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 March 31, 2001. 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 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. 2
3 RENAISSANCE MEDIA GROUP LLC RENAISSANCE MEDIA (LOUISIANA) LLC RENAISSANCE MEDIA (TENNESSEE) LLC RENAISSANCE MEDIA CAPITAL CORPORATION FORM 10-Q QUARTER ENDED MARCH 31, 2001 TABLE OF CONTENTS Page ---- Part I. Financial Information Item 1. Financial Statements - Renaissance Media Group LLC and Subsidiaries. 5 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. 12 Signatures. 13 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. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This Quarterly 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 Quarterly Report are identified by words such as "believe," "anticipate," "expect," "intend," "should," "estimated," "potential," "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 Quarterly Report 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: o general economic and business conditions, both nationally and in the regions where the Company operates; o anticipated capital expenditures for planned upgrades and the ability to fund these expenditures; o technology changes; 3
4 o the Company's ability to effectively compete in a highly competitive environment; o changes in business strategy or development plans; o beliefs regarding the effects of governmental regulation on the Company's business; o the ability to attract and retain qualified personnel; and o 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 Quarterly 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. 4
5 PART I. FINANCIAL INFORMATION. ITEM 1. FINANCIAL STATEMENTS. RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS) MARCH 31, DECEMBER 31, 2001 2000* --------- ------------ ASSETS (UNAUDITED) CURRENT ASSETS: Cash and cash equivalents $ -- $ 1,809 Accounts receivable, less allowance for doubtful accounts of $228 and $212, respectively 3,306 1,172 Prepaid expenses and other current assets 365 131 -------- -------- Total current assets 3,671 3,112 -------- -------- INVESTMENT IN CABLE PROPERTIES: Property, plant and equipment, net of accumulated depreciation of $29,008 and $20,545, respectively 131,855 134,497 Franchises, net of accumulated amortization of $53,081 and $46,157, respectively 362,355 369,487 -------- -------- Total investment in cable properties, net 494,210 503,984 -------- -------- $497,881 $507,096 ======== ======== LIABILITIES AND MEMBER'S EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $ 18,054 $ 35,117 Payables to manager of cable systems - related parties 45,314 31,149 -------- -------- Total current liabilities 63,368 66,266 -------- -------- LONG-TERM DEBT 96,737 94,600 MEMBER'S EQUITY 337,776 346,230 -------- -------- $497,881 $507,096 ======== ======== The accompanying notes are an integral part of these consolidated financial 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, 2000. 5
6 RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS) THREE MONTHS THREE MONTHS ENDED ENDED MARCH 31, 2001 MARCH 31, 2000 -------------- -------------- (UNAUDITED) REVENUES $ 20,648 $ 16,541 -------- -------- OPERATING EXPENSES: Operating, general and administrative 10,189 7,959 Depreciation and amortization 16,418 12,337 Corporate expense charges - related parties 326 294 -------- -------- 26,933 20,590 -------- -------- Loss from operations (6,285) (4,049) OTHER INCOME (EXPENSE): Interest expense (2,137) (1,928) Other, net (32) 7 -------- -------- (2,169) (1,921) -------- -------- Net loss $ (8,454) $ (5,970) ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 6
7 RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS) THREE MONTHS THREE MONTHS ENDED ENDED MARCH 31, 2001 MARCH 31, 2000 -------------- -------------- (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (8,454) $ (5,970) Adjustments to reconcile net loss to net cash from operating activities: Depreciation and amortization 16,418 12,337 Accretion on senior discount notes and non-cash interest expense 2,137 1,928 Changes in operating assets and liabilities: Accounts receivable (2,134) (90) Prepaid expenses and other current assets (292) (97) Accounts payable and accrued expenses (17,063) (5,634) Payables to related parties, including deferred management fees 14,165 8,524 -------- -------- Net cash flows from operating activities 4,777 10,998 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment (6,586) (9,138) Other investing activities -- (34) -------- -------- Net cash flows from investing activities (6,586) (9,172) -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,809) 1,826 CASH AND CASH EQUIVALENTS, beginning of period 1,809 3,521 -------- -------- CASH AND CASH EQUIVALENTS, end of period $ -- $ 5,347 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 7
8 RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. ORGANIZATION AND BASIS OF PRESENTATION The accompanying consolidated financial statements of the Renaissance Media Group LLC (the "Company") include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated. As of March 31, 2001, the Company owns and operates cable systems serving approximately 146,000 customers. The Company currently offers a full array of traditional analog cable services and advanced bandwidth services such as digital television, interactive video programming, Internet access through television-based service, dial-up telephone modems and high speed cable modems, and video-on-demand. The Company operates primarily in the states of Tennessee and Louisiana. 2. RESPONSIBILITY FOR INTERIM FINANCIAL STATEMENTS The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States for interim financial information and the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures typically included in the Company's Annual Report on Form 10-K have been condensed or omitted for this Quarterly Report. 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. 3. RELATED PARTY TRANSACTION During the first quarter, the Company exchanged certain of its cable system assets for certain cable system assets of an affiliate. Service to the Company's customers was unaffected. This transaction did not have a material effect on the Company's consolidated financial position or results of operations. 8
9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS The following table summarizes amounts and the percentage of total revenues for certain items for the periods indicated (dollars in thousands): THREE MONTHS ENDED THREE MONTHS ENDED MARCH 31, 2001 MARCH 31, 2000 -------------------------- ------------------------- % OF % OF AMOUNT REVENUES AMOUNT REVENUES -------- -------- -------- -------- Revenues (a) $ 20,648 100.0 % $ 16,541 100.0 % -------- ------- -------- ------- Operating expenses: Operating, general and administrative 10,189 49.3 % 7,959 48.1 % Depreciation and amortization 16,418 79.5 % 12,337 74.6 % Corporate expense charges-related parties 326 1.6 % 294 1.8 % -------- ------- -------- ------- 26,933 130.4 % 20,590 124.5 % -------- ------- -------- ------- Loss from operations (6,285) (30.4)% (4,049) (24.5)% Other income (expense): Interest expense (2,137) (10.3)% (1,928) (11.6)% Other, net (32) (0.2)% 7 -- -------- ------- -------- ------- (2,169) (10.5)% (1,921) (11.6)% -------- ------- -------- ------- Net loss $ (8,454) (40.9)% $ (5,970) (36.1)% ======== ======= ======== ======= Other financial and operational data for the periods indicated follows (dollars in thousands, except average monthly revenue per basic customer): THREE MONTHS ENDED MARCH 31, ----------------------------- 2001 2000 -------- -------- EBITDA (b) $ 10,101 $ 8,295 Adjusted EBITDA (c) 10,459 8,582 Homes passed (at period end) (d) 211,389 193,085 Basic customers (at period end) (e) 146,070 133,215 Basic penetration (at period end) (f) 69.1% 69.0% Average monthly revenue per basic customer (quarter) (g) $ 47.12 $ 41.39 9
10 (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. (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 (loss) 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 the Company's operating performance or as a measure of liquidity. In addition, because EBITDA is not calculated identically by all companies, the presentation herein 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 (loss) 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 the Company's operating performance or as a measure of liquidity. In addition, because adjusted EBITDA is not calculated identically by all companies, the presentation herein 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. (d) Homes passed are the number of living units, such as single residence homes, apartments and condominium units, passed by the cable distribution network in a given cable system service area. (e) Basic customers are customers who receive basic cable service. (f) Basic penetration represents basic customers as a percentage of homes passed. (g) Average monthly revenue per basic customer represents revenues divided by the number of months in the period divided by the number of basic customers at period end. COMPARISON OF RESULTS REVENUES. Revenues increased $4.1 million, or 24.8%, to $20.6 million for the three months ended March 31, 2001 from $16.5 million for the three months ended March 31, 2000. The increase in revenues for the three months ended March 31, 2001 resulted primarily from net gains in basic and digital customers coupled with increased general rate increases. OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES. Operating, general and administrative expenses increased $2.2 million, or 27.5%, to $10.2 million for the three months ended March 31, 2001 from $8.0 million for the three months ended March 31, 2000. This increase was primarily due to increases in programming expenses due in part to continued inflationary increases coupled with increased channel capacity. DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization expense increased $4.1 million, or 33.3%, to $16.4 million for the three months ended March 31, 2001 from $12.3 million for the 10
11 three months ended March 31, 2000. This increase was due to a full quarter of depreciation expense on 2000 capital expenditures for system upgrades. CORPORATE EXPENSE CHARGES - RELATED PARTIES. These charges for the three months ended March 31, 2001 and 2000, represent costs incurred on our behalf by Charter Investment, Inc. and Charter Communications, Inc., both affiliates of ours. The increase was due to rising corporate costs as a result of internal growth. INTEREST EXPENSE. Interest expense increased $0.2 million, or 10.5%, to $2.1 million for the three months ended March 31, 2001 from $1.9 million for the three months ended March 31, 2000. This increase is due to an increase in debt resulting from capital expenditures in 2000 and the first quarter of 2001. NET LOSS. Net loss increased by $2.5 million, or 41.7%, to $8.5 million for the three months ended March 31, 2001 from $6.0 million for the three months ended March 31, 2000 as a result of the combination of factors discussed above. 11
12 PART II. OTHER INFORMATION. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (A) EXHIBITS None (B) REPORTS ON FORM 8-K No reports on Form 8-K were filed during the quarter ended March 31, 2001. 12
13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrants have duly caused this Quarterly 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 May 15, 2001 By: CHARTER COMMUNICATIONS, INC., --------------------------------- Registrants' 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 May 15, 2001 By: /s/ Kent D. Kalkwarf --------------------------------- Name: Kent D. Kalkwarf Title: Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) 13