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SEC Filings

10-K405
RENAISSANCE MEDIA GROUP LLC filed this Form 10-K405 on 03/31/1999
Entire Document
 
<PAGE>
 
                          RENAISSANCE MEDIA GROUP LLC
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
                               December 31, 1998
                       (All dollar amounts in thousands)
 
 
6. Taxes
 
   For the year ended December 31, 1998, the provision for income taxes has
been calculated on a separate company basis. The components of the provision
for income taxes are as follows:
 

<TABLE>
<CAPTION>
                                                                     Year ended
                                                                    December 31,
                                                                        1998
                                                                    ------------
      <S>                                                           <C>
      Federal:
        Current....................................................     $--
        Deferred...................................................      --
      State:                                                             --
        Current....................................................      135
        Deferred...................................................      --
                                                                        ----
      Provision for income taxes...................................     $135
                                                                        ====
</TABLE>

 
   The Company's current state tax liability results from its obligation to
pay franchise tax in Tennessee and Mississippi and tax on capital in New York.
 
   The Company has a net operating loss ("NOL") carryforward for income tax
purposes which is available to offset future taxable income. This NOL totals
approximately $14,900 and expires in the year 2018. The Company has
established a valuation allowance to offset the entire potential future tax
benefit of the NOL carryforward and, therefore, has recognized no deferred tax
asset with respect to the NOL.
 
   Louisiana and Tennessee have elected to be treated as corporations for
federal income tax purposes and have not recorded any tax benefit for their
losses as the realization of these losses by reducing future taxable income in
the carry forward period is uncertain at this time.
 
7. Related Party Transactions
 
  (A) Transactions with Morgan Stanley entities
 
   In connection with the Acquisition, Media entered into the Credit Agreement
with Morgan Stanley Senior Funding Inc. and Morgan Stanley & Co. Incorporated
acted as the Placement Agent for the Notes. In connection with these services
the Morgan Stanley Entities received customary fees and expense reimbursement.
 
  (B) Transactions with Time Warner and related parties
 
   In connection with the Acquisition, Media entered into an agreement with
Time Warner, pursuant to which Time Warner manages the Company's programming
in exchange for providing the Company access to certain Time Warner
programming arrangements.
 
  (C) Transactions with management
 
   Prior to the consummation of the Acquisition described in Note 3, Media
paid fees in 1998 to six senior executives of the Company who are investors in
the Company (the "Management Investors") for services rendered prior to their
employment by Media relating to the Acquisition and the Credit Agreement.
These fees totaled $287 and were recorded as transaction and financing costs.
 
 
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