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SEC Filings

424B1
RENAISSANCE MEDIA GROUP LLC filed this Form 424B1 on 09/10/1998
Entire Document
 
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           PICAYUNE MS, LAFOURCHE LA, ST. TAMMANY LA, ST. LANDRY LA,
           POINTE COUPEE LA, AND JACKSON TN CABLE TELEVISION SYSTEMS
                         (INCLUDED IN TWI CABLE INC.)
 
              NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
 
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
 
 Use of Estimates
 
  The preparation of combined financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the combined financial
statements and footnotes thereto. Actual results could differ from those
estimates.
 
 Concentration of Credit Risk
 
  A significant portion of the customer base is concentrated within the local
geographical area of each of the individual cable television systems. The
Combined Systems generally extend credit to customers and the
ultimate collection of accounts receivable could be affected by the local
economy. Management performs continuous credit evaluations of its customers
and may require cash in advance or other special arrangements from certain
customers. Management does not believe that there is any significant credit
risk which could have a material effect on the financial condition of the
Combined Systems.
 
 Revenue and Costs
 
  Subscriber fees are recorded as revenue in the period the related services
are provided and advertising revenues are recognized in the period the related
advertisements are exhibited. Rights to exhibit programming are purchased from
various cable networks. The costs of such rights are generally expensed as the
related services are made available to subscribers.
 
 Franchise Fees
 
  Local governmental authorities impose franchise fees on the cable television
systems owned by the Combined Systems ranging up to a federally mandated
maximum of 5.0% of gross revenues. On a monthly basis, such fees are collected
from the Combined Systems' customers. Prior to January 1997, franchise fees
were not separately itemized on customers' bills. Such fees were considered
part of the monthly charge for basic services and equipment, and therefore
were reported as revenue and expense in the Combined Systems' financial
results. Management began the process of itemizing such fees on all customers'
bills beginning in January 1997. In conjunction with itemizing these charges,
the Combined Systems began separately collecting the franchise fee on all
revenues subject to franchise fees. As a result, such fees are no longer
included as revenue or as franchise fee expense. The net effect of this change
is a reduction in 1997 revenue and franchise fee expense of approximately
$1,500,000 versus the comparable period in 1996.
 
 Advertising Costs
 
  Advertising costs are expensed upon the first exhibition of the related
advertisements. Advertising expense amounted to $308,000, $632,000 and
$510,000 for the years ended 1995, 1996 and 1997, respectively and $147,000
and $105,000 for the periods ended March 31, 1997 and April 8, 1998,
respectively.
 
 Statement of Cash Flows
 
  The Combined Systems participate in a cash management system with affiliates
whereby cash receipts are transferred to a centralized bank account from which
centralized payments to various suppliers and creditors are made on behalf of
the Combined Systems. The excess of such cash receipts over payments is
included in net assets. Amounts shown as cash represent the Combined Systems'
net cash receipts not transferred to the centralized account as of December
31, 1996 and 1997. The average net intercompany payable balances were
$173,348,000 and $170,438,000 for the years ended December 31, 1996 and 1997,
respectively, and $171,296,000 (unaudited) and $166,522,000 (unaudited) for
periods ended March 31, 1997 and April 8, 1998, respectively.
 
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