paid before you from any of our subsidiaries' assets. In the event of
bankruptcy, liquidation or dissolution of a subsidiary, following payment by
such subsidiary of its liabilities, such subsidiary may not have sufficient
assets remaining to make payments to us as a shareholder or otherwise. This will
adversely affect our ability to make payments to you as a holder of the notes.
OUR ABILITY TO GENERATE THE SIGNIFICANT AMOUNT OF CASH NEEDED TO SERVICE OUR
DEBT AND GROW OUR BUSINESS DEPENDS ON MANY FACTORS BEYOND OUR CONTROL.
Our ability to make payments on our debt, including the notes, and to fund
our planned capital expenditures for upgrading our cable systems and for other
purposes will depend on our ability to generate cash and secure financing in the
future. This, to a certain extent, is subject to general economic, financial,
competitive, legislative, regulatory and other factors that are beyond our
control. If our business does not generate sufficient cash flow from operations,
and sufficient future borrowings are not available to us under our credit
facilities or from other sources of financing, we may not be able to repay our
debt, including the notes, to grow our business or to fund our other liquidity
WE HAVE GROWN RAPIDLY AND HAVE A LIMITED HISTORY OF OPERATING OUR CURRENT
SYSTEMS. THIS MAKES IT DIFFICULT FOR YOU TO COMPLETELY EVALUATE OUR PERFORMANCE.
We commenced active operations in 1994 and have grown rapidly since then
through acquisitions of cable systems. As of June 30, 1999, giving effect to our
pending acquisitions and recent acquisitions closed since June 30, 1999, our
systems served approximately 193% more customers than were served as of December
31, 1998. As a result, historical financial information about us may not be
indicative of the future or of results that we can achieve with the cable
systems which will be under our control. Our recent growth in revenue and growth
in EBITDA over our short operating history is not necessarily indicative of
WE HAVE A HISTORY OF NET LOSSES AND EXPECT TO CONTINUE TO EXPERIENCE NET LOSSES.
CONSEQUENTLY, WE MAY NOT HAVE THE ABILITY TO FINANCE OUR FUTURE OPERATIONS.
We have had a history of net losses and expect to continue to report net
losses for the foreseeable future. We reported net losses from continuing
operations, before extraordinary items, of $5 million for 1997, $23 million for
1998, and $216 million for the six months ended June 30, 1999. On a pro forma
basis, giving effect to our merger with Marcus Holdings and our recent and
pending acquisitions, we had net losses from continuing operations, before
extraordinary items of $760 million for 1998. For the six months ended June 30,
1999, on the same pro forma basis, we had net losses from continuing operations,
before extraordinary items of $375 million. We expect our net losses to increase
as a result of our merger with Marcus Holdings and our recent and pending
acquisitions. We cannot predict what impact, if any, continued losses will have
on our ability to finance our operations in the future.
WE MAY NOT BE ABLE TO OBTAIN CAPITAL SUFFICIENT TO FUND OUR PLANNED UPGRADES AND
OTHER CAPITAL EXPENDITURES. THIS COULD ADVERSELY AFFECT OUR ABILITY TO OFFER NEW
PRODUCTS AND SERVICES, WHICH COULD ADVERSELY AFFECT OUR GROWTH, FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
We intend to upgrade a significant portion of our cable systems over the
coming years and make other capital investments. For the three years ending
December 31, 2001, we