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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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                AVALON CABLE OF MICHIGAN, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                   (in thousands except per share data)

3. Merger

   The Merger was accounted for using the purchase method of accounting.
Accordingly, the consideration was allocated to the net assets acquired based
on their fair market values at the date of the Merger as determined through the
use of an independent appraisal. The excess of consideration paid over the fair
market value of the net assets acquired was $81,705, and is being amortized
using the straight line method over 15 years, its estimated economic life.

   The Merger agreement between Avalon Cable of Michigan Holdings, Inc. and the
Company permitted the Company to agree to acquire the 1,822,810 shares
(approximately 38% of the outstanding stock) of Mercom that it did not own (the
"Mercom Acquisition"). On September 10, 1998 the Company and Mercom entered
into a definitive agreement (the "Mercom Merger Agreement") providing for the
acquisition by the Company of all of such shares at a price of $12.00 per
share. The Company completed this acquisition in March 1999. The total
estimated consideration payable in conjunction with the Mercom Acquisition,
excluding fees and expenses was $21,900.

   Following is the unaudited pro forma results of operations for the year
ended December 31, 1998, as if the Merger occurred on January 1, 1998:


<TABLE>
<CAPTION>
                                                    December 31,
                                                        1998
                                                    ------------
                                                    (Unaudited)
         <S>                                        <C>
         Revenue...................................   $ 88,178
                                                      ========
         Loss from operations......................   $ (4,664)
                                                      ========
         Net loss..................................   $(17,055)
                                                      ========
</TABLE>


   In March 1999, Avalon Michigan Inc. acquired the cable television systems of
Nova Cablevision, Inc., Nova Cablevision VI, L.P. and Nova Cablevision VII,
L.P. for approximately $7,800, excluding transaction fees.

4. Property, Plant and Equipment

   Property, plant and equipment consists of the following:


<TABLE>
      <S>                                                              <C>
      Cable plant..................................................... $100,167
      Vehicles........................................................    2,475
      Buildings and improvements......................................    2,151
      Office furniture and fixtures...................................      846
      Construction in process.........................................      768
                                                                       --------
      Total property, plant and equipment.............................  106,407
      Less--accumulated depreciation..................................   (1,442)
                                                                       --------
      Property, plant and equipment, net.............................. $104,965
                                                                       ========
</TABLE>


   Depreciation expense was $1,442 for period from inception (June 2, 1998) to
December 31, 1998.

                                     F-117