RENAISSANCE MEDIA HOLDINGS LLC AND RENAISSANCE MEDIA LLC
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION
Renaissance Media Holdings LLC ("Holdings") was formed on November 5, 1997
to acquire certain cable television systems in Louisiana, Tennessee and
Mississippi. The initial investing stockholders of Holdings were Morgan
Stanley Capital Partners III, L.P., MSCP III 892 Investors, L.P., and Morgan
Stanley Capital Investors, L.P. Renaissance Media LLC ("Media") was formed on
November 24, 1997. The initial investing stockholder of Media was Morgan
Stanley Capital Partners III, Inc.
The financial statements of Holdings and Media (as combined, the "Company")
have been combined as of December 31, 1997 and for the period from November 5,
1997 (date of inception) to December 31, 1997. Subsequent to December 31,
1997, the following legal entity structure changes were enacted: a) Holdings
formed Renaissance Media Group LLC ("Group"); b) Group formed three wholly-
owned subsidiaries, Renaissance Media (Louisiana) LLC ("Louisiana"),
Renaissance Media (Tennessee) LLC ("Tennessee"), and Renaissance Media Capital
Corporation; and c) Media became a wholly-owned subsidiary of Holdings through
a 24% interest held by Tennessee and a 76% interest held by Louisiana. The
consolidated financial statements as of and for the three months ended March
31, 1998 include the financial statements of Holdings and its wholly-owned
subsidiaries; Renaissance Media Group LLC, Renaissance Media (Louisiana) LLC,
Renaissance Media (Tennessee) LLC, Renaissance Media Capital Corporation and
Renaissance Media LLC.
Significant intercompany transactions and accounts have been eliminated. The
accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial statements and
with the instructions to Article 10 of Regulation S-X. The interim financial
statements are unaudited but include all adjustments, which are of normal
recurring nature, that the Company considers necessary for a fair presentation
of the financial position and the results of operations and cash flows for
such period. Operating results of interim periods are not necessarily
indicative of results for a full year.
Certain reclassifications have been made to the 1997 financial statements to
conform to the current period presentation.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The presentation of the financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and footnotes thereto. Actual results
could differ from those estimates.
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
Deferred Acquisition and Financing Costs
Deferred acquisition and financing costs at December 31, 1997 and March 31,
1998 consist primarily of legal fees associated with the acquisition of
certain assets of TWI Cable Inc. ("TWI Cable") and financing costs relating to
the contemplated financing (see note 5). Subsequent to the closing of the
acquisition, these costs will be amortized over periods ranging from 8 to 15