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SEC Filings

S-4/A
AVALON CABLE OF MICHIGAN INC/ filed this Form S-4/A on 05/28/1999
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  Notes to Summary Unaudited Pro Forma Combined Financial and Operating Data--
                                (Continued)

 For the Three Months Ended March 31, 1999 and the Year Ended December 31, 1998

(11) Pegasus' combined results of operations includes the actual historical
     results of operations for the period from January 1, 1998 through June 30,
     1998.

(12) Taconic's results of operations includes the actual historical results of
     operations of Taconic for the year ended December 31, 1998.

(13) Pro forma adjustments represent those adjustments necessary to present
     operating results as if all pending and completed acquisitions and the
     related financing transactions and the reorganization occurred on January
     1, 1998. These adjustments include in each case, the following:

   (a) Adjustments to reflect the full year impact of the acquisitions of
       Nova Cablevision, Cross Country Cable TV, Traverse Internet, Galaxy
       American Communications, R/COM, Hometown TV and Novagate
       Communications.
   (b) Increased depreciation and amortization expense due to excess of fair
       value over historical cost generated from the completed and pending
       acquisitions.
   (c) Increased interest expense due to borrowings under our senior credit
       facility and the issuance of the old notes.

   (d) The removal of tax benefits, net, since after the reorganization
       transactions described herein, two of the three issuers will be
       treated as partnerships for federal income tax purposes.
   (e) Elimination of minority interest in loss of Mercom due to the
       acquisition of the remaining 38% of the outstanding stock of Mercom.
       Results for Mercom are included in the results of Avalon Michigan Inc.
       and Cable Michigan.

   See Notes to Unaudited Pro Forma Combined Statements of Operations for a
   further explanation of these pro forma adjustments.

(14) Represents net income before depreciation and amortization, interest
     income (expense), net, income taxes, other expenses, net, gain or loss
     from the sale of assets, nonrecurring items and non-cash expenses. For the
     period from January 1, 1998 through November 5, 1998, EBITDA excludes
     $5,764 of non-recurring seller transaction costs incurred by Cable
     Michigan in connection with the merger with and into Avalon Michigan Inc.
     Management believes that EBITDA is a meaningful measure of performance and
     it is commonly used in the cable television industry to analyze and
     compare cable television companies on the basis of operating performance,
     leverage and liquidity. However, EBITDA is not intended to be a
     performance measure that should be regarded as an alternative to, or more
     meaningful than, either operating income or net income as an indicator of
     operating performance or cash flows as a measure of liquidity, as
     determined in accordance with generally accepted accounting principles
     ("GAAP"). EBITDA, as computed by management, is not necessarily comparable
     to similarly titled amounts of other companies. See financial statements,
     including statements of cash flows, included elsewhere herein.

(15) Represents EBITDA, adjusted for the elimination of certain expenses and
     the inclusion of corporate overhead expenses as contemplated by the
     definition of "Leverage Ratio" in the indenture governing the old notes
     and the new notes, which is used in determining compliance with the debt
     incurrence covenant in the indenture. See "Description of the Notes--
     Certain Definitions." However, Adjusted EBITDA is not intended to be a
     performance measure that should be regarded as an alternative to, or more
     meaningful than, either operating income or net income as an indicator of
     operating performance or cash flows as a measure of liquidity, as
     determined in accordance with GAAP. Adjusted EBITDA, as computed by
     management, is not necessarily comparable to similarly titled amounts of
     other companies. See the financial statements, including statements of
     cash flows, included elsewhere herein.

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