1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2000.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ______ to ______.
Commission File Numbers:
333-56679
333-56679-02
333-56679-01
333-56679-03
RENAISSANCE MEDIA GROUP LLC*
RENAISSANCE MEDIA (LOUISIANA) LLC*
RENAISSANCE MEDIA (TENNESSEE) LLC*
RENAISSANCE MEDIA CAPITAL CORPORATION*
---------------------------------------
(Exact names of registrants as specified in their charters)
Delaware 14-1803051
Delaware 14-1801165
Delaware 14-1801164
Delaware 14-1803049
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12444 Powerscourt Drive - Suite 100
St. Louis, Missouri 63131
-------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(314) 965-0555
(Registrants' telephone number, including area code)
Indicate by check mark whether the registrants: (1) have filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X No
2
Indicate the number of shares outstanding of each of the issuers' classes of
common stock, as of the latest practicable date:
All of the limited liability company membership interests of
Renaissance Media (Louisiana) LLC and Renaissance Media (Tennessee)
LLC are held by Renaissance Media Group LLC. All of the issued and
outstanding shares of capital stock of Renaissance Media Capital
Corporation are held by Renaissance Media Group LLC. All of the
limited liability company membership interests of Renaissance Media
Group LLC are held by Charter Communications, LLC (and indirectly by
Charter Communications Holdings, LLC, a reporting company under the
Exchange Act). There is no public trading market for any of the
aforementioned limited liability company membership interests or
shares of capital stock.
* Renaissance Media Group LLC, Renaissance Media (Louisiana) LLC, Renaissance
Media (Tennessee) LLC and Renaissance Media Capital Corporation meet the
conditions set forth in General Instruction (H) (1)(a) and (b) of Form 10-Q and
are therefore filing this Form with the reduced disclosure format.
3
RENAISSANCE MEDIA GROUP LLC
RENAISSANCE MEDIA (LOUISIANA) LLC
RENAISSANCE MEDIA (TENNESSEE) LLC
RENAISSANCE MEDIA CAPITAL CORPORATION
FORM 10-Q - FOR THE QUARTER ENDED SEPTEMBER 30, 2000
INDEX
Page
Part I. Financial Information
Item 1. Financial Statements - Renaissance Media Group LLC and Subsidiaries. 4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 9
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K. 13
Signatures. 14
NOTE: Separate financial statements of Renaissance Media Capital Corporation
have not been presented as this entity had no operations and substantially no
assets or equity. Accordingly, management has determined that such financial
statements are not material.
4
PART I. FINANCIAL INFORMATION.
ITEM 1. FINANCIAL STATEMENTS.
RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
SUCCESSOR
------------------------------------------------
SEPTEMBER 30, DECEMBER 31,
2000 1999*
--------------------- ----------------------
ASSETS (UNAUDITED)
CURRENT ASSETS:
Cash and cash equivalents $ -- $ 3,521
Accounts receivable, less allowance for doubtful
accounts of $86 and $80, respectively 1,699 1,084
Prepaid expenses and other 274 157
Receivable from related party 4,359 12,500
--------------------- ----------------------
Total current assets 6,332 17,262
--------------------- ----------------------
INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net of accumulated
depreciation of $15,899 and $4,673, respectively 101,651 67,396
Franchises, net of accumulated amortization of $39,227
and $18,445, respectively 376,217 396,416
--------------------- ----------------------
477,868 463,812
--------------------- ----------------------
$484,200 $ 481,074
===================== ======================
LIABILITIES AND MEMBER'S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $21,299 $ 16,405
Payables to manager of cable systems - related parties 16,600 2,289
--------------------- ----------------------
Total current liabilities 37,899 18,694
--------------------- ----------------------
LONG-TERM DEBT 92,456 86,507
MEMBER'S EQUITY 353,845 375,873
--------------------- ----------------------
$484,200 $ 481,074
===================== ======================
The accompanying notes are an integral part of these consolidated statements.
- -----------
* Agrees with the audited consolidated balance sheet included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1999.
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RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
SUCCESSOR PREDECESSOR
---------------------- ----------------------
THREE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER, 30, 2000 SEPTEMBER 30, 1999
---------------------- ----------------------
REVENUES $17,200 $ 15,782
---------------------- ----------------------
OPERATING EXPENSES:
Operating, general and administrative 8,498 7,728
Depreciation and amortization 14,164 8,777
Corporate expense charges - related parties 293 311
---------------------- ----------------------
22,955 16,816
---------------------- ----------------------
Loss from operations (5,755) (1,034)
OTHER INCOME (EXPENSE):
Interest expense (2,027) (1,050)
Interest income 211 38
Other, net 11 --
---------------------- ----------------------
(1,805) (1,012)
---------------------- ----------------------
Net loss $ (7,560) $(2,046)
====================== ======================
The accompanying notes are an integral part of these consolidated statements.
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RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
SUCCESSOR PREDECESSOR
---------------------------------------------------- -----------------------
NINE MONTHS FOUR MONTHS
ENDED FIVE MONTHS ENDED ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999 APRIL 30, 1999
------------------------ ------------------------ -----------------------
REVENUES $50,815 $ 26,193 $ 20,396
------------------------ ------------------------ -----------------------
OPERATING EXPENSES:
Operating, general and administrative 24,656 12,608 9,317
Depreciation and amortization 40,987 14,570 8,912
Corporate expense charges - related parties
959 511 --
------------------------ ------------------------ -----------------------
66,602 27,689 18,229
------------------------ ------------------------ -----------------------
Income (loss) from operations (15,787) (1,496) 2,167
OTHER INCOME (EXPENSE):
Interest expense (5,949) (2,793) (6,321)
Interest income 211 38 122
Other, net (503) -- --
------------------------ ------------------------ -----------------------
(6,241) (2,755) (6,199)
------------------------ ------------------------ -----------------------
Net loss $(22,028) $ (4,251) $(4,032)
======================== ======================== =======================
The accompanying notes are an integral part of these consolidated statements.
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RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
SUCCESSOR PREDECESSOR
---------------------------------------- -------------------
NINE MONTHS FIVE MONTHS
ENDED ENDED FOUR MONTHS
SEPTEMBER 30, SEPTEMBER 30, ENDED
2000 1999 April 30, 1999
------------------- ------------------- -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (22,028) $ (4,251) $ (4,032)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization 40,987 14,570 8,912
Non-cash interest expense 5,949 2,744 3,850
Changes in assets and liabilities, net of effects from
acquisitions:
Accounts receivable (615) (14,816) 298
Prepaid expenses and other (117) 139 (75)
Receivable from related party 8,141 -- --
Accounts payable and accrued expenses 4,894 2,026 (5,046)
Payables to manager of cable systems - related parties 14,311 1,646 --
Other operating activities -- -- (135)
------------------- ------------------- -------------------
Net cash provided by operating activities 51,522 2,058 3,772
------------------- ------------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for acquisitions, net of cash acquired -- -- (2,770)
Purchase of property, plant and equipment (54,557) (3,937) (4,250)
Other investing activities (486) (268) 166
------------------- ------------------- -------------------
Net cash used in investing activities (55,043) (4,205) (6,854)
------------------- ------------------- -------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to parent -- (406) --
------------------- ------------------- -------------------
Net cash used in financing activities -- (406) --
------------------- ------------------- -------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (3,521) (2,553) (3,082)
CASH AND CASH EQUIVALENTS, beginning of period 3,521 5,400 8,482
------------------- ------------------- -------------------
CASH AND CASH EQUIVALENTS, end of period $ -- $ 2,847 $5,400
=================== =================== ===================
CASH PAID FOR INTEREST $ -- $ 2,525 $4,210
=================== =================== ===================
The accompanying notes are an integral part of these consolidated
statements.
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RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT WHERE INDICATED)
1. ORGANIZATION AND BASIS OF PRESENTATION
Renaissance Media Group LLC (Group) owns and operates cable systems
that provide programming and related services to subscribers. Group and its
subsidiaries are collectively referred to as the Company herein. All material
intercompany transactions and balances have been eliminated in consolidation.
On April 30, 1999, Charter Communications, LLC acquired all of the
outstanding membership interests in Group (the "Charter Transaction"). The
purchase price was $459 million, consisting of $348 million in cash and $111
million in accreted value of debt assumed.
As a result of the Charter Transaction, the application of push-down
accounting, and the allocation of purchase price, the financial information of
the Company in the accompanying consolidated financial statements for periods
subsequent to April 30, 1999 (the successor periods), is presented on a
different cost basis than the financial information of the Company for the
period prior to and through April 30, 1999 (the predecessor period). Therefore,
such information is not comparable.
2. RESPONSIBILITY FOR INTERIM FINANCIAL STATEMENTS
The accompanying consolidated financial statements of the Company have
been prepared in accordance with the rules and regulations of the Securities and
Exchange Commission. Accordingly, certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
The accompanying consolidated financial statements are unaudited;
however, in the opinion of management, such statements include all adjustments,
which consist of only normal recurring adjustments, necessary for a fair
presentation of the results for the periods presented. Interim results are not
necessarily indicative of results for a full year. For further information, see
the Company's Annual Report on Form 10-K for the year ended December 31, 1999.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Report includes forward-looking statements within the meaning of
the Securities Exchange Act of 1934, as amended, and of the Securities Act of
1933, as amended, and is subject to the safe harbors created by those acts. The
Company's actual results could differ materially from those discussed herein,
and its current business plans could be altered in response to market conditions
and other factors beyond the Company's control. The forward-looking statements
within this Form 10-Q are identified by words such as "believes," "anticipates,"
"expects," "intends," "may," "will" and other similar expressions. However,
these words are not the exclusive means of identifying such statements. In
addition, any statements that refer to expectations, projections or other
characterizations of future events or circumstances are forward-looking
statements. The Company undertakes no obligation to release publicly the results
of any revisions to these forward-looking statements that may be made to reflect
events or circumstances occurring subsequent to the filing of this Form 10-Q
with the SEC.
Important factors that could cause actual results to differ materially
from the forward-looking statements contained herein include, but are not
limited to, the following:
- - general economic and business conditions, both nationally and in the
regions where the Company operates;
- - anticipated capital expenditures for planned upgrades and the ability to
fund these expenditures;
- - technology changes;
- - the Company's ability to effectively compete in a highly competitive
environment;
- - changes in business strategy or development plans;
- - beliefs regarding the effects of governmental regulation on the Company's
business;
- - the ability to attract and retain qualified personnel; and
- - liability and other claims asserted against the Company.
Readers are urged to review and consider carefully the various
disclosures made by the Company in this Report and in the Company's other
reports filed with the SEC that attempt to advise interested parties of the
risks and factors that may affect the Company's business.
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RESULTS OF OPERATIONS
The following table summarizes amounts and the percentages of total
revenues for certain items for the periods indicated (dollars in thousands):
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
-------------------------- -------------------------------
Amount % Amount %
------ - ------ -
STATEMENT OF OPERATIONS:
Revenues (a) $ 50,815 100.0 $ 46,589 100.0
------------ --------- ---------------- ----------
Operating expenses:
Operating, general and administrative (a) 24,656 48.4 21,925 47.1
Depreciation and amortization 40,987 80.7 23,482 50.4
Corporate expense charges-related parties 959 1.9 511 1.1
------------ --------- ---------------- ----------
66,602 131.0 45,918 98.6
------------ --------- ---------------- ----------
Income (loss) from operations (15,787) (31.0) 671 1.4
Other income (expense):
Interest expense (5,949) (11.7) (9,114) (19.5)
Interest income 211 0.4 160 0.3
Other, net (502) (1.0) -- --
------------ --------- ---------------- ----------
(6,240) (12.3) (8,954) (19.2)
------------ --------- ---------------- ----------
Net loss $(22,027) (43.3) $(8,283) (17.8)
============ ========= ================ ==========
Other financial data is as follows for the periods indicated (dollars
in thousands, except Average Monthly Revenue per Basic Customer):
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
--------------------------- -------------------------------
EBITDA (b) $24,698 $24,153
Adjusted EBITDA (c) 26,159 24,664
Homes Passed (at period end) 201,300 170,800
Basic Customers (at period end) 135,100 132,300
Basic Penetration (at period end) 67% 77%
Premium Units (at period end) 101,800 60,800
Premium Penetration (at period end) 75% 46%
Average Monthly Revenue
per Basic Customer $41.79 $39.13
- ----------
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(a) Local governmental authorities impose franchise fees on the Company ranging
up to a federally mandated maximum of 5.0% of gross revenues. On a monthly
basis, such fees are collected from the Company's customers and are periodically
remitted to local franchises. Revenues and operating, general and administrative
expenses presented here have been restated for the period prior to April 30,
1999, to include the franchise fees collected from customers and then remitted
to local franchises as revenues.
(b) EBITDA represents earnings (loss) before interest and depreciation and
amortization. EBITDA is presented because it is a widely accepted financial
indicator of a cable company's ability to service indebtedness. However, EBITDA
should not be considered as an alternative to income from operations or to cash
flows from operating, investing or financing activities, as determined in
accordance with generally accepted accounting principles. EBITDA should also not
be construed as an indication of a company's operating performance or as a
measure of liquidity. In addition, because EBITDA is not calculated identically
by all companies, the presentation here may not be comparable to other similarly
titled measures of other companies. Management's discretionary use of funds
depicted by EBITDA may be limited by working capital, debt service and capital
expenditure requirements and by restrictions related to legal requirements,
commitments and uncertainties.
(c) Adjusted EBITDA means EBITDA before corporate expense charges and other
income (expense). Adjusted EBITDA is presented because it is a widely accepted
financial indicator of a cable company's ability to service indebtedness.
However, adjusted EBITDA should not be considered as an alternative to income
from operations or to cash flows from operating, investing or financing
activities, as determined in accordance with generally accepted accounting
principles. Adjusted EBITDA should also not be construed as an indication of a
company's operating performance or as a measure of liquidity. In addition,
because adjusted EBITDA is not calculated identically by all companies, the
presentation here may not be comparable to other similarly titled measures of
other companies. Management's discretionary use of funds depicted by adjusted
EBITDA may be limited by working capital, debt service and capital expenditure
requirements and by restrictions related to legal requirements, commitments and
uncertainties.
COMPARISON OF RESULTS
For purposes of the above comparison, the results for the predecessor
period (January 1, 1999 to April 30, 1999) have been combined with those for the
successor period (May 1, 1999 to September 30, 1999). As a result of the
acquisition of the Company by Charter Communications, LLC (the "Charter
Transaction"), the application of push-down accounting, and the allocation of
purchase price, the financial results for the periods presented above are not
comparable.
REVENUES. Revenues increased $4.2 million, or 9.1%, to $50.8 million
for the nine months ended September 30, 2000, from $46.6 million for the nine
months ended September 30, 1999. The increase in revenues for the nine months
ended September 30, 2000, resulted primarily from net gains in basic subscribers
and retail rate increases implemented. In addition, premium penetration
increased significantly.
OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES. Operating, general and
administrative expenses increased $2.7 million, or 12.5%, to $24.7 million for
the nine months ended September 30, 2000, from $21.9 million for the nine months
ended September 30, 1999. This increase was primarily due to increases in
license fees paid for programming due in part to an increase in license fees per
subscriber paid to programmers and in part to an increase in the number of
channels available to subscribers.
DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization
expense increased $17.5 million, or 74.5%, to $41.0 million for the nine months
ended September 30, 2000, from $23.5 million for the nine months ended September
30, 1999. This increase is primarily due to the Charter Transaction and
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the application of push-down accounting, which significantly increased the
carrying value of franchises and related amortization. In addition, capital
expenditures for system upgrades have increased, resulting in greater property,
plant and equipment balances and a corresponding increase in depreciation
expense.
CORPORATE EXPENSE CHARGES - RELATED PARTIES. These charges for the nine
months ended September 30, 2000, and for the five months ended September 30,
1999, represent costs incurred by Charter Investment, Inc. and Charter
Communications, Inc., both affiliates of the Company, on the Company's behalf.
INTEREST EXPENSE. Interest expense decreased $4.2 million, or 45.6%, to
$5.9 million for the nine months ended September 30, 2000, from $9.1 million
for the nine months ended September 30, 1999. This decrease is due to a decrease
in debt outstanding. In connection with the closing of the Charter Transaction
on April 30, 1999, all amounts outstanding under the Company's then-existing
credit agreement were paid in full, and the credit agreement was terminated. In
June 1999, pursuant to a change of control offer, Charter Communications
Operating, LLC, an indirect parent of the Company, repurchased 48,762 of the
Company's 10% Senior Discount Notes due 2008.
NET LOSS. Net loss increased by $13.7 million for the nine months ended
September 30, 2000, compared to the nine months ended September 30, 1999. The
increase in revenues and the decrease in interest expense were not sufficient to
offset the increases in operating, general and administrative, and depreciation
and amortization expenses discussed above.
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PART II. OTHER INFORMATION.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits (listed by numbers corresponding to the exhibit table in
Item 601 of Regulation S-K):
27.1 Financial Data Schedule (supplied for the information of the
Commission).*
- ---------
* Filed herewith.
(b) Reports on Form 8-K.
No reports on form 8-K were filed during the quarter ended September
30, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
RENAISSANCE MEDIA GROUP LLC
RENAISSANCE MEDIA (LOUISIANA) LLC
RENAISSANCE MEDIA (TENNESSEE) LLC
Dated November 13, 2000 By: CHARTER COMMUNICATIONS, INC.,
-----------------------------
their Manager
By: /s/ Kent D. Kalkwarf
-----------------------------
Name: Kent D. Kalkwarf
Title: Executive Vice President and
Chief Financial Officer (Principal
Financial Officer and Principal
Accounting Officer) of Charter
Communications, Inc. (Manager);
Renaissance Media Group LLC;
Renaissance Media (Louisiana) LLC;
and Renaissance Media (Tennessee)
LLC
RENAISSANCE MEDIA CAPITAL CORPORATION
Dated November 13, 2000 By: /s/ Kent D. Kalkwarf
---------------------------------
Name: Kent D. Kalkwarf
Title: Executive Vice President and
Chief Financial Officer (Principal
Financial Officer and Principal
Accounting Officer)
14
5
0001062363
RENAISSANCE MEDIA GROUP LLC
1,000
9-MOS
DEC-31-2000
JAN-01-2000
SEP-30-2000
0
0
1,785
86
0
6,332
117,550
15,899
484,200
37,899
92,456
0
0
0
353,845
484,200
0
50,815
0
0
66,602
0
5,949
(22,027)
0
(22,027)
0
0
0
(22,027)
0
0
