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SEC Filings

S-1/A
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form S-1/A on 11/01/1999
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            AVALON CABLE OF MICHIGAN HOLDINGS, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                 JUNE 30, 1999
 
     On March 26, 1999, after the acquisition of Mercom, the Company completed a
series of transactions to facilitate certain aspects of its financing between
affiliated entities under common control. As a result of these transactions:
 
     - The Company contributed the Senior Discount Notes and associated debt
       finance costs to Avalon Cable LLC and became a guarantor of the Senior
       Discount Notes.
 
     - Avalon Michigan contributed its assets and liabilities excluding deferred
       tax liabilities, net to Avalon Cable LLC in exchange for an approximate
       88% voting interest in Avalon Cable LLC. Avalon Cable LLC contributed
       these assets and liabilities, excluding the Senior Discount Notes and
       associated debt finance costs, to its wholly-owned subsidiary, Avalon
       Cable of Michigan LLC.
 
     - Avalon Cable of Michigan LLC has become the operator of the Michigan
       cluster replacing Avalon Michigan;
 
     - Avalon Cable of Michigan LLC is an obligor on the Senior Subordinated
       Notes replacing Avalon Michigan; and
 
     - Avalon Michigan is a guarantor of the obligations of Avalon Cable of
       Michigan LLC under the Senior Subordinated Notes. Avalon Michigan does
       not have significant assets, other than its 88% investment in Avalon
       Cable LLC at June 30, 1999.
 
     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, Avalon New England, and Avalon Cable
of Michigan LLC.
 
     Avalon Cable of Michigan LLC and Avalon New England provide cable services
to various areas in Michigan and New England, 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 Cable of 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 acquisition of various cable operating companies.
Avalon Cable Holdings Finance, Inc. 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.
 
                                      F-353