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SEC Filings

S-4/A
AVALON CABLE OF MICHIGAN INC/ filed this Form S-4/A on 07/22/1999
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            AVALON CABLE OF MICHIGAN HOLDINGS, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                  (dollars in thousands except per share data)
                               December 31, 1998
3. Merger and Acquisitions
   
   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. The purchase price was
allocated as follows: current assets and liabilities at fair values of $470,
approximately $94,000 to property, plant and equipment, $315,000 to cable
franchises and the excess of consideration paid over the fair market value of
the net assets acquired, or goodwill, of $81,705, offset by deferred taxes, net
of $60,000.     
 
   The Merger agreement between the Company and Avalon Michigan permitted
Avalon Michigan 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 Avalon Michigan and Mercom entered into a
definitive agreement (the "Mercom Merger Agreement") providing for the
acquisition by Avalon Michigan of all of such shares at a price of $12.00 per
share. Avalon Michigan completed this acquisition in March 1999. The total
estimated consideration payable in conjunction with the Mercom Acquisition,
excluding fees and expenses was $21,900.
 
   On May 29, 1998, the Company acquired certain assets of Amrac Clear View, A
Limited Partnership ("Amrac") for consideration of $8,124, including
acquisition costs of $589. The acquisition was accounted for using the purchase
method of accounting. Accordingly, the consideration was allocated to the net
assets acquired based on the fair market values at the date of acquisition as
determined through the use of an independent appraisal. The excess of the
consideration paid over the estimated fair market value of the net assets
acquired, or goodwill, was $256.
 
   On July 21, 1998, the Company acquired certain assets and liabilities from
Pegasus Cable Television, Inc. and Pegasus Cable Television of Connecticut,
Inc. (collectively, "Pegasus") for consideration of $30,467, including
acquisition costs of $175. The acquisition was accounted for using the purchase
method of accounting. Accordingly, the consideration was allocated to the net
assets acquired based on the fair market values at the date of acquisition as
determined through use of an independent appraisal. The excess of the
consideration paid over the estimated fair market value of the net assets
acquired, or goodwill, was $977.
 
   Following is the unaudited pro forma results of operations for the year
ended December 31, 1998, as if the Merger and acquisitions occurred on January
1, 1998:
 

<TABLE>
<CAPTION>
                                                    December 31,
                                                        1998
                                                    ------------
                                                    (Unaudited)
         <S>                                        <C>
         Revenue...................................   $ 96,751
                                                      ========
         Loss from operations......................   $ (5,292)
                                                      ========
         Net loss..................................   $(22,365)
                                                      ========
</TABLE>

 
   In March 1999, Avalon Michigan 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.
 
   In September 1998, the Company entered into a definitive agreement to
purchase all of the cable systems of Taconic Technology Corporation ("Taconic")
for approximately $8,525 (excluding transaction fees). As of
 
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