INTERMEDIA CABLE SYSTEMS
(COMPRISED OF COMPONENTS OF INTERMEDIA PARTNERS AND
INTERMEDIA CAPITAL PARTNERS IV, L.P.)
NOTES TO CONDENSED COMBINED FINANCIAL
STATEMENTS (UNAUDITED) -- (CONTINUED)
(DOLLARS IN THOUSANDS)
or ABR to ABR plus 0.25% based on IP-IV's Senior Debt Ratio. The IP-IV Bank
Facility requires quarterly payment of fees on the unused portion of the IP-IV
Revolving Credit Facility of 0.375% per annum when the Senior Debt Ratio is
greater than 4.0:1.0 and at 0.25% when the Senior Debt Ratio is less than or
equal to 4.0:1.0.
The terms and conditions of RMG's intercompany debt agreement are not
necessarily indicative of the terms and conditions which would be available if
the Systems were a separate legal entity.
4. RELATED PARTY TRANSACTIONS
ICM and IMI provide certain management services to IP-I and ICP-IV,
respectively, for per annum fixed fees, of which 20% per annum is deferred and
payable in each following year in order to support InterMedia's debt.
InterMedia's management fees for the three months ended March 31, 1999 and 1998
amounted to $1,353, of which $781 has been charged to the Systems.
IMI has entered into agreements with both IP-I and ICP-IV to provide
accounting and administrative services at cost. Under the terms of the
agreements, the expenses associated with rendering these services are charged to
the Systems and other affiliates based upon relative basic subscriber
percentages. Management believes this method to be reflective of the actual
cost. During the three months ended March 31, 1999 and 1998, IMI administrative
fees charged to the Systems totaled $859 and $1,206, respectively. Receivables
from affiliates at March 31, 1999 and December 31, 1998 include $405 and $52,
respectively, of advances to IMI, net of administrative fees charged by IMI and
operating expenses paid by IMI on behalf of the Systems.
IP-I is majority-owned, and ICP-IV is owned in part, by AT&T Broadband &
Internet Services ("AT&TBIS"), formerly Tele-Communications, Inc. As affiliates
of AT&TBIS, IP-I and ICP-IV are able to purchase programming services from a
subsidiary of AT&TBIS. Management believes that the overall programming rates
made available through this relationship are lower than the Systems could obtain
separately. Such volume rates may not continue to be available in the future
should AT&TBIS's ownership interest in InterMedia significantly decrease.
Program fees charged by the AT&TBIS subsidiary to the Systems for the three
months ended March 31, 1999 and 1998 amounted to $8,505 and $6,624,
respectively. Payables to affiliates include programming fees payable to the
AT&TBIS subsidiary of $2,846 and $2,918 at March 31, 1999 and December 31, 1998,
On January 1, 1998 an affiliate of AT&TBIS entered into agreements with
InterMedia to manage the Systems' advertising business and related services for
an annual fixed fee per advertising sales subscriber as defined by the
agreements. In addition to the annual fixed fee AT&TBIS is entitled to varying
percentage shares of the incremental growth in annual cash flows from
advertising sales above specified targets. Management fees charged by the
AT&TBIS subsidiary for the three months ended March 31, 1999 amounted to $90.
Receivables from affiliates at March 31, 1999 and December 31, 1998 include
$4,119 and $3,437, respectively, of receivable from AT&TBIS for advertising
As part of its normal course of business the Systems are involved in
transactions with affiliates of InterMedia which own and operate cable
television systems. Such transactions