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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 June 30, 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.)
12405 Powerscourt Drive
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
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.
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RENAISSANCE MEDIA GROUP LLC
RENAISSANCE MEDIA (LOUISIANA) LLC
RENAISSANCE MEDIA (TENNESSEE) LLC
RENAISSANCE MEDIA CAPITAL CORPORATION
FORM 10-Q
QUARTER ENDED JUNE 30, 2001
TABLE OF CONTENTS
PAGE
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Part I. Financial Information
Item 1. Financial Statements - Renaissance Media Group LLC
and Subsidiaries. 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K. 11
Signatures. 12
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;
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.
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PART I. FINANCIAL INFORMATION.
ITEM 1. FINANCIAL STATEMENTS.
RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
JUNE 30, DECEMBER 31,
2001 2000*
----------- ------------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ -- $ 1,809
Accounts receivable, less allowance for doubtful
accounts of $219 and $212, respectively 3,948 1,172
Prepaid expenses and other current assets 457 131
-------- --------
Total current assets 4,405 3,112
-------- --------
INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net of accumulated
depreciation of $35,196 and $20,545, respectively 141,740 134,497
Franchises, net of accumulated amortization of $60,005
and $46,157, respectively 355,434 369,487
-------- --------
Total investment in cable properties, net 497,174 503,984
-------- --------
$501,579 $507,096
======== ========
LIABILITIES AND MEMBER'S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 18,942 $35,117
Payables to manager of cable systems - related parties 53,451 31,149
-------- --------
Total current liabilities 72,393 66,266
-------- --------
LONG-TERM DEBT 98,942 94,600
MEMBER'S EQUITY 330,244 346,230
-------- --------
$501,579 $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.
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RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
THREE MONTHS THREE MONTHS
ENDED ENDED
JUNE 30, 2001 JUNE 30, 2000
-------------- -------------
(UNAUDITED)
REVENUES $21,302 $17,074
------- -------
OPERATING EXPENSES:
Operating, general and administrative 10,328 8,199
Depreciation and amortization 15,934 14,486
Corporate expense charges - related parties 323 372
------- -------
26,585 23,057
------- -------
Loss from operations (5,283) (5,983)
OTHER INCOME (EXPENSE):
Interest expense (2,205) (1,994)
Loss on disposal of equipment -- (504)
Other, net (44) (17)
------- -------
(2,249) (2,515)
------- -------
Net loss $(7,532) $(8,498)
======= =======
The accompanying notes are an integral part of these
consolidated financial statements.
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RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 2001 JUNE 30, 2000
------------- -------------
(UNAUDITED)
REVENUES $ 41,950 $ 33,615
-------- --------
OPERATING EXPENSES:
Operating, general and administrative 20,517 16,158
Depreciation and amortization 32,352 26,823
Corporate expense charges - related parties 649 666
-------- --------
53,518 43,647
-------- --------
Loss from operations (11,568) (10,032)
OTHER INCOME (EXPENSE):
Interest expense (4,342) (3,922)
Loss on disposal of equipment -- (504)
Other, net (76) (10)
-------- --------
(4,418) (4,436)
-------- --------
Net loss $(15,986) $(14,468)
======== ========
The accompanying notes are an integral part of these
consolidated financial statements.
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RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 2001 JUNE 30, 2000
------------- -------------
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(15,986) $(14,468)
Adjustments to reconcile net loss to net cash from
operating activities:
Depreciation and amortization 32,352 26,823
Noncash interest expense 4,342 3,922
Loss on disposal of equipment -- 504
Changes in operating assets and liabilities:
Accounts receivable (2,776) 115
Prepaid expenses and other current assets (546) (36)
Accounts payable and accrued expenses (16,175) 5,922
Payables to related parties 22,302 13,775
Other operating activities -- (3)
-------- --------
Net cash flows from operating activities 23,513 36,554
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (25,322) (38,307)
Other investing activities -- (1,150)
-------- --------
Net cash flows from investing activities (25,322) (39,457)
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,809) (2,903)
CASH AND CASH EQUIVALENTS, beginning of period 1,809 3,521
-------- --------
CASH AND CASH EQUIVALENTS, end of period $ -- $ 618
======== ========
The accompanying notes are an integral part of these
consolidated financial statements.
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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 in consolidation. The Company is a wholly-owned subsidiary
of Charter Communications Holdings, LLC. As of June 30, 2001, the Company owns
and operates cable systems serving approximately 148,000 customers. The Company
currently offers a full array of traditional analog cable services and advanced
bandwidth services such as digital cable 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 accounting principles generally accepted 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. Certain amounts in the accompanying 2000
consolidated financial statements have been reclassified to conform with the
2001 presentation.
3. NEW ACCOUNTING STANDARDS
In July 2001, the Financial Accounting Standards Board adopted Statements
of Financial Accounting Standards (SFAS) No. 141 "Business Combinations" and No.
142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires all business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method of accounting. SFAS No. 141 is required to be implemented for
all acquisitions initiated after June 30, 2001 and all business combinations
accounted for using the purchase method for which the date of acquisition is
July 1, 2001 or later. Adoption of SFAS No. 141 will not impact the consolidated
financial statements of the Company.
Under SFAS No. 142, goodwill is no longer subject to amortization over its
useful life, rather, it is subject to at least annual assessments of impairment.
Also, under SFAS No. 142, an intangible asset should be recognized if the
benefit of the intangible is obtained through contractual or other legal rights
or if the intangible asset can be sold, transferred, licensed, rented or
exchanged. Such intangibles will be amortized over their useful lives. Certain
intangibles have indefinite useful lives and will not be amortized. SFAS No. 142
will be implemented by the Company on January 1, 2002. All goodwill and
intangible assets acquired after June 30, 2001 will be immediately subject to
the provisions of SFAS No. 142. The Company is currently in process of assessing
the future impact of adoption of SFAS No. 142.
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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):
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2001 JUNE 30, 2000
--------------------------- ----------------------
% OF % OF
AMOUNT REVENUES AMOUNT REVENUES
----------- ---------- -------- --------
(UNAUDITED) (UNAUDITED)
Revenues (a) $ 41,950 100.0 % $ 33,615 100.0 %
-------- ----- -------- -----
Operating expenses:
Operating, general and administrative 20,517 48.9 % 16,158 48.0 %
Depreciation and amortization 32,352 77.1 % 26,823 79.8 %
Corporate expense charges - related parties 649 1.5 % 666 2.0 %
-------- ----- -------- -----
53,518 127.5 % 43,647 129.8 %
-------- ----- -------- -----
Loss from operations (11,568) (27.5)% (10,032) (29.8)%
Other income (expense):
Interest expense (4,342) (10.4)% (3,922) (11.7)%
Loss on disposal of equipment -- -- (504) (1.5)%
Other, net (76) (0.2)% (10) --
-------- ----- -------- -----
(4,418) (10.6)% (4,436) (13.2)%
-------- ----- -------- -----
Net loss $(15,986) (38.1)% $(14,468) (43.0)%
======== ===== ======== =====
Other financial and operational data for the periods indicated follows
(dollars in thousands, except average monthly revenue per basic customer):
SIX MONTHS ENDED JUNE 30,
-------------------------------
2001 2000
---------- ---------
EBITDA (b) $ 20,708 $ 16,277
Adjusted EBITDA (c) 21,433 17,457
Cash flows from operating activities 23,513 36,554
Cash flows from investing activities (25,322) (39,457)
Cash flows from financing activities -- --
Homes passed (at period end) (d) 211,300 193,100
Basic customers (at period end) (e) 147,700 135,000
Basic penetration (at period end) (f) 69.9% 69.9%
Digital customers (at period end) (g) 45,061 6,868
Digital penetration (at period end) (h) 30.5% 5.1%
Average monthly revenue per basic customer (quarter) (i) $ 48.07 $ 42.16
(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.
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(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) Digital customers are customers who receive digital cable service.
(h) Digital penetration represents digital customers as a percentage of basic
customers.
(i) 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 $8.4 million, or 25.0%, to $42.0 million for
the six months ended June 30, 2001 from $33.6 million for the six months ended
June 30, 2000. The increase in revenues for the six months ended June 30, 2001
resulted primarily from net gains in basic and digital customers coupled with
general inflationary rate increases.
OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES. Operating, general and
administrative expenses increased $4.3 million, or 26.5%, to $20.5 million for
the six months ended June 30, 2001 from $16.2 million for the six months ended
June 30, 2000. This increase was primarily due to net gains in customers and
increased programming expenses due to continued inflationary increases coupled
with increased channel capacity.
DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization
expense increased $5.6 million, or 20.9%, to $32.4 million for the six months
ended June 30, 2001 from $26.8 million for the six months ended June 30, 2000.
This increase was due to expenditures under our rebuild and upgrade program in
2000 and 2001.
CORPORATE EXPENSE CHARGES - RELATED PARTIES. Corporate expense charges for
the six months ended June 30, 2001 and 2000, represent costs incurred on our
behalf by Charter Investment, Inc. and Charter Communications, Inc., both
affiliates of ours. The decrease was due to increased activities performed
internally during the six months ended June 30, 2001 as compared with the six
months ended June 30, 2000.
INTEREST EXPENSE. Interest expense increased $0.4 million, or 10.3%, to
$4.3 million for the six months ended June 30, 2001 from $3.9 million for the
six months ended June 30, 2000. This increase is due to an increase in debt
during the three months ended June 30, 2001 to fund capital expenditures in 2000
and the six months ended June 30, 2001.
NET LOSS. Net loss increased by $1.5 million, or 10.3%, to $16.0 million
for the six months ended June 30, 2001 from $14.5 million for the six months
ended June 30, 2000 as a result of the combination of the factors discussed
above.
NEW ACCOUNTING STANDARDS
In July 2001, the Financial Accounting Standards Board adopted SFAS No. 141
"Business Combinations" and No. 142, "Goodwill and Other Intangible Assets."
SFAS No. 141 requires all business combinations initiated after June 30, 2001 to
be accounted for using the purchase method of accounting. SFAS No. 141 is
required to be implemented for all acquisitions initiated after June 30, 2001
and all business combinations accounted for using the purchase method for which
the date of acquisition is July 1, 2001 or later. Adoption of SFAS No. 141 will
not impact the consolidated financial statements of the Company.
Under SFAS No. 142, goodwill is no longer subject to amortization over its
useful life, rather, it is subject to at least annual assessments of impairment.
Also, under SFAS No. 142, an intangible asset should be recognized if the
benefit of the intangible is obtained through contractual or other legal rights
or if the intangible asset can be sold, transferred, licensed, rented or
exchanged. Such intangibles will be amortized over their useful lives. Certain
intangibles have indefinite useful lives and will not be amortized.
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SFAS No. 142 will be implemented by the Company on January 1, 2002. All goodwill
and intangible assets acquired after June 30, 2001 will be immediately subject
to the provisions of SFAS No. 142. The Company is currently in process of
assessing the future impact of adoption of SFAS No. 142.
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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 June 30,
2001.
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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
Date: August 10, 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
Date: August 10, 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)
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