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Insight Communications Announces Third Quarter 2001 Results

New York – November 06, 2001 –

Insight Communications Company (Nasdaq: ICCI) today announced financial results for the three months ended September 30, 2001. Revenue for the third quarter totaled $177.4 million, an increase of 48.7% over the prior year third quarter, due primarily to the inclusion of the Illinois systems acquired from AT&T, effective January 1, 2001. Operating cash flow for the third quarter totaled $80.1 million, in line with revised expectations.

As of September 30, 2001, Revenue Generating Units (“RGUs”) totaled approximately 1,590,000, or 10.7% higher than the prior year period on a same-store basis. The rate of RGU growth has nearly doubled, led by increasing digital demand. For the quarter, Insight added 28,396 digital customers versus 13,496 net digital additions for the quarter ended September 30, 2000. Modem net gains totaled 11,642, versus 11,200 for the prior year quarter, evidencing continued steady demand.

Insight continued to increase its interactive digital deployment. As of September 30, 2001, interactive digital was available to 809,000 customers or 63.4% of the Company’s total footprint. Insight interactive continues to lead the industry in revenue per digital customer of approximately $19 on average. In addition, Insight continues to experience low churn rates with this product.

“Our strategy of investing in technology, leveraging our infrastructure and delivering new lines of business is on track, driving important revenue gains. Excluding the recently acquired Illinois systems, average revenue per customer for the quarter totaled $47.17, up $3.71 or 8.5% over the prior year quarter,” said Kim D. Kelly, Executive Vice President, Chief Operating and Financial Officer. “New services accounted for approximately 87% of this increase and we are just beginning to launch telephony. Once the rebuilds in Illinois are concluded, we expect similar gains from new services.”

“Telephone expansion continues on track as we launched our second market during the quarter,” said Michael S. Willner, President and CEO. “96% of our customers continue to choose one bill, foretelling exciting metrics for us – increasing revenue per customer, reducing churn and providing us with an important competitive advantage.”

Operating data results

Revenue increased $58.1 million or 48.7% to $177.4 million for the three months ended September 30, 2001, from $119.3 million for the three months ended September 30, 2000. The increase in revenue was primarily the result of the Illinois cable systems acquired from AT&T in the AT&T transactions (the “AT&T Illinois Systems”). The incremental revenue generated by the acquisition of the AT&T Illinois Systems approximated $44.8 million, which represents 77.1% of the increase in consolidated revenue. Excluding the AT&T Illinois Systems, revenue increased 11.1%, largely due to the sale of new services. Revenue for digital and high-speed data in the existing systems increased by $9.3 million, a combined 132.2% growth rate.

On a pro forma basis including the AT&T Illinois Systems, RGUs (Revenue Generating Units) were approximately 1,590,000 as of September 30, 2001, compared to approximately 1,436,200 as of September 30, 2000. This represents an annualized growth rate of 10.7%. RGUs represent the sum of basic and digital video, high-speed data and telephone customers.

Average monthly revenue per basic customer, including management fee income, was $46.46 for the three months ended September 30, 2001 compared to $43.46 for the three months ended September 30, 2000, primarily reflecting the continued successful rollout of new product offerings in the Indiana, Kentucky and Ohio markets. Average monthly revenue per basic customer for high-speed data and interactive digital video increased to $5.75 for the three months ended September 30, 2001 from $2.55 for the three months ended September 30, 2000. Excluding the AT&T Illinois Systems, the number of high-speed data service customers increased to approximately 59,500 as of September 30, 2001 from approximately 23,700 as of September 30, 2000, while digital customers increased to approximately 182,300 as of September 30, 2001 from approximately 73,200 as of September 30, 2000.

Programming and other operating costs increased $23.6 million or 55.7% to $65.9 million for the three months ended September 30, 2001, from $42.3 million for the three months ended September 30, 2000. The increase in programming and other operating costs was primarily the result of the acquisition of the AT&T Illinois Systems. The incremental expense resulting from the AT&T Illinois Systems approximated $15.8 million, which represents 67.1% of the increase in consolidated programming and other operating costs. Excluding these systems, programming and other operating costs increased by approximately $7.8 million or 18.3%, primarily as a result of increased programming rates and additional programming.

Selling, general and administrative expenses increased $8.6 million or 38.0% to $31.3 million for the three months ended September 30, 2001, from $22.7 million for the three months ended September 30, 2000. The increase in selling, general and administrative expenses was primarily the result of the acquisition of the AT&T Illinois Systems. The incremental selling, general and administrative expenses resulting from

the AT&T Illinois Systems approximated $6.2 million, which represents 71.7% of the increase. Excluding these systems, selling, general and administrative costs increased by approximately $2.4 million or 10.8%, primarily reflecting increased marketing activity and corporate expenses associated with new service introductions.

Depreciation and amortization expense increased $32.0 million or 51.4% to $94.2 million for the three months ended September 30, 2001, from $62.3 million for the three months ended September 30, 2000. The increase in depreciation and amortization expense was primarily the result of the acquisition of the AT&T Illinois Systems. The incremental depreciation and amortization expense resulting from the AT&T Illinois Systems approximated $24.3 million, which represents 75.9% of the consolidated depreciation and amortization increase. Excluding these systems, depreciation and amortization increased by approximately $7.7 million or 12.4%, primarily due to capital expenditures made to rebuild the existing cable equipment during previous quarters.

Operating cash flow increased by $25.9 million to $80.1 million, primarily as a result of the acquisition of the AT&T Illinois Systems, which generated approximately $22.8 million or 88.0% 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 $23.9 million or 83.6% to $52.6 million for the three months ended September 30, 2001, from $28.6 million for the three months ended September 30, 2000. The increase in interest expense was primarily the result of higher outstanding debt resulting from the acquisition of the AT&T Illinois Systems and funding of capital expenditures during the past year.

The benefit for income taxes was $14.1 million and $7.4 million for the three months ended September 30, 2001 and 2000, representing effective tax rates of 41.2% and 38.4%.

For the three months ended September 30, 2001, the net loss was $20.2 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. The company is 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 analog 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. 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