Mediacom LLC
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ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2018 Mediacom LLC 1 Mediacom Way Mediacom Park, New York 10918 (Address of principal executive offices) (845) 443-2600 (Company’s telephone number) IMPORTANT NOTE; THIS DOCUMENT IS FOR INFORMATIONAL PURPOSES ONLY. NEITHER MEDIACOM LLC NOR MEDIACOM CAPITAL CORPORATION IS REQUIRED TO FILE PERIODIC REPORTS WITH THE SECURITY AND EXCHANGE COMMISSION (“SEC”). ACCORDINGLY, THIS DOCUMENT HAS NOT BEEN FILED NOR WILL BE FILED WITH THE SEC AND HAS NOT BEEN PREPARED IN COMPLIANCE WITH ALL APPLICABLE SEC REPORTING REQUIREMENTS, INCLUDING THE DISCLOSURE REQUIREMENTS OF FORM 10-K. MEDIACOM LLC 2018 ANNUAL REPORT TABLE OF CONTENTS Page PART I Item 1. Business ....................................................................................................................................................................... 4 Item 1A. Risk Factors.................................................................................................................................................................. 17 Item 2. Properties ..................................................................................................................................................................... 24 Item 3. Legal Proceedings ........................................................................................................................................................ 24 PART II Item 5. Market for Company’s Common Equity and Related Stockholder Matters ................................................................. 25 Item 6. Selected Financial Data ................................................................................................................................................ 25 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ....................................... 27 Item 7A. Quantitative and Qualitative Disclosures About Market Risk ..................................................................................... 41 Item 8. Financial Statements and Supplementary Data ............................................................................................................ 42 PART III Item 10. Directors, Executive Officers and Corporate Governance ........................................................................................... 64 Item 11. Executive Compensation .............................................................................................................................................. 66 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ..................... 66 Item 13. Certain Relationships and Related Transactions, and Director Independence ............................................................. 66 PART IV Item 15. Exhibits, Financial Statement Schedules...................................................................................................................... 67 Mediacom LLC is a New York limited liability company and a wholly-owned subsidiary of Mediacom Communications Corporation, a Delaware corporation. Mediacom Capital Corporation is a New York corporation and a wholly-owned subsidiary of Mediacom LLC. Mediacom Capital Corporation was formed for the sole purpose of acting as co-issuer with Mediacom LLC of debt securities and does not conduct operations of its own. References in this Annual Report to “we,” “us,” or “our” are to Mediacom LLC and its direct and indirect subsidiaries (including Mediacom Capital Corporation), unless the context specifies or requires otherwise. References in this Annual Report to “Mediacom” or “MCC” are to Mediacom Communications Corporation. 2 Cautionary Statement Regarding Forward-Looking Statements In this Annual Report, we state our beliefs of future events and of our future financial performance. In some cases, you can identify those so-called “forward-looking statements” by words such as “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should” or “will,” or the negative of those and other comparable words. These forward-looking statements are not guarantees of future performance or results, and are subject to risks and uncertainties that could cause actual results to differ materially from historical results or those we anticipate as a result of various factors, many of which are beyond our control. Factors that may cause such differences to occur include, but are not limited to: • increased levels of competition from direct broadcast satellite operators, local phone companies, other cable providers, wireless communications companies, providers of video delivered over the Internet including competitors using over-the- top (“OTT”) delivery and existing licensed content providers, and other services that compete for our customers; • lower demand for our services from existing and potential residential and business customers that may result from increased competition, weakened economic conditions or other factors; • continued increases in video programming costs and our ability to fully offset the effects of these higher costs; • an acceleration in bandwidth consumption by high-speed data customers greater than current expectations, that could require unplanned capital expenditures; • our ability to continue to grow our business services customer base and associated revenues; • our ability to successfully adopt new technologies and introduce new products and services, or enhance existing ones, to meet customer demands and preferences; • our ability to secure hardware, software and operational support for the delivery of products and services to consumers; • disruptions or failures of our network and information systems, including those caused by “cyber-attacks,” natural disasters or other events outside our control; • our reliance on certain intellectual property rights, and not infringing on the intellectual property rights of others; • our ability to generate sufficient cash flows from operations to meet our debt service obligations and make necessary capital investments; • our ability to refinance future debt maturities on favorable terms, if at all; • our ability to comply with all covenants in our credit facility, the failure to comply with some of which could result in an acceleration of our indebtedness; • changes in assumptions underlying our critical accounting policies; and • changes in legislative and regulatory matters that may cause us to incur additional costs and expenses or increase the level of competition we face. Statements included in this Annual Report are based upon information known to us as of the date hereof, and we assume no obligation to update or alter our forward-looking statements made in this Annual Report, whether as a result of new information, future events or otherwise. 3 PART I ITEM 1. BUSINESS Mediacom Communications Corporation We are a wholly-owned subsidiary of Mediacom Communications Corporation (“Mediacom” or “MCC”). MCC is the fifth largest cable operator in the U.S., serving almost 1.4 million residential and business customers, primarily in smaller markets in the Midwest and Southeast. MCC offers a wide array of information, communications and entertainment services to households and businesses, including video, high-speed data (“HSD”), phone, and home security and automation. Through Mediacom Business, MCC provides scalable broadband communications solutions to commercial and public sector customers of all sizes, and sells advertising and production services under the OnMedia brand. MCC’s cable systems are owned and operated through our operating subsidiaries and those of Mediacom Broadband LLC (“Mediacom Broadband”), another wholly-owned subsidiary of MCC. As of December 31, 2018, MCC’s cable systems passed an estimated 2.9 million homes and served approximately 776,000 video customers, 1,264,000 HSD customers and 614,000 phone customers, aggregating 2,654,000 primary service units (“PSUs”). MCC is a privately-owned company. An entity wholly-owned by Rocco B. Commisso and related parties is the sole shareholder of MCC, a C corporation. Mr. Commisso is MCC’s founder, Chairman and Chief Executive Officer. MCC manages us pursuant to management agreements with our operating subsidiaries. See Note 9 in our Notes to Consolidated Financial Statements. Mediacom LLC We are a holding company and do not have any operations or hold any assets other than our investments in our operating subsidiaries. As of December 31, 2018, our cable systems passed an estimated 1.4 million homes and served approximately 348,000 video customers, 565,000 HSD customers and 275,000 phone customers, aggregating 1,188,000 PSUs. As of the same date, our cable systems had 604,000 residential and business customer relationships. Our phone number is (845) 443-2600 and our principal executive offices are located at 1 Mediacom Way, Mediacom Park, New York, 10918. 2018 Developments 2018 Financing Activity On March 29, 2018, we entered into an amended and restated credit agreement under our bank credit facility that, among other things, provided for an additional $166.0 million of term loans and extended the maturity and amended the terms of certain term loans (together “the amended term loans”). On the same date, the full additional amounts of the amended term loans were borrowed and the proceeds, along with available cash were used to repay our entire outstanding balance under our existing revolving credit