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SEC Filings

10-Q
AVALON CABLE OF MICHIGAN INC/ filed this Form 10-Q on 08/16/1999
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                 AVALON CABLE OF MICHIGAN, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands except per share data)

    .   Avalon Michigan LLC has become the operator of the Michigan cluster,
        replacing the Company;

    .   Avalon Michigan LLC is an obligor on the Senior Subordinated Notes
        replacing the Company;

    .   The Company became a guarantor of the obligations of Avalon Michigan LLC
        under the Senior Subordinated Notes. The Company does not have
        significant assets, other than its investment in Avalon Cable LLC at
        June 30, 1999.

    .   Michigan Holdings contributed the Senior Discount Notes to the Company
        who then contributed the notes to Avalon Cable LLC. Both the Company and
        Michigan Holdings became guarantors of the Senior Discount Notes. The
        Company does not have significant assets other than its investment in
        Avalon Cable LLC.

    As a result of this reorganization between entities under common control,
the Company accounted for the reorganization similar to a pooling-of-interests.
Under the pooling-of-interests method, the results of operations include the
results of operations from the earliest date that a member becomes a part of the
control group by inception or acquisition. For the Company, the results of
operations are from the date of inception (September 4, 1997) for Avalon New
England, a wholly-owned subsidiary of Avalon Cable LLC.

    The Company has a majority interest in Avalon Cable LLC. Avalon Cable LLC
wholly owns Avalon Cable Holdings Finance, Inc. ("Avalon Holdings Finance"),
Avalon New England and Avalon Michigan LLC.

    Avalon Michigan LLC and Avalon New England provide cable services to various
areas in the state of Michigan and the New England area, respectively. Avalon
New England and Avalon Michigan LLC's cable systems offer customer packages for
basic cable programming services which are offered at a per channel charge or
packaged together to form a tier of services offered at a discount from the
combined channel rate. Avalon New England and Avalon Michigan LLC's cable
systems also provide premium cable services to their customers for an extra
monthly charge. Customers generally pay initial connection charges and fixed
monthly fees for cable programming and premium cable services, which constitute
the principle sources of revenue for the Company.

    Avalon Holdings Finance was formed for the sole purpose of facilitating
financings associated with the acquisitions of various cable operating
companies. Avalon Holdings Finance conducts no other activities.

2.       Basis of Presentation

    Pursuant to the rules and regulations of the Securities and Exchange
Commission, certain financial information has been condensed and certain
footnote disclosures have been omitted. Such information and disclosures are
normally included in financial statements prepared in accordance with generally
accepted accounting principles.

    These condensed financial statements should be read in conjunction with the
Company's audited financial statements as of December 31, 1998 and notes thereto
as included in the Company's Registration Statement on Form S-4 filed with the
Securities and Exchange Commission ("SEC") and declared effective with the SEC
on July 22, 1999.

    The financial statements as of June 30,1999 and for the three and six month
periods ended June 30, 1999 and 1998 are unaudited; however, in the opinion of
management, such statements include all adjustments (consisting solely of normal
and recurring adjustments except for the acquisition of Cross Country Cable, LLC
("Cross Country"), Nova Cablevision, Inc., Nova Cablevision VI, L.P. and Nova
Cablevision VII, L.P. ("Nova Cable"), Novagate Communication Corporation

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