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Insight Communications Announces Fourth Quarter and Year-End 2000 Results

New York – March 08, 2001 –

Insight Communications Company (Nasdaq: ICCI) announced today financial results for the three months and year ended December 31, 2000. For the year ended December 31, 2000 revenue totaled $476.2 million, a 96.2% increase over the prior year, largely reflecting the acquisition of the Kentucky systems on October 1, 1999 and the consolidation of the Columbus, Ohio subsidiary. Operating cash flow increased 85.4% to $214.1 million.

For the three months ended December 31, 2000 revenue and operating cash flow totaled $123.2 million and $56.3 million, respectively, slightly ahead of expectations.

Sequentially, revenue increased 3.3% in the fourth quarter over the third quarter as a result of a 2.7% increase in RGUs (revenue generating units). The average monthly revenue per customer increased 3.0% to $44.77 for the fourth quarter, largely reflecting RGU growth as well as increases in advertising sales.

"2000 was a pivotal year for us as we transformed our company from one that delivers plain old television into a full service telecommunications company. During the year we substantially completed our rebuilds so that by the end of the year 94% of our customers were served by state-of-the-art networks. We lead the industry in exploiting these networks’ capabilities, offering our customers a better way to watch television. Our interactive digital service, including video on demand, has more than met our expectations, " stated Michael S. Willner, Insight's President and CEO. "On the heels of our rebuilds, we launched our signature interactive digital product so that by year-end we had the product available to over 750,000 customers with over 100,000 subscribing and with new additions topping 10,000 per month. We have continued to deliver on the promise of the telecommunications bundle and have launched our first AT&T-branded voice telephony service in Louisville, Kentucky.”

“One of our most important achievements in 2000 was our continued delivery of excellent customer service. In fact, 73% of our customers rate our service either a 4 or a 5 on a scale of 1 to 5, a ranking that, according to the Peter Hart Research poll, puts us near the top of our industry. We believe that our success is based upon investing in technology, delivering services of value, and providing excellent customer service. We are well-positioned for 2001 and beyond,” Willner concluded.

Effective January 1, 2001, Insight concluded a series of transactions with AT&T Broadband which resulted in the addition of 350,000 customers served and the consolidation of Insight’s wholly-owned systems into Insight Midwest, the 50/50 joint venture with AT&T Broadband. The systems acquired are located in central Illinois, serving second and third tier markets including Peoria, Springfield, Bloomington and Champaign-Urbana. Concurrent with the transaction, Insight Midwest concluded a financing raising $1.750 billion in a revolving credit/term loan. At close, $1.4 billion was drawn and used primarily to refinance existing debt as well as debt associated with the expansion of the partnership.

“The acquisition of the Illinois systems is consistent with our strategy of owning markets where we can leverage technical clusters and market size to deploy a bundle of entertainment and telecommunications services efficiently,” Kim D. Kelly, Insight’s Chief Operating and Financial Officer, stated. “Importantly with our bank financing, we are fully funded for all of our capital needs, including telephone.“

Operating Data Results

Revenues increased 96.2% to $476.2 million for the year ended December 31, 2000 compared to $242.7 million for the year ended December 31, 1999 due primarily to the Kentucky acquisition and the consolidation of Insight Ohio. The incremental revenue generated by the Kentucky systems approximated $173.4 million, or 74.3% of the consolidated revenue increase and Insight Ohio accounted for $49.7 million, or 21.3% of the consolidated revenue increase.

Revenues per customer per month averaged $42.92 for the year ended December 31, 2000 compared to $38.44 for the year ended December 31, 1999, primarily reflecting an increase in average monthly basic revenue per customer of $2.45. Average monthly basic revenue per customer averaged $29.72 during the year ended December 31, 2000 compared to $27.27 during the comparable period of 1999, reflecting rate increases associated with the completion of rebuilds. In addition, increased revenue for new services, namely high-speed data and interactive digital video, provided for $2.36 per customer per month for the year ended December 31, 2000.

Programming and other operating costs increased 132.3% to $167.2 million for the year ended December 31, 2000 compared to $72.0 million for the year ended December 31, 1999. The incremental expense generated by the Kentucky systems approximated $62.3 million accounting for 65.4% of the consolidated expense increase and the consolidation of Insight Ohio accounted for approximately $19.0 million or 20.0% of the consolidated expense increase. Excluding these systems, these costs increased by approximately $13.9 million accounting for approximately 14.6% of the total increase, primarily as a result of increased programming rates and additional programming carried by the systems.

Selling, general and administrative expenses increased 72.0% to $94.9 million for the year ended December 31, 2000 compared to $55.2 million for the year ended December 31, 1999. The incremental expense generated by the Kentucky systems approximated $25.5 million accounting for 64.1% of the consolidated expense increase, and the consolidation of Insight Ohio accounted for approximately $10.6 million or 26.6% of the consolidated expense increase. Excluding these systems, these costs increased by approximately $3.6 million accounting for approximately 9.3% of the total increase, primarily reflecting increased marketing activity and corporate expenses associated with new product introductions.

Depreciation and amortization expense increased 80.7% to $236.2 million for the year ended December 31, 2000 compared to $131.3 million for the year ended December 31, 1999. This increase was primarily due to the acquisitions and addition of the cable systems discussed above and additional capital expenditures associated with the rebuilds of our systems, partially offset by a decrease in depreciation expense attributable to a change in estimate as of January 1, 2000 which resulted in assets being depreciated over longer lives.

For the year ended December 31, 2000, an operating loss of $22.1 million was incurred as compared to an operating loss of $35.1 million for the year ended December 31, 1999, primarily for the reasons set forth above. The operating loss for 1999 includes a one-time non-cash compensation expense of $19.3 million which was recorded in the third quarter of 1999.

EBITDA increased 108.6% to $269.3 million for the year ended December 31, 2000 as compared to $129.1 million for the year ended December 31, 1999.

Interest expense, net increased 117.8% to $109.8 million for the year ended December 31, 2000 compared to $50.4 million for the year ended December 31, 1999. The increase was primarily due to higher average outstanding indebtedness related to the Kentucky acquisition and the consolidation of Insight Ohio. Average debt outstanding during the year ended December 31, 2000 was $1.3 billion at an average interest rate of 8.8%.

The benefit for income taxes was $33.8 million for the year ended December 31, 2000. For the year ended December 31, 1999, the tax provision was $31.6 million, which consisted primarily of a one-time, non-recurring charge recorded for deferred taxes upon the exchange of the limited partnership interests in Insight LP for our common stock at the time of our initial public offering.

For the year ended December 31, 2000, the net loss was $42.9 million for the reasons set forth above.

Investment Activity

For the year ended December 31, 2000, we spent $262.2 million in capital expenditures largely to support our network rebuild, digital converter purchases and to a lesser extent, telephony.

It is anticipated that during 2001, we will spend approximately $300 million in capital expenditures, including capital expenditures required for the deployment of telephony. We will be able to fund these capital expenditures through cash generated from operations and borrowings under our credit facility.

2001 Guidance

In 2001, we expect operating cash flow to approximate $328 million representing an increase of 11-12% in their rebuilt Indiana and Kentucky properties, and a 7-8% increase in the recently acquired Illinois systems. We expect to spend approximately $300 million on capital which includes capital for rebuilds in Illinois, telephone deployment, and continued interactive digital expansion.

For the first quarter, we expect revenues of approximately $169 million and operating cash flow of approximately $75 million, representing increases of 47% and 52%, respectively, reflecting continued ARPU growth and the Illinois acquisition.

Insight Communications (NASDAQ: ICCI) is the 8th largest cable operator in the United States, serving approximately 1.4 million subscribers. 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 D. Kelly
Executive VP/COO/CFO
Insight Communications
(917) 286-2300