<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER 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 333-11893
INTERMEDIA CAPITAL PARTNERS IV, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
CALIFORNIA 94-3247750
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
235 MONTGOMERY STREET, SUITE 420
SAN FRANCISCO, CA 94104
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (415) 616-4600
Indicate 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 ___
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<PAGE> 2
INTERMEDIA CAPITAL PARTNERS IV, L.P.
INDEX TO REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements.................................................. 1
ITEM 2. Management's Discussion and Analysis of Financial Condition and 11
Results of Operations.................................................
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings..................................................... 19
ITEM 2. Changes in Securities................................................. 19
ITEM 3. Defaults Upon Senior Securities....................................... 19
ITEM 4. Submission of Matters to a Vote of Security Holders................... 19
ITEM 5. Other Information..................................................... 19
ITEM 6. Exhibits and Reports on Form 8-K...................................... 24
SIGNATURES.......................................................................... 25
</TABLE>
INFORMATION CONTAINED IN THIS REPORT INCLUDES "FORWARD-LOOKING STATEMENTS"
WITHIN THE MEANING OF THE SECURITIES LAWS. ALL STATEMENTS, OTHER THAN STATEMENTS
OF HISTORICAL FACT, REGARDING ACTIVITIES, EVENTS OR DEVELOPMENTS THAT THE
COMPANY EXPECTS, BELIEVES OR ANTICIPATES WILL OR MAY OCCUR IN THE FUTURE,
INCLUDING SUCH MATTERS AS, THE COMPANY'S OPERATING STRATEGIES, CAPITAL
EXPENDITURES, THE EFFECTS OF COMPETITION, AND OTHER SUCH MATTERS, ARE
FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS
REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, THESE
FORWARD-LOOKING STATEMENTS ARE BASED UPON CERTAIN ASSUMPTIONS AND ARE SUBJECT TO
A NUMBER OF RISKS AND UNCERTAINTIES, AND THE COMPANY CAN GIVE NO ASSURANCE THAT
SUCH EXPECTATIONS WILL PROVE TO HAVE BEEN CORRECT. IMPORTANT FACTORS THAT COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM SUCH EXPECTATIONS INCLUDE, BUT
ARE NOT LIMITED TO, THOSE DISCUSSED IN PART II, ITEM 5 "OTHER INFORMATION."
<PAGE> 3
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTERMEDIA CAPITAL PARTNERS IV, L.P.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31,
1997
DECEMBER 31, -----------
1996
------------- (UNAUDITED)
<S> <C> <C>
ASSETS
Cash................................................................ $ 8,770 $ 6,654
Accounts receivable, net of allowance for doubtful accounts of
$2,130 and $1,990, respectively................................... 17,539 18,723
Escrowed investments held to maturity............................... 28,237 28,829
Interest receivable on escrowed investments......................... 2,194 698
Receivable from affiliate........................................... 923 1,362
Prepaids............................................................ 2,768 2,336
Other current assets................................................ 232 199
-------- --------
Total current assets...................................... 60,663 58,801
Escrowed investments held to maturity............................... 60,518 45,999
Intangible assets, net.............................................. 634,087 613,090
Property & equipment, net........................................... 230,055 233,640
Deferred income taxes............................................... 9,910 11,398
Other non-current assets............................................ 1,466 1,335
-------- --------
Total assets.............................................. $ 996,699 $ 964,263
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued liabilities............................ $ 28,973 $ 20,013
Payable to affiliates............................................... 3,408 3,378
Deferred revenue.................................................... 11,753 12,272
Accrued interest.................................................... 20,322 11,843
-------- --------
Total current liabilities................................. 64,456 47,506
Long-term debt...................................................... 846,000 852,000
Other non-current liabilities....................................... 70 92
-------- --------
Total liabilities......................................... 910,526 899,598
-------- --------
Commitments and contingencies
Minority interest
Mandatorily redeemable preferred shares............................. 12,357 12,571
PARTNERS' CAPITAL
Preferred limited partnership interest.............................. 22,962 21,454
General and limited partners' capital............................... 52,704 32,490
Note receivable from general partner................................ (1,850) (1,850)
-------- --------
Total partners' capital................................... 73,816 52,094
-------- --------
Total liabilities and partners' capital................... $ 996,699 $ 964,263
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
1
<PAGE> 4
INTERMEDIA CAPITAL PARTNERS IV, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1996 1997
------- --------
<S> <C> <C>
Basic and cable services................................................ $ 2,423 $ 41,288
Pay service............................................................. 495 10,001
Other service........................................................... 212 9,530
------- --------
3,130 60,819
------- --------
Program fees............................................................ 653 13,025
Other direct expenses................................................... 350 6,851
Depreciation and amortization........................................... 1,893 33,290
Selling, general and administrative expenses............................ 611 11,756
Management and consulting fees.......................................... 838
------- --------
3,507 65,760
------- --------
Loss from operations.................................................... (377) (4,941)
------- --------
Other income (expense):
Interest and other income............................................. 19 1,378
Interest expense...................................................... (1,399) (19,263)
Other expense......................................................... (1) (170)
------- --------
(1,381) (18,055)
------- --------
Loss before income tax benefit and minority interest.................... (1,758) (22,996)
Income tax benefit...................................................... 1,488
------- --------
Net loss before minority interest....................................... (1,758) (21,508)
Minority interest....................................................... (214)
------- --------
Net loss................................................................ $(1,758) $(21,722)
======= ========
</TABLE>
See accompanying notes to consolidated financial statements
2
<PAGE> 5
INTERMEDIA CAPITAL PARTNERS IV, L.P.
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PREFERRED
LIMITED GENERAL LIMITED NOTES
PARTNER PARTNER PARTNERS RECEIVABLE TOTAL
--------- ------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Syndication costs.................... $ (43) $ (7) $ (575) $ $ (625)
------ ------ ------ -------- --------
Balance at December 31, 1995......... (43) (7) (575) (625)
Cash contributions................... 1,913 188,637 190,550
Notes receivable from General
Partner............................ 1,850 (1,850)
In-kind contributions, historical
cost basis......................... 237,805 237,805
Conversion of GECC debt to equity.... 25,000 11,667 36,667
Allocation of RMG's and IPWT's
historical equity balances......... (2,719) (239,368) (242,087)
Distribution......................... (119,775) (119,775)
Syndication costs.................... (69) (10) (911) (990)
Net loss............................. (1,926) (290) (25,513) (27,729)
------ ------ ------ -------- --------
Balance at December 31, 1996......... 22,962 737 51,967 (1,850) 73,816
Net loss (unaudited)................. (1,508) (227) (19,987) (21,722)
------ ------ ------ -------- --------
Balance at March 31, 1997
(unaudited)........................ $ 21,454 $ 510 $ 31,980 $ (1,850) $ 52,094
====== ====== ====== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE> 6
INTERMEDIA CAPITAL PARTNERS IV, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
1996 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................................................. $ (1,758) $(21,722)
Minority interest.................................................... 214
Depreciation and amortization........................................ 2,013 33,625
Changes in assets and liabilities:
Accounts receivable............................................... (445) (1,184)
Interest receivable on escrowed investments....................... 1,496
Receivable from affiliates........................................ (439)
Prepaids.......................................................... (43) 432
Other current assets.............................................. 33
Deferred income taxes............................................. (1,488)
Other non-current assets.......................................... (6) 131
Accounts payable and accrued liabilities.......................... 996 (2,914)
Payable to affiliate.............................................. 321 (30)
Deferred revenue.................................................. 24 519
Accrued interest.................................................. 1,269 (8,479)
Other non-current liabilities..................................... 16 22
-------- --------
Cash flows from operating activities................................. 2,387 216
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of cable systems, net of cash acquired..................... (96,512)
Property and equipment............................................... (163) (21,788)
Intangible assets.................................................... (407)
Proceeds from sale of escrowed investments........................... 13,927
-------- --------
Cash flows from investing activities................................. (96,675) (8,268)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings from long-term debt....................................... 96,000 6,000
Debt issue costs..................................................... (478) (64)
Syndication costs.................................................... (32)
-------- --------
Cash flows from financing activities................................. 95,490 5,936
-------- --------
Net change in cash..................................................... 1,202 (2,116)
Cash, beginning of period.............................................. 8,770
-------- --------
Cash, end of period.................................................... $ 1,202 $ 6,654
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 7
INTERMEDIA CAPITAL PARTNERS IV, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
1. THE COMPANY AND BASIS OF PRESENTATION:
InterMedia Capital Partners IV, L.P. ("ICP-IV" or the "Company"), a
California limited partnership, was formed on March 19, 1996, as a successor to
InterMedia Partners IV, L.P. ("IP-IV") which was formed in October 1994, for the
purpose of acquiring and operating cable television systems in three geographic
clusters, all located in the southeastern United States.
As of March 31, 1997, ICP-IV's systems served the following number of basic
subscribers and encompassed the following number of homes passed:
<TABLE>
<CAPTION>
BASIC HOMES
SUBSCRIBERS PASSED
----------- -------
<S> <C> <C>
Nashville/Mid-Tennessee Cluster................ 332,407 511,635
Greenville/Spartanburg Cluster................. 147,388 208,784
Knoxville/East Tennessee Cluster............... 98,971 135,514
------- -------
Total................................ 578,766 855,933
======= =======
</TABLE>
The accompanying unaudited interim consolidated financial statements
include the accounts of ICP-IV and its directly and indirectly, majority-owned
subsidiaries, InterMedia Partners IV, Capital Corp. ("IPCC"), IP-IV, InterMedia
Partners Southeast ("IPSE"), InterMedia Partners of Tennessee ("IP-TN"),
InterMedia Partners of West Tennessee, L.P. ("IPWT"), and Robin Media Group,
Inc. ("RMG"). ICP-IV and its majority-owned subsidiaries are collectively
referred to as the "Company." All significant intercompany accounts and
transactions have been eliminated in consolidation.
The accompanying unaudited interim consolidated financial statements have
been prepared in accordance with generally accepted accounting principles and
are presented in accordance with the rules and regulations of the Securities and
Exchange Commission applicable to interim financial information. Accordingly,
certain footnote disclosures have been condensed or omitted. In the Company's
opinion, the interim unaudited consolidated financial statements reflect all
adjustments (consisting of only normal recurring adjustments) necessary for a
fair presentation of the Company's financial position as of March 31, 1997, and
its results of operations and cash flows for the three months ended March 31,
1997. The results of operations for the three months ended March 31, 1997 are
not necessarily indicative of results that may be expected for the year ending
December 31, 1997. These consolidated financial statements should be read in
conjunction with the Company's audited consolidated financial statements and
notes thereto contained in its Form 10-K for the year ended December 31, 1996.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
Certain amounts have been reclassified in the accompanying financial
statements for the three months ended March 31, 1996 to conform with the
presentation for the three months ended March 31, 1997.
2. ACQUISITIONS
On July 30, 1996 and August 1, 1996, the Company borrowed $558,000 under a
new bank term loan and revolving credit agreement (the "Bank Facility"), issued
$292,000 in senior notes (the "Notes"), and received
5
<PAGE> 8
INTERMEDIA CAPITAL PARTNERS IV, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(DOLLARS IN THOUSANDS)
equity contributions from its partners of $360,000, consisting of: $190,550 in
cash; $117,600 representing the fair market value of certain cable television
systems (the "Greenville/Spartanburg System") contributed, net of cash paid to
the contributing partner of $119,775; $13,333 representing the fair market value
of general and limited partner interests in IPWT, an affiliate; $36,667 in
exchange for notes receivable from IPWT; and $1,850 in the form of a note
receivable from InterMedia Capital Management IV, L.P. ("ICM-IV"), the 1.1%
general partner of ICP-IV. The Bank Facility, the Notes and the equity
contributions are referred to as the "Financing."
On July 30, 1996, the Company acquired cable television systems serving
approximately 360,400 basic subscribers in Tennessee, South Carolina and Georgia
through the Company's acquisition of controlling equity interests in IPWT and
Robin Media Holdings, Inc. ("RMH"), an affiliate, and through the equity
contribution of the Greenville/Spartanburg System to the Company by affiliates
of Tele-Communications, Inc. ("TCI").
The Company acquired all of the general and limited partner interests of
IPWT in exchange for a $13,333 limited partner interest in ICP-IV. Concurrently,
GECC transferred to ICP-IV its $55,800 note receivable from IPWT and related
interest receivable of $3,356 in exchange for an $11,667 limited partner
interest in ICP-IV, a $25,000 preferred limited partner interest in ICP-IV and
cash of $22,489.
InterMedia Partners V, L.P. ("IP-V"), a former affiliate, owned all of the
outstanding equity of RMH prior to the Company's acquisition of a majority of
the voting interests in RMH. In conjunction with a recapitalization of RMH,
ICP-IV purchased 3,285 shares of RMH's Class A Common Stock for $329.
Concurrently, a wholly owned subsidiary of TCI converted its outstanding loan to
IP-V into a limited partnership interest and, in dissolution of the IP-V
partnership, received 365 shares of RMH Class B Common Stock valued at $37 and
12,000 shares of RMH Redeemable Preferred Stock valued at $12,000. Upon
completion of the recapitalization, the Company has 60% of the voting interests
of RMH, with TCI owning the remaining 40%. In connection with the acquisition,
the Company assumed approximately $331,450 of long-term debt and $11,565 of
accrued interest, which was repaid with proceeds from the Financing. Upon
consummation of the acquisition, RMH merged into its wholly owned operating
subsidiary RMG. All of the RMH stock just described was converted as a result of
the merger into capital stock of RMG with the same terms.
Affiliates of TCI contributed cash and transferred their interests in the
Greenville/Spartanburg System to the Company in exchange for a 49.0% limited
partner interest in ICP-IV and an assumption of $119,775 of debt which was
simultaneously repaid by the Company with proceeds from the Financing. The cash
paid of $119,775 for debt assumed has been recorded as a distribution to TCI in
the accompanying consolidated financial statements.
TCI held substantial direct and indirect ownership interests in each of
RMH, IPWT and the Greenville/Spartanburg System. As a result of TCI's
substantial continuing interest in RMG, IPWT and the Greenville/Spartanburg
System after the Company's acquisitions, the acquired assets of these entities
have been accounted for at their historical basis as of the acquisition date.
Results of operations for these entities have been included in the Company's
consolidated results only from the acquisition date.
On August 1, 1996, the Company acquired certain cable television systems of
Viacom in metropolitan Nashville, Tennessee (the "Nashville System") for an
aggregate purchase price of $315,333.The Company's acquisition of the Nashville
System has been accounted for as a purchase in accordance with Accounting
Principles Bulletin No. 16 ("APB16") and the Nashville System's results of
operations have been included in the Company's consolidated results only from
August 1, 1996, the date of the acquisition.
6
<PAGE> 9
INTERMEDIA CAPITAL PARTNERS IV, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(DOLLARS IN THOUSANDS)
During the year ended December 31, 1996, the Company acquired other cable
television systems currently serving approximately 60,300 basic subscribers
primarily in central and eastern Tennessee for an aggregate purchase price of
$102,701 (the "Miscellaneous Acquisitions"). The Miscellaneous Acquisitions
include the Company's acquisitions of certain cable television systems during
the three month period ended March 31, 1996 located in counties near Nashville,
Kingsport and Hendersonville, Tennessee, currently serving approximately 58,800
basic subscribers. These acquisitions have also been accounted for as purchases
in accordance with APB16. Accordingly, results of operations of the
Miscellaneous Acquisitions have been included in the Company's consolidated
results only from the dates of acquisition.
3. ESCROWED INVESTMENTS HELD TO MATURITY
The Company's investments held to maturity are carried at amortized cost
and consist of U.S. Treasury Notes with maturities ranging from four to
twenty-eight months. The investments are held in an escrow account to be used by
the Company to make interest payments on the Company's senior notes (see Note
4 -- Long-Term Debt). On February 1, 1997, the Company paid interest of $16,569
on the senior notes with the proceeds from and interest earned on escrowed
investments that matured on January 31, 1997. The fair value and maturities of
U.S. Treasury Notes held in escrow are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996 MARCH 31, 1997
----------------------- -----------------------
CARRYING ESTIMATED CARRYING ESTIMATED
VALUE FAIR VALUE VALUE FAIR VALUE
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Matures within 1 year............................. $ 28,237 $ 28,333 $ 28,829 $ 28,947
Matures between 1 and 3 years..................... 60,518 61,019 45,999 46,038
------- ------- ------- -------
Total................................... $ 88,755 $ 89,352 $ 74,828 $ 74,985
======= ======= ======= =======
</TABLE>
The fair values of the investments are based on quoted market prices.
4. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
------------ ---------
<S> <C> <C>
Bank revolving credit facility, $475,000 commitment as of
March 31, 1997, interest currently at LIBOR plus 1.625%
payable quarterly, matures July 1, 2004................ $334,000 $ 340,000
Bank term loan; interest at LIBOR plus 2.375% payable
quarterly, matures January 1, 2005..................... 220,000 220,000
11 1/4% senior notes, interest payable semi-annually, due
August 1, 2006......................................... 292,000 292,000
-------- --------
$846,000 $ 852,000
======== ========
</TABLE>
The Company's bank debt is outstanding under the revolving credit facility
and term loan agreement executed by IP-IV and dated July 30, 1996. The revolving
credit facility currently provides for $475,000 of available credit. Starting
January 1, 1999, revolving credit facility commitments will be permanently
reduced semiannually by increments ranging from $22,500 to $47,500 through
maturity on July 1, 2004. The term loan requires semiannual principal payments
of $500 starting January 1, 1999 through January 1, 2004, and final principal
payments in two equal installments of $107,250 on July 1, 2004 and January 1,
2005. Advances under the Bank Facility are available under interest rate options
related to the base rate of the administrative agent for the Bank Facility
("ABR") or LIBOR. Interest rates on borrowings under the term loan are at LIBOR
plus 2.375% or ABR plus 1.125%. Interest rates vary on borrowings under the
revolving credit facility
7
<PAGE> 10
INTERMEDIA CAPITAL PARTNERS IV, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(DOLLARS IN THOUSANDS)
from LIBOR plus 0.75% to LIBOR plus 1.75% or ABR to ABR plus 0.50% based on the
Company's ratio of senior debt to annualized quarterly operating cash flow. For
purposes of this computation, senior debt, as defined, excludes the 11 1/4%
senior notes. The Bank Facility requires quarterly interest payments, or more
frequent interest payments if a shorter period is selected under the LIBOR
option, and quarterly payment of fees on the unused portion of the revolving
credit facility at 0.375% per annum when the senior leverage ratio is greater
than 4.0:1.0 and at 0.25% when the senior leverage ratio is less than or equal
to 4.0:1.0. At December 31, 1996 and March 31, 1997, the interest rate on
borrowings outstanding under the revolving credit facility was 7.125% and 7.19%,
respectively.
Interest expense for the three months ended March 31, 1996 related to
borrowings outstanding under a bank revolving loan agreement dated January 29,
1996 (the "Bridge Loan"), which provided for borrowings up to $130,000 and
interest payable quarterly at the bank's reference rate plus 1% or LIBOR plus
2.25%. The Bridge Loan was repaid on July 30, 1996 with proceeds from the Bank
Facility and the Notes.
The Company has entered into interest rate swap agreements in the aggregate
notional principal amount of $120,000 to establish long-term fixed interest
rates on its variable senior bank debt. Under the swap agreements, the Company
pays quarterly interest at fixed rates ranging from 6.28% to 6.3225% and
receives quarterly interest payments equal to LIBOR. The differential to be paid
or received in connection with an individual swap agreement is accrued as
interest rates change over the period to which the payments or receipts relate.
The agreements expire between May 1999 and February 2000.
The estimated fair value of the interest rate swaps, which is gross of
unrealized market gains or losses, is based on the current value in the market
for transactions with similar terms and adjusted for the holding period. At
December 31, 1996 and March 31, 1997, the fair market value of the interest rate
swaps was $(2,700) and $(275), respectively.
Borrowings under the Bank Facility are secured by the capital stock and
partnership interests of IP-IV's subsidiaries.
The 11 1/4% senior notes will be redeemable at the option of the Company,
in whole or in part, subsequent to August 1, 2001 at specified redemption prices
which will decline in equal annual increments and range from 105.625% beginning
August 1, 2001 to 100.0% of the principal amount beginning August 1, 2004
through the maturity date, plus accrued interest.
As of December 31, 1996 and March 31, 1997, ICP-IV has $90,949 and $75,526,
respectively, in pledged securities, including interest, which represent
sufficient funds to provide for payment in full of interest on the Notes through
August 1, 1999 and are pledged as security for repayment of the Notes under
certain circumstances. Proceeds from the pledged securities will be used by
ICP-IV to make interest payments on the Notes through August 1, 1999.
ICP-IV is the issuer of the Notes and, as a holding company, has no direct
operations. The Notes are structurally subordinated to borrowings of IP-IV under
the Bank Facility. The Bank Facility restricts IP-IV and its subsidiaries from
paying dividends and making other distributions to ICP-IV.
The debt agreements contain certain covenants which restrict the Company's
ability to encumber assets, make investments or distributions, retire
partnership interests, pay management fees currently, incur or guarantee
additional indebtedness and purchase or sell assets. The debt agreements include
financial covenants which require minimum interest and debt coverage ratios and
specify maximum debt to cash flow ratios.
Based on recent trading prices of the Notes, the fair value of these
securities at December 31, 1996 and March 31, 1997 is $297,665 and $300,760,
respectively. Borrowings under the Bank Facility are at rates that
8
<PAGE> 11
INTERMEDIA CAPITAL PARTNERS IV, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(DOLLARS IN THOUSANDS)
would be otherwise currently available to the Company. Accordingly, the carrying
amounts of bank borrowings outstanding as of December 31, 1996 and March 31,
1997 approximate their fair value.
5. COMMITMENTS AND CONTINGENCIES
The Company is committed to provide cable television services under
franchise agreements with remaining terms of up to twenty years. Franchise fees
of up to 5% of gross revenues are payable under these agreements.
Current FCC regulations require that cable television operators obtain
permission to retransmit major network and certain local television station
signals. The Company has entered into long-term retransmission agreements with
all applicable stations in exchange for in-kind and/or other consideration.
The Company is subject to litigation and other claims in the ordinary
course of business. In the opinion of management, the ultimate outcome of any
existing litigation or other claims will not have a material adverse effect on
the Company's financial condition or results of operations.
6. RELATED PARTY TRANSACTIONS
ICM-IV manages the business of ICP-IV and its subsidiaries for a per annum
fee of 1% of the Company's total non-preferred capital contributions, or $3,350,
of which ICM-IV will defer 20% per annum, payable in each following year, in
order to support the Company's bank debt. However, pursuant to ICP-IV's Limited
Partnership Agreement, ICM-IV's first year management fees of $3,350 were
prepaid in July and August 1996, of which $838 was charged to expense for the
three months ended March 31, 1997. ICM-IV management fee expense was not
recognized during the first seven months of 1996, until the Company's capital
contributions were received from its partners.
InterMedia Management, Inc. ("IMI") is wholly owned by the managing general
partner of ICM-IV. IMI has entered into agreements with all of ICP-IV's
subsidiaries to provide accounting and administrative services at cost. IMI also
provides such services to other cable systems which are affiliates of the
Company. Administrative fees charged by IMI were $124 and $1,675 for the three
months ended March 31, 1996 and 1997, respectively. Receivable from affiliate
represents advances to IMI, net of administrative fees charged by IMI, and
operating expenses paid by IMI on behalf of ICP-IV's subsidiaries.
In February 1997, Leo J. Hindery, Jr., the managing general partner of
ICM-IV and various other affiliated InterMedia partnerships, was appointed
President of TCI. As part of Mr. Hindery's transition, TCI is negotiating for
the purchase of Mr. Hindery's interests in IMI and ICM-IV as well as various
other affiliated InterMedia partnerships. Through ICM-IV, Mr. Hindery has
managed ICP-IV and its subsidiaries as well as other affiliated InterMedia
partnerships. Upon the completion of the transaction, Mr. Hindery will no longer
hold a controlling interest in any of the various InterMedia corporations or
partnerships. The transition is expected to be completed in 1997 and will
require amendments to ICP-IV and its subsidiaries' various senior debt and
partnership agreements.
As an affiliate of TCI, ICP-IV is able to purchase programming services
from a subsidiary of TCI. Management believes that the overall programming rates
made available through this relationship are lower than ICP-IV could obtain
separately. The TCI subsidiary is under no obligation to continue to offer such
volume rates to ICP-IV, and such rates may not continue to be available in the
future should TCI's ownership in ICP-IV significantly decrease or if TCI or the
programmers should otherwise decide not to offer such participation to the
Company. Programming fees charged by the TCI subsidiary for the three months
ended March 31, 1996 and 1997 amounted to $507 and $9,853, respectively. Payable
to affiliates includes programming fees payable to the TCI subsidiary of $3,353
and $3,311 as of December 31, 1996 and March 31, 1997, respectively.
9
<PAGE> 12
INTERMEDIA CAPITAL PARTNERS IV, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(DOLLARS IN THOUSANDS)
7. SUPPLEMENTAL DISCLOSURES TO CONSOLIDATED STATEMENTS OF CASH FLOWS
During the three months ended March 31, 1996 and 1997, the Company paid
interest of $10 and $27,406, respectively.
As described in Note 2, during 1996 the Company acquired several cable
television systems located in central and eastern Tennessee. In conjunction with
the Miscellaneous Acquisitions completed during the three months ended March 31,
1996, assets acquired and liabilities assumed were as follows:
<TABLE>
<S> <C>
Fair value of assets acquired............................ $96,569
Liabilities assumed, net of current assets............... (57)
-------
Net cash paid............................................ $96,512
=======
</TABLE>
10
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis is intended to assist in an
understanding of significant changes and trends related to the results of
operations and financial condition of the Company and should be read in
conjunction with the Company's Management's Discussion and Analysis of Financial
Condition and Results of Operations included in the Company's Form 10-K for the
year ended December 31, 1996. This discussion contains, in addition to
historical information, forward-looking statements that are based upon certain
assumptions and are subject to a number of risks and uncertainties. The
Company's actual results may differ significantly from the results predicted in
such forward-looking statements. This discussion and analysis should be read in
conjunction with the separate financial statements of the Company.
OVERVIEW
The Company generates substantially all of its revenues from monthly
subscription fees for basic, expanded basic (also referred to as cable
programming services, "CPS"), premium and ancillary services (such as rental of
converters and remote control devices) and installation charges. Additional
revenues have been generated from local and national advertising sales,
pay-per-view programming and home shopping commissions.
The Company has reported net losses primarily caused by high levels of
depreciation and amortization and interest expense. Management believes that net
losses are common for cable television companies and that the Company will incur
net losses in the future.
Historically, certain programmers have periodically increased the rates
charged for their services. Management believes that such rate increases are
common for the cable television industry and that the Company will experience
program fee rate increases in the future.
Acquisitions
During the year ended December 31, 1996 the Company acquired cable
television systems serving approximately 573,700 basic subscribers in Tennessee,
South Carolina and Georgia through (i) the Company's acquisition on July 30,
1996 of controlling equity interests in IPWT and RMG, (ii) the equity
contribution on July 30, 1996 of the Greenville/Spartanburg System to the
Company by TCI, (iii) the purchase of the Nashville System on August 1, 1996,
(iv) the purchases on January 29, 1996 and February 1, 1996 of cable television
systems currently serving approximately 58,800 basic subscribers, and (v) the
purchases on May 2, 1996, July 1, 1996, and August 6, 1996 of cable television
systems currently serving approximately 1,500 basic subscribers (together with
the January 29, 1996 and the February 1, 1996 acquisitions, the "Miscellaneous
Acquisitions").
The Company paid cash of approximately $418.0 million, including related
acquisition costs and fees, for the Miscellaneous Acquisitions and the purchase
of the Nashville System. The Miscellaneous Acquisitions and the purchase of the
Nashville System have been accounted for as purchases and results of operations
are included in the Company's consolidated results only from the dates the
systems were acquired.
In connection with the Company's acquisitions of RMG and IPWT, the Company
paid cash of $0.3 million for its equity interests in RMG and repaid in cash
$365.5 million of the acquired entities' indebtedness, including $14.9 million
of accrued interest. The Company also paid cash to TCI of $119.8 million in
connection with TCI's contribution of the Greenville/Spartanburg System to the
Company. The cash payment to TCI has been recorded as an equity distribution in
the Company's December 31, 1996 consolidated financial statements.
The Company acquired IPWT and extinguished $36.7 million of IPWT's
indebtedness in exchange for non-cash consideration consisting of limited
partner interest in ICP-IV of $11.7 million and a preferred limited partner
interest in ICP-IV of $25.0 million. TCI received non-cash consideration of
$117.6 million in the form of a limited partner interest in ICP-IV in exchange
for its contribution of the Greenville/Spartanburg System to the Company.
11
<PAGE> 14
IPWT, RMG and the Greenville/Spartanburg System were acquired from entities
in which TCI had a significant ownership interest. Because of TCI's substantial
continuing interest in these entities as a 49.0% limited partner in ICP-IV,
these acquisitions were accounted for at their historical cost basis as of the
acquisition date. Results of these entities are included in the Company's
consolidated results of operations only from the date of acquisition.
Rate Regulation and Competition
The Company's operations are regulated by the Federal Communications
Commission ("FCC") and local franchise authorities under the Cable Television
Consumer Protection and Competition Act of 1992 (the "1992 Cable Act") and the
Telecommunications Act of 1996 (the "1996 Act"). Certain of the Company's cost
of service cases justifying rates for the CPS or expanded basic tier of service
are pending before the FCC. Additionally, pursuant to the FCC's regulations,
several local franchising authorities are reviewing the Company's basic rate
justifications and several other franchising authorities have requested that the
FCC review the Company's basic rate justifications. Management believes that the
Company has substantially complied in all material respects with related FCC
regulations and the outcome of these proceedings will not have a material
adverse effect on the Company.
The Company is subject to competition from alternative providers of video
services, including wireless service providers and local telephone companies.
BellSouth has applied for cable franchises in certain areas where the Company
operates. However, BellSouth has since acknowledged it is postponing its request
for cable franchises in the state of Tennessee. On October 22, 1996 the
Tennessee Cable Telecommunications Association and the Cable Television
Association of Georgia filed a formal complaint with the FCC challenging certain
alleged acts and practices that BellSouth is taking in certain areas of
Tennessee and Georgia including, among others, subsidizing its deployment of
cable television facilities with regulated services revenues that are not
subject to competition. The Company is joined by several other cable operators
as the "Complainant Cable Operators" in the complaint. The cross-subsidization
claims are currently pending before the FCC's Common Carrier Bureau. The Company
cannot predict the likelihood of success on this complaint. See Part II, Item 5
"Other Information -- Certain Factors Affecting Future Results -- Competition in
Cable Television Industry; Rapid Technological Change."
The Company cannot predict the extent to which competition will materialize
or, if competition materializes, the extent of its effect on the Company.
Transactions with Affiliates
Due to TCI's equity ownership in the Company, the Company is able to
purchase programming services from Satellite Services, Inc. ("SSI"), a
subsidiary of TCI. Management believes that the aggregate programming rates
obtained through this relationship are lower than the rates the Company could
obtain through arm's-length negotiations with third parties. TCI is under no
obligation to offer such benefits to the Company. The loss of the relationship
with TCI could adversely affect the financial position and results of operations
of the Company. During the three months ended March 31, 1996 and 1997, the
Company paid 77.6% and 75.7%, respectively, of its program fees to SSI.
The Company and its affiliated entities InterMedia Partners, a California
limited partnership, and InterMedia Partners III, L.P. and their consolidated
subsidiaries (together the "Related InterMedia Entities") have entered into
agreements ("Administrative Agreements") with IMI, pursuant to which IMI
provides accounting, operational, marketing, engineering, legal, regulatory
compliance and other administrative services at cost. IMI is wholly owned by Leo
J. Hindery, Jr., who is the managing general partner of and owns the controlling
interest in ICM-IV, which is the general partner of ICP-IV. Generally, IMI
charges costs to the Related InterMedia Entities based on each entity's number
of basic subscribers as a percentage of total basic subscribers for all of the
Related InterMedia Entities. In addition to changes in IMI's aggregate cost of
providing such services, changes in the number of the Company's basic
subscribers and/or changes in the number of basic subscribers for the other
Related InterMedia Entities will affect the level of IMI costs charged to the
Company. IMI charged $0.1 million and $1.7 million to the Company for the three
months ended March 31, 1996 and 1997, respectively.
12
<PAGE> 15
ICM-IV manages the business of the Company for an annual fee of one percent
of the Company's total non-preferred capital contributions. See Part II, Item 5
"Other Information -- Certain Factors Affecting Future Results -- Related Party
Transactions."
In February of this year Leo J. Hindery, Jr. was appointed president of
TCI. As part of Mr. Hindery's transition to TCI, all or a part of Mr. Hindery's
interests in ICM-IV and its general partner IMI, as well as various other
management partnerships for the Related InterMedia Entities, will be converted
or sold. Upon completion of the transition, Mr. Hindery will no longer hold a
controlling interest in IMI or ICM-IV. The transition is expected to be
completed by mid-1997.
It is currently contemplated that Mr. Hindery's interests in ICM-IV, the
general partner of the Company, will be converted as follows. Mr. Hindery will
sell his stock in IMI, the general partner of ICM-IV, to Robert J. Lewis.
ICM-IV's general partnership interest in the Company will be converted into a
limited partnership interest. A newly-formed limited liability corporation
("ICM-LLC"), for which IMI will be the managing member, will be admitted as the
Managing General Partner of the Company. The transactions described above are
subject to final negotiation and documentation, therefore the final structure of
these transactions may differ upon completion.
RESULTS OF OPERATIONS
As described above, the Company acquired all of its cable television
systems during the year ended December 31, 1996 ("1996 Acquisitions"). A
significant portion of these acquisitions occurred in July and August 1996.
Results of operations of the acquired cable television systems have been
included in the Company's results of operations only from the dates the systems
were acquired. The Company had no operations prior to its first acquisition on
January 29, 1996. As a result, the comparability of the Company's results of
operations for the three months ended March 31, 1996 and 1997 is affected by the
1996 Acquisitions, particularly by the acquisitions which closed subsequent to
the three months ended March 31, 1996 ("Late 1996 Acquisitions").
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
--------------------------------------------
1996 1997
-------------------- ---------------------
PERCENTAGE PERCENTAGE
AMOUNT OF REVENUE AMOUNT OF REVENUE
------- ---------- -------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Statement of Operations Data: (dollars in thousands)
Revenue................................................ $ 3,130 100.0% $ 60,819 100%
Costs and Expenses:
Program fees......................................... 653 20.9 13,025 21.4
Other direct and operating expenses(1)............... 350 11.2 6,851 11.3
Selling, general and administrative(2)............... 611 19.5 11,756 19.3
Management and consulting fees....................... 838 1.4
Depreciation and amortization........................ 1,893 60.5 33,290 54.7
------ ------ ------- ------
Loss from operations................................... (377) (12.0) (4,941) (8.1)
Interest and other income.............................. 19 0.6 1,378 2.3
Interest expense....................................... (1,399) (44.7) (19,263) (31.7)
Other expense.......................................... (1) 0.0 (170) (0.3)
Income tax benefit..................................... 1,488 2.4
Minority interest...................................... (214) (0.4)
------ ------ ------- ------
Net loss............................................... $(1,758) (56.2)% $(21,722) (35.7)%
====== ====== ======= ======
Other Data:
EBITDA(3).............................................. $ 1,516 48.4% $ 28,349 46.6%
</TABLE>
- ---------------
(1) Other direct and operating expenses consist of expenses relating to
installations, plant repairs and maintenance and other operating costs
directly associated with revenues.
(2) Selling, general and administrative expenses consist mainly of costs related
to system offices, customer service representatives and sales and
administrative employees.
13
<PAGE> 16
(3) EBITDA is defined as earnings before interest, income taxes, depreciation
and amortization, minority interest and other expense. EBITDA is a commonly
used measure of performance in the cable industry. However, it does not
purport to represent cash flows from operating activities in related
Consolidated Statements of Cash Flows and should not be considered in
isolation or as a substitute for measures of performance in accordance with
GAAP. For information concerning cash flows from operating, investing and
financing activities, see Unaudited Financial Statements included elsewhere
in this Report.
Revenues
The Company's revenues for the three months ended March 31, 1997 increased
to $60.8 million from $3.1 million for the three months ended March 31, 1996 due
primarily to the Late 1996 Acquisitions. The Company's total revenues for the
three months ended March 31, 1997 consisted of $41.3 million of basic service
revenues, or 67.9% of total revenues, compared to 77.4% for the three months
ended March 31, 1996. The decrease in basic service revenues as a percentage of
total revenues is due primarily to proportionately higher volume of pay
services, advertising sales, converter rental and other services provided by the
systems acquired subsequent to March 31, 1996, as compared to those systems
acquired during the three months ended March 31, 1996. Pay service revenues of
$10.0 million for the three months ended March 31, 1997 represented 16.4% of
total revenues, compared to 15.8% for the three months ended March 31, 1996.
Other service revenues of $9.5 million for the three months ended March 31, 1997
represented 15.7%, compared to 6.8% for the three months ended March 31, 1996.
Other service revenues for the three months ended March 31, 1997 included
non-recurring advertising revenue of $1.3 million earned from certain
programmers to promote and launch their new services.
The Company served approximately 578,800 basic subscribers who subscribed
to 445,200 pay units at March 31, 1997, compared to 56,100 basic subscribers and
24,900 pay units at March 31, 1996 reflecting pay to basic penetration of 76.9%
and 44.4% as of March 31, 1997 and 1996, respectively. Average basic service
revenue per basic subscriber for the three months ended March 31, 1997 was
$23.92 compared to $21.70 for the three months ended March 31, 1996. The
increase represents rate increases implemented by certain of the Company's cable
systems in September 1996 and in early 1997 and higher effective basic service
rates for the systems acquired subsequent to March 31, 1996, compared to those
systems acquired during the three months ended March 31, 1996. Average pay
service revenue per pay unit for the three months ended March 31, 1997 was $7.53
compared to $9.86 for the three months ended March 31, 1996. The decrease is due
primarily to marketing promotions offered by the Company and the impact of the
systems acquired subsequent to March 31, 1996 with lower average pay service
revenue per pay unit than those systems acquired during the first three months
of 1996.
Program Fees
Program fees for the three months ended March 31, 1997 increased to $13.0
million as compared with $0.7 million for the three months ended March 31, 1996
due primarily to the Late 1996 Acquisitions. Program fees for the three months
ended March 31, 1997 represent 25.4% of basic and pay service revenues compared
to 22.4% for the three months ended March 31, 1996. The increase as a percentage
of basic and pay service revenues reflects the impact of program fee increases,
which resulted from higher rates charged by certain programmers and higher
pay-per-view program costs, outpacing revenue growth for the period.
Other Direct Expenses
Other direct expenses increased to $6.9 million for the three months ended
March 31, 1997 from $0.4 million for the three months ended March 31, 1996 as a
result of the Late 1996 Acquisitions. Other direct expenses as a percentage of
total revenues remained relatively constant at 11.3% for the three months ended
March 31, 1997 compared to 11.2% for the three months ended March 31, 1996.
14
<PAGE> 17
Selling, General and Administrative
Selling, general and administrative ("SG&A") expenses for the three months
ended March 31, 1997 increased to $11.8 million from $0.6 million for the three
months ended March 31, 1996 due primarily to the Late 1996 Acquisitions. SG&A as
a percentage of total revenues remained relatively constant at 19.3% for the
three months ended March 31, 1997 compared to 19.5% for the three months ended
March 31, 1996.
Management and Consulting Fees
Management and consulting fees of $0.8 million for the three months ended
March 31, 1997 represent fees charged by ICM-IV. ICM-IV manages the business of
the Company for a per annum fee of 1.0% of the Company's total non-preferred
capital contributions, or $3.4 million. ICM-IV management fees were not accrued
on the Company's books prior to July 30, 1996, the date on which the Company's
capital contributions were received from its partners.
Depreciation and Amortization
Depreciation and amortization expense for the three months ended March 31,
1997 increased to $33.3 million from $1.9 million for the three months ended
March 31, 1996 as a result of the Late 1996 Acquisitions and capital
expenditures of $59.8 million for the twelve months ended March 31, 1997.
Interest and Other Income
Interest and other income of $1.4 million for the three months ended March
31, 1997 is comprised primarily of $1.2 million of interest income earned on the
escrowed securities and $0.1 million of interest income earned on cash and cash
equivalents. The Company had no escrowed securities until it issued its 11.25%
senior notes on July 30, 1996.
Interest Expense
Interest expense increased to $19.3 million for the three months ended
March 31, 1997 compared to $1.4 million for the three months ended March 31,
1996 due primarily to higher debt balances during 1997 compared to the same
period in 1996. Interest expense for the three months ended March 31, 1997
includes interest on borrowings outstanding under the 11.25% senior notes and
bank debt, which were incurred to finance the Company's acquisitions in July and
August 1996. Interest expense for the three months ended March 31, 1996 includes
interest on the Bridge Loan which was obtained by a subsidiary of ICP-IV
primarily to fund acquisitions of cable television systems during the first
three months of 1996.
Income Tax Benefit
Income tax benefit of $1.5 million for the three months ended March 31,
1997 has been recorded based on RMG's stand alone tax provision. As
partnerships, the tax attributes of ICP-IV and its subsidiaries other than RMG
and IPCC accrue to the partners. Prior to ICP-IV's acquisition of RMG on July
30, 1996, the Company had no income tax expense or benefit.
Minority Interest
Minority interest for the three months ended March 31, 1997 represents
accrued dividends of $0.2 million on RMG's mandatorily redeemable preferred
stock issued to a subsidiary of TCI which is the minority shareholder of RMG's
common stock. The mandatorily redeemable preferred shares were issued in
connection with the Company's acquisition of RMG on July 30, 1996.
Net Loss
The Company's net loss for the three months ended March 31, 1997 increased
to $21.7 million from $1.8 million for the three months ended March 31, 1996.
The increase is due primarily to the Late 1996 Acquisitions, which resulted in
significantly higher expenses relative to the increased revenues. Net losses for
15
<PAGE> 18
the periods ended March 31, 1996 and 1997 reflect the impact of significant
amounts of depreciation, amortization and interest expense.
LIQUIDITY AND CAPITAL RESOURCES
The following table sets forth certain statement of cash flows information
of the Company (in thousands) for the three months ended March 31, 1996 and
1997. The Company consummated acquisitions of cable television systems in
January, February, May, July and August 1996. Cash flows from operating
activities of the acquired systems have been included only from the dates of
acquisition.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1996 1997
-------- -------
(UNAUDITED)
<S> <C> <C>
STATEMENT OF CASH FLOWS DATA:
Cash flows from operating activities............................ $ 2,387 $ 216
Cash flows from investing activities............................ (96,675) (8,268)
Cash flows from financing activities............................ 95,490 5,936
</TABLE>
THREE MONTHS ENDED MARCH 31, 1996
The Company's cash balance increased from zero as of January 1, 1996 to
$1.2 million as of March 31, 1996.
Cash Flows From Operating Activities
The Company generated cash flows from operating activities of $2.4 million
for the three months ended March 31, 1996 reflecting (i) income from operations
of $1.5 million before non-cash charges to income for depreciation and
amortization of $1.9 million; and (ii) net working capital sources of
approximately $0.9 million.
Cash Flows From Investing Activities
The Company used cash during the three months ended March 31, 1996 of $96.5
million to fund its purchase of certain cable television systems. The Company
also purchased property and equipment of $0.2 million during the three months
ended March 31, 1996 consisting primarily of cable system upgrades and rebuilds,
plant extensions, converters and initial subscriber installations.
Cash Flows From Financing Activities
The Company financed the acquisitions described above with proceeds from
the Bridge Loan.
THREE MONTHS ENDED MARCH 31, 1997
The Company's cash balance decreased by $2.1 million from $8.8 million as
of January 1, 1997 to $6.7 million as of March 31, 1997.
Cash Flows From Operating Activities
The Company generated cash flows from operating activities of $0.2 million
for the three months ended March 31, 1997 reflecting (i) income from operations
of $28.3 million before non-cash charges to income for depreciation and
amortization of $33.3 million; (ii) interest and other income received of $2.9
million, primarily from escrowed investments; (iii) interest paid of $27.4
million; and (iv) other working capital uses and non-operating expenses of $3.6
million.
16
<PAGE> 19
Cash Flows From Investing Activities
The Company purchased property and equipment of $21.8 million during the
three months ended March 31, 1997 consisting primarily of cable system upgrades
and rebuilds, plant extensions, converters and initial subscriber installations.
The Company received $13.9 million in proceeds from sale of its escrowed
investments upon maturity on January 31, 1997. These proceeds and related
interest received were used to fund interest payment obligations on the Notes of
$16,569 on February 1, 1997. During the three months ended March 31, 1997, the
Company paid approximately $0.3 million for the right to provide cable services
to a multiple dwelling unit in Greenville/Spartanburg.
Cash Flows From Financing Activities
The Company's cash flows from financing activities for the three months
ended March 31, 1997 consisted primarily of net borrowings of $6.0 million under
the bank revolving credit facility, which were used, along with cash available
from operations, to fund the Company's capital requirements.
PRO FORMA LIQUIDITY AND CAPITAL RESOURCES
The Company has plans to make substantial expenditures for technological
upgrades and rebuilds over the next several years under its Capital Improvement
Program, which is reviewed and modified periodically by management. Management
believes that substantial growth in revenues and operating cash flows is not
achievable without implementing at least a significant portion of the Capital
Improvement Program.
For each of the years through maturity of the Notes, the Company's
principal sources of liquidity are expected to be cash generated from operations
and borrowings under the Company's revolving credit facility. The revolving
credit facility provides for borrowings up to $475.0 million in the aggregate,
with permanent annual commitment reductions beginning in 1999, and matures in
2004. As of March 31, 1997, the Company had $340.0 million outstanding under the
revolving credit facility, leaving availability of $135.0 million. Prior to
January 1, 1999, the Company has no mandatory amortization requirements under
the Bank Facility.
Management believes that the Company will be able to realize substantial
growth rates in revenue over the next several years through a combination of
household growth, increased penetration and new product offerings that the
Company will be able to make available as technological upgrades are completed
under the Capital Improvement Program.
Management believes that, with the Company's ability to realize operating
efficiencies and sustain substantial growth rates in revenue, it will be able to
generate cash flows from operating activities which, together with available
borrowing capacity under the revolving credit facility, will be sufficient to
fund required interest payments and planned capital expenditures over the next
several years. However, the Company may not be able to generate sufficient cash
from operations or accumulate sufficient cash from other activities or sources
to repay in full the principal amounts outstanding under the Notes on maturity.
In order to satisfy its repayment obligations with respect to the Notes due
August 1, 2006, the Company may be required to refinance the Notes. There can be
no assurance that financing will be available at that time in order to
accomplish any necessary refinancing on terms favorable to the Company. See Part
II, Item 5 "Other Information -- Certain Factors Affecting Future
Results -- Substantial Leverage; Deficiency of Earnings to Cover Fixed Charges";
and "-- Future Capital Requirements."
Borrowings under the revolving credit facility are available under interest
rate options related to the base rate of the administrative agent for the Bank
Facility ("ABR") (which is based on the administrative agent's published prime
rate) and LIBOR. Interest rates vary under each option based on IP-IV's senior
leverage ratio. For ABR loans the rate varies from ABR to ABR plus 0.50%, and
for LIBOR loans the rate varies from LIBOR plus 0.75% to LIBOR plus 1.75%.
Interest periods are specified as one, two or three months for LIBOR loans. The
Bank Facility requires quarterly interest payments, or more frequent interest
payments if a shorter period is selected under the LIBOR option. The Bank
Facility also requires IP-IV to pay
17
<PAGE> 20
quarterly a commitment fee of 0.25% or 0.375% per year, depending on the senior
leverage ratio of IP-IV, on the unused portion of available credit.
The obligations of IP-IV under the Bank Facility are secured by a first
priority pledge of the capital stock and/or partnership interests of IP-IV's
subsidiaries, a negative pledge on other assets of IP-IV and subsidiaries and a
pledge of any inter-company notes. The obligations of IP-IV under the Bank
Facility are guaranteed by IP-IV's subsidiaries.
The Bank Facility and the Indenture, as defined herein, restrict, among
other things, the Company's ability to incur additional indebtedness, incur
liens, pay distributions or make certain other restricted payments, consummate
certain asset sales and enter into certain transactions with affiliates. In
addition, the Bank Facility and Indenture restrict the ability of a subsidiary
to pay distributions or make certain payments to ICP-IV, 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 Bank
Facility also requires the Company to maintain specified financial ratios and
satisfy certain financial condition tests. Such restrictions and compliance
tests, together with the Company's substantial leverage and the pledge of
substantially all of IP-IV's equity interests in its subsidiaries, could limit
the Company's ability to respond to market conditions, to provide for
unanticipated capital investments or to take advantage of business
opportunities. As of March 31, 1997 the Company was in compliance with all of
the debt covenants as provided by the Bank Facility and the Indenture.
COMMITMENTS AND CONTINGENCIES
The Company has continuing commitments under franchise agreements and FCC
regulations and is subject to litigation and other claims in the ordinary course
of business. See Note 5 to the Consolidated Financial Statements included
herein. See Part II, Item 5 "Other Information -- Certain Factors Affecting
Future Results -- Regulation of the Cable Television Industry" and
"-- Expiration of Franchises."
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
Statements in this report which are prefaced with words such as expects,
anticipates, believes and similar words and other statements of similar sense,
are forward-looking statements. These statements are based on the Company's
current expectations and estimates as to prospective events and circumstances
which may or may not be within the Company's control and as to which there can
be no firm assurances given. These forward-looking statements, like any other
forward-looking statements, involve risks and uncertainties that could cause
actual results to differ materially from those projected or anticipated.
In addition to other risks and uncertainties that may be described
elsewhere in this document, certain risks and uncertainties that could affect
the Company's financial results include the following: the development, market
acceptance and successful introduction of new services and enhancements;
competitors' service introductions and enhancements; and risks associated with
the 1996 Acquisitions, including the Company's ability to successfully integrate
the acquired cable television systems.
(For a description of the above risks and uncertainties, see the Certain
Factors that May Affect Future Results section under Item 5 of PART II.)
18
<PAGE> 21
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material legal proceedings to which the Company is a party or
to which the Company's properties are subject. The Company knows of no
threatened or pending material legal action against it or its properties.
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
INTERMEDIA PARTNERS IV, CAPITAL CORP.
InterMedia Partners IV, Capital Corp., a Delaware corporation ("IPCC"), is
the wholly owned subsidiary of the Company and was formed solely for the purpose
of serving as a co-issuer of the Notes. The Notes are the joint and several
obligation of the Company and IPCC. Separate financial statements and other
disclosure concerning IPCC have not been provided because IPCC's financial
position is not deemed to be material and it does not have any operations.
CERTAIN FACTORS AFFECTING FUTURE RESULTS
SUBSTANTIAL LEVERAGE; DEFICIENCY OF EARNINGS TO COVER FIXED CHARGES
The Company has indebtedness that is substantial in relation to partners'
capital. On March 31, 1997, the Company's total debt balance was approximately
$852.0 million and partners' capital balance was approximately $52.1 million.
Under the Financing, ICP-IV received $360.0 million of new equity from its
partners, comprised of cash and in-kind contributions. See Part I, Item 1
"Financial Statements -- InterMedia Capital Partners IV, L.P. -- Notes to
Consolidated Financial Statements." In addition, subject to the restrictions in
the indenture for the Notes (the "Indenture"), ICP-IV and its subsidiaries
(other than IPCC) may incur additional indebtedness from time to time to finance
acquisitions and capital expenditures or for general corporate purposes. The
high level of the Company's indebtedness will have important consequences,
including: (i) a substantial portion of the Company's cash flow from operations
must be dedicated to debt service and will not be available for general
corporate purposes or for the Capital Improvement Program; (ii) the Company's
ability to obtain additional debt financing in the future for working capital,
capital expenditures, acquisitions or for the Capital Improvement Program may be
limited; and (iii) the Company's level of indebtedness could limit its
flexibility in reacting to changes in the industry and economic conditions
generally. See "-- Future Capital Requirements."
There can be no assurance that the Company will generate earnings in future
periods sufficient to cover its fixed charges, including its debt service
obligations with respect to the Notes. In the absence of such earnings or other
financial resources, the Company could face substantial liquidity problems.
ICP-IV's ability to pay interest on the Notes and to satisfy its other debt
obligations will depend upon its future operating performance, including the
successful implementation of the Capital Improvement Program and will be
affected by prevailing economic conditions and financial, business and other
factors, many of which are beyond
19
<PAGE> 22
the Company's control. Based upon expected increases in revenue and cash flow,
the Company anticipates that its cash flow, together with available borrowings,
including borrowings under the Bank Facility, will be sufficient to meet its
operating expenses and capital expenditure requirements and to service its debt
requirements for the next several years. See Part I, Item 2 "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
However, in order to satisfy its repayment obligations with respect to the
Notes, ICP-IV may be required to refinance the Notes on their maturity. There
can be no assurance that financing will be available at that time in order to
accomplish any necessary refinancing on terms favorable to the Company or at
all. If the Company is unable to service its indebtedness, it will be forced to
adopt an alternative strategy that may include actions such as reducing or
delaying capital expenditures, selling assets, restructuring or refinancing its
indebtedness or seeking additional equity capital. There can be no assurance
that any of these strategies could be effected on satisfactory terms, if at all.
Management believes that substantial growth in revenues and operating cash flows
is not achievable without implementing at least a significant portion of the
Capital Improvement Program. See Part I, Item 2 "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
HOLDING COMPANY STRUCTURE; STRUCTURAL SUBORDINATION
The Notes are the general obligations of ICP-IV and IPCC and rank pari
passu with all senior indebtedness of ICP-IV and IPCC, if any. The Company's
operations are conducted through the direct and indirect subsidiaries of IP-IV.
ICP-IV and IPCC hold no significant assets other than their investments in and
advances to ICP-IV's subsidiaries, and ICP-IV and IPCC have no independent
operations and, therefore, are dependent on the cash flow of ICP-IV's
subsidiaries and other entities to meet their own obligations, including the
payment of interest and principal obligations on the Notes when due.
Accordingly, ICP-IV's and IPCC's ability to make interest and principal payments
when due and their ability to purchase the Notes upon a Change of Control or
Asset Sale (as defined in the Indenture) is dependent upon the receipt of
sufficient funds from ICP-IV's subsidiaries and will be severely restricted by
the terms of existing and future indebtedness of ICP-IV's subsidiaries. The Bank
Facility was entered into by IP-IV and prohibits payment of distributions by any
of ICP-IV's subsidiaries to ICP-IV or IPCC prior to February 1, 2000, and
permits such distributions thereafter only to the extent necessary for ICP-IV to
make cash interest payments on the Notes at the time such cash interest is due
and payable, provided that no default or event of default with respect to the
Bank Facility exists or would exist as a result.
RESTRICTIONS IMPOSED BY LENDERS
The Bank Facility and, to a lesser extent, the Indenture contain a number
of significant covenants that, among other things, restrict the ability of the
Company to dispose of assets or merge, incur debt, pay distributions, repurchase
or redeem capital stock, create liens, make capital expenditures and make
certain investments or acquisitions and otherwise restrict corporate activities.
The Bank Facility also contains, among other covenants, requirements that IP-IV
maintain specified financial ratios, including maximum leverage and minimum
interest coverage, and prohibits IP-IV and its subsidiaries from prepaying the
Company's other indebtedness (including the Notes). The ability of the Company
to comply with such provisions may be affected by events that are beyond the
Company's control. The breach of any of these covenants could result in a
default under the Bank Facility. In the event of any such default, lenders party
to the Bank Facility could elect to declare all amounts borrowed under the Bank
Facility, together with accrued interest and other fees, to be due and payable.
If the indebtedness under the Bank Facility were to be accelerated, all
indebtedness outstanding under such Bank Facility would be required to be paid
in full before IP-IV would be permitted to distribute any assets or cash to
ICP-IV. There can be no assurance that the assets of ICP-IV and its subsidiaries
would be sufficient to repay all borrowings under the Bank Facility and the
other creditors of such subsidiaries in full. In addition, as a result of these
covenants, the ability of the Company to respond to changing business and
economic conditions and to secure additional financing, if needed, may be
significantly restricted, and the Company may be prevented from engaging in
transactions that might otherwise be considered beneficial to the Company.
20
<PAGE> 23
FUTURE CAPITAL REQUIREMENTS
Consistent with the Company's business strategy, and in order to comply
with requirements imposed by certain of its franchising authorities and to
address existing and potential competition, the Company has implemented the
Capital Improvement Program. Pursuant to the Capital Improvement Program, the
Company is expanding and upgrading the systems' plant to improve channel
capacity and system reliability and to allow for interactive services such as
enhanced pay-per-view, home shopping, data transmission (including Internet
access) and other interactive services to the extent they become technologically
viable and economically practicable. The Company expects to upgrade certain of
its existing systems with a digital-capable, high-capacity, broadband hybrid
fiber/coaxial network architecture to accomplish these objectives. Although the
Company anticipates that it will continue to upgrade portions of its systems
over the next several years, there can be no assurance that the Company will be
able to upgrade its cable television systems at a rate that will allow it to
remain competitive with competitors that either do not rely on cable into the
home (e.g., MMDS and DBS) or have access to significantly greater amounts of
capital and an existing communications network (e.g., certain telephone
companies). The Company's business requires continuing investment to finance
capital expenditures and related expenses for expansion of the Company's
subscriber base and system development. There can be no assurance that the
Company will be able to fund its Capital Improvement Program or any of its other
capital expenditures. The Company's inability to upgrade its cable television
systems or make its other planned capital expenditures could have a material
adverse effect on the Company's operations and competitive position and could
have a material adverse effect on the Company's ability to service its debt,
including the Notes.
LIMITED OPERATING HISTORY; DEPENDENCE ON MANAGEMENT
ICP-IV was organized in March 1996. The partners of IP-IV transferred their
partnership interests to ICP-IV in 1996. Therefore, there is limited historical
financial information about the Company upon which to base an evaluation of its
performance. Pursuant to the Acquisitions, the Company substantially increased
the size of its operations. Therefore, the historical financial data of the
Company may not be indicative of the Company's future results of operations.
Further, there can be no assurance that the Company will be able to successfully
implement its business strategy. The future success of the Company will be
largely dependent upon the efforts of senior management of its general partner,
ICM-IV. Leo J. Hindery, Jr., the Company's founder who is the managing general
partner of the general partner of the Company, will be selling his controlling
interest in ICM-IV as well as other affiliates of the Company and the Related
InterMedia Entities pursuant to his appointment as President of TCI. Although
ICM-IV as general partner of ICP-IV may acquire systems on behalf of the
Company, there is no obligation to do so.
COMPETITION IN CABLE TELEVISION INDUSTRY; RAPID TECHNOLOGICAL CHANGE
Cable television systems face competition from other sources of news,
information and entertainment, such as off-air television broadcast programming,
newspapers, movie theaters, live sporting events, interactive computer programs
and home video products, including video tape cassette recorders. Competing
sources of video programming include, but are not limited to, off-air broadcast
television, DBS, MMDS, SMATV and other new technologies. Furthermore, the cable
television industry is subject to rapid and significant changes in technology.
The effect of any future technological changes on the viability or
competitiveness of the Company's business cannot be predicted.
In addition, the Telecommunications Act of 1996 has repealed the
cable/telephone cross-ownership ban, and telephone companies will now be
permitted to provide cable television service within their service areas.
Certain of such potential service providers have greater financial resources
than the Company, and in the case of local exchange carriers seeking to provide
cable service within their service areas, have an installed plant and switching
capabilities, any of which could give them competitive advantages with respect
to cable television operators such as the Company.
BellSouth has applied for cable franchises in certain of the Company's
franchise areas and is acquiring a number of wireless cable companies in regions
where the Company operates. However, BellSouth has since
21
<PAGE> 24
acknowledged it is postponing its request for cable franchises in the state of
Tennessee. On October 22, 1996 the Tennessee Cable Telecommunications
Association ("TCTA") and the Cable Television Association of Georgia filed a
formal complaint with the FCC challenging certain acts and practices that
BellSouth is taking in connection with its deployment of video distribution
facilities in certain areas of Tennessee and Georgia. In addition, the TCTA also
filed a petition for investigation with the Tennessee Regulatory Authority
concerning certain alleged acts and practices that BellSouth is taking in
connection with its construction and deployment of cable facilities in
Tennessee. The Company is joined by several other cable operators in the
complaint. The Company cannot predict the likelihood of success in this
complaint or the petition nor can there be any assurance that the Company will
be successful with either the complaint or the petition. Furthermore, the
Company cannot predict either the extent to which competition from BellSouth or
other potential service providers will materialize or, if such competition
materializes, the extent of its effect on the Company.
REGULATION OF THE CABLE TELEVISION INDUSTRY
The cable television industry is subject to extensive regulation at the
federal, state and local levels, and many aspects of such regulation are
currently the subject of judicial proceedings and administrative or legislative
proposals. In February 1996, Congress passed, and the President signed into law,
major telecommunications reform legislation, the Telecommunications Act of 1996.
Among other things, the 1996 Act reduces in some circumstances and by 1999 will
eliminate, rate regulation for CPS packages for all cable television systems and
immediately eliminates regulation of this service tier for small cable
operators. The FCC is undertaking numerous rulemaking proceedings to interpret
and implement the provisions of the 1996 Act. The 1996 Act and the FCC's
implementing regulations could have a significant effect on the cable television
industry. In addition, the Cable Television Consumer Protection and Competition
Act of 1992 (the "1992 Cable Act") imposed substantial regulation on the cable
television industry, including rate regulation, and significant portions of the
1992 Act remain in effect despite the enactment of the 1996 Act and remain
highly relevant to the Company's operations.
The Company elected the benchmark or cost-of-service methodologies to
justify its basic and CPS tier rates in effect prior to May 15, 1994, but relied
primarily upon the cost-of-service methodology to justify regulated service
rates in effect after May 14, 1994. The Company's cost-of-service cases
justifying certain rates for the CPS tier of service are currently pending
before the FCC. Additionally, pursuant to the FCC's regulations, several local
franchising authorities are reviewing the Company's basic rate justifications
and several other franchising authorities have requested that the FCC review the
Company's basic rate justifications. Although the Company generally believes
that its rates are justified under the FCC's benchmark or cost-of-service
methodologies, it cannot predict the ultimate resolution of these cases.
Management believes that the regulation of the cable television industry
will remain a matter of interest to Congress, the FCC and other regulatory
bodies. There can be no assurance as to what, if any, future actions such
legislative and regulatory authorities may take or the effect thereof on the
industry or the Company.
RELATED PARTY TRANSACTIONS
Conflicts of interests may arise due to certain contractual relationships
of the Company and the Company's relationship with the Related InterMedia
Entities and its other affiliates. IMI, which is wholly owned by Leo J. Hindery,
Jr., provides administrative services at cost to the Company and to the
operating companies of the Related InterMedia Entities. Mr. Hindery will be
selling his interest in IMI pursuant to his appointment as president of TCI.
Conflicts of interest may arise in the allocation of management and
administrative services as a result of such relationships. In addition, the
Related InterMedia Entities and their respective related management partnerships
have certain relationships, and will likely develop additional relationships in
the future with TCI, which could give rise to conflicts of interest.
EXPIRATION OF FRANCHISES
In connection with a renewal of a franchise, the franchising authority may
require the Company to comply with different conditions with respect to
franchise fees, channel capacity and other matters, which
22
<PAGE> 25
conditions could increase the Company's cost of doing business. Although
management believes that it generally will be able to negotiate renewals of its
franchises, there can be no assurance that the Company will be able to do so and
the Company cannot predict the impact of any new or different conditions that
might be imposed by franchising authorities in connection with such renewals. In
connection with the withdrawal of Leo J. Hindery, Jr. as the managing general
partner of the general partner of the Company, the Company will need to obtain a
number of franchise consents. There can be no assurance that the Company will
receive these consents or that the franchising authorities will not attempt to
increase the Company's franchise obligations as a part of receiving the
consents.
LOSS OF BENEFICIAL RELATIONSHIP WITH TCI
The Company's relationship with TCI currently enables the Company to (i)
purchase programming services and equipment from a subsidiary of TCI at rates
that management believes are generally lower than the Company could obtain
through arm's-length negotiations with third parties, (ii) share in TCI's
marketing test results, (iii) share in the results of TCI's research and
development activities and (iv) consult with TCI's operating personnel with
expertise in engineering, technical, marketing, advertising, accounting and
regulatory matters. While the Company expects the relationship to continue, TCI
is under no obligation to offer such benefits to the Company, and there can be
no assurance that such benefits will continue to be available in the future
should TCI's ownership in the Company significantly decrease or should TCI for
any other reason decide not to continue to offer such benefits to the Company.
The loss of the relationship with TCI could adversely affect the financial
position and results of operations of the Company. Further, the Bank Facility
provides that an event of default will exist if TCI does not own beneficially
35.0% or more of ICP-IV's non-preferred partnership interests. See Part I, Item
2 "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Transactions with Affiliates."
PURCHASE OF NOTES UPON A CHANGE OF CONTROL
Upon the occurrence of a Change of Control, the ICP-IV and IPCC are
required to make an offer to purchase all outstanding Notes at a purchase price
equal to 101.0% of the principal amount thereof, together with accrued and
unpaid interest, if any, to the date of purchase. There can be no assurance that
ICP-IV and IPCC will have available funds sufficient to purchase the Notes upon
a Change of Control. In addition, any Change of Control, and any repurchase of
the Notes required under the Indenture upon a Change of Control, would
constitute an event of default under the Bank Facility, with the result that the
obligations of the borrowers thereunder could be declared due and payable by the
lenders. Any acceleration of the obligations under the Indenture or the Bank
Facility would make it unlikely that IP-IV could make adequate distributions to
ICP-IV in order to service the Notes and, accordingly, that IP-IV could make
adequate distributions to ICP-IV as required to permit ICP-IV and IPCC to effect
a purchase of the Notes upon a Change of Control.
ABSENCE OF PUBLIC MARKET; POSSIBLE VOLATILITY OF EXCHANGE NOTE PRICE
The Notes registered pursuant to the exchange offer completed in January
(the "Exchange Notes") are new securities for which there is currently no
market. The Company does not intend to apply for listing of the Exchange Notes
on any securities exchange or for the inclusion of the Exchange Notes in any
automated quotation system. Although the Company was advised by NationsBanc
Capital Markets, Inc. ("NationsBanc") and Toronto Dominion Securities (USA) Inc.
("Toronto Dominion") that, following completion of the private offering in July
1996, NationsBanc and Toronto Dominion intend to make a market in the Notes,
they are not obligated to do so and any such market making activities may be
discontinued at any time without notice. Accordingly, there can be no assurance
as to the development or liquidity of any market for the Exchange Notes. If a
market for the Exchange Notes were to develop, the Exchange Notes could trade at
prices that may be higher or lower than their initial offering price depending
upon many factors, including prevailing interest rates, the Company's operating
results and the markets for similar securities. Historically, the market for
non-investment-grade debt has been subject to disruptions that have caused
substantial volatility in the prices of securities similar to the Exchange
Notes. There can be no assurance that, if a market for the Exchange Notes were
to develop, such a market would not be subject to similar disruptions.
23
<PAGE> 26
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit Index
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER EXHIBIT NUMBERED PAGES
- ------- -------------------------------------------------------------------- --------------
<C> <S> <C>
24.1 Power of Attorney (included on page 25).............................
27.1 Schedule of Financial Data for InterMedia Capital Partners IV,
L.P. ...............................................................
</TABLE>
(b) Reports on Form 8-K:
No reports on Form 8-K were filed with the Securities and Exchange
Commission during the fiscal quarter ended March 31, 1997.
24
<PAGE> 27
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
INTERMEDIA CAPITAL PARTNERS IV, L.P.
By: InterMedia Capital Management IV,
L.P., its General Partner
By: InterMedia Management, Inc., its
General Partner
By: /s/ LEO J. HINDERY, JR.
------------------------------------
Leo J. Hindery, Jr.
President
Date: May 14, 1997.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Robert J. Lewis and Edon V. Hartley, and each of
them, his true and lawful attorneys-in-fact and agents, each with full power of
substation and resubstation, for him and in his name, place and stead, in any
and all capacities, to sign any and all amendments to this report, and to file
the same, with exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done, and
fully to all intents and purposes as he might or could do in person, hereby
ratifying and conforming all that each of said attorneys-in-fact and agents or
their substitute or substitutes may lawfully do or cause to be done by virtue
hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1934, THIS REPORT HAS
BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES
INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------- -----------------
<S> <C> <C>
/s/ LEO J. HINDERY, JR. President, Chief Executive May 14, 1997
- ------------------------------------------ Officer and Sole Director of
Leo J. Hindery, Jr. InterMedia Management, Inc.
(principal executive officer)
/s/ EDON V. HARTLEY Chief Financial Officer of May 14, 1997
- ------------------------------------------ InterMedia Management, Inc.
Edon V. Hartley (principal financial officer)
/s/ THOMAS R. STAPLETON Vice President of InterMedia May 14, 1997
- ------------------------------------------ Management, Inc.
Thomas R. Stapleton (principal accounting officer)
</TABLE>
25
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
INTERMEDIA CAPITAL PARTNERS IV, L.P.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 6,654
<SECURITIES> 74,828
<RECEIVABLES> 18,723
<ALLOWANCES> (1,990)
<INVENTORY> 0
<CURRENT-ASSETS> 58,801
<PP&E> 233,640<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 964,263
<CURRENT-LIABILITIES> 47,506
<BONDS> 0
12,571
0
<COMMON> 0
<OTHER-SE> 52,094
<TOTAL-LIABILITY-AND-EQUITY> 964,263
<SALES> 60,819
<TOTAL-REVENUES> 60,819
<CGS> 13,025<F2>
<TOTAL-COSTS> 65,760
<OTHER-EXPENSES> 170
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,263
<INCOME-PRETAX> (22,996)
<INCOME-TAX> (1,488)
<INCOME-CONTINUING> (21,722)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21,722)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>PP&E IS SHOWN NET OF ACCUMULATED DEPRECIATION.
<F2>INCLUDES PROGRAM FEES AND OTHER DIRECT EXPENSES
</FN>
</TABLE>
