Advances in communications technology as well as changes in the marketplace
and the regulatory and legislative environments are constantly occurring.
Thus, it is not possible to predict the effect that ongoing or future
developments might have on the cable industry or on the operations of the
The Company has 181 full-time employees and 8 part-time employees, none of
whom are represented by a labor union on the date hereof.
A cable television system consists of three principal operating components.
The first component, known as the headend, receives television, radio and
information signals generally by means of special antennas and satellite earth
stations. The second component, the distribution network, which originates at
the headend and extends throughout the system's service area, consists of
microwave relays, coaxial or fiber optic cables and associated electronic
equipment placed on utility poles or buried underground. The third component
of the system is a "drop cable," which extends from the distribution network
into each customer's home and connects the distribution system to the
customer's television set. An additional component used in certain systems is
the home terminal device, or converter/descrambler, that expands channel
capacity to permit reception of more than twelve channels of programming on a
non-cable ready television set and permits the operator to control the
reception of program offerings by subscribers.
The Company's principal physical assets consist of cable television systems,
including signal-receiving, encoding and decoding apparatus, headends,
distribution systems and subscriber house drop equipment for each of the
Systems. The signal receiving apparatus typically includes a tower, antennas,
ancillary electronic equipment and earth stations for reception of satellite
signals. Headends, consisting of associated electronic equipment necessary for
the reception, amplification and modulation of signals, typically are located
near the receiving devices. The Company's distribution systems consist
primarily of coaxial cable, fiber optic cable and related electronic
equipment. As upgrades are completed, the Systems will continue to incorporate
fiber optic cable. Subscriber equipment consists of house drops,
converters/descramblers and, in some cases, traps. The Company owns its
distribution systems, various office fixtures, test equipment and certain
service vehicles. The physical components of the Systems require maintenance
and periodic upgrading to keep pace with technological advances.
The Company's cables are generally attached to utility poles under pole
rental agreements with local public utilities, although in some areas the
distribution cable is buried in trenches or placed in underground ducts. The
FCC regulates most pole attachment rates under the Federal Pole Attachment Act
although in certain cases attachment rates are regulated by state law.
The Company owns or leases 27 parcels of real property for signal reception
sites (antenna towers and headends), microwave complexes and business offices.
The Company believes that its properties, both owned and leased, are in good
condition and are suitable and adequate for the Company's business operations
as presently conducted.
As of the date hereof, the Company is not a party to any litigation
proceedings. The Systems are subject to certain litigation proceedings
incidental to their businesses. Pursuant to the Asset Purchase Agreement, the
Company did not assume any liabilities related to litigation commenced on or
prior to the Acquisition Date, and Time Warner has agreed to indemnify the
Company from and against any such liabilities, subject to the terms and
provisions of the Asset Purchase Agreement. See "The Company--Asset Purchase
Agreement." The Company's management believes that the outcome of all pending
legal proceedings will not, individually or in