Print Page  Close Window

SEC Filings

S-4/A
AVALON CABLE OF MICHIGAN INC/ filed this Form S-4/A on 07/22/1999
Entire Document
 
<PAGE>
 
   Inc. This increased the equity in Avalon Cable of Michigan Holdings and
   reduced the equity in Avalon Cable of Michigan, Inc.
 
  . The assets and liabilities, excluding the deferred tax liabilities, net
    of Avalon Cable of Michigan, Inc. were then transferred to Avalon Cable
    LLC in exchange for an approximate 88% interest in Avalon Cable LLC. The
    assets and liabilities transferred by Avalon Cable of Michigan, Inc. to
    Avalon Cable LLC included the old notes and associated discount and
    deferred financing costs received from Avalon Cable of Michigan Holdings.
 
  . Avalon Cable LLC contributed the assets and liabilities received from
    Avalon Cable of Michigan, Inc., other than the old notes and associated
    discount and deferred financing costs, to its wholly-owned subsidiary,
    Avalon Cable of Michigan LLC. Since Avalon Cable LLC and Avalon Cable of
    Michigan, Inc. are under common control, these assets and liabilities
    were recorded at their historical cost.
 
  . Avalon Cable of Michigan LLC's statement of operations will include
    activity from the date after the reorganization through March 31, 1999.
 
  . At March 31, 1999, the financial statements of Avalon Cable LLC were
    consolidated in Avalon Cable of Michigan, Inc. with a minority interest
    of approximately 12%.
 
  . Intercompany debt with Avalon Cable of New England was cancelled.
 
   Although Avalon Cable of Michigan Holdings and Avalon Cable of Michigan,
Inc. are guarantors of the obligations of Avalon Cable LLC under the new
notes, their assets consist of their equity interests in Avalon Cable of
Michigan, Inc. and Avalon Cable LLC, respectively. As a result, you should not
expect Avalon Cable of Michigan Holdings and Avalon Cable of Michigan, Inc.,
as guarantors, to have any assets available to make interest and principal
payments on the new notes since they do not have other operations and will not
have access to additional sources of cash flow other than their investment in
the respective companies.
 
   We have implemented a number of operational and organizational changes to
the businesses we have acquired and expect others, including in connection
with pending acquisitions. As a result, we believe that the historical results
of operations presented below of each of Cable Michigan, AMRAC Clear View,
Pegasus Cable Television, and Taconic Technology may not be indicative of our
results of operations in the future. For additional information, please refer
to "--Pro Forma Operating Results" section of this prospectus.
 
   Revenues. Our revenues are primarily attributable to monthly subscription
fees charged to subscribers for our basic and premium cable television
programming services. Our basic revenues consist of monthly subscription fees
for all services other than premium programming, as well as monthly charges
for customer equipment rental. Premium revenues consist of monthly
subscription fees for programming provided on a per channel basis. In
addition, we derive other revenues from installation and reconnection fees
that we charge to subscribers to commence or reinstate service, pay-per-view
charges, late payment fees, advertising revenues and commissions related to
the sale of merchandise by home shopping services.
 
   Operating Expenses. Our expenses primarily consist of programming fees,
plant and operating costs, general and administrative expenses, and marketing
costs directly attributable to our cable systems. We expect that our
programming costs will increase in the ordinary course of our business as a
result of increases in the number of subscribers, increases in the number of
channels that we provide to customers and contractual rate increases from our
programming suppliers. We benefit and expect to continue to benefit from our
membership in industry cooperatives which provide members with volume
discounts from programming networks and cable equipment vendors. Plant and
operating costs include expenses related to wages and employee benefits,
electricity, systems supplies, vehicles and other operating costs. General and
administrative expenses directly attributable to the systems include wages and
employee benefits for customer service, accounting and administrative
personnel, franchise fees and expenses related to billing, payment processing
and office administration.
 
                                      49