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SEC Filings

S-4
AVALON CABLE OF MICHIGAN INC/ filed this Form S-4 on 04/01/1999
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<PAGE>
 
         NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
                      For the Year Ended December 31, 1998
 
(1) On November 6, 1998, a subsidiary of Avalon Michigan Inc. acquired Cable
    Michigan. Prior to this acquisition, Avalon Michigan Inc. did not have any
    operations. Avalon Michigan Inc.'s results of operations include the
    results of operations for the period from acquisition through December 31,
    1998.
 
(2) Cable Michigan's results of operations includes the actual historical
    results of operations of Cable Michigan for the year ended December 31,
    1997 and for the period from January 1, 1998 through September 30, 1998.
 
(3) Avalon Cable LLC results of operations include its results of operations
    from its inception (October 21, 1998) through December 31, 1998, and the
    results of operations of Avalon New England from the commencement of its
    operations (November 6, 1998) through December 31, 1998.
 
(4) On May 29, 1998, Avalon New England acquired Amrac. On July 21, 1998,
    Avalon New England acquired Pegasus. Prior to these acquisitions, Avalon
    New England did not have any operations. Avalon New England's results of
    operations include the results of operations for the period from the
    acquisitions (May 29, 1998 for Amrac and July 21, 1998 for Pegasus) through
    December 31, 1998.
 
(5) Amrac's results of operations includes the historical results of operations
    for the year ended December 31, 1997 and for the period from January 1,
    1998 through May 28, 1998.
 
(6) Pegasus' combined results of operations includes the actual historical
    results of operations for the year ended December 31, 1997 and for the
    period from January 1, 1998 through June 30, 1998.
 
(7) Taconic's results of operations includes the actual historical results of
    operations of Taconic for the year ended December 31, 1998.
 
(8) Pro forma adjustments represent those adjustments necessary to present
    operating results as if all pending and completed acquisitions and the
    financings and the reorganization occurred on January 1, 1998. These
    adjustments included the following:
 
  (a) To adjust revenues, operating expenses and corporate overhead of
      $6,061,000, $4,036,000 and $97,000, respectively for the year ended
      December 31, 1998, to account for the acquisitions of Nova, Cross
      Country, Traverse Internet, Galaxy, R/COM, Novagate and Hometown as if
      these acquisitions occurred on January 1, 1998.
 
  (b) Amount represents increased depreciation and amortization due to excess
      of fair value over historical cost generated from the acquisitions of
      Cable Michigan (including Mercom), Amrac, Pegasus, Taconic and our
      other completed and pending acquisitions calculated as follows (dollars
      in thousands):
 

<TABLE>
<CAPTION>
                                                                     Year Ended
                                                                    December 31,
                                                                        1998
                                                                    ------------
      <S>                                                           <C>
      Pro forma depreciation and amortization......................   $44,828
      Historical depreciation and amortization.....................    37,589
                                                                      -------
      Pro forma adjustment.........................................   $ 7,239
                                                                      =======
</TABLE>

 
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