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Insight Communications Announces Third Quarter 2002 Results

New York – October 24, 2002 –

Insight Communications Company (Nasdaq: ICCI) today announced financial results for the three months ended September 30, 2002. Revenue for the three months ended September 30, 2002 totaled $204.9 million, an increase of $21.5 million or 11.7% over the prior year, due primarily to basic rate increases and gains in high-speed data and digital services. Operating cash flow totaled $92.5 million for the quarter, or 15.5% 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 September 30, 2002 include the results of SourceSuite, LLC, consolidated effective January 1, 2002, except where noted.

"We continued to deliver on plan significant cash flow growth of 15.5% for the quarter, largely driven by RGU growth, coupled with greater efficiencies afforded by selling multiple services," said Michael S. Willner, Vice Chairman and Chief Executive Officer. "Additionally, we are very pleased to be reporting this quarter's results in accordance with the new NCTA standards in order to help drive further clarity and consistency among industry reporting."

As of September 30, 2002, Revenue Generating Units (RGUs), representing the sum of analog, digital, high-speed data and telephone customers, as defined by the newly released NCTA Standard Reporting Categories, totaled 1,753,600 compared to 1,602,300 as of September 30, 2001, on a same-store basis, representing a 9.4% annual growth rate. Of the total increase of 151,300, net analog additions totaled 4,200 resulting in 1,289,000 analog customers as of September 30, 2002; net digital additions totaled 87,200, resulting in 317,100 digital customers as of September 30, 2002; net high-speed data additions totaled 39,700 (including a bulk adjustment of 3,200), resulting in 124,600 high-speed data customers as of September 30, 2002; and net telephone additions totaled 20,200, resulting in 22,900 telephone customers as of September 30, 2002.

RGU growth for the quarter was 46,600, up significantly over the prior quarter's growth of 17,100 and consistent with gains achieved in the third quarter 2001. Penetration of new services continues to increase, with digital customer penetration at 26.1%, up from 20.5% during the previous year's quarter; modem penetration at 6.5%, up from 5.1% at the end of the previous year's quarter; and telephone penetration at 6.1%, up from 3.7% at the end of the previous year's quarter.

Third quarter average monthly revenue per customer totaled approximately $52.95, a $4.90 or 10.2% increase over the prior year, driven by basic rate increases and growth in new services. Basic rates increased $2.02 on average, up 6.5% over the prior year's quarter. New services caused substantial increases in average monthly revenue per customer, with average monthly digital revenue per customer up $1.08 and average monthly high-speed data revenue per customer up $1.42 over the prior year's quarter.

Year-to-date capital expenditures totaled $188.1 million. Of the total, approximately 38.3% was for Customer Premise Equipment and 33.1% was for Upgrade/Rebuild costs as defined by the newly released NCTA Standard Reporting Categories. For the nine months ended September 30, 2002, capital expenditures per customer totaled $145.93. On September 30, 2002, including Illinois, 86% 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 financings.

"We continue to execute on our plan to leverage our broadband infrastructure to diversify into new services, realizing significant revenue growth," said Kim D. Kelly, President and Chief Operating Officer. "The revenue opportunity with the bundle is exciting," she continued. "In Louisville, 40% of our telephone customers are in high-end bundles, spending $82 to $118 monthly with us."

Monthly operating cash flow per customer, excluding the results from SourceSuite, for the three months ended September 30, 2002 totaled $23.94, up 14.1% from $20.98 in the prior year. In addition, the operating cash flow margin, including SourceSuite, increased to 45.1% for the quarter ended September 30, 2002, up from 43.7% for the prior year's quarter.

Operating Data Results

Revenue increased $21.5 million or 11.7% to $204.9 million for the three months ended September 30, 2002, from $183.5 million for the three months ended September 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's quarter of 57.0% and 36.2%. In addition, our basic cable service revenue increased primarily due to basic cable rate increases.

Average monthly revenue per basic customer, including management fee revenue and SourceSuite revenue, was $52.95 for the three months ended September 30, 2002, compared to $48.05 for the three months ended September 30, 2001.

Average monthly revenue per basic customer, excluding management fee revenue and SourceSuite revenue, was $52.65 for the three months ended September 30, 2002, compared to $47.89 for the three months ended September 30, 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 digital service increased to $8.25 for the three months ended September 30, 2002, up from $5.75 for the three months ended September 30, 2001.

Programming and other operating costs increased $3.8 million or 5.8% to $69.7 million for the three months ended September 30, 2002, from $65.9 million for the three months ended September 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 10.5% for the three months ended September 30, 2002 from the three months ended September 30, 2001.

Selling, general and administrative expenses increased $5.3 million or 14.1% to $42.7 million for the three months ended September 30, 2002, from $37.4 million for the three months ended September 30, 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.

Depreciation and amortization expense decreased $31.8 million or 33.7% to $62.5 million for the three months ended September 30, 2002, from $94.2 million for the three months ended September 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. This was partially offset by a $9.0 million write-down of the carrying value of current video-on-demand equipment, which is being replaced on or about December 31, 2002 in connection with our transition to a new video-on-demand vendor.

Operating cash flow increased $12.4 million or 15.5% to $92.5 million for the three months ended September 30, 2002, from $80.1 million for the three months ended September 30, 2001. Excluding SourceSuite, operating cash flow increased $12.5 million or 15.7% to $92.6 million for the three months ended September 30, 2002, from the three months ended September 30, 2001, 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.

Interest expense decreased $1.6 million or 3.1% to $50.9 million for the three months ended September 30, 2002, from $52.6 million for the three months ended September 30, 2001. The decrease is the result of lower interest rates, which averaged 8.0% for the three months ended September 30, 2002, versus 8.6% for the three months ended September 30, 2001. Partially offsetting this decrease was higher outstanding debt, which averaged $2.6 billion for the three months ended September 30, 2002, versus $2.4 billion for the three months ended September 30, 2001.

Minority interest decreased $20.0 million or 63.3% to $11.6 million for the three months ended September 30, 2002 from $31.6 million for the three months ended September 30, 2001 as a direct result of the decrease in Insight Midwest's 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 September 30, 2002.

For the three months ended September 30, 2002, the net loss was $9.0 million.

Investment Activity

It is anticipated that during 2002, the Company will spend approximately $300.4 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.

Supplemental Information & Quarterly Operating Statistics (MS Word)

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 nine months ended September 30, 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.