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, 1998 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>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
<TABLE>
RIFKIN ACQUISITION PARTNERS, L.L.L.P.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1998 1997
<S> <C> <C>
Revenue:
Service................................ $20,535,417 $18,301,175
Installation and other................. 1,470,093 1,035,154
Total revenue 22,005,510 19,336,329
Costs and Expenses:
Operating expense...................... 3,546,468 3,475,763
Programming expense.................... 4,941,131 4,208,390
Selling, general and administrative
expense.............................. 2,748,970 2,537,871
Depreciation and amortization.......... 9,442,832 9,528,188
Management fees........................ 770,193 676,771
Loss on disposal of assets............. 260,912 129,003
Gain on sale of Michigan assets........ (5,989,846) -
Total costs and expenses......... 15,720,660 20,555,986
Operating income (loss) 6,284,850 (1,219,657)
Interest expense....................... 5,945,495 5,566,182
Income (loss) before income taxes...... 339,355 (6,785,839)
Income tax benefit..................... (1,098,000) (788,000)
Net income (loss)...................... $ 1,437,355 $(5,997,839)
Adjusted EBITDA........................ $10,188,747 $ 8,602,534
<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,
1998 1997
<S> <C> <C>
Cash................................... $ 1,191,237 $ 1,902,555
Subscriber accounts receivable,
net of allowance for doubtful
accounts of $429,857 in 1998
and $425,843 in 1997............... 1,008,720 1,371,050
Other receivables...................... 4,018,907 4,615,089
Prepaid expenses and other............. 1,927,323 1,753,257
Property, plant and equipment at cost:
Cable television transmission and
distribution systems and related
equipment.......................... 131,851,390 131,806,310
Land, building, vehicles and
furniture and fixtures............. 6,804,551 7,123,429
138,655,941 138,929,739
Less accumulated depreciation.......... (28,358,074) (26,591,458)
Net property, plant and equipment 110,297,867 112,338,281
Franchise costs and other intangible
assets, net of accumulated
amortization of $54,854,683 in 1998
and $53,449,637 in 1997............ 167,771,855 180,059,655
Total assets................. $286,215,909 $302,039,887
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued
liabilities.......................... $ 10,766,883 $ 11,690,894
Subscriber deposits and prepayments.... 1,466,183 1,503,449
Interest payable....................... 3,682,453 7,384,509
Deferred taxes payable................. 11,040,000 12,138,000
Notes payable.......................... 218,000,000 229,500,000
Total liabilities............. 244,955,519 262,216,852
Commitments
Redeemable partners' interests......... 8,514,400 7,387,360
Partners' capital (deficit)
General partner...................... (2,011,986) (1,885,480)
Limited partners..................... 34,473,109 34,044,912
Preferred equity interest............ 284,867 276,243
Total partners' capital...... 32,745,990 32,435,675
Total liabilities and
partners' capital.......... $286,215,909 $302,039,887
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
RIFKIN ACQUISITION PARTNERS, L.L.L.P.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
<CAPTION>
March 31, March 31,
1998 1997
<S> <C> <C>
ASSETS
Cash.................................... $ 1,191,237 $ 1,035,374
Subscriber accounts receivable,
net of allowance for doubtful
accounts of $429,857 in 1998
and $362,904 in 1997.................. 1,008,720 1,015,106
Other receivables....................... 4,018,907 2,283,356
Prepaid expenses and other.............. 1,927,323 1,727,899
Property, plant and equipment at cost:
Cable television transmission and
distribution systems and related
equipment........................... 131,851,390 116,444,367
Land, building, vehicles and
furniture and fixtures.............. 6,804,551 6,131,187
138,655,941 122,575,554
Less accumulated depreciation........... (28,358,074) (17,557,294)
Net property, plant and
equipment.................... 110,297,867 105,018,260
Franchise costs and other intangible
assets, net of accumulated
amortization of $54,854,683 in 1998
and $35,288,193 in 1997............... 167,771,855 184,404,499
Total assets................... $286,215,909 $295,484,494
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued
liabilities........................... $ 10,766,883 $ 10,274,534
Subscriber deposits and prepayments..... 1,466,183 1,353,094
Interest payable........................ 3,682,453 3,303,022
Deferred taxes payable.................. 11,040,000 16,685,000
Notes payable........................... 218,000,000 204,000,000
Total liabilities.............. 244,955,519 235,615,650
Commitments
Redeemable partners' interests.......... 8,514,400 6,606,080
Partners' capital (deficit)
General partner....................... (2,011,986) (1,587,362)
Limited partners...................... 34,473,109 54,453,608
Preferred equity interest............. 284,867 396,518
Total partners' capital........ 32,745,990 53,262,764
Total liabilities and partners'
capital...................... $286,215,909 $295,484,494
<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,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)........................ $ 1,437,355 $(5,997,839)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization........ 9,442,832 9,528,188
Amortization of deferred loan cost 247,440 247,440
Gain on sale of Michigan assets...... (5,989,846) -
Loss on disposal of fixed assets..... 260,912 129,003
Deferred taxes benefit............... (1,098,000) (788,000)
Decrease in subscriber accounts
receivable......................... 309,085 168,968
Decrease in other receivables........ 593,691 339,019
Decrease (increase) in prepaid
expenses and other................. (205,882) 48,373
Increase (decrease) in accounts
payable and accrued liabilities.... (900,090) 337,296
Increase in subscriber deposits
and prepayment.................... 15,946 80,815
Decrease in interest payable......... (3,702,056) (3,481,239)
Net cash provided by operating
activities...................... 411,387 612,024
Cash flows from investing activities:
Additions to property, plant and
equipment.............................. (6,727,584) (6,468,637)
Additions to cable television
franchises, net of retirements
and changes in other intangible
assets................................. (38,349) (40,891)
Net proceeds from sale of Michigan
assets................................. 17,050,564 -
Net proceeds from the disposal of assets
(other than Michigan).................. 92,664 45,646
Net cash provided by (used in)
investing activities............ 10,377,295 (6,463,882)
Cash flows from financing activities
Proceeds from long-term bank debt........ 8,500,000 8,000,000
Payments of long term-bank debt.......... (20,000,000) (2,500,000)
Net cash provided by (used in)
financing activities............ (11,500,000) 5,500,000
Net decrease in cash..................... (711,318) (351,858)
Cash at beginning of quarter............. 1,902,555 1,387,232
Cash at end of quarter................... $ 1,191,237 $ 1,035,374
<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, 1998 and 1997
<CAPTION>
Preferred
Equity General Limited
Interest Partner Partners Total
<S> <C> <C> <C> <C>
Partners' capital (deficit)
at 12/31/97............... $ 276,243 $(1,885,480) $34,044,912 $32,435,675
Net income for the quarter
ended 3/31/98............. 8,624 14,374 1,414,357 1,437,355
Accretion of redeemable
partners' interest........ - (140,880) (986,160) (1,127,040)
Partners' capital (deficit)
at 3/31/98................ $ 284,867 $(2,011,986) $34,473,109 $32,745,990
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
<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, 1998, December 31, 1997 and March
31,1997, and its consolidated results of operations and cash flows
for the three months ended March 31, 1998 and 1997. 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, 1997.
2. Acquisition of Cable Properties
On April 1, 1997, the company acquired the cable operating assets
of two cable systems serving the Tennessee communities of
Shelbyville and Manchester from Act V (the "Act V Acquisition"),
for an aggregate purchase price of approximately $19.7 million.
The acquisition was funded by proceeds from the Company's reducing
revolving loan with a financial institution.
3. Sale of Michigan Assets
On February 4, 1998, with an effective date of January 31, 1998,
the Partnership sold all of its operating assets in the state of
Michigan (the "Michigan Sale")to Bresnan Communications Company
("Bresnan"). The sale resulted in a gain recognized by the Company
as follows:
Original cash proceeds $16,931,200
Final adjustment to value of
assets and liabilities assumed 119,364
Net proceeds 17,050,564
Net book value of assets sold 11,060,718
Net gain from sale $ 5,989,846
Proceeds from the sale were used by the Company to reduce its
revolving loan with a financial institution.
4. 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, 1998 and 1997.
<PAGE>
RIFKIN ACQUISITION CAPITAL CORP.
BALANCE SHEET
March 31, December 31,
1998 1997
Assets
Cash................................... $ 1,000 $ 1,000
Total assets..................... $ 1,000 $ 1,000
Stockholder's Equity
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.
<PAGE>
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.
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition
And Results of Operations
Special Note Regarding Forward-Looking Statements
Certain statements in this Form 10-Q, including the sections entitled
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995
(the "Reform Act"). The words "believes," "expects," "intends,"
"strategy," "considers" or "anticipates" and similar expressions
identify forward-looking statements. The Company does not undertake to
update, revise or correct any of the forward-looking information. Such
forward-looking statements involve known and unknown risks,
uncertainties, and other factors which may cause the actual results,
performance, or achievements of the Company to be materially different
from any future results, performance, or achievements expressed or
implied by such forward-looking statements. Such factors include,
among others, the following: general economic and business conditions;
competition in the cable television industry; substantial leverage and
risk of inability to service or repurchase the Company's and RACC's
debt; restrictions imposed by the terms of indebtedness; the Company's
acquisition strategy; the need for significant capital expenditures;
potential termination of franchises; the non-exclusivity of franchises;
government regulation in the cable television industry; dependence on
key personnel; dependence upon distributions from the Partnership's
subsidiaries; potential conflicts of interest arising out of the
relationship between the Company, RACC, and affiliates and other
factors.
Where any such forward-looking statement includes a statement of the
assumptions or bases underlying such forward-looking statement, the
Company cautions that, while it believes such assumptions or bases to
be reasonable and makes them in good faith, assumed facts or bases
almost always vary from actual results, and the differences between
assumed facts or bases and actual results can be material, depending
upon the circumstances. Where, in any forward-looking statement, the
Company, or its management, expresses an expectation or belief as to
the future results, such expectation or belief is expressed in good
faith and believed to have a reasonable basis, but there can be no
assurance that the statement of expectation or belief will result or be
achieved or accomplished.
Results of Operations
In August 1995, the Partnership 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 (the "Notes"), which were subsequently
publicly registered, and amended its Credit Agreement to provide
ongoing borrowing availability, including availability to finance
acquisitions.
Three Months Ended March 31, 1998 Compared to Three Months Ended March
31, 1997
Revenue increased 13.8%, or $2.7 million, to $22.0 million for the
three months ended March 31, 1998 from $19.3 million for the three
months ended March 31, 1997. This increase resulted from
approximately $2.3 million from growth in basic customers and increases
in basic and tier rates, and approximately $1.2 million in total
revenue as a result of the April 1, 1997 acquisition of cable systems
serving Manchester and Shelbyville, Tennessee (the "ACT V Acquisition")
offset by approximately $800,000 in total revenue decreases due to the
January 31, 1998 sale of systems serving Bridgeport and Bad Axe,
Michigan (the "Michigan Sale"). Basic customers increased 2.3% to
approximately 189,800 at March 31, 1998 from approximately 185,600 at
March 31, 1997. This increase was attributable to the approximate
11,200 customer decline in conjunction with the Michigan Sale, offset
by 11,600 from the Act V Acquisition and by continued growth in Georgia
(3,900 or 7.3%). Average monthly revenue per customer increased 14.5%
from $32.91 for the three months ended March 31, 1997 to $37.68 for
1998 primarily a result of acquisition timing and rate increases.
Premium service units decreased .2% to approximately 103,500 as of
March 31, 1998, from approximately 103,700 as of March 31, 1997, as a
result of the Michigan Sale ( 6,300) offset by increases in Tennessee
(3,000) and increases in Georgia (3,300). The Company's premium
penetration decreased to 54.5% from 55.9% between 1998 and 1997.
Operating expense, which includes costs related to technical personnel,
franchise fees and repairs and maintenance, increased 2.0%, or
approximately $100,000 to approximately $3.5 million for the three
months ended March 31, 1998 , and decreased as a percentage of revenue
to 16.1% from 18.0%. Approximately $200,000 of the increase relates to
the operating expense of the acquired systems in the ACT V Acquisition,
offset by an approximate $100,000 decrease related to the Michigan
Sale.
Programming expense, which includes costs related to basic, tier and
premium services, increased 17.4%, or approximately $700,000 to
approximately $4.9 million for the three months ended March 31, 1998
from approximately $4.2 million for the three months ended March 31,
1997, and increased as a percentage of revenue to 22.5% from 21.8%.
Approximately $300,000 of the increase relates to the programming
expenses of the acquired systems in the ACT V Acquisition offset by an
approximate $200,000 decrease related to the Michigan Sale. 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 8.3%, or approximately
$200,000 to approximately $2.7 million for the three months ended March
31, 1998 from $2.5 million for the same period in 1997. As a
percentage of revenue, selling, general and administrative expense
decreased to 12.5% for the three months ended March 31, 1998 from
13.1% in 1997. Approximately $200,000 of the increase related to the
selling, general and administrative expense of the acquired systems in
the ACT V Acquisition offset by an approximate $100,000 decrease
related to the Michigan Sale.
Depreciation and amortization expense of approximately $9.4 million for
the three months ended March 31, 1998 decreased approximately $100,000
from the three months ended March 31, 1997 . The increase in
depreciation resulted primarily from increases of approximately $6.7
million in 1998 and approximately $6.5 million in 1997 in property,
plant and equipment. The decreases in amortization expense resulted
primarily from the amortization of franchise cost related to the ACT V
Acquisition offset by the reduction in franchise cost related to the
Michigan Sale. As a percentage of revenue, depreciation and
amortization expenses decreased to 42.9% in 1998 from 49.3% in 1997.
Management fees, equal to 3.5% of gross revenue, of approximately
$800,000 in 1998 increased approximately $100,000 from the three months
ended March 31, 1997 due to the increase in the Company's revenue as a
result of rate increases and increased customers as well as the ACT V
Acquisition.
The loss on disposal of assets, primarily the write-off of replaced
house drops and rebuilt trunk and distribution equipment, increased to
approximately $300,000 in 1998 from approximately $100,000 in 1997. An
approximate $6.0 million gain on the Michigan Sale was recorded for the
three months ended March 31, 1998.
Interest expense during 1998 increased approximately $400,000 from the
three months ended March 31, 1997 and decreased as a percentage of
revenue from 28.8% to 27.0%. Interest expense was based on an average
debt balance of $225.1 million with an average interest rate of 10.6%
and an average debt balance of $203.1 million with an average interest
rate of 11.0% for 1998 and 1997, respectively. This increase was
primarily a result of the increased borrowings related to the ACT V
Acquisition offset by the debt retirement related to the Michigan Sale.
The Partnership is a "pass-through" entity for income tax purposes.
All income or loss flows through to the partners of the Partnership in
accordance with the Partnership Agreement. An income tax benefit of
approximately $1.1 million was recorded in 1998 compared to an income
tax benefit of approximately $800,000 from the three months ended March
31, 1997. The income tax benefit 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, the Company experienced Net
Income of approximately $1.4 million in 1998, compared with an
approximate $6.0 million loss in 1997.
Adjusted EBITDA, defined as income (loss) before interest expense,
income taxes, depreciation and amortization, loss on disposal of
assets, gain on the sale of Michigan assets and the non-cash provision
for the management incentive plan, increased 18.4%, or approximately
$1.6 million to $10.2 million in 1998 from $8.6 million for 1997. As
a percent of revenue, Adjusted EBITDA increased to 46.3% in 1998 from
44.4% for 1997. 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, 1998 and 1997, net
cash provided by operations (including changes in working capital) of
the Company was approximately $400,000 and $600,000, respectively.
From December 31, 1997 to March 31, 1998, the Company's available cash
decreased from approximately $1.9 million to approximately $1.2
million. Interest payable decreased approximately $3.7 million to
approximately $3.7 million for the same comparable periods due
primarily to the effect of the timing of payments. Also, for the same
comparable periods, deferred taxes payable decreased approximately $1.1
million to approximately $11.0 million as a result of differences in
book and tax depreciation and amortization lives and methods. Notes
payable decreased by $11.5 million from December 31, 1997 to March 31,
1998 due primarily to the borrowings related to the ACT V Acquisition
offset by the debt retirement related to the proceeds from the Michigan
Sale.
The Company has decreased its total consolidated debt to $218.0 million
as of March 31, 1998 from $229.5 million at December 31, 1997. The
Company has unused commitments under the Amended and Restated Credit
Agreement of $67.1 million, all of which is available for general
corporate and/or acquisition purposes. Access to the remaining
commitments 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 5.75x. As of March 31, 1998, the Company's Total Funded Debt
Ratio was 5.36x. 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 with a final maturity date of March 31, 2003. The
revolving facility was subject to permanent annual commitment
reductions commencing in 1997 with a remaining commitment as of March
31, 1998 of $70.6 million. 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>
PART II: OTHER INFORMATION
ITEM 5. Other Information
<TABLE>
RIFKIN ACQUISITION PARTNERS, L.L.L.P.
REVENUE AND OPERATING CASH FLOW REPORT
(UNAUDITED)
Three Months Ended March 31, 1998 and 1997
<CAPTION>
REVENUES:
1998 1997
<S> <C> <C>
Georgia................................ $ 7,092,344 $ 6,059,311
Illinois............................... 2,655,844 2,455,047
Michigan(3)............................ 378,046 1,090,188
Tennessee.............................. 11,850,920 9,708,914
Other(2)............................... 28,356 22,869
Total............................... $22,005,510 $19,336,329
OPERATING CASH FLOW(1):
Georgia................................ $ 3,496,859 $ 2,912,397
Illinois............................... 1,390,189 1,234,360
Michigan(3)............................ 80,228 543,965
Tennessee.............................. 5,990,925 4,587,551
Other.................................. 739 1,032
Total............................... $10,958,940 $ 9,279,305
OPERATING CASH FLOW AS A PERCENT OF REVENUES:
Georgia................................ 49.3% 48.1%
Illinois............................... 52.3% 50.3%
Michigan(3)............................ 21.2% 49.9%
Tennessee.............................. 50.6% 47.3%
Total (excluding other)............. 49.9% 48.0%
<FN>
(1) Excludes management fee expense of $770,193 and $676,771, net
losses related to the disposition of certain plant assets of
$260,912 and $129,003, and non-cash management incentive plan
expense of $189,999 and $165,000 for the quarters ended March
31, 1998 and 1997.
(2) Principally interest income.
(3) Activity relates to the Michigan Systems which were sold
effective January 31, 1998.
</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, 1998.
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-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,191
<SECURITIES> 0
<RECEIVABLES> 1,009
<ALLOWANCES> 430
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 138,656
<DEPRECIATION> 28,358
<TOTAL-ASSETS> 286,216
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 218,000
0
0
<COMMON> 0
<OTHER-SE> 41,260
<TOTAL-LIABILITY-AND-EQUITY> 286,216
<SALES> 0
<TOTAL-REVENUES> 22,006
<CGS> 0
<TOTAL-COSTS> 21,450
<OTHER-EXPENSES> (5,728)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,945
<INCOME-PRETAX> 339
<INCOME-TAX> (1,098)
<INCOME-CONTINUING> 1,437
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,437
<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>
