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Insight Communications Announces First Quarter 2002 Results

New York – May 10, 2002 –

Insight Communications Company (Nasdaq: ICCI) today announced financial results for the three months ended March 31, 2002. Revenue for the three months ended March 31, 2002 totaled $192.2 million, an increase of 10.3% over the prior year's quarter, due primarily to gains in high-speed data and digital services accompanied by increases in basic cable service revenue. Operating cash flow, excluding a non-recurring charge of $4.1 million related to Excite@Home, totaled $81.7 million for the quarter. In line with recent accounting guidance, all revenue and S,G&A expenses include franchise fees for all periods presented. In addition, all results of operations for the quarter ended March 31, 2002 include the results of SourceSuite, LLC, consolidated effective January 1, 2002, except where noted.

As of March 31, 2002, Revenue Generating Units (RGUs), representing the sum of basic and digital video, high-speed data and telephone customers, totaled 1,689,900, compared to 1,540,700 as of March 31, 2001, on a same store basis, representing a 9.7% internal annual growth rate.

"We are very pleased with our first quarter performance," said Michael S. Willner, President and CEO. "Operating cash flow for the first quarter increased 9.6%, nearly double the rate of growth in the comparable period for 2001, excluding the results generated from the SourceSuite acquisition, as we moved our management focus from rebuilds to product deployments."

First quarter average monthly revenue per customer totaled approximately $49.46, a 9.0% increase over the quarter ended March 31, 2001. New services drove the substantial moves in average monthly revenue per customer, with average monthly digital revenue per customer up $1.49 over the quarter ended March 31, 2001, and average monthly modem revenue per customer up $1.31.

RGUs gained in every category. Basic customers totaled 1,302,000 as of March 31, 2002, representing a quarterly increase of 1.0% from December 31, 2001. Net digital additions totaled 24,800 during the quarter, resulting in 282,500 digital customers as of March 31, 2002. Net modem additions were 6,400, increasing at twice the rate over the previous quarter, as the Company completed its successful transition from Excite@Home to Insight Broadband in February. This allowed for the relaunching of marketing efforts for the high-speed data product. Telephone customers as of March 31, 2002 totaled 10,900, nearly double the amount from December 31, 2001. The Company operated in two markets during the quarter, Louisville, Ky. and Evansville, In., and since then has started commercial deployment of the product in Columbus, Ohio as well.

Insight also reported its Ohio system results, where revenues and operating cash flow for the quarter ended March 31, 2002 were up 11.5% and 16.4% over the prior year's quarter.

"Columbus highlights the success of our strategy," added Kim D. Kelly, Executive Vice President and Chief Operating Officer. "Investment in technology and value-added products have resulted in superior growth in Columbus, where we compete not only with DBS, but also with a wireline overbuild. We grew revenue 11.5%, operating cash flow 16.4%, basic customers 1.9%, and average revenue per customer totaled $57.76. Columbus defines success."

Capital expenditures for the quarter totaled $50.3 million, compared to $63.7 million for the previous year's quarter, including $11.5 million for the deployment of telephony. Capital was funded through cash flow from operations as well as through bank financings.

Operating data results

Revenue, including SourceSuite, increased $18.0 million or 10.3% to $192.2 million for the three months ended March 31, 2002, from $174.2 million for the three months ended March 31, 2001. 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 79.9% and 62.1%. In addition, our basic cable service revenue increased $5.5 million or 4.7% primarily due to basic cable rate increases that took effect in the second quarter of 2001 and 1.0% internal basic customer growth during the quarter.

RGUs were approximately 1,689,900 as of March 31, 2002, compared to approximately 1,540,700 as of March 31, 2001 after giving effect to acquisitions. This represents an annualized growth rate of 9.7%.

Average monthly revenue per basic customer, including management fees and revenue from SourceSuite, increased by $4.07 to $49.46 for the three months ended March 31, 2002, compared to $45.39 for the three months ended March 31, 2001, 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 $6.97 for the three months ended March 31, 2002 from $4.17 for the three months ended March 31, 2001.

Programming and other operating costs increased $7.0 million or 11.1% to $69.6 million for the three months ended March 31, 2002, from $62.6 million for the three months ended March 31, 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.

Selling, general and administrative expenses increased $4.3 million or 11.7% to $40.9 million for the three months ended March 31, 2002, from $36.6 million for the three months ended March 31, 2001. The increases in selling, general and administrative expenses were primarily the result of increased employee compensation and other related expenses, offset by a decrease in marketing.

Non-recurring 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 that we 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 during the three months ended March 31, 2002.

Depreciation and amortization expense decreased $39.8 million or 45.1% to $48.4 million for the three months ended March 31, 2002, from $88.3 million for the three months ended March 31, 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 capital expenditures made to rebuild the existing cable equipment.

Operating cash flow, including SourceSuite and excluding the non-recurring charge of $4.1 million related to @Home, increased by $6.7 million to $81.7 million, primarily as a result of revenue gains from increased digital and modem penetration and basic rate increases offset primarily by higher programming costs as mentioned above.

Interest expense remained relatively flat from the prior year quarter increasing $527,000 or 1.0% to $51.9 million for the three months ended March 31, 2002, from $51.4 million for the three months ended March 31, 2001. The increase is the result of higher outstanding debt resulting from the funding of capital expenditures during the quarter, partially offset by lower average interest rates.

For the three months ended March 31, 2002, the net loss was $12.3 million primarily for the reasons set forth above.

Investment Activity

For the year ended December 31, 2001, we spent $325.6 million in capital expenditures, largely to support our network rebuild, digital deployments, and to a lesser extent, telephony.

It is anticipated that during 2002, we will spend approximately $300 million in capital expenditures, including capital for rebuilds in Illinois which is estimated to be substantially completed by year-end, telephone deployment, and success-based capital including interactive digital expansion. We will be able to fund these capital expenditures through existing sources 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, including, but not limited to, the completion of the quarterly review of Insight Communication's financial statements for the three months ended March 31, 2002 by its independent auditors under Statement on Auditing Standards No. 71 (Interim Financial Information). Other 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. 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)