Standard Reporting Categories, totaled 1,870,000 compared to 1,689,900 as of March 31, 2002, representing an 11% growth rate. On a same-store basis, RGUs increased 10% after giving effect to the swap of the Griffin, GA system for the Louisville ADI systems.

On a same-store basis, net RGU additions in the first quarter totaled 58,900. Of this total, 8,300 were basic additions, resulting in 1,308,700 basic customers as of March 31, 2003 and a penetration of 57% of homes passed. Net digital additions were 20,000, for a quarter-ending total of 355,400 digital customers and a penetration of 28% of digital homes passed. High-speed data net additions were 23,500 for the quarter, reaching a total of 168,300 high-speed data customers as of March 31, 2003 and a penetration of 8% of modem homes passed. Net telephone additions totaled 7,100, resulting in 37,700 telephone customers as of March 31, 2003 and a penetration of 7% of marketable, telephony-enabled homes.

"On a same-store basis, net RGU additions were up 18% over the first quarter of 2002, while capital expenditures were down 19%. Indeed, net RGU additions were up 20% over the fourth quarter," said Kim D. Kelly, President and Chief Operating Officer. "These results highlight our key positive financial metrics Ð revenue growth from new products combined with significant reductions in capital spending. The upgraded infrastructure we've built is a platform for continuous revenue opportunity."

First quarter average monthly revenue per basic customer totaled approximately $55.34, a $5.74 or 12% increase over the prior year quarter, driven by growth in new services and basic rate increases. New services caused substantial increases in average monthly revenue per basic customer, with average monthly digital revenue per basic customer up $0.95 or 24%, and average monthly high-speed data revenue per basic customer up $2.21 or 74% over the prior year's quarter. Basic rates increased $2.20 on average, up 7.0% over the prior year's quarter.

Capital expenditures totaled $40.5 million for the three months ended March 31, 2003. Of the total, approximately 57% was for Customer Premise Equipment and 20% was for Upgrade/Rebuild costs as defined by the NCTA Standard Reporting Categories. For the three months ended March 31, 2003, capital expenditures per customer totaled approximately $30.98. As of March 31, 2003, including Illinois, an estimated 94% of Insight's customers were passed by upgraded network. Capital was funded through cash generated from operations as well as through bank borrowings.

"This quarter we have, once again, shown solid revenue and cash flow growth, further proof that we continue to deliver on our promise to investors," said Dinesh C. Jain, Senior Vice President and Chief Financial Officer. "We reiterate our plan to be free cash flow positive for the second half of the year."

Monthly operating cash flow margin per basic customer increased to 42% for the quarter ended March 31, 2003, up from 40% for the prior year's quarter.


Operating data results

Revenue increased $22.3 million or 12% to $215.0 million for the three months ended March 31, 2003 from $192.7 million for the three months ended March 31, 2002. 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 quarter of 74% and 24%. In addition, our basic cable service revenue increased 7% primarily due to basic rate increases.

Average monthly revenue per basic customer, including management fee revenue and SourceSuite revenue, was $55.34 for the three months ended March 31, 2003, compared to $49.60 for the three months ended March 31, 2002 primarily reflecting the continued successful rollout of new product offerings in all markets. Average monthly revenue per basic customer for high-speed data and digital service increased to $10.13 for the three months ended March 31, 2003, up from $6.97 for the three months ended March 31, 2002.

Programming and other operating costs increased $9.7 million or 14% to $79.9 million for the three months ended March 31, 2003, from $70.1 million for the three months ended March 31, 2002. The increase in programming and other operating costs was primarily the result of increased programming costs for our classic, digital and high-speed data services due to increased programming rates and customers served as well as additional programming added in our newly rebuilt systems. Programming costs increased 10% for the three months ended March 31, 2003 from the three months ended March 31, 2002.

Selling, general and administrative expenses increased $4.2 million or 10% to $45.1 million for the three months ended March 31, 2003, from $40.9 million for the three months ended March 31, 2002. The increase in selling, general and administrative expenses was primarily the result of increased costs related to salaries and benefits due to increased headcount in our telephone and customer service groups. Additionally, the increase is related to a decrease in funds received for marketing support (recorded as a reduction to selling, general & administrative expenses) for the three months ended March 31, 2003 compared to the three months ended March 31, 2002.

High-speed data service charges were incurred through February 28, 2002 as a result of payments made to At Home Corporation ("@Home"), the former provider of high-speed data services for all of our systems, except for those located in Ohio. On September 28, 2001, @Home 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 service arrangement that required us to pay $10.0 million to @Home to extend service for three months through February 28, 2002. As a result of this arrangement we incurred approximately $4.1 million in excess of our original agreed-to cost for such services rendered through February 28, 2002.

Depreciation and amortization expense increased $6.6 million or 14% to $55.0 million for the three months ended March 31, 2003, from $48.4 million for the three months ended March 31, 2002. The increase in depreciation and amortization expense was primarily the result of additional capital expenditures through March 31, 2003 to support the continued rebuild of our Illinois systems and the rollout of new digital, high-speed data and telephone services to existing rebuilt systems.

Operating Cash Flow (OCF) increased $12.5 million or 16% to $90.1 million for the three months ended March 31, 2003, from $77.6 million for the three months ended March 31, 2002. The increase is primarily due to increased basic, digital and high-speed data revenue, partially offset by increases in programming and other operating costs and selling, general and administrative costs. In addition, the increase in OCF is also attributable to the absence of high-speed data service charges to @Home for the three months ended March 31, 2003 that were previously included in the adjustments to OCF during the three months ended March 31, 2002. The following is a reconciliation of operating income to OCF:

Three months ended March 31,
	2003	2002
(in thousands)
Operating income (loss)	$ 35,089	$ 29,185
Adjustment*:
Depreciation and amortization	54,994	48,444
Operating Cash Flow	$ 90,083	$ 77,629

* The adjustment to OCF excludes high-speed data charges of $4.1 million for the three months ended March 31, 2002 that were included in previous reports filed by us.


Interest expense remained relatively flat for the three months ended March 31, 2003 compared to the three months ended March 31, 2002. Interest expense decreased $489,000 or 1% primarily as a result of lower interest rates, which averaged 7.79% for the three months ended March 31, 2003, versus 7.88% for the three months ended March 31, 2002. Partially offsetting this decrease was higher outstanding debt, which averaged $2.60 billion for the three months ended March 31, 2003, versus $2.56 billion for the three months ended March 31, 2002.

For the three months ended March 31, 2003, net income was $4.3 million.


Insight Communications (NASDAQ: ICCI) is the 9th largest cable operator in the United States, serving approximately 1.4 million customers 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, as amended, for the year ended December 31, 2002. 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)