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SEC Filings

RENAISSANCE MEDIA GROUP LLC filed this Form 10-K405 on 03/31/1999
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   Revenues. Revenues increased $5.8 million or 11.3% to $56.7 million in 1998
from $51.0 million in 1997. The primary reasons for this increase in revenues
were increases in subscription rates in 1998 and an increase in subscribers of
2,606 in 1998. In January 1998, the systems increased their subscriber rates
from $7.69 to $7.88 on a weighted average basis (excluding bulk subscribers)
for basic service, and from $17.33 to $20.28 on a weighted average basis, for
the cable programming satellite tier (CPST). In total, average revenue per
basic subscriber, per month, increased to $36.98 in 1998 from $34.02 in 1997.
In addition to these increases in subscription revenue, advertising revenue
increased approximately $.3 million or 24.8%.
   Systems Operating Expenses. Systems operating expenses increased $3.1
million or 13.3% to $26.2 million in 1998 from $23.1 million in 1997. The
primary reason for this increase in systems operating expenses was the
increase in programming costs of $2.8 million, an increase of 26.4% over 1997
programming costs. This increase in programming costs resulted from: (1) loss
of certain volume discounts resulting from not being a part of a larger MSO,
(2) annual rate increases on programming services and (3) new services
launched in 1998. Other systems operating expenses generally increased
consistent with general inflation rates. Offsetting these cost increases, in
part, was the increase in capitalized internal labor and overhead costs of $.6
million associated with capital projects. Capitalized internal labor and
overhead costs increased in 1998 due to the increase in 1998 over 1997 in new
capital projects; primarily, the upgrade in St. Tammany and Jackson and the
increase in new build projects.
   System cash flow increased $2.7 million or 9.6% to $30.5 million in 1998
from $27.8 million in 1997. System cash flow margin decreased slightly to
53.8% in 1998 from 54.6% in 1997.
   Non-System Operating Expenses. Non-system operating expenses, which
consists of corporate overhead, did not change materially in 1998 from 1997
amounts. As a percentage of revenue, non-system operating expenses were 4.97%
and 5.46% in 1998 and 1997, respectively.
   Depreciation, Amortization and Loss (Gain) on Disposal of Fixed Assets
("D&A"). D&A increased $6.8 million or 35.5% to $26.2 million in 1998 from
$19.3 million in 1997. This increase is due to: (1) the Company's depreciation
computations based on a composite useful life of its assets of approximately 7
years, giving consideration to the planned upgrade of the cable
infrastructure, which is shorter than the composite useful life of
approximately 11 years used by Time Warner; and (2) the Company's amortization
period for franchise assets and goodwill of 15 and 25 years, respectively,
which differ from the estimated useful lives of franchise assets and goodwill
over periods up to 20 years and over periods up to 40 years, respectively,
used by Time Warner.
   Operating Income. Operating Income decreased $4.2 million or 73.3% to $1.5
million in 1998 from $5.7 million in 1997. This decrease is due primarily to
the increase in D&A of $6.8 million or 35.5% to $26.2 million in 1998,
exceeding the increase in system cash flow of $2.7 million or 9.6% to $30.5
million in 1998.
   Interest Expense. Interest expense was $19.6 million in 1998. Interest
expense represents interest incurred by the Company in 1998 on the credit
agreement, including $110.0 million of term loans facilities and a $40.0
million revolving credit facility, between Renaissance Media, Renaissance
Louisiana, Renaissance Tennessee, Renaissance Capital, Morgan Stanley Senior
Funding (MSSF), and other lenders party thereto (the "Senior Credit Facility")
(including commitment fees) and the 10% Senior Discount Notes due 2008 (the
"Senior Discount Notes") and the amortization of an interest rate cap
agreement and debt issuance costs. The Systems had no indebtedness in 1997.
   Income Tax Expense. Renaissance Louisiana and Renaissance Tennessee have
elected to be treated as corporations for United States Federal income tax
purposes. The provision for income tax expense in 1998 represents corporate
franchise tax expense. No income tax benefit for the loss incurred in 1998 has
been recorded due to the uncertainty of the realization of such loss during
the related carry forward period. The provision for income taxes in 1997
represents income tax expense computed on a stand alone basis for the Systems.
   Net Loss. For the reasons discussed above, the net loss was $18.2 million
in 1998 compared to net income of $3.5 million in 1997.