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Insight Communications Announces First Quarter 2001 Results

New York – May 07, 2001 –

Insight Communications Company (Nasdaq: ICCI) today announced financial results for the three months ended March 31, 2001. Revenue for the period totaled $168.5 million, an increase of 46.8% over the prior year, primarily due to the January 5th acquisition of the Illinois systems from AT&T Broadband. Operating cash flow increased 52.1% to $75.0 million, in-line with expectations, and also largely due to the acquisition of the Illinois systems.

On a same store basis, RGUs (Revenue Generating Units) increased at an annualized pace of 16.5%, more than double the growth rate realized during 2000 as the company capitalized on rebuilds completed during 2000. Interactive digital net adds averaged over 10,000 per month, increasing digital customers to 136,632 at the end of the quarter. High-speed data customers grew at a 125% annual rate on a same store basis as well.

“We have had a very focused vision of delivering the bundle of entertainment and telecommunication services to our customers,” said Michael S. Willner, President & CEO. “Our first quarter results support the wisdom of this strategy and our success in executing it. We are rapidly rebuilding our newly acquired Illinois systems and expect to be launching our suite of value- added services later this year.”

In addition, Insight announced that it launched AT&T Digital Telephone service in Louisville, Kentucky during the quarter. “We are very excited to deliver a key product in the bundle,” said Kim D. Kelly, Executive Vice President, Chief Operating and Financial Officer. “Our early results are very promising on all measurements, service take up, single billing and costs.”

Operating Data results

Revenues increased $53.7 million to $168.5 million for the three months ended March 31, 2001, compared to $114.8 million for the three months ended March 31, 2000. The increase in revenues is primarily the result of the acquisition of the Illinois systems. The incremental revenue generated by the acquisition of the Illinois systems approximated $44.6 million. In addition, the previously owned systems increased revenue for digital and high-speed data by $4.6 million, a combined 106.7% growth rate.

Average monthly revenue per customer was $43.91 for the three months ended March 31, 2001, compared to $41.39 for the three months ended March 31, 2000, primarily reflecting the continued successful rollout of new product offerings in the Indiana, Kentucky and Ohio markets. Average monthly revenue per customer for high-speed data and interactive digital video increased to $3.46 for the three months ended March 31, 2001, compared to $1.39 for the comparable period in 2000. Excluding the systems acquired in Illinois from AT&T Broadband, the number of high-speed data service customers increased to 39,800 as of March 31, 2001 from 12,400 as of March 31, 2000, while digital customers increased to 136,600 as of March 31, 2001 from 54,700 as of March 31, 2000.

Programming and other operating costs increased $17.1 million to $54.4 million for the three months ended March 31, 2001, compared to $37.3 million for the three months ended March 31, 2000. The increase in programming and other operating costs is primarily the result of the acquisition of the cable television systems acquired in Illinois. The incremental expense generated by the acquisition of the Illinois systems approximated $13.9 million, which represents 81.2% of the increase in consolidated programming and other operating costs. Excluding these systems, programming and other operating costs increased by approximately $3.2 million or 18.8%, primarily as a result of increased programming rates and additional programming carried by the existing systems.

Selling, general and administrative expenses increased $10.9 million to $39.1 million for the three months ended March 31, 2001, compared to $28.2 million for the three months ended March 31, 2000. The increase in selling, general and administrative expenses is primarily the result of the acquisition of the cable television systems acquired in Illinois. The incremental selling, general and administrative expenses generated by the acquisition of the Illinois systems approximated $7.6 million, which represents 69.8% of the increase. Excluding these systems, these costs increased by approximately $3.3 million, primarily reflecting increased marketing activity and corporate expenses associated with new product introductions.

Depreciation and amortization expense increased $32.5 million to $88.3 million for the three months ended March 31, 2001, compared to $55.8 million for the three months ended March 31, 2000. The increase in depreciation and amortization expense is primarily the result of the acquisition of the cable television systems acquired in Illinois. The incremental depreciation and amortization expense generated by the acquisition of the Illinois systems approximated $21.4 million, which represents 65.7% of the consolidated depreciation and amortization increase. Excluding these systems, depreciation and amortization increased by approximately $11.1 million or 34.3%, primarily due to capital expenditures made to rebuild the existing cable equipment during previous quarters.

Operating cash flow increased by $25.7 million to $75.0 million, primarily as a result of the acquisition of the Illinois cable systems, which generated approximately $23.1 million or 89.9% of the increase. Excluding these systems, the increase in operating cash flow is due to revenue gains from increased digital and modem penetration, and basic rate increases offset primarily by higher programming costs as mentioned above.

Interest expense increased $25.1 million to $51.4 million for the three months ended March 31, 2001, compared to $26.3 million for the three months ended March 31, 2000. The increase in interest expense is primarily the result of higher outstanding debt required by the acquisition of the cable television systems acquired in Illinois and funding of capital expenditures during the past year.

The provision for income taxes was $1.0 million and $25.9 million for the three months ended March 31, 2001 and 2000.

For the three months ended March 31, 2001, the net loss was $2.0 million for the reasons set forth above.

Insight Communications (Nasdaq: ICCI) is the 8th largest cable operator in the United States with approximately 1.4 million customers. The company is highly concentrated in the four contiguous states of Illinois, Indiana, Kentucky, and Ohio. The company specializes in offering bundled, state-of-the-art technology in mid-sized communities delivering analog and digital video, high-speed data and, in the near future, voice telephony 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. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from historical results or those the Company anticipates. Factors that could have a material and adverse impact on actual results are described in Insight’s Registration Statement on form S-1 declared effective by the Securities and Exchange Commission on July 21, 1999. All forward-looking statements in this press release are qualified by reference to the cautionary statements included in Insight’s Registration Statement.

Supplemental Information & Quarterly Operating Statistics (MS Word)


Contact:

Kim Kelly
EVP/COO/CFO
(917) 286-2300