Current Report
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 3, 2009
RCN Corporation
(Exact name of registrant as specified in its charter)
| Delaware | 001-16805 | 22-3498533 | ||
|
(State or other jurisdiction
of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
|
196 Van Buren Street
Herndon, VA |
20170 |
|
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code:
(703) 434-8200
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On November 3, 2009, RCN Corporation (collectively, with its direct and indirect subsidiaries,
“RCN”), announced its financial results for the quarter ended September 30, 2009. A copy of the
press release containing the announcement is included as Exhibit 99.1 to this report and is
incorporated herein by reference. RCN does not intend for this Item 2.02 or Exhibit 99.1 to be
treated as “filed” under the Securities and Exchange Act of 1934, as amended, or incorporated by
reference into its filings under the Securities Act of 1933, as amended.
Item 7.01 Regulation FD Disclosure.
RCN prepared a slide presentation in connection with RCN’s earnings release for the quarter
ended September 30, 2009. A copy of the slide presentation is included as Exhibit 99.2 to this
report and is incorporated herein by reference. RCN does not intend for this Item 7.01 or Exhibit
99.2 to be treated as “filed” under the Securities and Exchange Act of 1934, as amended, or
incorporated by reference into its filings under the Securities Act of 1933, as amended.
Item 9.01 Financial Statements and Exhibits.
(d)
Exhibits
99.1
RCN Corporation Earnings Press Release dated November 3, 2009.
99.2
RCN Corporation Slide Presentation dated November 3, 2009.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
RCN CORPORATION
By:
/s/ Michael T. Sicoli
Name:
Michael T. Sicoli
Title:
Executive Vice President and Chief
Financial Officer
Date: November 3, 2009
Exhibit Index
Exhibit
No.
Description
99.1
RCN Corporation Earnings Press Release dated November 3, 2009.
99.2
RCN Corporation Slide Presentation dated November 3, 2009.
Exhibit 99.1
RCN Reports Third Quarter 2009 Results
Free Cash Flow of $11 Million Generated in Quarter; $29 Million YTD
Revenue of $192 Million, EBITDA of $56 Million, up 3% and 12% Y-o-Y, Respectively
EBITDA margin expands by nearly 250 basis points Y-o-Y to over 29%
HERNDON, Va., November 3, 2009
—
RCN Corporation
(NASDAQ: RCNI) today announced third quarter 2009
results.
RCN Corporation
is a leading provider of all-digital and
high-definition video
, high-speed
internet, and premium voice services to residential and small-medium business customers, in
Philadelphia, Lehigh Valley, PA, New York, Boston, Chicago and Washington D.C., as well as
high-capacity transport services
to carrier and large enterprise customers.
“We are executing very well against our 2009 objectives, building free cash flow to $29 million
year-to-date while still fueling our business for future growth,” stated Peter D. Aquino, President
and Chief Executive Officer. “We have successfully managed through nearly a full year of economic
uncertainty, and stayed on pace to expand margins, invest in product development, and make process
improvements. In our residential business, Project Analog Crush
SM
is now complete in
all of our metro markets and we are midway through our Lehigh Valley Crush. By year end, RCN will
be the largest MSO in the country to be 100% digital, providing over 100 HD channels, an expansive
VOD library, and a robust International tier, with channel capacity for future growth. In
addition, the RCN/TiVo HD DVR remains on track for a first quarter 2010 launch, and we are
accelerating our DOCSIS 3.0 deployment to address the huge SMB opportunity in RCN’s metro markets.
In the RCN Metro segment, we continue to capture demand for high capacity bandwidth from large
carrier and enterprise customers, leveraging our position as a premier regional service provider
with best-in-class Metro Ethernet and on-net fiber connectivity in 5 of the top 10 metro markets in
the country.”
Third Quarter Review
Following are highlights of third quarter 2009 results for consolidated RCN and for the company’s
two reporting segments: Residential/Small-Medium Business, comprised of the RCN and RCN Business
Services business units; and RCN Metro Optical Networks.
Consolidated Results
| • |
Revenue.
Total revenue of $192 million increased 3% from $187 million in the third quarter
of 2008 and was flat compared to $192 million in the second quarter of 2009.
|
|
| • |
EBITDA.
EBITDA of $56.4 million increased 12% from $50 million in the third quarter of 2008
and increased 2% from $55.5 million in the second quarter of 2009. EBITDA margin of 29%
expanded by nearly 250 basis points from the third quarter of 2008 and 50 basis points from
the second quarter of 2009. EBITDA is a non-GAAP financial measure — see “Non-GAAP Measures”
below.
|
|
| • |
Capital Expenditures.
Capital expenditures were $34 million compared to $34 million in the
third quarter of 2008 and $25 million in the second quarter of 2009.
|
1
| • |
Free Cash Flow.
Free cash flow was $11 million compared to negative $2 million in the
third quarter of 2008 and $10 million in the second quarter of 2009. Free cash flow is a
non-GAAP financial measure — see “Non-GAAP Measures” below.
|
|
| • |
Share Repurchases.
RCN repurchased nearly 85,000 shares of common stock during the third
quarter at an average price of $6.94, or an aggregate value of $0.6 million. To date, RCN has
repurchased over 2.4 million shares under its $25 million repurchase authorization, for an
aggregate value of approximately $17 million, leaving approximately $8 million remaining under
the program.
|
Residential/Small-Medium Business Segment
| • |
Revenue.
Residential/Small-Medium Business revenue of $144 million was flat compared to
$144 million in the third quarter of 2008 and decreased 1% from $145 million in the second
quarter of 2009. Year-over-year revenue comparisons reflect the addition of 2,000 customers
and flat average revenue per customer (“ARPC”) of $111.
|
|
| • |
EBITDA.
Residential/Small-Medium Business EBITDA of $40 million increased 9% from $37
million in the third quarter of 2008, and was flat compared to the second quarter of 2009.
EBITDA margin of 28% expanded by over 200 basis points from the third quarter of 2008 and
approximately 25 basis points from the second quarter of 2009. Third quarter 2009 EBITDA
includes $1.8 million in direct cost benefits related to the settlement of ordinary course
network cost disputes.
|
|
| • |
Capital Expenditures.
Residential/Small-Medium Business capital expenditures were $25
million, down from $27 million in the third quarter of 2008 and up from $16 million in the
second quarter of 2009.
|
|
| • |
Customers, RGUs and Digital Penetration.
Residential/Small-Medium Business customers of
approximately 430,000 increased 2,000 compared to the third quarter of 2008 and were flat
compared to the second quarter of 2009. Total revenue generating units of approximately
903,000 decreased by 12,000 compared to the third quarter of 2008 and decreased by 8,000
compared to the second quarter of 2009, as continued growth in video and data RGU’s was offset
by a reduction in voice RGU’s, consistent with trends for highly-penetrated landline voice
providers. Third quarter 2009 bundle rate and digital video penetration rate remained stable
at 67% and 91%, respectively.
|
RCN Metro Optical Networks Segment
| • |
Revenue.
RCN Metro revenue of $48 million increased 11% from $43 million in the third
quarter of 2008, and 2% from $47 million in the second quarter of 2009, driven primarily by
continued strength in transport services as well as growth in data and Internet services.
|
|
| • |
EBITDA.
RCN Metro EBITDA of $17 million increased 21% from $14 million in the third quarter
of 2008 and 6% from $16 million in the second quarter of 2009. EBITDA margin of 34% grew by
nearly 300 basis points from the third quarter of 2008 and over 130 basis points from the
second quarter of 2009. EBITDA and EBITDA margin increased primarily as a result of revenue
growth and continued realization of synergies.
|
|
| • |
Capital Expenditures.
RCN Metro capital expenditures were $9 million compared to $6 million
in the third quarter of 2008 and $9 million in the second quarter of 2009.
|
Reported Results
Revenue increased to $192 million in the third quarter of 2009, compared to $187 million in the
third quarter of 2008 and $192 million in the second quarter of 2009. Net loss was $6 million in
the third quarter of 2009, compared to $15 million in the third quarter of 2008 and $9 million in
the second quarter of 2009.
Michael T. Sicoli, Chief Financial Officer of RCN, stated, “Our strategy of investing to drive
consistent revenue growth and margin expansion while maintaining a stable level of capital
expenditures is delivering significant growth in free cash flow. Year to date, we have generated
$29 million in free cash flow, a $38 million improvement compared to the same period in 2008. We
will continue to focus on optimizing our balanced geographic and customer portfolio for growth and
further strengthening our operational and financial flexibility. We remain on track to achieve our
2009 objectives of revenue and EBITDA growth and solid free cash flow generation.”
2
Non-GAAP Measures
In addition to the results presented in accordance with Generally Accepted Accounting Principles
(“GAAP”) throughout this press release, RCN has presented non-GAAP financial measures, such as
EBITDA, EBITDA Margin, Free Cash Flow and ARPC. RCN believes that these non-GAAP measures, viewed
in addition to and not in lieu of its reported GAAP results, provide useful information to
investors because they are an integral part of RCN’s internal evaluation of operating performance.
In addition, they are measures that RCN uses to evaluate management’s effectiveness.
Reconciliations to comparable GAAP measures as well as definitions begin on page 8. RCN’s non-GAAP
financial measures may not be comparable to similarly titled measures presented by other companies.
Third Quarter Conference Call
Management will conduct a conference call to discuss third quarter 2009 results today at 08:30 AM
Eastern time. Please be sure to dial into the call 10 to 15 minutes before start time. The dial in
number for the call is (877) 862-3628, conference ID: 34787863. The call is also being webcast
with an accompanying slide presentation, which can be accessed at
http://investor.rcn.com/events.cfm.
A replay of this conference call will be available from 9:30 AM today until 11:59 PM Eastern time
on November 10. The dial in number for the replay is 706-645-9291; the conference ID is the same as
above. The webcast and slides will also be archived on RCN’s website.
About RCN Corporation
RCN Corporation (NASDAQ: RCNI),
www.rcn.com
, is a competitive broadband services provider
delivering all-digital and high-definition video, high-speed internet and premium voice services to
residential and small-medium business customers under the brand names of RCN and RCN Business
Services, respectively. In addition, through its RCN Metro Optical Networks business unit, RCN
delivers fiber-based high-capacity data transport services to large commercial customers, primarily
large enterprises and carriers, targeting the metropolitan central business districts in the
company’s geographic markets. RCN’s primary service areas include Washington, D.C., Philadelphia,
Lehigh Valley (PA), New York City, Boston and Chicago. (RCNI-Q)
RCN Forward-Looking Statements
This press release contains forward-looking statements regarding future events and future
performance of RCN that involve risks and uncertainties that could materially affect actual
results. This information is qualified in its entirety by cautionary statements and risk factors
disclosure contained in certain of RCN’s Securities and Exchange Commission filings. For a
description of certain factors that could cause actual results to vary from current expectations
and forward-looking statements contained in this press release, refer to documents that RCN files
from time to time with the Securities and Exchange Commission.
(Tables follow)
3
RCN CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions)
| For the three months ended | ||||||||
| September 30, 2009 | September 30, 2008 | |||||||
|
|
||||||||
|
Revenues
|
$ | 191.9 | $ | 187.1 | ||||
|
Costs and expenses:
|
||||||||
|
Direct expenses
|
66.7 | 64.6 | ||||||
|
Selling, general and administrative
(including stock-based compensation
expense)
|
70.9 | 74.7 | ||||||
|
Exit costs and restructuring charges
|
0.3 | 0.8 | ||||||
|
Depreciation and amortization
|
49.4 | 49.6 | ||||||
|
|
||||||||
|
|
||||||||
|
Operating income (loss)
|
$ | 4.7 | $ | (2.6 | ) | |||
|
|
||||||||
|
Investment income
|
— | 0.5 | ||||||
|
Interest expense
|
(10.4 | ) | (12.6 | ) | ||||
|
|
||||||||
|
|
||||||||
|
Net loss
|
$ | (5.7 | ) | $ | (14.7 | ) | ||
|
|
||||||||
4
RCN CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in millions)
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in millions)
| * |
RCN has changed the classification of short-term securities totaling $30.1 million at December 31, 2008 from cash and cash
equivalents to short-term investments to conform to the Company’s policy. While these securities matured during the three
months ended March 31, 2009, they had original maturities of greater than three months at the time of purchase.
|
5
RCN CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
| For the nine months ended | ||||||||
| September 30, 2009 | September 30, 2008 | |||||||
|
Cash flows from operating activities:
|
||||||||
|
Net loss from continuing operations
|
$ | (24.7 | ) | (57.6 | ) | |||
|
|
||||||||
|
Adjustments to reconcile net loss to net cash provided
by operating
activities:
|
||||||||
|
Non cash stock-based compensation expense
|
6.6 | 11.5 | ||||||
|
Depreciation and amortization
|
148.7 | 148.7 | ||||||
|
Other, net
|
2.4 | 1.4 | ||||||
|
Net change in certain assets and other liabilities
|
(17.6 | ) | (2.2 | ) | ||||
|
|
||||||||
|
|
||||||||
|
Net cash provided by operating activities
|
115.3 | 101.9 | ||||||
|
|
||||||||
|
Cash flows from investing activities:
|
||||||||
|
Additions to property, plant and equipment
|
(87.5 | ) | (111.9 | ) | ||||
|
Decrease in short-term investments
|
7.1 | 7.7 | ||||||
|
Proceeds from sales of fixed assets
|
0.8 | 1.4 | ||||||
|
Proceeds from sale of discontinued operations
|
— | 2.5 | ||||||
|
Decrease in restricted investments
|
3.7 | 7.4 | ||||||
|
|
||||||||
|
|
||||||||
|
Net cash used in investing activities
|
(76.0 | ) | (92.9 | ) | ||||
|
|
||||||||
|
Cash flows from financing activities:
|
||||||||
|
Payments of long-term debt, including capital leases
|
(5.5 | ) | (5.5 | ) | ||||
|
Dividend payments
|
(0.6 | ) | (1.4 | ) | ||||
|
Cost of common shares repurchased
|
(6.3 | ) | (3.7 | ) | ||||
|
Other, net
|
— | 0.3 | ||||||
|
|
||||||||
|
|
||||||||
|
Net cash used in financing activities
|
(12.5 | ) | (10.3 | ) | ||||
|
|
||||||||
|
Net increase in cash and cash equivalents
|
26.9 | (1.2 | ) | |||||
|
Cash and cash equivalents at beginning of the period
|
10.8 | 21.8 | ||||||
|
|
||||||||
|
|
||||||||
|
Cash and cash equivalents at end of the period
|
$ | 37.6 | $ | 20.6 | ||||
|
|
||||||||
6
RESIDENTIAL / SMALL-MEDIUM BUSINESS SEGMENT OPERATING RESULTS
| For the three months ended | ||||||||||||
| (dollars in millions) | September 30, 2009 | June 30, 2009 | September 30, 2008 | |||||||||
|
|
||||||||||||
|
Video
|
$ | 78.6 | $ | 78.5 | $ | 74.9 | ||||||
|
Data
|
34.7 | 35.8 | 36.1 | |||||||||
|
Voice
|
27.3 | 27.4 | 28.6 | |||||||||
|
Recip Comp/Other
|
3.4 | 3.5 | 4.1 | |||||||||
|
|
||||||||||||
|
Total Revenue
|
143.9 | 145.1 | 143.7 | |||||||||
|
|
||||||||||||
|
Direct expenses
|
49.5 | 52.1 | 48.9 | |||||||||
|
Selling, general and administrative
(1)
|
54.5 | 53.1 | 58.0 | |||||||||
|
|
||||||||||||
|
|
||||||||||||
|
EBITDA
|
$ | 39.9 | $ | 39.9 | $ | 36.7 | ||||||
|
EBITDA Margin
|
27.8 | % | 27.5 | % | 25.6 | % | ||||||
|
|
||||||||||||
|
Capital Expenditures
|
$ | 25.4 | $ | 15.8 | $ | 27.3 | ||||||
|
|
||||||||||||
|
Key Metrics
(customers & RGUs in thousands) |
||||||||||||
|
|
||||||||||||
|
Video RGUs
|
367 | 368 | 366 | |||||||||
|
Data RGUs
|
309 | 307 | 301 | |||||||||
|
Voice RGUs
|
227 | 236 | 247 | |||||||||
|
|
||||||||||||
|
Total RGUs (Excluding Digital)
|
903 | 911 | 915 | |||||||||
|
|
||||||||||||
|
Customers
|
430 | 430 | 428 | |||||||||
|
Average Revenue Per Customer
|
$ | 111 | $ | 111 | $ | 111 | ||||||
|
Digital Penetration
|
91 | % | 91 | % | 78 | % | ||||||
RCN METRO OPTICAL NETWORKS SEGMENT OPERATING RESULTS
| For the three months ended | ||||||||||||
| (dollars in millions) | September 30, 2009 | June 30, 2009 | September 30, 2008 | |||||||||
|
|
||||||||||||
|
Transport Services
|
$ | 36.9 | $ | 36.0 | $ | 33.3 | ||||||
|
Data and Internet Services
|
1.5 | 1.1 | 0.6 | |||||||||
|
Colocation
|
2.9 | 2.9 | 3.0 | |||||||||
|
Leased Services
|
5.1 | 5.2 | 4.9 | |||||||||
|
Installation and Other
|
1.6 | 1.9 | 1.6 | |||||||||
|
|
||||||||||||
|
Total Revenue
|
48.0 | 47.2 | 43.4 | |||||||||
|
|
||||||||||||
|
Direct expenses
|
17.2 | 17.1 | 15.7 | |||||||||
|
Selling, general and administrative
(1)
|
14.3 | 14.5 | 14.0 | |||||||||
|
|
||||||||||||
|
|
||||||||||||
|
EBITDA
|
$ | 16.5 | $ | 15.6 | $ | 13.6 | ||||||
|
EBITDA Margin
|
34.3 | % | 33.0 | % | 31.5 | % | ||||||
|
|
||||||||||||
|
Capital Expenditures
|
$ | 8.8 | $ | 9.2 | $ | 6.4 | ||||||
| (1) |
Excludes non cash stock-based compensation expense
|
7
RCN Corporation
Non-GAAP Reconciliations
Non-GAAP Reconciliations
(1) EBITDA
EBITDA is defined as net income (loss) plus income tax benefit (expense), other income (expense)
net, interest expense, investment income, depreciation and
amortization, non cash stock-based
compensation expense and other special items including impairments, exit costs and other charges.
EBITDA margin represents EBITDA divided by total revenues. We believe that EBITDA provides useful
information to investors because it is an indicator of the strength and performance of our ongoing
business operations, including our ability to fund discretionary spending such as capital
expenditures and other investments and our ability to incur and service debt. While depreciation
and amortization are considered operating costs under generally accepted accounting principles,
these expenses represent non cash current period allocation of costs associated with long-lived
assets acquired or constructed in prior periods. EBITDA is a calculation commonly used as a basis
for investors, analysts and credit rating agencies to evaluate and compare the periodic and future
operating performance and value of companies within the cable industry. EBITDA, as defined above,
may not be similar to EBITDA measures of other companies, is not a measurement under accounting
principles generally accepted in the United States and should be considered in addition to, but not
as a substitute for, the information contained in our statements of operations.
CONSOLIDATED
| For the three months ended | ||||||||||||
| (dollars in millions) | September 30, 2009 | June 30, 2009 | September 30, 2008 | |||||||||
|
Net loss
|
$ | (5.7 | ) | $ | (9.4 | ) | $ | (14.7 | ) | |||
|
Income tax expense
|
— | 0.8 | — | |||||||||
|
Other expense, net
|
— | 0.3 | — | |||||||||
|
Interest expense
|
10.4 | 11.0 | 12.6 | |||||||||
|
Investment income
|
— | (0.1 | ) | (0.5 | ) | |||||||
|
Depreciation and amortization
|
49.4 | 50.8 | 49.6 | |||||||||
|
Non cash stock-based compensation expense
|
2.1 | 2.1 | 2.6 | |||||||||
|
Exit costs and restructuring charges
|
0.3 | — | 0.8 | |||||||||
|
|
||||||||||||
|
EBITDA
|
$ | 56.4 | $ | 55.5 | $ | 50.4 | ||||||
|
EBITDA Margin
|
29.4 | % | 28.9 | % | 26.9 | % | ||||||
RESIDENTIAL / SMALL-MEDIUM BUSINESS
| For the three months ended | ||||||||||||
| (dollars in millions) | September 30, 2009 | June 30, 2009 | September 30, 2008 | |||||||||
|
Operating loss
|
$ | (2.4 | ) | $ | (3.9 | ) | $ | (8.1 | ) | |||
|
Depreciation and amortization
|
40.5 | 42.2 | 42.3 | |||||||||
|
Non cash stock-based compensation expense
|
1.6 | 1.6 | 2.0 | |||||||||
|
Exit costs and restructuring charges
|
0.3 | — | 0.5 | |||||||||
|
|
||||||||||||
|
EBITDA
|
$ | 39.9 | $ | 39.9 | $ | 36.7 | ||||||
|
EBITDA Margin
|
27.8 | % | 27.5 | % | 25.6 | % | ||||||
RCN METRO OPTICAL NETWORKS
| For the three months ended | ||||||||||||
| (dollars in millions) | September 30, 2009 | June 30, 2009 | September 30, 2008 | |||||||||
|
Operating income
|
$ | 7.1 | $ | 6.5 | $ | 5.4 | ||||||
|
Depreciation and amortization
|
8.9 | 8.5 | 7.3 | |||||||||
|
Non cash stock-based compensation expense
|
0.5 | 0.5 | 0.6 | |||||||||
|
Exit costs and restructuring charges
|
— | — | 0.4 | |||||||||
|
|
||||||||||||
|
EBITDA
|
$ | 16.5 | $ | 15.6 | $ | 13.6 | ||||||
|
EBITDA Margin
|
34.3 | % | 33.0 | % | 31.5 | % | ||||||
8
(2) ARPC
Average monthly revenue per customer, or ARPC, is an industry metric that measures revenues,
excluding Metro and other residential revenue (consisting of dial-up, reciprocal compensation and
web hosting revenue) per period divided by the average number of customers during that period. We
believe that ARPC provides useful information concerning the appeal of our service offerings and
our rate plans. ARPC, as defined above, may not be similar to ARPC measures of other companies, is
not a measurement under accounting principles generally accepted in the United States and should be
considered in addition to, but not as a substitute for, the information contained in our statements
of operations.
| For the three months ended | ||||||||||||
| (dollars in millions, except ARPC) | September 30, 2009 | June 30, 2009 | September 30, 2008 | |||||||||
|
Total Revenues
|
$ | 191.9 | $ | 192.3 | $ | 187.1 | ||||||
|
Less: Metro Revenue
|
(48.0 | ) | (47.2 | ) | (43.4 | ) | ||||||
|
Less: Other Residential Revenue
|
(1.8 | ) | (1.9 | ) | (2.6 | ) | ||||||
|
|
||||||||||||
|
Customer Revenues
|
$ | 142.1 | $ | 143.2 | $ | 141.1 | ||||||
|
|
||||||||||||
|
ARPC
|
$ | 111 | $ | 111 | $ | 111 | ||||||
(3) Free Cash Flow
Free cash flow is defined as net cash from operating activities, plus net cash from investing
activities, activity in short-term investments and restricted investments, minus proceeds from
discontinued operations. We believe that free cash flow provides useful information to investors,
analysts and our management about the cash generated by our core operations after interest and our
ability to fund scheduled debt maturities and other financing activities. Free cash flow, as
defined above, may not be comparable to free cash flow measures of other companies, is not a
measurement under accounting principles generally accepted in the United States and should be
considered in addition to, but not as a substitute for, the information contained in our statements
of cash flows.
| For the nine months | ||||||||||||||||
| For the three months ended | ended | |||||||||||||||
| September 30, | June 30, | September 30, | September 30, | |||||||||||||
| (dollars in millions) | 2009 | 2009 | 2008 | 2009 | ||||||||||||
|
Net cash provided by operating activities
|
$ | 49.0 | $ | 36.5 | $ | 42.3 | $ | 115.3 | ||||||||
|
Net cash used in investing activities
|
(30.7 | ) | (26.8 | ) | (68.2 | ) | (76.0 | ) | ||||||||
|
(Decrease) increase in short-term investments
|
(7.2 | ) | 0.1 | 24.2 | (7.1 | ) | ||||||||||
|
Decrease in restricted investments
|
— | — | — | (3.7 | ) | |||||||||||
|
Change in accrued interest on short-term
investments
|
— | 0.1 | — | 0.1 | ||||||||||||
|
|
||||||||||||||||
|
Free Cash Flow
|
$ | 11.0 | $ | 9.9 | $ | (1.7 | ) | $ | 28.6 | |||||||
Contact:
RCN
Richard Ramlall
SVP Strategic External Affairs and Programming
(703) 434-8430
Richard Ramlall
SVP Strategic External Affairs and Programming
(703) 434-8430
Lippert/Heilshorn & Associates
Carolyn Capaccio
(212) 838-3777
ccapaccio@lhai.com
Carolyn Capaccio
(212) 838-3777
ccapaccio@lhai.com
9
Exhibit 99.2
| 1 Third Quarter 2009 Results Supplemental Information November 3, 2009 |
| 2 "Safe Harbor" Statement Caution Concerning Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify those so-called "forward-looking statements" by words such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue," or the negative of those words and other comparable words. We wish to take advantage of "safe harbor" provided for by the Private Securities Litigation Reform Act of 1995 and we caution you that actual events or results may differ materially from the expectations we express in our forward-looking statements as a result of various risks and uncertainties, many of which are beyond our control. Factors that could cause our actual results to differ materially from these forward-looking statements, include: (1) changes in laws and regulations, (2) changes in the competitive environment, (3) changes in technology, (4) franchise related matters, (5) market conditions that may adversely affect the availability of debt and equity financing for working capital, capital expenditures or other purposes, (6) demand for the programming content we distribute or continued access to programming content, (7) general economic conditions, and (8) other risks described from time to time in reports and other documents we file with the Securities and Exchange Commission. Non-GAAP Financial Measures This presentation contains certain non-GAAP financial measures. Definitions and reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company's Web site at www.rcn.com. |
| 3 Q309 Highlights Revenue +3%; EBITDA +12% Y-o-Y Positive Free Cash Flow: $29M YTD RCN Metro accelerating contribution Continue to invest in broadband infrastructure and product enhancements: Analog Crush TiVo DOCSIS 3.0 Colo / Data Center expansion Low latency routes Revenue & EBITDA EBITDA Mix ($ in millions) Note: Totals may not add due to rounding YTD 3Q08 YTD 3Q09 |
| 4 Residential / SMB Update Customers RGUs (Customers and RGUs in 000s) Note: Totals may not add due to rounding Expansive Fiber / Coax network reaching 1.4M marketable homes ~31% customer penetration Largest MSO in the country to be 100% digital Continued performance in key metrics DOCSIS 3.0 services go live in Q4 for New York and Boston SMB customers |
| 5 RCN Metro Update Revenue +11%; EBITDA +21% Y-o-Y EBITDA margin up ~300 bps to 34% Selected as Extranet provider for Chicago Board Option Exchange (CBOE) Building low latency ring for Financial Services firms in data-center rich Northern NJ / NY Received Atlantic-ACM customer satisfaction survey awards |
| 6 Consolidated Results Revenue ($ in millions) EBITDA +3% Y-o-Y +12% Y-o-Y Note: Totals may not add due to rounding. EBITDA Margin Capex |
| 7 Residential / SMB Results Revenue ($ in millions) EBITDA Note: Totals may not add due to rounding. EBITDA Margin Capex |
| 8 Revenue RCN Metro Results ($ in millions) EBITDA Note: Totals may not add due to rounding. EBITDA Margin Capex |
| 9 Liquidity / Debt Position Free Cash Flow Cash & Short-Term Investments Leverage Ratios Debt Maturity Profile (1) Calculated on a trailing 12 months basis, pro forma for NEON Note: Totals may not add due to rounding. ($ in millions) (1) |