UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 10-Q
--------------------------
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange act of 1934
For the quarterly period ended March 31, 1997 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 number: (S-1) 333-3084
RIFKIN ACQUISITION PARTNERS, L.L.L.P.
RIFKIN ACQUISITION CAPITAL CORP.
(Exact name of registrant as specified in its charter.)
Colorado 84-1317717
Colorado 84-1341424
(State of Incorporation)(I.R.S. Employer Identification No.)
360 South Monroe St., Suite 600
Denver, Colorado 80209
(Address of principal executive offices)(zip code)
Registrant's Telephone Number: (303) 333-1215
Indicated by check mark whether the registrant (1) has 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
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
<PAGE>
RIFKIN ACQUISITION PARTNERS, L.L.L.P.
INDEX
Page Number
-----------
Part I. Financial Information:
Item 1. Financial Statements:
Rifkin Acquisition Partners, L.L.L.P.
a. Pro Forma Consolidated Statement of Operations.. 3
b. Consolidated Balance Sheet...................... 4
c. Consolidated Statement of Cash Flows............ 6
d. Consolidated Statement of Partners' Capital
(Deficit)....................................... 7
e. Notes to Consolidated Financial Statements...... 8
Rifkin Acquisition Capital Corp.
a. Balance Sheet................................... 10
b. Notes to Balance Sheet.......................... 11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................ 12
Part II: Other Information:
Item 1. Legal Proceedings--(none)
Item 2. Changes in Securities--(none)
Item 3. Defaults Upon Senior Securities--(none)
Item 4. Submission of Matters to a Vote of Security
Holders--(none)
Item 5. Other Information
a. Revenue and Operating Cash Flow Report.......... 16
Item 6. Exhibits and Reports on Form 8-K--(none)
Signatures.................................................. 17
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RIFKIN ACQUISITION PARTNERS, L.L.L.P.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
-----------------
- ---------
1997 1996
----------- -----------
<S> <C> <C>
Revenue:
Service................................ $18,301,175 $14,070,866
Installation and other................. 1,035,154 1,411,864
----------- -----------
Total revenue 19,336,329 15,482,730
Costs and Expenses:
Operating Expense...................... 3,475,763 2,210,856
Programming Expense.................... 4,208,390 3,108,977
Selling, general and administrative
expense.............................. 2,537,871 2,079,253
Depreciation and amortization.......... 9,528,188 7,286,183
Management Fees........................ 676,771 522,286
Loss on disposal of assets............. 129,003 140,245
----------- -----------
Total costs and expenses......... 20,555,986 15,347,800
----------- -----------
Operating income (loss) (1,219,657) 134,930
Interest expense....................... 5,566,182 5,153,044
----------- -----------
Loss before income taxes (6,785,839) (5,018,114)
Income tax benefit..................... (788,000) (845,000)
----------- -----------
Net loss............................... $(5,997,839) $(4,173,114)
=========== ===========
Adjusted EBITDA........................ $ 8,602,534 $ 7,166,093
=========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
RIFKIN ACQUISITION PARTNERS, L.L.L.P.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
<CAPTION>
ASSETS
- ------
March 31, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Cash................................... $ 1,035,374 $ 1,387,232
Subscriber accounts receivable,
net of allowance for doubtful
accounts of $362,904 in 1997
and $381,197 in 1996............... 1,015,106 1,184,074
Other receivables...................... 2,283,356 2,622,375
Prepaid expenses and other............. 1,727,899 1,776,272
Property, plant and equipment at cost:
Cable television transmission and
distribution systems and related
equipment.......................... 116,444,367 110,600,391
Land, building, vehicles and
furniture and fixtures............. 6,131,187 5,726,169
------------ ------------
122,575,554 116,326,560
Less accumulated depreciation.......... (17,557,294) (14,264,937)
------------ ------------
Net property, plant and equipment 105,018,260 102,061,623
Franchise costs and other intangible
assets, net of accumulated
amortization of $35,288,193 in 1997
and $28,849,916 in 1996............. 184,404,499 190,801,885
------------ ------------
Total assets................. $295,484,494 $299,833,461
============ ============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
- -------------------------------------------
Accounts payable and accrued
liabilities.......................... $ 10,274,534 $ 9,937,238
Subscriber deposits and prepayments.... 1,353,094 1,272,279
Interest payable....................... 3,303,022 6,784,261
Deferred taxes payable................. 16,685,000 17,473,000
Notes payable.......................... 204,000,000 198,500,000
------------ ------------
Total liabilities............. 235,615,650 233,966,778
Commitments (Note 7)
Redeemable partners' interests....... 6,606,080 4,861,840
Partners' capital (deficit)
General partner...................... (1,587,362) (1,309,354)
Limited partners..................... 54,453,608 61,881,692
Preferred equity interest............ 396,518 432,505
------------ ------------
Total partners' capital...... 53,262,764 61,004,843
------------ ------------
Total liabilities and
partners' Capital.......... $295,484,494 $299,833,461
============ ============
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
RIFKIN ACQUISITION PARTNERS, L.L.L.P.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
<CAPTION>
ASSETS
- ------
March 31, March 31,
1997 1996
------------- ------------
<S> <S> <S>
Cash.................................... $ 1,035,374 $ 6,166,666
Subscriber accounts receivable,
net of allowance for doubtful
accounts of $362,904 in 1997
and $338,020 in 1996.................. 1,015,106 994,884
Other receivables....................... 2,283,356 1,502,296
Prepaid expenses and other.............. 1,727,899 1,266,788
Property, plant and equipment at cost:
Cable television transmission and
distribution systems and related
equipment........................... 116,444,367 93,695,252
Land, building, vehicles and
furniture and fixtures.............. 6,131,187 4,319,699
------------ ------------
122,575,554 98,014,951
Less accumulated depreciation........... (17,557,294) (5,075,954)
------------ ------------
Net property, plant and
equipment.................... 105,018,260 92,938,997
Franchise costs and other intangible
assets, net of accumulated
amortization of $35,288,193 in 1997
and $9,658,456 in 1996................ 184,404,499 204,335,900
------------ ------------
Total assets................... $295,484,494 $307,205,531
============ ============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
- -------------------------------------------
Accounts payable and accrued
liabilities........................... $ 10,274,534 $ 6,839,137
Subscriber deposits and prepayments..... 1,353,094 1,182,535
Interest payable........................ 3,303,022 2,584,948
Deferred taxes payable.................. 16,685,000 20,274,000
Notes payable........................... 204,000,000 193,000,000
------------ ------------
Total liabilities.............. 235,615,650 223,880,620
Commitments (Note 7)
Redeemable partners' interests and
detachable warrants................... 6,606,080 3,880,000
Partners' capital (deficit)
General partner....................... (1,587,362) (1,012,042)
Limited partners...................... 54,453,608 79,919,699
Preferred equity interest............. 396,518 537,254
------------ ------------
Total partners' capital........ 53,262,764 79,444,911
------------ ------------
Total liabilities and partners'
capital...................... $295,484,494 $307,205,531
============ ============
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
RIFKIN ACQUISITION PARTNERS, L.L.L.P.
CONSOLIDATED STATEMENT OF CASH FLOW (UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss................................. $(5,997,839) $(4,173,114)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation and amortization........ 9,528,188 7,286,183
Amortization of deferred loan cost 247,440 231,213
Loss on disposal of fixed assets..... 129,003 140,245
Deferred taxes benefit............... (788,000) (853,000)
Decrease (increase) in subscriber
accounts receivable................ 168,968 (109,976)
Decrease in other receivables........ 339,019 40,371
Decrease (increase) in prepaid
expenses and other................. 48,373 (342,559)
Increase (decrease) in accounts
payable and accrued liabilities.... 337,296 971,553
Increase in subscriber deposits
and prepayment..................... 80,815 221,007
Increase (decrease) in interest
payable............................ (3,481,239) 2,493,675
----------- -----------
Net Cash provided by operating
activities...................... 612,024 5,905,598
Cash flows from investing activities:
Acquisition of Mid-Tennessee Systems..... - (61,804,006)
Additions to property, plant and
equipment.............................. (6,468,637) (3,025,400)
Additions to cable television
franchises, net of retirements
and changes in other intangible
assets................................. (40,891) (33,959)
Net proceeds from the sale of assets 45,646 47,253
----------- -----------
Net cash used in investing
activities...................... (6,463,882) (64,816,112)
Cash flows from financing activities
Proceeds from issuance of Senior
subordinated notes..................... - 125,000,000
Proceeds from long-term bank debt........ 8,000,000 4,000,000
Deferred loan costs...................... - (5,740,840)
Payments of long term-bank debt.......... (2,500,000) (73,500,000)
Partners' capital contributions.......... - 15,000,000
----------- -----------
Net cash provided by financing
activities...................... 5,500,000 64,759,160
----------- -----------
Net increase in cash..................... (351,858) 5,848,646
Cash at beginning of quarter............. 1,387,232 318,020
----------- -----------
Cash at end of quarter................... $ 1,035,374 $ 6,166,666
=========== ===========
<FN>
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
RIFKIN ACQUISTION PARTNERS, L.L.L.P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
(UNAUDITED)
Three Months Ended March 31, 1997 and 1996
<CAPTION>
Preferred
Equity General Limited
Interest Partner Partners Total
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Partners' capital (deficit)
at 12/31/96............... $ 432,505 $(1,309,354) $61,881,692 $61,004,843
Net loss for the quarter
ended 3/31/97............. (35,987) (59,978) (5,901,874) (5,997,839)
Accretion of redeemable
partners' interest........ - (218,030) (1,526,210) (1,744,240)
---------- ---------- ----------- -----------
Partners' capital (deficit)
at 3/31/97................ $ 396,518 $(1,587,362) $54,453,608 $53,262,764
========= =========== =========== ===========
Partners' capital (deficit)
at 12/31/95............... $ 562,293 $(1,085,311) $69,421,043 $68,898,025
Net loss for the quarter
ended 3/31/96............. (25,039) (41,731) (4,106,344) (4,173,114)
Partners' contributions..... - 150,000 14,850,000 15,000,000
Accretion of redeemable
partners' interest........ - (35,000) (245,000) (280,000)
---------- ---------- ----------- -----------
Partners' capital (deficit)
at 3/31/96................ $ 537,254 $(1,012,042) $79,919,699 $79,444,911
========== =========== =========== ===========
<FN>
See accompanying notes to financial statement.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. General Information and Transfer of Net Assets
Rifkin Acquisition Partners, L.P. ("RAP L.P.") was formed on December 16,
1988, pursuant to the laws of the State of Colorado, for the purpose of
acquiring and operating cable television (CATV) systems. On September
1, 1995, RAP L.P. registered as a limited liability limited partnership,
Rifkin Acquisition Partners, L.L.L.P. (the "Partnership"), pursuant to
the laws of the State of Colorado. Rifkin Acquisition Management, L.P.,
was the general partner of RAP L.P. and is the general partner of the
Partnership ("General Partner"). The Partnership and its subsidiaries
are hereinafter referred to on a consolidated basis as the "Company."
The Partnership operates under a limited liability limited partnership
agreement (the "Partnership Agreement") which establishes contribution
requirements, enumerates the rights and responsibilities of the partners
and advisory committee, provides for allocations of income, losses and
distributions, and defines certain items relating thereto.
On September 1, 1995, unrelated third party investors purchased the
interest of certain limited partners in RAP L.P. and contributed
additional equity for an approximate 89% limited partner interest.
In addition, existing RAP L.P. limited and general interests were
carried over and additional equity contributed for 10% and 1%,
respectively (the "Carryover Interests"). Further, on September 1, 1995,
RAP L.P. was renamed Rifkin Acquisition Partners, L.L.L.P. and a new basis
of accounting was established.
This form 10-Q is being filed in conformity with the SEC requirements
for unaudited consolidated financial statements for the Company and does
not contain all of the necessary footnote disclosures required for a fair
presentation of the balance sheets, statements of operations, of partners'
capital(deficit), and of cash flows in conformity with generally accepted
accounting principles. However, in the opinion of management, this data
includes all adjustments, consisting only of normal recurring accruals,
necessary to present fairly the Company's consolidated financial position
at March 31, 1997, December 31, 1996 and March 31,1996, and its consolidated
results of operations and cash flows for the three months ended March 31,
1997 and 1996. The consolidated financial statements should be read in
conjunction with the Company's annual consolidated financial statements
and notes thereto included on Form 10-K, No. 333-3084, for the year ended
December 31, 1996.
2. Acquisition of Cable Properties
On March 1, 1996, the Company acquired certain cable operating assets
("Mid-Tennessee Systems") from Mid-Tennessee CATV, L.P., and on April
1, 1996 acquired certain cable operating assets ("RCT Systems") from
Rifkin Cablevision of Tennessee, Ltd. Both Mid-Tennessee CATV, L.P.
and Rifkin Cablevison of Tennessee, Ltd. were affiliates of the General
Partner. The acquisition cost was funded by $15 million of additional
partner contributions and the remainder from a portion of the proceeds
received from the issuance of $125 million of 11 1/8% Senior Subordinated
Notes due 2006 (see Note 3).
The acquisitions were accounted for using the purchase method of accounting,
and the results of operations of the Mid-Tennessee Systems have been included
in the consolidated financial statements since March 1, 1996, and the results
of the RCT Systems have been included in the consolidated financial statements
since April 1, 1996.
The following unaudited pro forma information presents a summary of
consolidated results of operations for the Company as if the Mid-Tennessee
and RCT Systems acquisitions had occurred at the beginning of 1996, with pro
forma adjustments to show the effect on depreciation and amortization for the
acquired assets, management fees on additional revenues and interest expense
on additional debt (dollars in thousands):
Quarter ended
March 31,
--------------------
1997 1996
-------- --------
Total revenues................................ $19,336 $18,543
Net loss...................................... (5,997) (5,100)
The pro forma financial information is not necessarily indicative of the
operating results that would have occurred had the Mid-Tennessee and RCT
Systems actually been acquired on January 1, 1996.
Subsequent to the March 31, 1997 consolidated financial statement date,
the Company acquired, on April 1, 1997, the cable operating assets of two
cable systems serving the Tennessee communities of Shelbyville and Manchester,
for an aggregate purchase price of approximately $19,750,000 subject to
certain post-closing adjustments.
3. Senior Subordinated Notes
On January 26, 1996, the Company and its wholly-owned subsidiary, Rifkin
Acquisition Capital Corp (RAC), co-issued a $125 million aggregate principal
amount of 11 1/8% Senior Subordinated Notes ("the Notes") to institutional
investors. These Notes were subsequently exchanged on June 18, 1996 for
publicly registered notes with identical terms. Interest on the Notes is
payable in cash, semi-annually on January 15 and July 15 of each year,
commencing on July 15, 1996. The Notes, which mature on January 15, 2006,
can be redeemed in whole or in part, at the Issuers' option, at any time on
or after January 15, 2001, at redeemable prices contained in the Notes plus
accrued interest. In addition, at any time on or prior to January 15, 1999,
the Issuers, at their option, may redeem up to 25% of the principle amount
of the notes issued to institutional investors of not less than $25 million.
The Senior Subordinated Notes had a balance of $125 million At March 31, 1997
and 1996.
RIFKIN ACQUISITION CAPITAL CORP.
BALANCE SHEET
March 31, December 31,
1997 1996
------------ ------------
Assets
Cash.......................................... $ 1,000 $ 1,000
----------- ------------
Total assets............................ $ 1,000 $ 1,000
============ ============
Stockholder's Equity
Common Stock; $1.00 par value;
10,000 shares authorized, 1000
shares issued and outstanding........... $ 1,000 $ 1,000
------------ ------------
Total stockholder's equity....... $ 1,000 $ 1,000
============ ============
The accompanying notes are an integral part of the balance sheet.
RIFKIN ACQUISITION CAPITAL CORP.
NOTES TO BALANCE SHEET
1. Organization and Summary of Significant Accounting Policies
Organization
Rifkin Acquisition Capital Corp. ("RACC"), a Colorado Corporation, was formed
on January 24, 1996, as a wholly-owned subsidiary of Rifkin Acquisition
Partners, L.L.L.P. (the "Partnership") for the purpose of co-issuing, with
the Partnership, $125.0 million in Senior Subordinated Notes (the "Notes")
which were used to repay advances under the Partnership's term debt and to
fund the Partnership's acquisitions of certain cable television systems.
Upon closing of the Notes issuance on January 26, 1996, none of the Notes
were issued by RACC; accordingly, no debt is reflected on its balance sheet.
In addition, RACC does not, and is not expected to have, any other operations;
as such, no statements of operations, stockholder's equity or cash flows are
presented.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
In August 1995, Rifkin Acquisition Partners, L.L.L.P. (the "Company") effected
a recapitalization in which a group led by VS&A Communications Partners II,
L.P. and further comprised of Greenwich Street (RAP) Partners I, L.P., IEP
Holdings I LLC and Paine Webber Capital, Inc. acquired the interests of certain
limited partners in Rifkin Acquisition Partners, L.P. (the "Predecessor").
Concurrently, all of the Predecessor's debt was repaid and the Company entered
into a new credit agreement (the "Credit Agreement") with a syndicate of banks.
In addition, in January 1996, the Company completed the issuance of $125
million of 11 1/8% Senior Subordinated Notes due 2006 ("Notes") and amended
its Credit Agreement to provide ongoing borrowing availability, including
availability to finance acquisitions.
Three months ended March 31, 1997 compared to three months ended March 31, 1996
Revenue increased 24.9%, or approximately $3.9 million, to approximately $19.3
million for the three months ended March 31, 1997 from approximately $15.5
million for the three months ended March 31, 1996. This increase resulted
from the following: (a) approximately $500,000 from growth in basic customers
and increases in basic and tier rates, (b) approximately $2.3 million in total
revenue as a result of the March 1, 1996 acquisition of cable systems serving
Hickory Hill, Lebanon and McMinnville, Tennessee (the "Mid-Tennessee
Acquisition"), and (c) approximately $1.1 million in total revenue as a
result of the April 1, 1996 acquisition of cable systems serving Fayetteville,
Lawrenceburg and Pulaski, Tennessee (the "RCT Acquisition"). Basic
customers increased 10.9% to approximately 185,600 at March 31, 1997 from
approximately 167,300 at March 31, 1996. This increase was attributable
to the approximate 12,200 customers acquired in the RCT Acquisition, as
well as continued growth in Georgia (3,900) and Tennessee (2,300) systems.
Average monthly revenue per customer increased 5.1% from $31.31 for the
three months ended March 31, 1996 to $32.91 for 1997. Premium service units
increased 1.5% to 103,700 as of March 31, 1997, from 102,100 as of March 31,
1996, largely as a result of the RCT Acquisition (6,900) offset by decreases
in Tennessee as a result of moving the Disney Channel from premium to tier
in certain systems. The Company's premium penetration decreased to
55.9% from 61.0% between the comparable periods in 1997 and 1996 due
mainly to decreased premium penetrations in Tennessee, again as a result
of moving the Disney Channel from premium to tier in certain systems.
Operating expense, which includes costs related to technical personnel,
franchise fees and repairs and maintenance, increased 57.2%, or approximately
$1.3 million to approximately $3.5 million for the three months ended
March 31, 1997 from approximately $2.2 million in 1996, and increased
as a percentage of revenue to 18.0% from 14.3%. Approximately $500,000
and $200,000 of the increase relates to the operating expense of the
acquired systems in the Mid-Tennessee Acquisition and RCT Acquisition,
respectively. Approximately $300,000 of the increase relates to higher
salaries and benefits as a result of added technical personnel and
annual wage increases.
Programming expense, which includes costs related to basic, tier and
premium services, increased 35.3%, or approximately $1.1 million, to
approximately $4.2 million for the three months ended March 31, 1997
from approximately $3.1 million for the three months ended March 31,
1996, and increased as a percentage of revenue to 21.8% from 20.1%.
Approximately $500,000 and $300,000 of the increase relates to the
programming expenses of the acquired systems in the Mid-Tennessee
Acquisition and RCT Acquisition, respectively. The remainder of
the increase is due to program vendor rate increases and the addition
of programming in certain systems.
Selling, general and administrative expense, which includes expenses
related to on-site office and customer-service personnel, customer
billing and postage and marketing, increased 22.1%, or approximately
$500,000 to approximately $2.5 million for the three months ended
March 31, 1997 from approximately $2.1 million for the same period in
1996. As a percentage of revenue, selling, general and administrative
expense decreased to 13.1% for the three months ended March 31, 1997
from 13.4% for the same period in 1996. Approximately $300,000 and
$200,000 related to the selling, general and administrative expense
of the acquired systems in the Mid-Tennessee Acquisition and RCT
Acquisition, respectively.
Depreciation and amortization expense of approximately $9.5 million
for the three months ended March 31, 1997 increased approximately $2.2
million from depreciation and amortization expense for the same period
in 1996. The increases in depreciation resulted primarily from increases
of approximately $3.0 million in the first quarter of 1996 and approximately
$6.5 million in the comparable period in 1997 in property, plant and
equipment. The increases in amortization expense resulted primarily from
the amortization of franchise cost related to the Mid-Tennessee Acquisition
and RCT Acquisition, respectively. As a percentage of revenue, depreciation
and amortization expenses increased to 49.3% in the first quarter of 1997
from 47.1% in the comparable period in 1996.
Management fees, equal to 3.5% of gross revenue, increased to approximately
$700,000 in the first quarter of 1997 from management fees of approximately
$500,000 in the comparable period of 1996, due to the increase in the
Company's revenue as a result of rate increases as well as the Mid-Tennessee
Acquisition and RCT Acquisition, respectively.
The loss on disposal of assets, primarily the write-off of replaced house
drops and rebuilt trunk and distribution equipment, remained constant at
approximately $100,000 in the first quarters of 1997 and 1996.
Interest expense in the first quarter of 1997 increased by approximately
$400,000 or 8.0% over interest for the same period in 1996 and decreased
as a percentage of revenue from 33.3% to 28.8%. Interest expense was
based on an average debt balance of $203.1 million with an average interest
rate of 11.0% and an average debt balance of $212.1 million with an average
interest rate of 9.7% for the first quarters of 1997 and 1996, respectively.
This increase was primarily a result of higher interest costs in 1997.
The Company is a "pass-through" entity for income tax purposes. All
income or loss flows through to the partners of the Company in accordance
with the Partnership Agreement. An income tax benefit of approximately
$800,000 was recorded in each of the three month periods ended March 31,
and relates to deferred income taxes recorded as a result of the non-cash
tax liability of the Company's corporate subsidiaries in conjunction with
the application of Financial Accounting Standard No. 109 (FAS 109),
"Accounting for Income Taxes."
As a result of the factors discussed above, net loss increased 43.7%, or
approximately $1.8 million in the three months ended March 31, 1997 compared
to the comparable period of 1996.
Adjusted EBITDA, defined as income (loss) before interest expense, income
taxes, depreciation and amortization, loss on disposal of assets,
non-recurring interest income (related to the escrowed Notes proceeds)
and the non-cash provision for the management incentive plan increased 19.7%,
or approximately $1.4 million, to approximately $8.6 million in 1997 from
$7.2 million in 1996. As a percentage of revenue, Adjusted EBITDA decreased
to 44.5% in the first quarter of 1997 from 46.3% in the comparable period in
1996 as the Company's expense growth exceeded its revenue growth. Industry
analysts generally consider Adjusted EBITDA to be an appropriate measure of
the performance of multi-channel television operations. Adjusted EBITDA
is not presented in accordance with generally accepted accounting principles
and should not be considered an alternative to, or more meaningful than,
operating income or operating cash flow as an indication of the Company's
operating performance.
LIQUIDITY AND CAPITAL RESOURCES
The Company has relied upon cash generated by operations, borrowing and
equity contributions to fund capital expenditures and acquisitions, service
its indebtedness and finance its working capital needs. During the
comparable three month periods ended March 31, 1997 and 1996, net cash
provided by operations (including changes in working capital) of the Company
was approximately $600,000 and $5.9 million, respectively.
From December 31, 1996, the Company's available cash decreased from
approximately $1.4 million to approximately $1.0 million. For the same
comparable dates, accounts payable and accrued liabilities increased by
approximately $300,000 to approximately $10.3 million. Interest payable
decreased from approximately $6.8 million to approximately $3.3 million
for the same comparable dates due primarily to the effect of the timing
of payments. Also, for the same comparable dates, deferred taxes payable
decreased approximately $800,000 to approximately $16.7 million as a result
of differences in book and tax depreciation and amortization lives and
methods. Notes payable increased by $5.5 million from December 31, 1996
to March 31, 1997 due to capital expenditures primarily related to planned
Georgia and Tennessee plant upgrades.
Additionally, in conjunction with the Mid-Tennessee and RCT Acquisitions
and the issuance of the Notes, the partners of the Company contributed an
additional $15 million of equity.
The Company has increased its total consolidated debt to $204 million as
of March 31, 1997 from $198.5 million at December 31, 1996. The Company
has unused commitments under the Amended and Restated Credit Agreement of
$67.1 million, $9.7 million of which is available for general corporate
purposes. Access to the remaining $57.4 million of availability under the
Credit Agreement for general corporate purposes or Permitted Acquisitions
(as defined in the Amended and Restated Credit Agreement) is subject to
the Company's compliance with all covenants in such facility and the
Company's Total Funded Debt Ratio (defined as the ratio of funded
indebtedness of the Company to annualized Adjusted EBITDA based on the
most recent quarter) being below 6.25x. As of March 31, 1997, the Company's
Total Funded Debt Ratio was 5.97x. Interest payments on the Notes and
interest and principal payments under the Amended and Restated Credit
Agreement represent significant liquidity requirements for the Company.
The Amended and Restated Credit Agreement provides for two term loan facilities
in a total amount of $65 million. Term Loan A in the amount of $25 million,
matures on March 31, 2003 and begins amortizing on March 31, 2000. Term Loan
B in the amount of $40 million, matures March 31, 2004 and begins amortizing
March 31, 2002. The Amended and Restated Credit Agreement also provides for
an $80 million reducing revolving facility, which has reduced to $78.1
million as of March 31, 1997, with a final maturity date of March 31, 2003.
Borrowings under the Amended and Restated Credit Agreement will bear interest
at floating rates and will require interest payments on various dates
depending upon the interest rate options selected by the Company.
In addition to its debt service obligations, the Company will require
liquidity for capital expenditures and working capital needs. The
cable television business requires substantial capital for construction,
expansion and maintenance of plant and the Company has committed substantial
capital resources to (i) expand its cable systems; (ii) conduct routine
replacement of cable television plant; and (iii) increase the channel
capacity of certain systems.
The Company expects that cash flow from operating activities and available
borrowings will be sufficient to meet its debt service obligations,
anticipated capital expenditure requirements and working capital needs for
the next twelve months, as well as through the maturity date of the Notes.
The Amended and Restated Credit Agreement and the Indenture restrict,
among other things, the Company's and the Subsidiary Guarantors' ability
to incur additional indebtedness, incur liens, pay distributions or make
certain other restricted payments, consummate certain asset sales, enter
into certain transactions with affiliates, merge or consolidate with any
other person or sell, assign, transfer, lease, convey or otherwise dispose
of all or substantially all of the assets of the Company. The Amended
and Restated Credit Agreement also requires the Company to maintain
specified financial ratios and satisfy certain financial condition tests.
The obligations under the Amended and Restated Credit Agreement are secured
by (i) a pledge of all of the equity interest of the Company's subsidiaries
and (ii) subject to certain exceptions, a perfected first priority security
interest in all tangible and intangible assets.
<PAGE>
<TABLE>
PART II: OTHER INFORMATION
ITEM 5. OTHER INFORMATION
RIFKIN ACQUISITION PARTNERS, L.L.L.P.
REVENUE AND OPERATING CASH FLOW REPORT
(UNAUDITED)
Three Months Ended March 31, 1997 and 1996
<CAPTION>
REVENUES:
1997 1996
------------ -----------
<S> <C> <C>
Georgia................................ $ 6,059,311 $ 5,497,034
Illinois............................... 2,455,047 2,378,755
Michigan............................... 1,090,188 1,051,969
RTL-Tennessee.......................... 5,162,549 4,885,866
RAP-Tennessee.(3)...................... 4,546,365 1,058,532
Other(2)............................... 22,869 610,574
------------ ------------
Total............................... $19,336,329 $15,482,730
============ ============
OPERATING CASH FLOW(1):
Georgia................................ $ 2,912,397 $ 2,817,913
Illinois............................... 1,234,360 1,211,724
Michigan............................... 543,965 535,746
RTL-Tennessee.......................... 2,600,361 2,553,289
RAP-Tennessee.(3)...................... 1,987,190 527,815
Other.................................. 1,032 602,157
----------- ------------
Total............................... $ 9,279,305 $ 8,248,644
=========== ===========
OPERATING CASH FLOW AS A PERCENT OF REVENUES:
Georgia................................ 48.1% 51.3%
Illinois............................... 50.3% 50.9%
Michigan............................... 49.9% 50.9%
RTL-Tennessee.......................... 50.4% 52.3%
RAP-Tennessee.(3)...................... 43.7% 49.9%
Total (excluding other)............. 48.0% 51.4%
<FN>
(1) Excludes management fee expense of $676,771 and $413,644, net losses related
to the disposition of certain plant assets of $129,003 and $41,434 for the
quarters ended March 31, 1997 and 1996, respectively, and non-cash
management incentive plan expense of $165,000 for both quarters ended March
31, 1997 and 1996.
(2) Principally interest income. In addition, 1996 includes interest income from
Senior Subordinated Notes proceeds held in escrow from January 31, 1996
through March 1, 1996, totalling $560,265.
(3) Activity relates to the Mid-Tennessee Systems acquired on March 1, 1996, and
the RCT Systems acquired on April 1, 1996.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Denver,
State of Colorado, as of May 15, 1997.
RIFKIN ACQUISITION PARTNERS, L.L.L.P.
By: Rifkin Acquisition Management, L.P.
a Colorado limited partnership, its
general partner
By: RT Investments Corp., a Colorado
corporation, its general partner
By: /s/ Dale D. Wagner
Dale D. Wagner
Its: Vice President & Assistant Treasurer
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001011701
<NAME> RIFKIN ACQUISITION CAPITAL CORP
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,035
<SECURITIES> 0
<RECEIVABLES> 1,015
<ALLOWANCES> 362
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 122,576
<DEPRECIATION> 17,557
<TOTAL-ASSETS> 295,484
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 204,000
0
0
<COMMON> 0
<OTHER-SE> 59,869
<TOTAL-LIABILITY-AND-EQUITY> 295,484
<SALES> 0
<TOTAL-REVENUES> 19,336
<CGS> 0
<TOTAL-COSTS> 20,427
<OTHER-EXPENSES> 129
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,566
<INCOME-PRETAX> (6,786)
<INCOME-TAX> (788)
<INCOME-CONTINUING> (5,998)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,998)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>The amount shown for current assets and current liabilities is
zero due to an unclassified balance sheet in the financial
statements.
</FN>
</TABLE>
