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S-4
CHARTER COMMUNICATIONS HOLDINGS CAPITAL CORP filed this Form S-4 on 01/25/2000
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<PAGE>   508
 
                       RIFKIN CABLE INCOME PARTNERS L.P.
 
                         NOTES TO FINANCIAL STATEMENTS
                                  (UNAUDITED)
 
1.  BASIS OF PRESENTATION AND ACQUISITION BY INTERLINK COMMUNICATION PARTNERS,
LLP
 
     The accompanying financial statements are unaudited. However, in the
opinion of management, the financial statements reflects all adjustments,
consisting of normal recurring adjustments, necessary for fair presentation in
accordance with generally accepted accounting principles. Interim results of
operations are not necessarily indicative of results for the full year. The
accompanying financial statements should be read in conjunction with the
December 31, 1998 audited financial statements of Rifkin Cable Income Partners,
L.P.(the "Partnership" or "RCIP").
 
     As of December 31, 1998, InterLink Communication Partners, LLP ("ICP")
agreed to purchase all of the Partnership interests, for a total purchase price
of approximately $24.7 million. The acquisition of the Partnership by ICP was
accounted for as a purchase and a new basis of accounting was established
effective January 1, 1999. The new basis resulted in assets and liabilities
being recorded at their fair market value resulting in a increase in property,
plant, and equipment and franchise costs of approximately $6.4 million and
approximately $11.7 million, respectively. Accordingly, the 1999 interim
unaudited financial statements are not comparable to the 1998 interim unaudited
or the December 31, 1998 audited financial statements of the Partnership, which
are based on historical costs.
 
     Effective April 1, 1999, ICP completed the purchase of the remaining
general partner interest in the Partnership and the Partnership was merged into
ICP and ceased to exist as a separate legal entity. RCIP's financial statements
subsequent to that date represent a divisional carve-out from ICP. These
financial statements include all the direct costs of operating RCIP's business;
however, certain assets, liabilities and costs not specifically related to the
Partnership's activities were allocated and reflected in the financial position
as of September 13, 1999, and the results of its operations and its cash flows
for the period January 1, 1999 to September 13, 1999. In addition, receivables
and payables to ICP are presented in the accompanying financial statements net
as amounts due to/due from intercompany. Management believes these allocations
were made on a reasonable basis. Nonetheless, the financial information included
herein may not necessarily reflect what the financial position and results of
operations of the Partnership would have been as a stand-alone entity.
 
2.  ACQUISITION BY CHARTER COMMUNICATIONS HOLDINGS, LLC
 
     On February 12, 1999, ICP signed a letter of intent to sell all of its
partnership interests, including RCIP, to Charter Communications Holdings, LLC
("Charter"). On April 26, 1999, ICP signed a definitive Purchase and Sales
Agreement with Charter for the sale of the individual partner's interest. The
sales transaction closed on September 13, 1999. These statements represent the
Partnership just prior to the transaction and do not reflect any adjustments
related thereto.
 
3.  LITIGATION
 
     The Partnership could possible be named as defendant in various actions and
proceedings arising from the normal course of business. In all such cases, the
Partnership will vigorously defend itself against the litigation and, where
appropriate, will file counterclaims. Although the eventual outcome of potential
lawsuits cannot be predicted, it is management's opinion that any such lawsuit
will not result in liabilities that would have a material effect on the
partnership's financial position or results of operations.
 
                                      F-279