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Insight Communications Announces Second Quarter 2002 Results

New York – July 23, 2002 –

Insight Communications Company (Nasdaq: ICCI) today announced financial results for the three months ended June 30, 2002. Revenue for the three months ended June 30, 2002 totaled $200.0 million, an increase of $18.8 million or 10.4% over the prior year, due primarily to gains in high-speed data and digital services. Operating cash flow totaled $89.3 million for the quarter, or 15.8%, over the prior year. In line with recent cable industry accounting guidance, all revenue and S,G&A expenses include franchise fees for all periods presented. In addition, results of operations for the three months ended June 30, 2002 include the results of SourceSuite, LLC, consolidated effective January 1, 2002, except where noted.

As of June 30, 2002, Revenue Generating Units (RGUs), representing the sum of basic, digital, high-speed data, and telephone customers, totaled 1,707,000, compared to 1,555,200 as of June 30, 2001, on a same-store basis, representing a 9.8% internal annual growth rate.

RGUs increased in the digital, high-speed data and telephone categories during the quarter ended June 30, 2002. Net digital additions totaled 12,300 during the quarter, resulting in 294,800 digital customers as of June 30, 2002. Net high-speed data additions totaled 9,000 during the quarter, resulting in 103,400 high-speed data customers as of June 30, 2002. Net telephone additions totaled 6,700 during the quarter, resulting in 17,600 telephone customers as of June 30, 2002. As of the end of the quarter, the Company had launched telephone services in three markets -- Louisville, Ky., Evansville, In., and Columbus, Ohio.

As of June 30, 2002, basic customers totaled 1,291,000, up nearly 1.0% over June 30, 2001 on a same-store basis. The Company serves a large number of university communities and historically has a net loss of customers during the second quarter of the year while the students are on summer break. For the three months ended June 30, 2002, however, the net loss of customers of 10,900, or 0.8%, was lower than the prior year second quarter net loss of customers of 14,900, or 1.2%. For the six months ended June 30, 2002, the Company had a year-to-date net gain in basic customers of 2,500, compared to a net loss of 7,400 during the same period last year.

"When we look at our results in the earlier-launched markets, we feel even more convinced that we have chosen the right strategy," said Michael S. Willner, President and CEO. "Excluding Illinois, where rebuilds are still nearing completion, basic customers are up 1.8%, digital penetration increased from 18.8% to 27.8%, and high-speed data penetration from 3.8% to 5.1%. In these systems operating cash flow is up 16.3%, excluding the Illinois systems and SourceSuite results. These impressive results do not include the full impact of our basic rate increases, which occur primarily in June and July, leaving most of their impact to the third and fourth quarters."

Second quarter average monthly revenue per customer totaled approximately $51.42, a $4.13 or 8.7% increase over the prior year. New services drove the substantial increases in average monthly revenue per customer, with average monthly digital revenue per customer up $1.24 over the prior year, and average monthly high-speed data revenue per customer up $1.41.

Year-to-date capital expenditures totaled $121.6 million, including $24.9 million for the deployment of telephony. Capital was funded through cash generated from operations as well as through bank financings.

"As we continue to launch our bundled service packages across the rest of our footprint, it is clear that economies of scale are having a positive impact on the business," said Kim D. Kelly, Executive Vice President and Chief Operating Officer. "Indeed our cash flow margins are beginning to reflect just how efficient our business can be when offering voice, video and data on one platform."

"All of the components of our second quarter results meet or exceed our expectations," added Dinesh C. Jain, Chief Financial Officer. "We are extremely confident that we will meet our 2002 previously announced full-year guidance of both cash flow and capital expenditures. Accordingly, we are on track to achieving free-cash-flow breakeven by the end of next year, including additional telephony launches in several new markets."

Monthly operating cash flow per customer, excluding the results from SourceSuite, for the three months ended June 30, 2002 totaled $23.02, up 14.4% from $20.12 in the prior year. In addition, the operating cash flow margin, including SourceSuite, increased to 44.6% for the quarter ended June 30, 2002, up from 42.5% for the prior year quarter.

Operating Data Results

Revenue increased $18.8 million or 10.4% to $200.0 million for the three months ended June 30, 2002, from $181.2 million for the three months ended June 30, 2001. Excluding the increase in revenue derived from SourceSuite, 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 quarter of 66.2% and 43.2%. In addition, basic cable service revenue increased, primarily due to basic cable rate increases.

RGUs were approximately 1,707,000 as of June 30, 2002, compared to approximately 1,555,200 as of June 30, 2001 on a same-store basis. This represents an annualized growth rate of 9.8%.

Average monthly revenue per basic customer, including management fees and revenue from SourceSuite, was $51.42 for the three months ended June 30, 2002, compared to $47.29 for the three months ended June 30, 2001. Average monthly revenue per basic customer, excluding management fees and revenue from SourceSuite, was $51.13 for the three months ended June 30, 2002, compared to $47.19 for the three months ended June 30, 2001, primarily reflecting the continued 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 $7.87 for the three months ended June 30, 2002, up from $5.22 for the three months ended June 30, 2001.

Programming and other operating costs increased $3.6 million or 5.6% to $69.2 million for the three months ended June 30, 2002, from $65.6 million for the three months ended June 30, 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. Programming costs increased 11.9% for the three months ended June 30, 2002 from the three months ended June 30, 2001.

Selling, general and administrative expenses increased $2.9 million or 7.6% to $41.5 million for the three months ended June 30, 2002, from $38.6 million for the three months ended June 30, 2001. The increase in selling, general and administrative expense was primarily the result of increased employee compensation and employment levels associated with new services partially offset by a decrease in marketing costs.

Depreciation and amortization expense decreased $42.6 million or 46.3% to $49.5 million for the three months ended June 30, 2002, from $92.1 million for the three months ended June 30, 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, partially offset by depreciation of capital expenditures subsequent to June 30, 2001.

Operating cash flow increased by $12.2 million to $89.3 million, primarily as a result of revenue gains from increased digital and high-speed data penetration offset primarily by higher programming costs as mentioned above.

Interest expense decreased $2.8 million or 5.2% to $50.8 million for the three months ended June 30, 2002, from $53.6 million for the three months ended June 30, 2001. The decrease is the result of lower average interest rates of 7.9% for the three months ended June 30, 2002 from 9.1% for the three months ended June 30, 2001, partially offset by higher outstanding debt of $2.6 billion during the three months ended June 30, 2002 from $2.4 billion during the three months ended June 30, 2001.

Minority interest decreased $31.1 million or 88.2% to $4.2 million for the three months ended June 30, 2002 from $35.2 million for the three months ended June 30, 2001 as a direct result of the decrease in Insight MidwestÕs net loss applicable to common interests due primarily to the adoption of SFAS No. 142 effective January 1, 2002. The non-amortization provisions of SFAS No. 142 resulted in decreased depreciation and amortization expense for the three months ended June 30, 2002.

For the three months ended June 30, 2002, the net loss was $6.6 million.

Investment Activity

It is anticipated that during 2002, the Company will spend approximately $300 million in capital expenditures, including capital for rebuilds in Illinois which are estimated to be substantially completed by year-end, telephone deployment, and success-based capital including interactive digital expansion. These capital expenditures will be funded primarily through operating cash flow and borrowings under our credit facility.

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. Named "2001 Cable Operator of the Year" by Cablevision Magazine, 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. The words "estimate," "expect," "anticipate" and other expressions that indicate future events and trends identify forward-looking statements. The above forward-looking estimates 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 are described in Insight Communications' annual report on Form 10-K for the year ended December 31, 2001 and quarterly report on Form 10-Q for the three months ended March 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 and Form 10-Q.

Supplemental Information & Quarterly Operating Statistics (MS Word)