Print Page  Close Window

SEC Filings

RENAISSANCE MEDIA GROUP LLC filed this Form S-4 on 06/12/1998
Entire Document
  Basic revenue has been increasing as a percentage of total revenues since
1995 due primarily to increases in subscription rates offset by a change in
the treatment of franchise fees. Prior to 1997, franchise fees were included
in both revenues and expenses. In 1997, the Systems began itemizing franchise
fees on subscriber billing invoices and recorded such fees only as an offset
to System operating expenses. Premium revenues have been decreasing as a
percentage of total revenues due to marginal growth in this revenue category.
Other revenue has been decreasing as a percentage of total revenues due
primarily to the elimination in 1996 and 1995 of additional outlet charges,
offset in part, by increases in other revenue items.
  System Operating Expenses. System operating expenses are comprised of
variable operating expenses and selling, service and administrative expenses
directly attributable to the Systems. Variable operating expenses consist of
costs directly attributable to providing cable services to customers and
therefore generally vary directly with revenues. Variable operating expenses
include programming fees paid to suppliers of programming included in the
Systems' basic and premium cable television services, as well as expenses
related to copyright fees, franchise fees and bad debt expenses. Programming
costs have historically increased at rates in excess of inflation due, in
part, to improvements in the quality of programming. Cable programming costs
are expected to continue to increase due to additional programming being
provided to customers, inflationary increases and other factors. Programming
costs as a percentage of revenue increased to 20.5% in 1997 from 20.1% in 1996
and to 21.0% in the three months ended March 31, 1998 from 20.0% the three
months ended March 31, 1997. The Systems have lost certain programming
discounts that were realized as a result of being part of a large MSO and, as
a result, the Company expects that programming costs will increase as a
percentage of revenues. See "Pro Forma Financial Data." Selling, service and
administrative expenses directly attributable to the Systems include the
salaries and wages of field and office personnel, plant operating expenses,
office and administrative expenses and sales costs.
  Non-System Operating Expenses. Non-system operating expenses consist
primarily of corporate related expenses, which are not directly attributable
to the Systems. These expenses include personnel costs, rent, legal, audit,
tax and other corporate overhead costs.
  Depreciation, Amortization and Loss (Gain) on Disposal of Fixed
Assets. Depreciation, amortization and loss (gain) on disposal of fixed assets
include depreciation of the Systems' network and equipment, amortization of
goodwill and intangibles assets and losses or gains recognized on the disposal
of assets. Management expects depreciation, amortization and loss (gain) on
disposal of fixed assets to increase as a result of the purchase accounting
adjustments arising in connection with the Acquisition. See "Pro Forma
Financial Data."
  The table below sets forth for the periods indicated certain data regarding
expenses expressed as a percentage of total revenues:

                                                               THREE MONTHS
                                   YEAR ENDED DECEMBER 31,    ENDED MARCH 31,
                                   -------------------------  ----------------
                                    1995     1996     1997     1997     1998
                                   -------  -------  -------  -------  -------
   <S>                             <C>      <C>      <C>      <C>      <C>
   Revenues......................    100.0%   100.0%   100.0%   100.0%   100.0%
     System operating expenses...     47.7     47.8     45.4     46.4     43.2
     Non-system operating
      expenses...................      5.1      5.8      5.5      5.6      5.0
     Depreciation, amortization
      and loss (gain) on disposal
      of fixed assets............     40.4     38.3     37.9     37.5     32.9
      Operating income...........      6.8      8.1     11.2     10.5     18.9
     Interest expense............     27.3      --       --       --       --
     Income tax (benefit)
      expense....................     (8.2)     3.2      4.4      5.3      8.5
     Net (loss) income...........    (12.3)     4.9      6.8      5.2     10.4

  The Systems have not had any material acquisitions during these periods and
thus the growth since 1995 represents internal growth resulting from
subscriber additions, rate increases and additional services purchased by
subscribers and advertisers.

<S>  <C> <C> <C>
     === === ===