AVALON CABLE LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands)--(Continued)
March 31, 1999
On March 26, 1999, Avalon completed a series of transactions to facilitate
certain aspects of its financing between affiliated entities under common
control. As a result of these transactions:
. Avalon Cable of Michigan, Inc. contributed its assets and liabilities
excluding deferred tax liabilities, net to Avalon in exchange for an
approximate 88% voting interest in Avalon, which then transferred those
assets and liabilities to its wholly-owned subsidiary Avalon Michigan;
. Avalon Michigan now operates the Michigan cluster replacing Avalon Cable
of Michigan, Inc.;
. Avalon Cable of Michigan Holdings, Inc. ceased to be an obligor on the
exchanged notes and together with Avalon Cable of Michigan, Inc. became
a guarantor of the obligations of the Company under the exchanged notes;
. Avalon Michigan became an additional obligor on the Senior Subordinated
Notes replacing Avalon Cable of Michigan, Inc.; and
. Avalon Cable of Michigan, Inc. ceased to be an obligor on the Senior
Subordinated Notes and the credit facility and became a guarantor of the
obligations of Avalon Michigan under the Senior Subordinated Notes and
the credit facility.
As a result of the reorganization between entities under common control,
Avalon accounted for the reorganization similar to a pooling-of-interests.
Under the pooling-of-interests method, the results of operations for Avalon
include the results of operations from the date of inception (June 2, 1998) of
Avalon Cable of Michigan, Inc. and the date of acquisition of the completed
Avalon New England and Avalon Michigan provide cable service to the western
New England area and the state of Michigan, respectively. Avalon New England
and Avalon Michigan's cable systems offer customer packages of basic and
premium 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 Michigan 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
principal sources of revenue for Avalon New England and Avalon Michigan.
Avalon Holdings Finance was formed for the sole purpose of facilitating
financings associated with the acquisitions of various cable operating
companies. Avalon Holdings Finance 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.
The consolidated financial statements herein include the accounts of the
Company and its wholly-owned subsidiaries.
These condensed financial statements should be read in conjunction with the
Company's audited financial statements as of December 31, 1998 and notes
thereto included elsewhere herein.
The financial statements as of March 31, 1999 and for the three month period
then ended are unaudited; however, in the opinion of management, such
statements include all adjustments (consisting solely of normal and recurring
adjustments except for the acquisition of Cross Country Cable, LLC ("Cross