<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------
FORM 10-Q
/X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2000.
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From to .
------ ------
Commission File Numbers:
333-56679
333-56679-02
333-56679-01
333-56679-03
RENAISSANCE MEDIA GROUP LLC*
RENAISSANCE MEDIA (LOUISIANA) LLC*
RENAISSANCE MEDIA (TENNESSEE) LLC*
RENAISSANCE MEDIA CAPITAL CORPORATION*
---------------------------------------
(Exact names of registrants as specified in their charters)
Delaware 14-1803051
Delaware 14-1801165
Delaware 14-1801164
Delaware 14-1803049
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12444 Powerscourt Drive - Suite 100
St. Louis, Missouri 63131
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(Address of principal executive offices) (Zip Code)
(314) 965-0555
--------------
(Registrants' telephone number, including area code)
Indicate by check mark whether the registrants: (1) have filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
<PAGE> 2
Indicate the number of shares outstanding of each of the issuers' classes of
common stock, as of the latest practicable date:
All of the limited liability company membership interests of
Renaissance Media (Louisiana) LLC and Renaissance Media (Tennessee) LLC
are held by Renaissance Media Group LLC. All of the issued and
outstanding shares of capital stock of Renaissance Media Capital
Corporation are held by Renaissance Media Group LLC. All of the limited
liability company membership interests of Renaissance Media Group LLC
are held by Charter Communications, LLC (and indirectly by Charter
Communications Holdings, LLC, a reporting company under the Exchange
Act). There is no public trading market for any of the aforementioned
limited liability company membership interests or shares of capital
stock.
* Renaissance Media Group LLC, Renaissance Media (Louisiana) LLC, Renaissance
Media (Tennessee) LLC and Renaissance Media Capital Corporation meet the
conditions set forth in General Instruction (H) (1)(a) and (b) of Form 10-Q and
are therefore filing this Form with the reduced disclosure format.
<PAGE> 3
RENAISSANCE MEDIA GROUP LLC
---------------------------
RENAISSANCE MEDIA (LOUISIANA) LLC
---------------------------------
RENAISSANCE MEDIA (TENNESSEE) LLC
---------------------------------
RENAISSANCE MEDIA CAPITAL CORPORATION
-------------------------------------
FORM 10-Q - FOR THE QUARTER ENDED JUNE 30, 2000
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INDEX
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<TABLE>
<CAPTION>
Part I. Financial Information Page
--------------------- ----
<S> <C>
Item 1. Financial Statements - Renaissance Media Group LLC and Subsidiaries. 4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. 9
Part II. Other Information
-----------------
Item 6. Exhibits and Reports on Form 8-K. 13
Signatures. 14
</TABLE>
NOTE: Separate financial statements of Renaissance Media Capital Corporation
have not been presented as this entity had no operations and substantially no
assets or equity. Accordingly, management has determined that such financial
statements are not material.
<PAGE> 4
PART I. FINANCIAL INFORMATION.
ITEM 1. FINANCIAL STATEMENTS.
RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SUCCESSOR
------------------------------------------------
JUNE 30, DECEMBER 31,
2000 1999*
--------------------- ----------------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 618 $ 3,521
Accounts receivable, less allowance for doubtful
accounts of $80 for both periods 969 1,084
Prepaid expenses and other 193 157
Receivable from related party -- 12,500
--------------------- ----------------------
Total current assets 1,780 17,262
--------------------- ----------------------
INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net of accumulated
depreciation of $6,864 and $4,673, respectively 93,379 67,396
Franchises, net of accumulated amortization of $32,888
and $18,445, respectively 382,563 396,416
--------------------- ----------------------
475,942 463,812
--------------------- ----------------------
$ 477,722 $ 481,074
===================== ======================
LIABILITIES AND MEMBER'S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 22,327 $ 16,405
Payables to manager of cable systems - related parties 3,564 2,289
--------------------- ----------------------
Total current liabilities 25,891 18,694
--------------------- ----------------------
LONG-TERM DEBT 90,426 86,507
MEMBER'S EQUITY 361,405 375,873
--------------------- ----------------------
$ 477,722 $ 481,074
===================== ======================
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
-----------
* Agrees with the audited consolidated balance sheet included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1999.
4
<PAGE> 5
RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SUCCESSOR | PREDECESSOR
-------------------------------------------------- | ----------------------
THREE MONTHS ENDED TWO MONTHS ENDED | ONE MONTH ENDED
JUNE 30, 2000 JUNE 30, 1999 | APRIL 30, 1999
---------------------- ----------------------- | ----------------------
<S> <C> <C> | <C>
REVENUES $ 17,074 $ 10,411 | $ 5,142
---------------------- ----------------------- | ----------------------
|
OPERATING EXPENSES: |
Operating, general and administrative 8,199 4,880 | 2,370
Depreciation and amortization 14,486 5,793 | 2,257
Corporate expense charges - related parties 372 200 | --
---------------------- ----------------------- | ----------------------
23,057 10,873 | 4,627
---------------------- ----------------------- | ----------------------
|
Income (loss) from operations (5,983) (462) | 515
|
OTHER INCOME (EXPENSE): |
Interest expense (1,994) (1,743) | (1,524)
Interest income -- -- | 32
Other, net (521) -- | --
---------------------- ----------------------- | ----------------------
(2,515) (1,743) | (1,492)
---------------------- ----------------------- | ----------------------
|
Net loss $(8,498) $ (2,205) | $(977)
====================== ======================= | ======================
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
5
<PAGE> 6
RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SUCCESSOR | PREDECESSOR
-------------------------------------------------- | ----------------------
SIX MONTHS ENDED TWO MONTHS ENDED | FOUR MONTHS ENDED
JUNE 30, 2000 JUNE 30, 1999 | APRIL 30, 1999
---------------------- ----------------------- | ----------------------
<S> <C> <C> | <C>
REVENUES $ 33,615 $ 10,411 | $ 20,396
---------------------- ----------------------- | ----------------------
|
OPERATING EXPENSES: |
Operating, general and administrative 16,158 4,880 | 9,317
Depreciation and amortization 26,823 5,793 | 8,912
Corporate expense charges - related parties 666 200 | --
---------------------- ----------------------- | ----------------------
43,647 10,873 | 18,229
---------------------- ----------------------- | ----------------------
|
Income (loss) from operations (10,032) (462) | 2,167
|
OTHER INCOME (EXPENSE): |
Interest expense (3,922) (1,743) | (6,321)
Interest income -- -- | 122
Other, net (514) -- | --
---------------------- ----------------------- | ----------------------
(4,436) (1,743) | (6,199)
---------------------- ----------------------- | ----------------------
|
Net loss $ (14,468) $ (2,205) | $(4,032)
====================== ======================= | ======================
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
6
<PAGE> 7
RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SUCCESSOR | PREDECESSOR
---------------------------------------- | -------------------
SIX MONTHS ENDED TWO MONTHS ENDED | FOUR MONTHS ENDED
JUNE 30, 2000 JUNE 30, 1999 | APRIL 30, 1999
------------------- ------------------- | -------------------
|
<S> <C> <C> | <C>
CASH FLOWS FROM OPERATING ACTIVITIES: |
Net loss $ (14,468) $ (2,205) | $ (4,032)
Adjustments to reconcile net loss to net cash provided by |
(used in) operating activities: |
Depreciation and amortization 26,823 5,793 | 8,912
Non-cash interest expense 3,922 1,754 | 3,850
Changes in assets and liabilities, net of effects from |
acquisitions: |
Accounts receivable 115 (10,015) | 298
Prepaid expenses and other (36) 232 | (75)
Receivable from related party 12,500 -- | --
Accounts payable and accrued expenses 5,922 363 | (5,046)
Payables to manager of cable systems - related parties 1,275 129 | --
Other operating activities (3) -- | (135)
------------------- ------------------- | -------------------
Net cash provided by (used in) operating activities 36,050 (3,949) | 3,772
------------------- ------------------- | -------------------
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
Payments for acquisitions, net of cash acquired -- -- | (2,770)
Purchase of property, plant and equipment (38,307) (659) | (4,250)
Other investing activities (646) -- | 166
------------------- ------------------- | -------------------
Net cash used in investing activities (38,953) (659) | (6,854)
------------------- ------------------- | -------------------
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
Net cash used in financing activities -- -- | --
------------------- ------------------- | -------------------
|
NET DECREASE IN CASH AND CASH EQUIVALENTS (2,903) (4,608) | (3,082)
CASH AND CASH EQUIVALENTS, beginning of period 3,521 5,400 | 8,482
------------------- ------------------- | -------------------
|
CASH AND CASH EQUIVALENTS, end of period $ 618 $ 792 | $ 5,400
=================== =================== | ===================
|
CASH PAID FOR INTEREST $ -- $ 2,515 | $ 4,210
=================== =================== | ===================
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
7
<PAGE> 8
RENAISSANCE MEDIA GROUP LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT WHERE INDICATED)
1. ORGANIZATION AND BASIS OF PRESENTATION
Renaissance Media Group LLC (Group) owns and operates cable systems
that provide programming and related services to subscribers. Group and its
subsidiaries are collectively referred to as the Company herein. All material
intercompany transactions and balances have been eliminated in consolidation.
On April 30, 1999, Charter Communications, LLC acquired all of the
outstanding membership interests in Group (the "Charter Transaction"). The
purchase price was $459 million, consisting of $348 million in cash and $111
million in accreted value of debt assumed.
As a result of the Charter Transaction, the application of push-down
accounting, and the allocation of purchase price, the financial information of
the Company in the accompanying consolidated financial statements for periods
subsequent to April 30, 1999 (the successor periods), is presented on a
different cost basis than the financial information of the Company for the
period prior to and through April 30, 1999 (the predecessor period). Therefore,
such information is not comparable.
2. RESPONSIBILITY FOR INTERIM FINANCIAL STATEMENTS
The accompanying consolidated financial statements of the Company have
been prepared in accordance with the rules and regulations of the Securities and
Exchange Commission. Accordingly, certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
The accompanying consolidated financial statements are unaudited;
however, in the opinion of management, such statements include all adjustments,
which consist of only normal recurring adjustments, necessary for a fair
presentation of the results for the periods presented. Interim results are not
necessarily indicative of results for a full year. For further information, see
the Company's Annual Report on Form 10-K for the year ended December 31, 1999.
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Report includes forward-looking statements within the meaning of
the Securities Exchange Act of 1934, as amended, and of the Securities Act of
1933, as amended, and is subject to the safe harbors created by those acts. The
Company's actual results could differ materially from those discussed herein,
and its current business plans could be altered in response to market conditions
and other factors beyond the Company's control. The forward-looking statements
within this Form 10-Q are identified by words such as "believes," "anticipates,"
"expects," "intends," "may," "will" and other similar expressions. However,
these words are not the exclusive means of identifying such statements. In
addition, any statements that refer to expectations, projections or other
characterizations of future events or circumstances are forward-looking
statements. The Company undertakes no obligation to release publicly the results
of any revisions to these forward-looking statements that may be made to reflect
events or circumstances occurring subsequent to the filing of this Form 10-Q
with the SEC.
Important factors that could cause actual results to differ materially
from the forward-looking statements contained herein include, but are not
limited to, the following:
- General economic and business conditions, both nationally and in the
regions where the Company operates;
- Anticipated capital expenditures for planned upgrades and the ability to
fund these expenditures;
- Technology changes;
- The Company's ability to effectively compete in a highly competitive
environment;
- Changes in business strategy or development plans;
- Beliefs regarding the effects of governmental regulation on the
- Company's business;
- The ability to attract and retain qualified personnel; and
- Liability and other claims asserted against the Company.
Readers are urged to review and consider carefully the various
disclosures made by the Company in this Report and in the Company's other
reports filed with the SEC that attempt to advise interested parties of the
risks and factors that may affect the Company's business.
9
<PAGE> 10
RESULTS OF OPERATIONS
The following table summarizes amounts and the percentages of total
revenues for certain items for the periods indicated (dollars in thousands):
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2000 JUNE 30, 1999
-------------------------- -------------------------------
Amount % Amount %
--------- --------- --------- --------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Revenues (a) $33,615 100.0 $ 31,521 100.0
--------- --------- --------- --------
Operating expenses:
Operating, general and administrative (a) 16,158 48.0 14,911 47.3
Depreciation and amortization 26,823 79.8 14,705 46.7
Corporate expense charges-related parties 666 2.0 200 0.6
--------- --------- --------- --------
43,647 129.8 29,816 94.6
--------- --------- --------- --------
Income (loss) from operations (10,032) (29.8) 1,705 5.4
Other income (expense):
Interest expense (3,922) (11.7) (8,064) (25.6)
Interest income -- -- 122 0.4
Other, net (514) (1.5) -- --
--------- --------- --------- --------
(4,436) (13.2) (7,942) (25.2)
--------- --------- --------- --------
Net loss $(14,468) (43.0) $(6,237) (19.8)
========= ========= ========= ========
</TABLE>
Other financial data is as follows for the periods indicated (dollars
in thousands, except Average Monthly Revenue per Basic Customer):
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2000 JUNE 30, 1999
--------------------------- -------------------------------
<S> <C> <C>
EBITDA (b) $ 16,277 $ 16,410
Adjusted EBITDA (c) 17,457 16,610
Homes Passed (at period end) 193,100 189,400
Basic Customers (at period end) 135,000 131,400
Basic Penetration (at period end) 69.9% 69.4%
Premium Units (at period end) 71,400 54,300
Premium Penetration (at period end) 52.9% 41.3%
Average Monthly Revenue
per Basic Customer $41.50 $39.98
</TABLE>
----------
10
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(a) Local governmental authorities impose franchise fees on the Company ranging
up to a federally mandated maximum of 5.0% of gross revenues. On a monthly
basis, such fees are collected from the Company's customers and are periodically
remitted to local franchises. Revenues and operating, general and administrative
expenses presented here have been restated for the period prior to April 30,
1999, to include the franchise fees collected from customers and then remitted
to local franchises as revenues.
(b) EBITDA represents earnings (loss) before interest and depreciation and
amortization. EBITDA is presented because it is a widely accepted financial
indicator of a cable company's ability to service indebtedness. However, EBITDA
should not be considered as an alternative to income from operations or to cash
flows from operating, investing or financing activities, as determined in
accordance with generally accepted accounting principles. EBITDA should also not
be construed as an indication of a company's operating performance or as a
measure of liquidity. In addition, because EBITDA is not calculated identically
by all companies, the presentation here may not be comparable to other similarly
titled measures of other companies. Management's discretionary use of funds
depicted by EBITDA may be limited by working capital, debt service and capital
expenditure requirements and by restrictions related to legal requirements,
commitments and uncertainties.
(c) Adjusted EBITDA means EBITDA before corporate expense charges and other
income (expense). Adjusted EBITDA is presented because it is a widely accepted
financial indicator of a cable company's ability to service indebtedness.
However, adjusted EBITDA should not be considered as an alternative to income
from operations or to cash flows from operating, investing or financing
activities, as determined in accordance with generally accepted accounting
principles. Adjusted EBITDA should also not be construed as an indication of a
company's operating performance or as a measure of liquidity. In addition,
because adjusted EBITDA is not calculated identically by all companies, the
presentation here may not be comparable to other similarly titled measures of
other companies. Management's discretionary use of funds depicted by adjusted
EBITDA may be limited by working capital, debt service and capital expenditure
requirements and by restrictions related to legal requirements, commitments and
uncertainties.
COMPARISON OF RESULTS
For purposes of the above comparison, the results for the predecessor
period (January 1, 1999 to April 30, 1999) have been combined with those for the
successor period (May 1, 1999 to June 30, 1999). As a result of the acquisition
of the Company by Charter Communications, LLC (the "Charter Transaction"), the
application of push-down accounting, and the allocation of purchase price, the
financial results for the periods presented above are not comparable.
REVENUES. Revenues increased $2.1 million, or 6.6%, to $33.6 million
for the six months ended June 30, 2000, from $31.5 million for the six months
ended June 30, 1999. The increase in revenues for the six months ended June 30,
2000, resulted primarily from net gains in basic subscribers and retail rate
increases implemented. In addition, premium penetration increased significantly.
OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES. Operating, general and
administrative expenses increased $1.2 million, or 8.4%, to $16.2 million for
the six months ended June 30, 2000, from $14.9 million for the six months ended
June 30, 1999. This increase was primarily due to increases in license fees paid
for programming due in part to an increase in license fees per subscriber paid
to programmers and in part to an increase in the number of channels available to
subscribers.
DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization
expense increased $12.1 million, or 82.4%, to $26.8 million for the six months
ended June 30, 2000, from $14.7 million for the six months ended June 30, 1999.
This increase is primarily due to the Charter Transaction and the application of
push-down accounting, which significantly increased the carrying value of
franchises and
11
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related amortization. In addition, capital expenditures for
system upgrades have increased, resulting in greater property, plant and
equipment balances and a corresponding increase in depreciation expense.
CORPORATE EXPENSE CHARGES - RELATED PARTIES. These charges for the six
months ended June 30, 2000, and for the two months ended June 30, 1999,
represent costs incurred by Charter Investment, Inc. and Charter Communications,
Inc., both affiliates of the Company, on the Company's behalf.
INTEREST EXPENSE. Interest expense decreased $4.1 million, or
51.4%, to $3.9 million for the six months ended June 30, 2000, from $8.1 million
for the six months ended June 30, 1999. This decrease is due to a decrease in
debt outstanding. In connection with the closing of the Charter Transaction on
April 30, 1999, all amounts outstanding under the Company's then-existing credit
agreement were paid in full, and the credit agreement was terminated. In June
1999, pursuant to a change of control offer, Charter Communications Operating,
LLC, an indirect parent of the Company, repurchased 48,762 of the Company's 10%
Senior Discount Notes due 2008.
NET LOSS. Net loss increased by $8.2 million for the six months ended
June 30, 2000, compared to the six months ended June 30, 1999. The increase in
revenues and the decrease in interest expense were not sufficient to offset the
increases in operating, general and administrative, and depreciation and
amortization expenses discussed above.
12
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PART II. OTHER INFORMATION.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits (listed by numbers corresponding to the exhibit table in
Item 601 of Regulation S-K):
27.1 Financial Data Schedule (supplied for the information of
the Commission).*
---------
* Filed herewith.
(b) Reports on Form 8-K. No reports on form 8-K were filed during the
quarter ended June 30, 2000.
13
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
RENAISSANCE MEDIA GROUP LLC
RENAISSANCE MEDIA (LOUISIANA) LLC
RENAISSANCE MEDIA (TENNESSEE) LLC
Dated August 10, 2000 By: CHARTER COMMUNICATIONS, INC.
----------------------------
their Manager
By: /s/ Kent D. Kalkwarf
----------------------------
Name: Kent D. Kalkwarf
Title: Executive Vice President and
Chief Financial Officer (Principal
Financial Officer and Principal
Accounting Officer) of Charter
Communications, Inc. (Manager);
Renaissance Media Group LLC;
Renaissance Media (Louisiana) LLC;
and Renaissance Media (Tennessee)
LLC
RENAISSANCE MEDIA CAPITAL CORPORATION
Dated August 10, 2000 By: /s/ Kent D. Kalkwarf
-----------------------------
Name: Kent D. Kalkwarf
Title: Executive Vice President and
Chief Financial Officer (Principal
Financial Officer and Principal
Accounting Officer)
14
