<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(AMENDMENT NO. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 30, 1995
-------------------
TCA Cable TV, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Texas 0-11478 75-1798185
-------------- ------------ -------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation File Number) Identification No.)
3015 S.S.E. Loop 323, Tyler, Texas 75701
-----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (903) 595-3701
------------------
<PAGE> 2
Reference is made to the Current Report on Form 8-K (the "Form 8-K")
filed by TCA Cable TV, Inc. on July 14, 1995. The Form 8-K is hereby amended
to read in its entirety as follows:
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 24, 1995, Teleservice Corporation of America ("Teleservice"),
a wholly-owned subsidiary of TCA Cable TV, Inc. (the "Company"), entered into
an asset purchase agreement (as amended, the "San Angelo Agreement") with
Marcus Cable of San Angelo, L.P. ("Marcus Cable"), pursuant to which
Teleservice would acquire the assets of, and assume certain liabilities related
to, the operation of cable television systems (the "San Angelo System") in and
around the following cities, counties, and areas in Texas: City of San Angelo,
Goodfellow Air Force Training Center, Andrews County, City of Ballinger, City
of Miles, Tom Greene County and City of Winters.
The San Angelo Transaction was consummated on June 30, 1995.
The assets acquired in the San Angelo Transaction included, with
certain exceptions as set forth in the San Angelo Agreement, all of the assets
and properties, real and personal, tangible and intangible, used by Marcus
Cable in its operation of the San Angelo System. Teleservice intends to
continue to use such assets to provide cable television services to the
subscribers in the San Angelo System.
The aggregate consideration paid in the San Angelo Transaction was
approximately $65,500,000, subject to certain post closing adjustments as set
forth in the San Angelo Agreement. The acquisition consideration for the San
Angelo Transaction were determined by negotiations between the parties to the
San Angelo Agreement.
To the best knowledge of the Company, there is no material
relationship between Marcus Cable and the Company, or any of its affiliates,
any director or officer of the Company, or any associate of such director or
officer.
The primary sources of funds used in the San Angelo Transaction were
funds received under term notes issued to Prudential Insurance Company of
America, Prudential Life Insurance Company, The Variable Annuity Life Insurance
Company, and the Franklin Life Insurance Company as well as unsecured loans
extended by NationsBank of Texas, N.A.
2
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements
Audited balance sheets of Marcus Cable, as of December 31, 1993 and
1994, and the related statements of operations, partners' capital and cash
flows for the years then ended along with the unaudited balance sheets of
Marcus Cable as of June 30, 1995 and the related statements of operations,
partners' capital and cash flow for the six months then ended (and the
statements of operations and cash flow for the six months ending June 30, 1994)
are attached hereto as Annex A and made a part hereof.
(b) Pro Forma Financial Information
The following unaudited Pro Forma Balance Sheet of the Company and
Subsidiaries attached hereto as Annex B has been adjusted to give effect to the
purchase of the San Angelo System on June 30, 1995, through Teleservice as
though such purchase had occurred on April 30, 1995. The unaudited Pro Forma
Statements of Operations of the Company and Subsidiaries for the six months
ended April 30, 1995, and the year ended October 31, 1994 present the
historical results of the Company as if Teleservice had purchased the San
Angelo System on November 1, 1993. Such pro forma information is not
necessarily indicative of operating results that would have been achieved had
the purchase been consummated at the beginning of the respective periods
presented and should not be construed as representative of future operations.
The unaudited Pro Forma Financial Statements should be read in
conjunction with the historical Financial Statements of the Company and the
financial statements included in Item 7(a) herein. The unaudited historical
Financial Statements of the Company for the six months ended April 30, 1995
include, in the opinion of management, all adjustments necessary for a fair
presentation of the results of such periods.
3
<PAGE> 4
(c) Exhibits.
Exhibit No. Description
----------- -----------
2.1 Asset Purchase Agreement dated March 24, 1995,
between Teleservice Corporation of America and Marcus
Cable of San Angelo, L.P.(1)
2.2 Letter Agreement, dated June 16, 1995, between Marcus
Cable of San Angelo, L.P. and Teleservice Corporation
of America. (2)
23.1 Consent of KPMG Peat Marwick LLP.(3)
__________________________
(1) Previously filed as an exhibit to the Company's quarterly
report on Form 10-Q for the quarter ended April 30, 1995 and
incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's current
report on Form 8-K filed July 14, 1995 and incorporated herein
by reference.
(3) Filed herewith.
4
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TCA CABLE TV, INC.
Date: September 13, 1995 By: /s/ JIMMIE F. TAYLOR
------------------------------------
Jimmie F. Taylor
Its: VP, CFO & Treasurer
-----------------------------------
5
<PAGE> 6
ANNEX A
<PAGE> 7
INDEPENDENT AUDITORS' REPORT
The Partners
Marcus Cable of San Angelo, L.P.:
We have audited the accompanying balance sheets of Marcus Cable of San Angelo,
L.P. as of December 31, 1993 and 1994, and the related statements of
operations, partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Marcus Cable of San Angelo,
L.P. as of December 31, 1993 and 1994 and the results of its operations and its
cash flows for the years then ended, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
DALLAS, TEXAS
August 25, 1995
<PAGE> 8
MARCUS CABLE OF SAN ANGELO, L.P.
Balance Sheets
<TABLE>
<CAPTION>
Assets December 31
------ -------------------------- June 30,
1993 1994 1995
---- ---- ----
(unaudited)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 1,894,482 $ 151,733 $ 1,241,904
Accounts receivable:
Customers, net of allowance of $54,681
in 1993, $66,278 in 1994 and $-0-
in 1995 455,397 534,979 458,329
Other 156,602 29,860 73,881
Parent - 2,266,615 1,975,836
Prepaid expenses 39,703 58,051 81,404
------------- -------------- --------------
Total current assets 2,546,184 3,041,238 3,831,354
Property and equipment:
Cable systems 10,216,608 11,333,846 11,726,106
Land and buildings 47,479 59,169 61,553
Vehicles and other 609,975 764,157 789,348
------------- -------------- --------------
10,874,062 12,157,172 12,577,007
Less accumulated depreciation (1,949,066) (3,543,944) (4,359,443)
------------- -------------- --------------
Net property and equipment 8,924,996 8,613,228 8,217,564
------------- -------------- --------------
Other assets, net (note 4) 39,260,226 32,950,158 29,640,757
------------- -------------- --------------
$ 50,731,406 $ 44,604,624 $ 41,689,675
============= ============== ==============
Liabilities and Partners' Capital
---------------------------------
Current liabilities:
Accounts payable and accrued liabilities $ 777,779 $ 857,529 $ 583,484
Accrued interest 128,152 617,097 411,154
Current maturities of long-term debt 295,973 - -
Long-term debt (note 3) 40,213,532 41,635,402 43,043,448
Partners' capital (note 5) 9,315,970 1,494,596 (2,348,411)
Commitments and contingencies (notes 7
and 8) -
------------- -------------- --------------
$ 50,731,406 $ 44,604,624 $ 41,689,675
============= ============== ==============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 9
MARCUS CABLE OF SAN ANGELO, L.P.
Statements of Operations
<TABLE>
<CAPTION>
Years ended December 31 Six months ended June 30
----------------------- ------------------------
1993 1994 1994 1995
---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C>
Revenues:
Basic service $ 9,350,276 $ 8,504,395 $ 4,128,643 $ 4,202,065
Premium service 1,794,236 2,046,110 997,733 995,001
Installation and other 1,638,423 1,441,385 635,388 825,037
------------- ------------- ----------- ------------
Total revenues 12,782,935 11,991,890 5,761,764 6,022,103
------------- ------------- ----------- ------------
Operating expenses:
Programming costs 2,426,159 2,777,498 1,353,690 1,473,190
Selling, service and system
management 1,262,597 1,695,682 791,479 764,421
General and administrative 2,569,899 2,207,753 1,082,248 864,169
Regulatory refunds (note 7) - 319,205 408,089 -
Depreciation and amortization 7,701,769 7,991,121 3,935,940 4,072,369
------------- ------------- ----------- ------------
13,960,424 14,991,259 7,571,446 7,174,149
------------- ------------- ----------- ------------
Operating loss (1,177,489) (2,999,369) (1,809,682) (1,152,046)
------------- ------------- ----------- ------------
Other (income) expense:
Loss on retirement of fixed
assets 400,250 - - -
Interest expense 2,678,488 4,389,626 1,882,729 2,695,483
Interest income (50,259) (35,229) (22,894) (4,522)
------------- ------------- ----------- ------------
3,028,479 4,354,397 1,859,835 2,690,961
------------- ------------- ----------- ------------
Income (loss)
before
extraordinary
item (4,205,968) (7,353,766) (3,669,517) (3,843,007)
Extraordinary item - loss on early
retirement of debt (1,192,863) (467,608) - -
------------- ------------- ----------- ------------
Net income
(loss) $ (5,398,831) $ (7,821,374) $(3,669,517) $ (3,843,007)
============= ============= =========== ============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 10
MARCUS CABLE OF SAN ANGELO, L.P.
Statements of Partners' Capital
Years ended December 31, 1993 and 1994 and
six months ended June 30, 1995
<TABLE>
<CAPTION>
Class I Class B
Limited Limited General
Partner Partner Partner Total
------- ------- ------- -----
<S> <C> <C> <C> <C>
Balance at December 31, 1992 $ 760,254 $ - $ 16,345,398 $ 17,105,652
Redemptions (note 5) (1,000,000) - (97,480) (1,097,480)
Distribution - - (1,293,371) (1,293,371)
Reallocation of losses related to
limited partner units redeemed
(note 5(a)) 299,732 - (299,732) -
Net loss (59,986) - (5,338,845) (5,398,831)
------------ ------- ------------- ------------
Balance at December 31, 1993 - - 9,315,970 9,315,970
Net loss - - (7,821,374) (7,821,374)
------------ ------- ------------- ------------
Balance at December 31, 1994 - - 1,494,596 1,494,596
Net income - - (3,843,007) (3,843,007)
------------ ------- ------------- ------------
Balance at June 30, 1995 $ - $ - $ (2,348,411) $ (2,348,411)
============ ======= ============= ============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 11
MARCUS CABLE OF SAN ANGELO, L.P.
Statements of Cash Flows
<TABLE>
<CAPTION>
Years ended December 31 Six months ended June 30
---------------------------- -----------------------------
1993 1994 1994 1995
------------ ------------ ------------ -----------
(unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (5,398,831) $ (7,821,374) $(3,669,517) $(3,843,007)
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Extraordinary item - loss
on early retirement of debt 1,192,863 467,608 - -
Loss on retirement of
fixed assets 400,250 - - -
Accretion of discount on
long-term debt - 1,125,897 - 1,408,046
Depreciation and amortization 7,701,769 7,991,121 3,935,940 4,072,369
Payments of debt issuance costs (1,411,371) (633,663) - -
Other 169,851 79,970 48,570 22,476
Changes in assets and
liabilities:
Accounts receivable (124,127) (2,219,455) 21,466 323,408
Prepaid expenses 85,174 (18,438) (15,141) 23,353
Other assets 75,258 - (2,880) (16,651)
Accounts payable and
accrued liabilities 51,620 568,693 1,648,552 (479,988)
------------ ------------ ------------ -----------
Net cash provided
by (used in)
operating activities 2,742,456 (459,641) 1,966,990 1,510,006
------------ ------------ ------------ -----------
Cash flows used in investing
activities - additions to
property and equipment (1,262,902) (1,283,108) (560,929) (419,835)
------------ ------------ ------------ -----------
Cash flows from financing activities:
Proceeds from long-term debt 40,509,505 19,735,400 - -
Repayments of long-term debt (38,500,000) (19,735,400) - -
Redemption of Class I
limited partner units (1,097,480) - - -
Distribution (1,293,371) - - -
------------ ------------ ------------ -----------
Net cash used in
financing activities (381,346) - - -
------------ ------------ ------------ -----------
Net increase (decrease) in cash
and cash equivalents 1,098,208 (1,742,749) 1,406,061 1,090,171
Cash and cash equivalents
at beginning of period 796,274 1,894,482 1,894,482 151,733
Cash and cash equivalents at
end of period $ 1,894,482 $ 151,733 $ 3,300,543 $ 1,241,904
============ ============ ============ ===========
Supplemental disclosure of cash
flow information - interest
paid $ 2,386,367 $ 2,692,711 $ 1,301,812 $ 1,865,242
============ ============ ============ ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 12
MARCUS CABLE OF SAN ANGELO, L.P.
Notes to Financial Statements
December 31, 1993 and 1994
(1) Organization
Marcus Cable of San Angelo, L.P. (the "Partnership"), a Delaware
limited partnership, was formed on February 3, 1992 for the purpose of
owning and operating cable television systems and is a subsidiary of
Marcus Cable Company, L.P. ("MCC" or the "Parent") which owns a 99.99%
interest in the Partnership.
(2) Summary of Significant Accounting Policies
(a) Cash Equivalents
For purposes of the statement of cash flows, the Partnership
considers all highly liquid investments with original
maturities of three months or less to be cash equivalents. At
December 31, 1993, the Partnership had cash equivalents of
$1,298,856 (none in 1994), consisting of certificates of
deposit.
(b) Property and Equipment
Property and equipment are recorded at cost, including all
direct costs and certain indirect costs associated with the
construction of cable television transmission and distribution
systems, and the cost of new customer installations.
Maintenance and repairs are charged to expense as incurred and
equipment replacements and betterments are capitalized.
Property and equipment are depreciated using the straight-line
method based on estimated useful lives as follows: buildings,
15 years; cable systems, 3 to 10 years; and vehicles and
other, 3 to 10 years.
(c) Other Assets
Franchise rights and going concern value of acquired cable
systems are amortized on a straight-line basis over five to
ten years. The cost of noncompetition agreements is amortized
by the straight-line method over the periods of the respective
agreements. Deferred debt issuance costs are amortized to
interest expense using the interest method over the term of
the related debt.
The Partnership assesses the recoverability of intangible
assets as well as the related amortization lives by
determining whether the carrying value of the intangible
assets can be recovered over the remaining lives through
projected undiscounted future operating cash flows. To the
extent that such projections indicate that undiscounted future
operating cash flows are not expected to be adequate to
recover the carrying amounts of the related intangible assets,
such carrying amounts are adjusted for impairment to a level
commensurate with a discounted cash flow analysis of the
underlying assets.
(Continued)
<PAGE> 13
2
MARCUS CABLE OF SAN ANGELO, L.P.
Notes to Financial Statements
(d) Revenues
Revenues from basic and premium service are recognized when
the service is provided.
Installation revenues are recognized to the extent of direct
selling costs incurred. The remainder, if any, is deferred
and amortized to income over the estimated average period that
customers are expected to remain connected to the cable
television system.
(e) Income Taxes
The Partnership has not provided for federal income taxes
since such taxes are the responsibility of the individual
partners.
(f) Cash Management and Intercompany Account
Excess cash funds are periodically transferred to the Parent
using the Partnership's intercompany account. In addition,
the Parent allocates a portion of its corporate overhead
expenses to the Partnership. Such amounts are transferred to
the Partnership through its intercompany account.
(g) Interim Financial Information
In the opinion of management, the accompanying unaudited
condensed financial information of the Partnership contains
all adjustments, consisting only of those of a recurring
nature, necessary to present fairly the Partnership's
financial position as of June 30, 1995, and the results of its
operations and cash flows for the six-months ended June 30,
1994 and 1995. These results are not necessarily indicative
of the results to be expected for the full fiscal year.
(3) Long-term Debt
On July 29, 1994, the Partnership entered into a long-term discounted
note payable with a maturity value of $37,953,000 (the "13 1/2% Note")
with the Parent. No interest is payable on the 13 1/2% Note until
February 1, 2001. Thereafter, interest is payable semiannually until
maturity on August 1, 2004. The discount on the 13 1/2% Note is being
accreted using the interest method at an interest rate of 13 1/2%.
The unamortized discount was approximately $17,091,700 at December 31,
1994. Proceeds from the 13 1/2% Note were used to retire outstanding
borrowings under the Partnership's credit facility.
On October 13, 1993, the Partnership entered into an 11 7/8% long-term
note payable of $20,774,105 with MCC. Interest on the 11 7/8% Note
was payable beginning April 1, 1994 until maturity on October 1, 2005.
Proceeds from the 11 7/8% Note were used to repay indebtedness and to
redeem certain partnership preference units.
On October 13, 1993, the Partnership became a co-borrower with other
affiliates on a $95 million term loan credit facility of which
$19,735,400 was advanced to the Partnership. Amounts borrowed under
the credit facility bore interest at either the (i) base rate or (ii)
London Interbank Offered Rate, in either case plus a margin of 0.125%
to 2%, subject to certain adjustments based on the Parent's total debt
to annualized operating cash flows. At
(Continued)
<PAGE> 14
3
MARCUS CABLE OF SAN ANGELO, L.P.
Notes to Financial Statements
December 31, 1993, the interest rate on the debt outstanding was
5.4375%. The credit facility was repaid in connection with the
issuance of the 13 1/2% note.
(4) Other Assets
Other assets consist of the following at December 31, 1993 and 1994:
<TABLE>
<CAPTION>
1993 1994
---- ----
<S> <C> <C>
Franchise rights $ 35,156,000 $ 35,156,000
Going concern value of acquired cable systems 912,103 912,103
Noncompetition agreements 15,000,000 15,000,000
Debt issuance costs 1,359,447 1,486,051
Other 12,450 12,450
------------ ------------
52,440,000 52,566,604
Accumulated amortization (13,179,774) (19,616,446)
------------ ------------
$ 39,260,226 $ 32,950,158
============ ============
</TABLE>
(5) Partners' Capital
(a) General
The Class I limited partner received a preference return of
10%, compounded quarterly on its capital contribution.
Cumulative preference returns for the Class I limited partner
were $97,480 for the period of May 1992 through March 1993.
In April 1993, all Class I limited partner units were redeemed
for their face value of $1,000,000 plus unpaid preference
returns. Payment of the preference return has been recognized
in the accompanying statement of partners' capital as a
reduction of general partner capital and an increase in Class
I limited partner capital. The Class I limited partner units
had previously been allocated Partnership losses of $299,732
as provided by the partnership agreement. Since these losses
were not considered in the redemption value of the units, they
have been reallocated to the general partner.
The general partner is required to make additional capital
contributions as necessary to maintain a minimum capital
account balance (calculated in accordance with the partnership
agreement) equal to the lesser of 1% of the aggregate positive
capital account balances of all the partners or $500,000. In
return for such contributions, the general partner will be
issued additional general partner units.
(b) Allocation of Income and Loss to Partners
Income is allocated to the partners first to eliminate any
negative capital account balance until no partner has a
negative capital account balance and then to the general
partner and the Class I and Class B limited partners as
specified in the partnership agreement.
(Continued)
<PAGE> 15
4
MARCUS CABLE OF SAN ANGELO, L.P.
Notes to Financial Statements
Losses are allocated first to the Class B limited partner
until its capital account does not exceed zero. Then, losses
are allocated to the Class I limited partner and general
partner in accordance with their ownership interests until the
Class I limited partner capital account does not exceed zero.
Any additional losses are allocated to the general partner.
The general partner at all times shall be allocated a minimum
of 1% of net income or loss.
(c) Distributions
Distributions are made at the discretion of the general
partner. Distributions shall be made to the partners as
follows:
o First, to each partner in an amount
sufficient to pay income taxes on net
income allocated to such partner;
o Next, to Class I limited partners equal
to any accrued but unpaid preference
return and any unreturned capital
contributions;
o Next, to Class B limited partners
equal to any unreturned capital
contributions; and
o Next, to the general partner equal to
unreturned capital contributions
(6) Related Party Transactions
Through July 29, 1994, the Partnership had a management agreement with
Marcus Cable Management, Inc. ("MMI"), an affiliated entity, whereby
MMI provided various general, administrative and operating services to
the Partnership. MMI received an annual management fee equal to 5.5%
of gross revenues for such services. The Partnership recorded
management fees of $790,518 and $461,907 in 1993 and 1994,
respectively, pursuant to this agreement.
Beginning August 1, 1994, the Partnership was allocated a portion of
corporate overhead provided by the Parent. The Partnership recorded
expenses of $233,835 pursuant to this allocation for the period ended
December 31, 1994. The management fee and corporate allocation are
included in general and administrative expenses in the accompanying
statements of operations. It is not practicable to determine what
these costs would have been for the Partnership on a stand alone
basis.
(7) Commitments and Contingencies
The Partnership rents pole space from various companies under
agreements which are generally cancelable on short notice and leases
office space for system and corporate offices. Lease and rental costs
charged to expense were approximately $104,061 and $117,536 for the
years ended December 31, 1993 and 1994, respectively.
(Continued)
<PAGE> 16
5
MARCUS CABLE OF SAN ANGELO, L.P.
Notes to Financial Statements
In October 1992, Congress enacted the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act"). During
May 1993, pursuant to authority granted to it under the 1992 Cable
Act, the Federal Communications Commission ("FCC") issued its rate
regulation rules which became effective September 1, 1993. These rate
regulation rules required certain cable systems in franchise areas
which receive certification and are not subject to effective
competition, as defined, to set rates for basic and cable programming
services, as well as related equipment and installations, pursuant to
general cost-of-service standards or FCC prescribed benchmarks. These
FCC benchmarks were based on an average 10% competitive differential
between competitive and non-competitive systems. Effective September
1, 1993, regulated cable systems not electing cost-of-service were
required to reduce rates to the higher of the prescribed benchmarks or
rates that were 10% below those in effect on September 1, 1992.
In February 1994, the FCC announced further changes in its rate
regulation rules and announced its interim cost-of-service standards.
In connection with these changes, the FCC issued revised benchmark
formulas, based on a revised competitive differential of 17%, which
became effective on May 15, 1994 or if certain conditions were met, on
July 14, 1994. Regulated cable systems were required to reduce rates
to the higher of the new FCC prescribed benchmarks or rates that were
17% below those in effect on September 1, 1992.
The Partnership believes that it has complied with all provisions of
the 1992 Cable Act, including the rate setting provisions promulgated
by the FCC. However, in jurisdictions which have chosen not to
certify, refunds covering a one-year period of basic service may be
ordered upon certification if the Partnership is unable to justify its
rates through a cost-of-service filing. The amount of refund
liability, if any, to which the Partnership could be subject in the
event that these systems' rates are successfully challenged by
franchising authorities is not currently estimable.
During the year ended December 31, 1994, the Partnership paid rate
refunds of approximately $811,788 to its cable customers as a result
of rate orders issued by certain franchise authorities. Of this
amount, $319,205 related to services provided during 1993 and are
reported as a component of operating expenses for the year ended
December 31, 1994. Remaining refunds of $492,583 related to services
provided during 1994 have been presented as a reduction of revenues
for the year ended December 31, 1994.
(8) Subsequent Events
On June 30, 1995, the assets of Marcus Cable of San Angelo, L.P. were
sold to Teleservice Corporation of America for approximately $65
million. The accompanying financial statements as of and for the six
months ended June 30, 1995 present the financial position and results
of operations and cash flows of the Partnership immediately preceding
the consummation of the sale.
<PAGE> 17
ANNEX B
<PAGE> 18
TCA CABLE TV. INC. AND SUBSIDIARIES
PRO FORMA BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
TCA RECENT
APRIL 30, 1995 ACQUISITIONS ADJUSTMENTS PRO FORMA
<S> <C> <C> <C> <C>
ASSETS
Cash $ 2,444,953 $ 1,286,588 $(1,286,588)(a) $ 2,444,953
Accounts receivable, subscribers 5,809,833 909,222 6,719,055
Accounts receivable, other 190,682 2,049,717 (2,049,717)(a) 190,682
Investments 2,014,471 2,014,471
Property, plant and equipment, at cost 292,543,079 23,346,983 (9,980,161)(a) 305,909,901
Less accumulated depreciation (172,515,394) (9,661,682) 9,661,682 (a) (172,515,394)
--------------------- ------------------ -------------- ------------------
Property, plant and equipment, net 120,027,685 13,685,301 (318,479) 133,394,507
--------------------- ------------------ -------------- ------------------
Other assets:
Intangibles, net of
accumulated amortization 164,067,486 29,702,049 61,491,129 (a) 255,260,664
Prepaid expenses 677,103 105,632 (105,632)(a) 677,103
--------------------- ------------------ -------------- ------------------
164,744,589 29,807,681 61,385,497 255,937,767
--------------------- ------------------ -------------- ------------------
Total Assets $ 295,232,213 $47,738,509 $57,730,713 $ 400,701,435
===================== ================== ============== ==================
LIABILITIES
Accounts payable $ 6,848,502 $ 679,737 $ (679,737)(a) $ 6,848,502
Accrued expenses 10,600,377 1,144,238 (1,144,238)(a) 10,600,377
Subscriber advance payments 3,726,488 403,979 4,130,467
Income taxes payable 790,382 790,382
Deferred income taxes 42,900,000 42,900,000
Term debt 122,744,095 43,043,448 62,021,795 (a) 227,809,338
--------------------- ------------------ -------------- ------------------
Total Liabilities 187,609,844 45,271,402 60,197,820 293,079,066
--------------------- ------------------ -------------- ------------------
SHAREHOLDERS EQUITY
Common stock 2,474,945 2,474,945
Additional paid-in capital 43,129,634 43,129,634
Retained earnings 65,821,544 65,821,544
Net assets 2,467,107 (2,467,107)(a)
--------------------- ------------------ -------------- ------------------
111,426,123 2,467,107 (2,467,107) 111,426,123
Less treasury stock, at cost (3,803,754) (3,803,754)
--------------------- ------------------ -------------- ------------------
Total Shareholders Equity 107,622,369 2,467,107 (2,467,107) 107,622,369
--------------------- ------------------ -------------- ------------------
$ 295,232,213 $47,738,509 $57,730,713 $ 400,701,435
===================== ================== ============== ==================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 19
TCA CABLE TV, INC. AND SUBSIDIARIES
PRO FORMA STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
TCA
YEAR ENDED RECENT
OCTOBER 31, 1994 ACQUISITIONS ADJUSTMENTS PRO FORMA
<S> <C> <C> <C> <C>
Revenues $162,300,265 $18,353,373 $180,653,638
Operating expenses:
Programming costs 36,476,851 4,209,888 40,686,739
Other operating expenses 46,235,512 6,280,279 52,515,791
Depreciation and amortization 33,635,939 8,927,280 (5,756,329) (b) 36,806,890
---------------------- ----------------- ------------- --------------------
Total Operating Expenses 116,348,302 19,417,447 (5,756,329) 130,009,420
---------------------- ----------------- ------------- --------------------
Operating Income 45,951,963 (1,064,074) 5,756,329 50,644,218
Other income 1,662,688 43,823 1,706,511
Interest expense (9,747,932) (4,582,488) (2,980,592) (c) (17,311,012)
---------------------- ----------------- ------------- --------------------
Income before income taxes 37,866,719 (5,602,739) 2,775,737 35,039,717
Provision for (benefit from) income taxes 14,892,114 (1,823,361) (d) 13,068,753
---------------------- ----------------- ------------- --------------------
14,892,114 0 (1,823,361) 13,068,753
---------------------- ----------------- ------------- --------------------
Income from continuing operations $ 22,974,605 $(5,602,739) $ 4,599,098 $ 21,970,964
====================== ================= ============= ====================
Weighted average number of
common shares 24,638,135 24,638,135 24,638,135 24,638,135
Earnings per common share from
continuing operations $0.93 ($0.23) $0.19 $0.89
</TABLE>
<PAGE> 20
TCA CABLE TV, INC. AND SUBSIDIARIES
PRO FORMA STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
TCA
SIX MONTHS
ENDED RECENT
APRIL 30, 1995 ACQUISITIONS ADJUSTMENTS PRO FORMA
<S> <C> <C> <C> <C>
Revenues $87,258,079 $ 9,472,276 $96,730,355
Operating expenses:
Programming costs 19,892,817 2,244,253 22,137,070
Other operating expenses 23,714,498 2,681,879 26,396,377
Depreciation and amortization 12,843,753 4,544,692 (3,024,081)(b) 14,364,364
----------------------- --------------- ------------ -----------------
Total Operating Expenses 56,451,068 9,470,824 (3,024,081) 62,897,811
----------------------- --------------- ------------ -----------------
Operating Income 30,807,011 1,452 3,024,081 33,832,544
Other income 302,304 25,459 327,763
Interest expense (4,884,193) (2,791,044) (618,642)(c) (8,293,879)
----------------------- --------------- ------------ -----------------
Income before income taxes 26,225,122 (2,764,133) 2,405,439 25,866,428
Provision for (benefit from) income taxes 10,770,000 (74,029)(d) 10,695,971
----------------------- --------------- ------------ -----------------
10,770,000 0 (74,029) 10,695,971
----------------------- --------------- ------------ -----------------
Net income (loss) $15,455,122 $(2,764,133) $ 2,479,468 $15,170,457
======================= =============== ============ =================
Weighted average number of
common shares 24,559,659 24,559,659 24,559,659 24,559,659
Earnings (loss) per common share $0.62 ($0.11) $0.10 $0.62
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 21
TCA CABLE TV, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
1. Organization and Financial Statement Presentation
On May 9, 1995 TCA Cable TV, Inc. ("TCA" or the "Company") through its
subidiaries acquired substantially all of the assets used by Time Warner
Entertainment Company, L.P. ("Time Warner") in the operation of the cable
television systems in and around the following cities of Arkansas:
Fayetteville, Elkins, Farmington, Greenland, and unincorporated areas of
Washington County ( "Fayetteville" ). The cost of the acquisition was
approximately $39 million, all of which was paid in cash obtained from
the Company's bank lines of credit.
On June 30, 1995 the Company, through a subsidiary, acquired substantially
all of the assets used by Marcus Cable of San Angelo, L.P. ("Marcus
Cable") in the operation of the cable television systems in and around the
following cities, counties and areas in Texas; the cities of San Angelo,
Andrews, Ballinger, Miles and Winters, Andrews and Tom Green counties and
Goodfellow Air Force Base ("San Angelo"). The cost of the acquistion was
approximately $68 million, all of which was paid in cash obtained from the
Company's bank lines of credit.
The accompanying pro forma consolidated balance sheet as of April 30, 1995
has been prepared as if the acquisition had occurred as of the balance
sheet date. Accordingly, the pro forma balance sheet presents the
financial position of the Company, including the acquired assets, as of
April 30, 1995.
The accompanying pro forma consolidated statements of operations have been
prepared as if the Company had acquired the Fayetteville and San Angelo
systems on November 1, 1993. Accordingly, the pro forma consolidated
statements of operations present the operating results of the Company plus
the operating results of the acquired systems for the year ended October
31, 1994 and the six months ended April 30, 1995.
The operating results of the Fayetteville system for the six months ended
March 31, 1995 were not available from the seller and were estimated using
the audited statement of operations for the year ended December 31, 1994
and the unaudited statements of operations for the three months ended
March 31, 1995.
On May 1, 1995 TCA through its subsidiaries acquired substanially all of
the assets used by Time Warner in the operation of the cable television
systems in and around the following cities in Arkansas: Russellville,
Booneville, Paris, Clarksville, Johnson City, Pottsville, Pope County and
the unincorporated areas within Arkansas counties in which the foregoing
cities are located ("Russellville"). The Russellville acquisition is
immaterial and is not included in the pro forma financial statements.
2. Pro Forma Adjustments
Pro Forma Consolidated Balance Sheet
(a) The purchase price of the acquisitions is allocated as follows:
<TABLE>
<S> <C>
Property, plant and equipment $ 13,366,822
Intangibles 91,193,178
Account receivables, subscribers 909,222
Subscriber advance payments (403,979)
--------------------------------------------
$105,065,243
</TABLE>
Pro Forma Consolidated Statement of Operations
(b) Additional depreciation and amortization expense has been recorded to
reflect an increase in the basis of assets acquired and the revision of
the acquired system's depreciation and amortization policy to conform to
the Company's policy. Intangibles are amortized straight line over 40
years.
(c) Additional interest expense has been recorded to reflect the term debt
incurred to finance the acquisitions.
(d) The provision for income taxes has been adjusted to reflect the tax
provision as if the operations of the acquired systems had been taxed at
the Company's effective tax rate.
<PAGE> 22
INDEX TO EXHIBITS
Exhibit No. Description
----------- -----------
2.1 Asset Purchase Agreement dated March 24, 1995,
between Teleservice Corporation of America and Marcus
Cable of San Angelo, L.P.(1)
2.2 Letter Agreement, dated June 16, 1995, between Marcus
Cable of San Angelo, L.P. and Teleservice Corporation
of America. (2)
23.1 Consent of KPMG Peat Marwick LLP.(3)
__________________________
(1) Previously filed as an exhibit to the Company's quarterly
report on Form 10-Q for the quarter ended April 30, 1995 and
incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's current
report on Form 8-K filed July 14, 1995 and incorporated herein
by reference.
(3) Filed herewith.
<PAGE> 1
EXHIBIT 23.1
<PAGE> 2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
TCA Cable TV, Inc.:
We consent to the incorporation by reference in the registration statements on
Form S-8 (Nos. 2-82934, 2-88892, 33-21901, 33-49172, 33-33898, 33-55895 and
33-61041) and Form S-3 (Nos. 33-61616, 33-44289 and 33-40273) of TCA Cable TV,
Inc. of our report dated August 25, 1995, with respect to the balance sheets of
Marcus Cable of San Angelo, L.P. as of December 31, 1994 and 1993, and the
related statements of operations, partners' equity and cash flows for the years
then ended, which report is included in this Form 8-K/A of TCA Cable TV, Inc.
KPMG Peat Marwick LLP
Dallas, Texas
September 11, 1995
