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Insight Communications Announces Second Quarter 2001 Results

New York – August 07, 2001 –

Insight Communications Company (Nasdaq: ICCI) today announced financial results for the three months ended June 30, 2001. Revenue for the second quarter totaled $175.3 million, an increase of 47.4% over the prior year second quarter, due primarily to the inclusion of the Illinois systems acquired from AT&T, effective January 1, 2001. Operating cash flow for the second quarter totaled $77.1 million, in line with expectations, an increase of 42.6% over the prior year second quarter, due primarily to the inclusion of the AT&T Illinois Systems effective January 1, 2001.

As of June 30, 2001, RGUs (Revenue Generating Units) totaled 1,544,500, or 9.4% higher than the prior year on a same store basis. The rate of RGU growth has nearly doubled, reflecting the advanced state of rebuilds. As of June 30, 2001, interactive digital is available to nearly 800,000 customers, up from 123,000 as of June 30, 2000. Similarly, interactive digital penetration continues to grow as customers climbed to 149,900 as of June 30, 2001, representing a penetration of 18.7% versus 12.0% as of June 30, 2000. Cable modem growth also continues to show significant gains as customers on a same store basis increased to 73,300 as of June 30, 2001 from 27,700 as of June 30, 2000 as penetration increased to 4.6%, doubling from 2.3% the prior year.

"During the second quarter, the impact of expanding multiple service offerings is particularly evident. Our second quarter is typically our weakest in basic subscriber growth given the number of large universities we service. Despite this slightly lower customer base, revenues grew at an annualized rate of 16.0% due to new service offerings,” said Kim D. Kelly, Executive Vice President, Chief Operating and Financial Officer.

“We are on track with our strategy of delivering multiple value-added services to our customers. The early results of our telephone launches, where over 95% of our customers are choosing one bill, further supports our strategy of bundling voice, video and data,” said Michael S. Willner, President and CEO.

Operating data results

Revenue increased $56.4 million or 47.4% to $175.3 million for the three months ended June 30, 2001, from $118.9 million for the three months ended June 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 $45.5 million, which represents 80.6% of the increase in consolidated revenue. Excluding the AT&T Illinois Systems, revenue increased 9.2%, largely due to the sale of new services. Revenue for digital and high-speed data in the existing systems increased by $8.4 million, a combined 136.7% growth rate.

On a pro forma basis including the AT&T Illinois Systems, RGUs (Revenue Generating Units) were approximately 1,544,500 as of June 30, 2001, compared to approximately 1,411,300 as of June 30, 2000. This represents an annualized growth rate of 9.4%.

Average monthly revenue per basic customer, including management fees, was $45.74 for the three months ended June 30, 2001 compared to $43.02 for the three months ended June 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 $5.23 for the three months ended June 30, 2001 from $2.03 for the three months ended June 30, 2000. Excluding the AT&T Illinois Systems, the number of high-speed data service customers increased to approximately 46,400 as of June 30, 2001 from approximately 18,500 as of June 30, 2000, while digital customers increased to approximately 140,200 as of June 30, 2001 from approximately 63,800 as of June 30, 2000.

Programming and other operating costs increased $16.8 million or 40.4% to $58.3 million for the three months ended June 30, 2001, from $41.5 million for the three months ended June 30, 2000. The increase in programming and other operating costs was primarily the result of the AT&T Illinois Systems. The incremental expense resulting from the AT&T Illinois Systems approximated $15.4 million, which represents 91.6% of the increase in consolidated programming and other operating costs. Excluding these systems, programming and other operating costs increased by approximately $1.4 million, accounting for 8.4% of the increase, primarily as a result of increased programming rates and additional programming.

Selling, general and administrative expenses increased $16.6 million or 71.0% to $39.9 million for the three months ended June 30, 2001, from $23.3 million for the three months ended June 30, 2000. The increase in selling, general and administrative expenses was primarily the result of the AT&T Illinois Systems. The incremental selling, general and administrative expenses resulting from the AT&T Illinois Systems approximated $8.9 million, which represents 53.8% of the increase. Excluding these systems, these costs increased by approximately $7.7 million, accounting for 46.2% of the increase, primarily reflecting increased marketing activity and corporate expenses associated with new product introductions.

Depreciation and amortization expense increased $33.9 million or 58.2% to $92.1 million for the three months ended June 30, 2001, from $58.2 million for the three months ended June 30, 2000. The increase in depreciation and amortization expense was primarily the result of the AT&T Illinois Systems. The incremental depreciation and amortization expense resulting from the AT&T Illinois Systems approximated $23.9 million, which represents 70.5% of the consolidated depreciation and amortization increase. Excluding these systems, depreciation and amortization increased by approximately $10.0 million, accounting for 29.5% of the increase, primarily due to capital expenditures made to rebuild the existing cable equipment during previous quarters.

Operating cash flow increased by $23.0 million to $77.1 million, primarily as a result of the acquisition of the AT&T Illinois Systems, which generated approximately $21.2 million or 91.9% 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 $25.9 million or 93.6% to $53.6 million for the three months ended June 30, 2001, from $27.7 million for the three months ended June 30, 2000. The increase in interest expense was primarily the result of higher outstanding debt resulting from the AT&T Illinois Systems and funding of capital expenditures during the past year.

The benefit for income taxes was $12.2 million and $6.6 million for the three months ended June 30, 2001 and 2000, representing effective tax rates of 35.8% and 42.4%.

For the three months ended June 30, 2001, the net loss was $21.9 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 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 Kelly
EVP/COO/CFO
(917) 286-2300