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SEC Filings

S-4/A
AVALON CABLE OF MICHIGAN INC/ filed this Form S-4/A on 07/22/1999
Entire Document
 
<PAGE>
 
                          
                       NOTES TO UNAUDITED PRO FORMA     
                     STATEMENTS OF OPERATIONS--(Continued)
 For the Three Months Ended March 31, 1999 and the Year Ended December 31, 1998
   the year ended December 31, 1998, the results of operations of Holdings
   Finance, its wholly-owned subsidiary, from its inception (October 21, 1998)
   through December 31, 1998, and the results of operations of Avalon Michigan
   LLC from the date of acquisition (November 6, 1998) of Cable Michigan
   through December 31, 1998.
 
 (8) Amrac's results of operations includes the historical results of
     operations for the period from January 1, 1998 through May 28, 1998.
 
 (9) Pegasus' combined results of operations includes the actual historical
     results of operations for the period from January 1, 1998 through June 30,
     1998.
 
(10) Taconic's results of operations includes the actual historical results of
     operations of Taconic for the year ended December 31, 1998.
 
(11) Pro forma adjustments represent those adjustments necessary to present
     operating results as if all pending and completed acquisitions and the
     financings and the reorganization occurred on January 1, 1998. These
     adjustments included the following:
 
  (a) To adjust revenues, costs and expenses and corporate overhead of
      $6,061, $4,036 and $97, respectively for the year ended December 31,
      1998, to account for the acquisitions of Nova Cablevision, Cross
      Country Cable TV, Traverse Internet, Galaxy American Communications,
      R/COM, Novagate Communications and Hometown TV as if these acquisitions
      occurred on January 1, 1998.
     
  (b) Amount represents increased depreciation and amortization due to excess
      of fair value over historical cost generated from the acquisitions of
      Cable Michigan (including Mercom), Amrac, Pegasus, Taconic and our
      other completed and pending acquisitions using a useful life of fifteen
      years calculated as follows (dollars in thousands):     
 

<TABLE>
<CAPTION>
                                                                     Year Ended
                                                                    December 31,
                                                                        1998
                                                                    ------------
      <S>                                                           <C>
      Pro forma depreciation and amortization......................   $44,828
      Historical depreciation and amortization.....................    37,589
                                                                      -------
      Pro forma adjustment.........................................   $ 7,239
                                                                      =======
</TABLE>

 
  (c) Amount represents increased interest expense due to the financings and
      the offerings (dollars in thousands):
 

<TABLE>
<CAPTION>
                                                                   Year Ended
                                                                  December 31,
                                                                      1998
                                                                 --------------
      <S>                                                        <C>    <C>
      Historical interest expense, net..........................        $16,409
                                                                        -------
      Senior subordinated notes................................. 14,063
      Senior discount notes..................................... 13,500
      Credit facility (1)....................................... 16,386
      Other debt................................................    122
      Amortization of deferred financing fees...................  1,458
                                                                 ------
      Pro forma interest expense................................         45,529
                                                                        -------
      Pro forma adjustment......................................        $29,120
                                                                        =======
</TABLE>

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     (1) If the assumed interest rate on the credit facility increased by
         0.125%, total pro forma interest expense would increase by
         $225,000 for the year ended December 31, 1998.
 
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