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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>   661
                          FALCON COMMUNICATIONS, L.P.
                   (SUCCESSOR TO FALCON HOLDING GROUP, L.P.)
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
under the plans are subject to closing of the sale to Charter, will be
determined based on the final working capital and debt balances of the
Partnership and will be paid from net sale proceeds. The total recorded deferred
compensation expense of $44.6 million under these plans is included in accrued
expenses.
 
     In addition to the amounts expected to be paid pursuant to the plans,
management currently expects to pay from net sale proceeds additional bonuses to
certain employees in the aggregate amount of approximately $22 million
contingent upon the closing of the sale to Charter. Such amounts will be
reflected in the condensed consolidated financial statements when the closing of
the sale to Charter has occurred.
 
NOTE 5 -- ACQUISITIONS
 
     In March 1998, the Partnership acquired substantially all of the assets of
Falcon Classic Cable Income Properties, L.P. As discussed in Note 1, on
September 30, 1998 the Partnership acquired the TCI systems and the Falcon Video
systems in accordance with the Contribution Agreement. The following unaudited
condensed consolidated pro forma statement of operations presents the
consolidated results of operations of the Partnership as if the acquisitions had
occurred at January 1, 1998 and is not necessarily indicative of what would have
occurred had the acquisitions been made as of that date or of results which may
occur in the future.
 

<TABLE>
<CAPTION>
                                                             NINE
                                                         MONTHS ENDED
                                                         SEPTEMBER 30,
                                                             1998
                                                         -------------
                                                          (DOLLARS IN
                                                          THOUSANDS)
<S>                                                      <C>
Revenues...............................................    $ 321,058
Expenses...............................................     (335,064)
                                                           ---------
  Operating loss.......................................      (14,006)
Interest and other expenses............................      (98,127)
                                                           ---------
Loss before extraordinary items........................    $(112,133)
                                                           =========
</TABLE>

 
     In January 1999, the Partnership acquired the assets of certain cable
systems serving approximately 591 customers in Oregon for $800,700. On March 15,
1999, the Partnership acquired the assets of certain cable systems serving
approximately 7,928 customers in Utah for $6.8 million. On March 22, 1999, the
Partnership acquired the assets of the Franklin, Virginia system in exchange for
the assets of its Scottsburg, Indiana systems and $8 million in cash and
recognized a gain of $8.5 million. The Franklin system serves approximately
9,042 customers and the Scottsburg systems served approximately 4,507 customers.
The effects of this transaction on results of operations are not material. On
July 30, 1999, the Partnership acquired the assets of certain cable systems
serving approximately 6,500 customers in Oregon for $9.5 million.
 
NOTE 6 -- SALE OF SYSTEMS
 
     On March 1, 1999, the Partnership contributed $2.4 million cash and certain
systems located in Oregon with a net book value of $5.6 million to a joint
venture with Bend Cable Communications, Inc., which manages the joint venture.
The Partnership owns 17% of the joint venture. These systems had been acquired
from Falcon Classic in March 1998, and served approximately 3,471 subscribers at
March 1, 1999. On March 26, 1999, the Partnership sold certain systems serving
approximately 2,550 subscribers in Kansas for $3.2 million and recognized a gain
of $2.5 million.
 
                                      F-432