UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Quarterly Period Ended:
SEPTEMBER 30, 1995
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 0-16767
CABLEVISION INVESTMENT OF DETROIT, INC.
(Exact name of registrant as specified in its charter)
MICHIGAN 38-2697922
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o Comcast Corporation
1500 Market Street, Philadelphia, PA 19102-2148
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (215) 665-1700
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 twelve months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such requirements
for the past 90 days.
Yes __X__ No ____
As of September 30, 1995, there were 1,000,000 shares of Common Stock
outstanding.
<PAGE>
CABLEVISION INVESTMENT OF DETROIT, INC.
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1995
TABLE OF CONTENTS
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheet at September 30, 1995
and December 31, 1994 (Unaudited).........................2
Condensed Statement of Operations and
Accumulated Deficit for the Nine and Three Months
Ended September 30, 1995 and 1994 (Unaudited).............3
Condensed Statement of Cash Flows for the
Nine Months Ended September 30, 1995 and 1994
(Unaudited)...............................................4
Notes to Condensed Financial Statements
(Unaudited)...........................................5 - 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations...........................................9 - 11
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security Holders....................................11 - 12
Item 6. Exhibits and Reports on Form 8-K.........................12
<PAGE>2
CABLEVISION INVESTMENT OF DETROIT, INC.
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1995
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in thousands)
September 30, December 31,
1995 1994
---------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash.......................................................... $106 $1,125
Due from affiliate............................................ 1,005
Other assets.................................................. 4
------- -------
Total current assets.................................... 1,111 1,129
------- -------
INVESTMENT IN COMCAST CABLEVISION OF DETROIT...................... 6,984 8,534
------- -------
DEFERRED CHARGES.................................................. 7,880 7,839
Accumulated amortization...................................... (312) (18)
------- -------
Deferred charges, net......................................... 7,568 7,821
------- -------
$15,663 $17,484
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable ............................................. $8 $12
------- -------
Total current liabilities............................... 8 12
------- -------
DEFERRED INCOME TAXES............................................. 7,339 7,823
------- -------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $.01 par value - authorized,
4,000,000 shares; issued, 1,000,000 ....................... 10 10
Additional capital............................................ 9,253 9,686
Accumulated deficit........................................... (947) (47)
------- -------
Total stockholders' equity.............................. 8,316 9,649
------- -------
$15,663 $17,484
======= =======
</TABLE>
See notes to condensed financial statements.
<PAGE>3
CABLEVISION INVESTMENT OF DETROIT, INC.
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1995
CONDENSED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
(Unaudited)
<TABLE>
<CAPTION>
(Amounts in thousands, except per share data)
Nine Months Ended Three Months Ended
September 30, September 30,
1995 1994 1995 1994
-------- -------- -------- --------
(Predecessor (Predecessor
Corporation) Corporation)
<S> <C> <C> <C> <C>
INCOME
Interest income.............................................. $52 $33 $19 $16
Equity in net (loss) income of Comcast
Cablevision of Detroit.................................. (1,117) 721 (364) 234
------- ------- ------- -------
(1,065) 754 (345) 250
------- ------- ------- -------
EXPENSES
Amortization................................................ 294 423 98 141
Administrative.............................................. 25 26 16 8
------- ------- ------- -------
319 449 114 149
------- ------- ------- -------
(LOSS) INCOME BEFORE INCOME
TAX BENEFIT.................................................. (1,384) 305 (459) 101
------- ------- ------- -------
INCOME TAX BENEFIT.............................................. (484) (160)
------- ------- ------- -------
NET (LOSS) INCOME............................................... (900) 305 (299) 101
ACCUMULATED DEFICIT
Beginning of period......................................... (47) (3,465) (648) (3,261)
Dividends declared - $1.25 per share........................ (1,250) (1,250)
------- ------- ------- -------
End of period............................................... ($947) ($4,410) ($947) ($4,410)
======= ======= ======= =======
NET (LOSS) INCOME PER SHARE..................................... ($.90) $.31 ($.30) $.10
======= ======= ======= =======
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING DURING THE PERIOD........................ 1,000 1,000 1,000 1,000
======= ======= ======= =======
</TABLE>
See notes to condensed financial statements.
<PAGE>4
CABLEVISION INVESTMENT OF DETROIT, INC.
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1995
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in thousands)
Nine Months Ended September 30,
1995 1994
------ ------
(Predecessor
Corporation)
<S> <C> <C>
OPERATING ACTIVITIES
Net (loss) income ....................................... ($900) $305
Noncash items included in net (loss) income:
Equity in net loss (income) of Comcast
Cablevision of Detroit......................... 1,117 (721)
Amortization....................................... 294 423
Deferred income tax benefit........................ (484)
-------- --------
27 7
Decrease (increase) in other assets................... 4 (3)
Decrease in accounts payable.......................... (4) (1)
-------- --------
Net cash provided by operating activities...... 27 3
-------- --------
FINANCING ACTIVITIES
Dividends ............................................... (1,250)
-------- --------
Net cash used in financing activities.......... (1,250)
-------- --------
INVESTING ACTIVITIES
Net transactions with affiliates......................... (1,005) 1,000
Distribution received from Comcast
Cablevision of Detroit................................ 1,250
Purchase of short-term investment........................ (1,011)
Other.................................................... (41)
-------- --------
Net cash (used in) provided by
investing activities......................... (1,046) 1,239
-------- --------
DECREASE IN CASH.............................................. (1,019) (8)
Cash, Beginning of Period................................ 1,125 119
-------- --------
CASH, End of Period........................................... $106 $111
======== ========
</TABLE>
See notes to condensed financial statements.
<PAGE>5
CABLEVISION INVESTMENT OF DETROIT, INC.
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1995
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED FINANCIAL STATEMENTS
Organization
Cablevision Investment of Detroit, Inc. (the "Company"), an approximate
96.5% owned subsidiary of Com MH Cable TV, Inc. (formerly Maclean Hunter
Cable TV, Inc.) ("Cable TV"), a Michigan corporation, is a general partner
which holds a 10% partnership interest in Comcast Cablevision of Detroit
(formerly Barden Cablevision and referred to herein as the "Partnership"),
a Michigan general partnership. The Partnership operates a cable
communications system pursuant to a franchise agreement with the city of
Detroit, Michigan (the "City"). Effective December 22, 1994 (see Note 2),
Cable TV became an indirect majority owned subsidiary of Comcast
Corporation ("Comcast"), a Pennsylvania corporation which is a publicly
owned company.
Basis of Presentation
The condensed balance sheet at December 31, 1994 has been condensed from
the audited balance sheet at that date. The condensed balance sheet at
September 30, 1995, the condensed statement of operations and accumulated
deficit for the nine and three months ended September 30, 1995 and 1994 and
the condensed statement of cash flows for the nine months ended September
30, 1995 and 1994 have been prepared by the Company and have not been
audited by the Company's Independent Auditors. In the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows as of September 30, 1995 and for all periods
presented have been made.
Certain information and note disclosures normally included in the Company's
annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These condensed
financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's December 31, 1994
Annual Report on Form 10-K filed with the Securities and Exchange
Commission. The results of operations for the periods ended September 30,
1995 are not necessarily indicative of operating results for the full year.
Net (Loss) Income Per Share
Net (loss) income per share is based on the weighted average number of
common shares outstanding. The Company has no common share equivalents
outstanding.
Reclassifications
Certain reclassifications have been made to the 1994 financial statements
to conform with the classifications used in 1995.
2. MACLEAN HUNTER ACQUISITION
On March 31, 1994, Rogers Communications Inc. ("RCI") acquired
substantially all of the outstanding shares of capital stock of Maclean
Hunter Limited, which was formerly the parent of Maclean Hunter, Inc.
("MHI"). On December 22, 1994, pursuant to a share purchase agreement
between Comcast and RCI, Comcast MH Holdings, Inc. ("MH Holdings")
purchased all of the issued and outstanding shares of capital stock of MHI
and, in conjunction with a separate agreement with the shareholders of
Comcast Michigan Holdings, Inc. (formerly Barden Communications, Inc. and
referred to herein as "CMH"), acquired all of the issued and outstanding
shares of capital stock of CMH, for an aggregate purchase price of
approximately $1.2 billion (subject to certain adjustments) in cash (the
purchase of the shares of MHI is referred to herein as the "MHI Share
Purchase" and, together with the purchase of the CMH shares, as the "Share
Purchase"). MH Holdings is an indirect wholly owned subsidiary of Comcast
MHCP Holdings, L.L.C. ("MHCP"), a Delaware limited liability corporation.
MHCP is owned 55% by a wholly owned subsidiary of Comcast and 45% by the
California Public Employees'
<PAGE>6
CABLEVISION INVESTMENT OF DETROIT, INC.
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1995
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
Retirement System ("CalPERS"), and is managed by Comcast. The MHI Share
Purchase resulted in a change of control of the Company because Cable TV,
the Company's parent, became an indirect wholly owned subsidiary of MH
Holdings. In addition, the Share Purchase resulted in a change of control
of the Partnership because the partners became substantially indirect
wholly owned subsidiaries of MH Holdings.
As a result of the Share Purchase, a new cost basis was established for the
purchased assets and liabilities. The financial position of the Company and
the Partnership as of September 30, 1995 and December 31, 1994, and their
results of operations for the nine and three months ended September 30,
1995, reflect an allocation of the purchase price for the Share Purchase to
the assets and liabilities of the Company and the Partnership based on
relative estimated market values. Such allocation is preliminary pending
the final purchase price adjustment between Comcast and RCI. Financial
information prior to the Share Purchase with respect to the Company and the
Partnership has been presented herein as "Predecessor Corporation" and
"Predecessor Partnership," respectively.
3. INVESTMENT IN COMCAST CABLEVISION OF DETROIT
The Company accounts for its investment in the Partnership under the equity
method. The Company records its investment at cost and adjusts the recorded
investment periodically to recognize the Company's proportionate share of
the Partnership's net income or loss after the date of investment, as well
as any additional contributions made and distributions received.
The following is summarized financial information with respect to the
Partnership:
Condensed Financial Position
(Dollars in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
---- ----
<S> <C> <C>
Current assets.................................................. $4,959 $4,576
Property and equipment, net..................................... 58,497 59,358
Deferred charges, net........................................... 229,952 245,195
-------- --------
$293,408 $309,129
======== ========
Current liabilities............................................. $61,985 $63,136
Long-term liabilities........................................... 161,582 160,647
Partners' capital............................................... 69,841 85,346
-------- --------
$293,408 $309,129
======== ========
</TABLE>
<PAGE>7
CABLEVISION INVESTMENT OF DETROIT, INC.
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1995
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
Condensed Statement of Operations
(Dollars in thousands)
<TABLE>
<CAPTION>
(Predecessor (Predecessor
Partnership) Partnership)
Nine Months Ended Three Months Ended
September 30, September 30,
1995 1994 1995 1994
-------- -------- -------- ------
<S> <C> <C> <C> <C>
Service income........................................... $50,633 $49,211 $17,113 $16,128
-------- -------- -------- --------
Operating, selling, general and
administrative expenses................................. 32,954 32,477 11,117 10,552
Depreciation and amortization............................ 19,550 7,415 6,469 2,444
-------- -------- -------- --------
52,504 39,892 17,586 12,996
-------- -------- -------- --------
Operating (loss) income ................................. (1,871) 9,319 (473) 3,132
Interest expense......................................... 9,302 2,255 3,173 833
-------- -------- -------- --------
Net (loss) income for allocation to partners............. ($11,173) $7,064 ($3,646) $2,299
======== ======== ======== ========
</TABLE>
Prior to the Share Purchase, the Company was allocated 10.2% of the
Partnership's net income or loss. Contemporaneously with the Share
Purchase, Detroit Cable TV, Inc. ("Detroit Cable"), a wholly owned
subsidiary of Cable TV, exercised its option to acquire additional
interests in the Partnership of 0.2% from the Company and 0.8% from CMH for
consideration previously provided. Following the Share Purchase, Detroit
Cable, CMH and the Company hold interests of 50%, 40% and 10%,
respectively, in the Partnership. As a result of the Share Purchase, the
Company's recorded investment balance was increased to 10% of the new basis
of the Partnership's net assets.
Related Party Transactions
Effective December 22, 1994, management fees are charged to the Partnership
pursuant to a management agreement between Comcast and MH Holdings (the
"Management Agreement"). Under the terms of the Management Agreement,
Comcast will supervise the management and operation of the Partnership for
compensation equal to 4.5% of the Partnership's gross revenues, with
payment of one-third of such fees being deferred by MH Holdings. In
addition, the Management Agreement provides for the reimbursement and
sharing of certain of Comcast's actual costs relating to the operations of
MH Holdings, including the operations of the Partnership. For the nine and
three months ended September 30, 1995, the Partnership was charged $2.3
million and $770,000, respectively, under the Management Agreement.
Effective December 22, 1994, the Partnership is also charged by Comcast for
certain operating expenses under a separate agreement between Comcast and
MH Holdings (the "Cost Sharing Agreement"). These expenses are charged to
MH Holdings, and ultimately the Partnership, by Comcast on the same basis
that approximates what would have been charged if it purchased directly
from the supplier, subject to certain adjustments and limitations. For the
nine and three months ended September 30, 1995, the amount charged to the
Partnership under the Cost Sharing Agreement was $14.6 million and $4.9
million, respectively.
Through November 30, 1994, the Partnership paid to Cable Management of
Detroit, a partnership formed by Cable TV and CMH, a monthly fee equal to
6% of the Partnership's gross revenues. Fees incurred for the nine and
three months ended September 30, 1994 totalled $3.0 million and $1.0
million, respectively.
<PAGE>8
CABLEVISION INVESTMENT OF DETROIT, INC.
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1995
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONCLUDED
(Unaudited)
Through December 21, 1994, the Partnership purchased certain services
jointly with an affiliate owned by Cable TV. Reimbursement to the affiliate
for these services for the nine and three months ended September 30, 1994
totalled $5.3 million and $1.7 million, respectively.
For the nine and three months ended September 30, 1995, interest expense of
$9.3 million and $3.2 million, respectively, represents interest on the
Partnership's assumed portion of the outstanding borrowings of MH Holdings
under the Assumption Agreement (see Note 4).
Pension Plan
On October 5, 1995, the Partnership decided to terminate its defined
benefit pension plan as soon as practicable, but prior to December 31,
1995. The termination of this plan is not expected to have a significant
effect on the financial position or results of operations of the
Partnership or the Company.
Commitments and Contingencies
The Partnership is subject to legal proceedings and claims which arise in
the ordinary course of its business. In the opinion of management, the
amount of ultimate liability with respect to these actions will not
materially affect the financial position and results of operations of the
Partnership.
On March 30, 1994, the Federal Communications Commission ("FCC"), among
other things, adopted interim regulations to govern cost-of-service
showings by cable operators, establishing an industry-wide 11.25% after tax
rate of return and a rebuttable presumption that acquisition costs above
original historic book value of tangible assets should be excluded from the
rate base; and reconsidered, among other matters, its regulations
concerning rates for the addition of regulated services and the treatment
of packages of "a la carte" channels. The Partnership is currently seeking
to justify certain of its existing rates on the basis of cost-of-service
showings at the City. Although management believes that the Partnership's
rates are supportable in a cost of service proceeding, no assurance can be
given that the Partnership will be successful. If the Partnership is not
successful in such efforts, and there is no legislative, administrative or
judicial relief, the FCC regulations may adversely affect the Partnership's
results of operations.
4. STATEMENT OF CASH FLOWS - SUPPLEMENTAL INFORMATION
In connection with the Share Purchase, MH Holdings entered into an $850.0
million credit agreement with certain lenders (the "Credit Agreement"). On
December 22, 1994, the Partnership entered into a loan assumption agreement
(the "Assumption Agreement") with MH Holdings whereby the Partnership,
along with certain other subsidiaries of MH Holdings, would assume a
portion of MH Holdings' obligations under the Credit Agreement. The
Partnership's allocated portion of the total commitment under the Credit
Agreement was $184.1 million, of which $154.9 million was outstanding as of
December 31, 1994. During the nine months ended September 30, 1995,
additional borrowings were made under the Credit Agreement and the
Partnership was allocated an additional $4.3 million pursuant to the
Assumption Agreement, with a corresponding decrease in partners' capital.
The Company has recorded a decrease in its investment in the Partnership
for its proportionate share of this assumed liability of $433,000, with a
corresponding decrease in additional capital. This transaction has been
excluded from the Company's condensed statement of cash flows due to its
noncash nature.
5. RELATED PARTY TRANSACTIONS
As of September 30, 1995, the due from affiliate balance includes interest
bearing amounts due from MH Holdings of approximately $1.0 million.
<PAGE>9
CABLEVISION INVESTMENT OF DETROIT, INC.
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1995
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Organization
Cablevision Investment of Detroit, Inc. (the "Company"), an approximate 96.5%
owned subsidiary of Com MH Cable TV, Inc. (formerly Maclean Hunter Cable TV,
Inc.) ("Cable TV"), a Michigan corporation, is a general partner which holds a
10% partnership interest in Comcast Cablevision of Detroit (formerly Barden
Cablevision and referred to herein as the "Partnership"), a Michigan general
partnership. The Partnership operates a cable communications system (the
"System") pursuant to a franchise agreement with the city of Detroit, Michigan
(the "City"). Effective December 22, 1994, Cable TV became an indirect majority
owned subsidiary of Comcast Corporation ("Comcast"), a Pennsylvania corporation
which is a publicly owned company.
Maclean Hunter Acquisition
On March 31, 1994, Rogers Communications Inc. ("RCI") acquired substantially all
of the outstanding shares of capital stock of Maclean Hunter Limited, which was
formerly the parent of Maclean Hunter, Inc. ("MHI"). On December 22, 1994,
pursuant to a share purchase agreement between Comcast and RCI, Comcast MH
Holdings, Inc. ("MH Holdings") purchased all of the issued and outstanding
shares of capital stock of MHI and, in conjunction with a separate agreement
with the shareholders of Comcast Michigan Holdings, Inc. (formerly Barden
Communications, Inc. and referred to herein as "CMH"), acquired all of the
issued and outstanding shares of capital stock of CMH, for an aggregate purchase
price of approximately $1.2 billion (subject to certain adjustments) in cash
(the purchase of the shares of MHI is referred to herein as the "MHI Share
Purchase" and, together with the purchase of the CMH shares, as the "Share
Purchase"). MH Holdings is an indirect wholly owned subsidiary of Comcast MHCP
Holdings, L.L.C. ("MHCP"), a Delaware limited liability corporation. MHCP is
owned 55% by a wholly owned subsidiary of Comcast and 45% by the California
Public Employees' Retirement System ("CalPERS"), and is managed by Comcast. The
MHI Share Purchase resulted in a change of control of the Company because Cable
TV, the Company's parent, became an indirect wholly owned subsidiary of MH
Holdings. In addition, the Share Purchase resulted in a change of control of the
Partnership because the partners became substantially indirect wholly owned
subsidiaries of MH Holdings.
Contemporaneously with the Share Purchase, Detroit Cable TV, Inc. ("Detroit
Cable"), a wholly owned subsidiary of Cable TV, exercised its option to acquire
additional interests in the Partnership of 0.2% from the Company and 0.8% from
CMH for consideration previously provided. Following the Share Purchase, Detroit
Cable, CMH and the Company hold interests of 50%, 40% and 10%, respectively, in
the Partnership.
Liquidity and Capital Resources
The Company currently does not have any significant capital requirements.
On July 29, 1994, the Company received a $1.25 million distribution from the
Partnership. On August 26, 1994, the Company paid a $1.25 million dividend to
its shareholders.
The Partnership's capital requirements, anticipated to be approximately $1.0
million during the remainder of 1995, are principally for maintenance and
upgrading of the system. The amount of such capital expenditures for years
subsequent to 1995 will depend on numerous factors, many of which are beyond the
Partnership's control. These factors include whether competition in the market
necessitates a system rebuild or upgrade, whether the system has sufficient
capacity to handle new product offerings, including the offering of cable
telephony and telecommunications services, and whether and to what extent the
Partnership will be able to recover its investment under Federal Communications
Commission ("FCC") rate guidelines.
<PAGE>10
CABLEVISION INVESTMENT OF DETROIT, INC.
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1995
The Company believes that the Partnership will be able to meet its current and
long-term liquidity and capital requirements, including its fixed charges
(interest expense), through its cash flows from operating activities and other
sources of financing.
Results of Operations
As a result of the Share Purchase, a new cost basis was established for the
purchased assets and liabilities. The financial position of the Company and the
Partnership as of September 30, 1995 and December 31, 1994, and their results of
operations for the nine and three months ended September 30, 1995, reflect an
allocation of the purchase price for the Share Purchase to the assets and
liabilities of the Company and the Partnership based on relative estimated
market values. Such allocation is preliminary pending the final purchase price
adjustment between Comcast and RCI.
Cablevision Investment of Detroit, Inc.
The Company accounts for its investment in the Partnership under the equity
method. The Company records its investment at cost and adjusts the recorded
investment periodically to recognize the Company's proportionate share of the
Partnership's net income or loss after the date of investment, as well as any
additional contributions made and distributions received.
The Company realized net (loss) income of ($900,000), $305,000, ($299,000) and
$101,000 for the nine and three months ended September 30, 1995 and 1994,
respectively. The results of operations include equity in net (loss) income of
the Partnership of ($1.1) million, $721,000, ($364,000) and $234,000,
respectively, for those periods. The financial results of the Partnership are
discussed below.
Comcast Cablevision of Detroit
The Partnership realized operating income before depreciation and amortization
(commonly referred to in the Partnership's business as "operating cash flow") of
$17.7 million, $16.7 million, $6.0 million and $5.6 million for the nine and
three months ended September 30, 1995 and 1994, respectively, representing
increases of $1.0 million or 6% and $400,000 or 7% from 1994 to the same periods
in 1995. These changes are a result of the items discussed below. Operating cash
flow is presented as a measure of the Partnership's ability to generate cash to
service its obligations, including debt service obligations, and to finance
capital and other expenditures. In part due to the capital intensive nature of
the telecommunications industry and the significant level of non-cash
depreciation and amortization expense, operating cash flow is frequently used as
one of the bases for comparing companies in the industry. Operating cash flow
does not purport to represent net income or net cash provided by operating
activities, as those terms are defined under generally accepted accounting
principles, and should not be considered as an alternative to such measurements
as an indicator of the Partnership's performance.
The Partnership realized service income of $50.6 million, $49.2 million, $17.1
million and $16.1 million for the nine and three months ended September 30, 1995
and 1994, respectively, representing increases of $1.4 million or 3% and $1.0
million or 6% from 1994 to the same periods in 1995. The fluctuations in service
income are principally due to changes in subscribers and additional product
offerings.
Operating, selling, general and administrative expenses were $33.0 million,
$32.5 million, $11.1 million and $10.6 million for the nine and three months
ended September 30, 1995 and 1994, respectively, representing increases of
$500,000 or 2% and $500,000 or 5% from 1994 to the same periods in 1995. Such
expenses have remained relatively consistent between periods primarily due to
operating efficiencies realized as a result of the Share Purchase, offset by
cost increases predominantly associated with subscriber growth. It is
anticipated that the Partnership's cost of
<PAGE>11
CABLEVISION INVESTMENT OF DETROIT, INC.
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1995
cable programming will increase in the future as cable programming rates
increase and additional sources of cable programming become available.
Depreciation and amortization expense was $19.6 million, $7.4 million, $6.5
million and $2.4 million for the nine and three months ended September 30, 1995
and 1994, respectively, representing increases of $12.2 million and $4.1 million
from 1994 to the same periods in 1995. The increases are primarily due to the
effects of establishing a new cost basis for the assets purchased in the Share
Purchase.
Interest expense was $9.3 million, $2.3 million, $3.2 million and $833,000 for
the nine and three months ended September 30, 1995 and 1994, respectively,
representing increases of $7.0 million and $2.3 million from 1994 to the same
periods in 1995. The increases are principally due to the effects of debt
assumed by the Partnership in connection with the Share Purchase.
Statement of Cash Flows
Cablevision Investment of Detroit, Inc.
Cash decreased $1.0 million at September 30, 1995 from December 31, 1994 due to
the effects of net investing transactions with affiliates.
Cable Rate Regulation Developments
On March 30, 1994, the FCC, among other things, adopted interim regulations to
govern cost-of-service showings by cable operators, establishing an
industry-wide 11.25% after tax rate of return and a rebuttable presumption that
acquisition costs above original historic book value of tangible assets should
be excluded from the rate base; and reconsidered, among other matters, its
regulations concerning rates for the addition of regulated services and the
treatment of packages of "a la carte" channels. The Partnership is currently
seeking to justify certain of its existing rates on the basis of cost-of-service
showings at the City. Although management believes that the Partnership's rates
are supportable in a cost of service proceeding, no assurance can be given that
the Partnership will be successful. If the Partnership is not successful in such
efforts, and there is no legislative, administrative or judicial relief, the FCC
regulations may adversely affect the Partnership's results of operations.
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting on July 14, 1995, the shareholders approved the
following proposals:
To elect four directors to serve for the ensuing year and until their
respective successors shall have been duly elected and qualified.
Director For Withheld
-------- --- --------
Ralph J. Roberts 973,132 174
Julian A. Brodsky 973,120 186
Brian L. Roberts 973,132 174
Stanley L. Wang 973,132 174
<PAGE>12
CABLEVISION INVESTMENT OF DETROIT, INC.
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1995
Ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the 1995 fiscal year.
For Against Abstain
--- ------- -------
973,170 12 124
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits required to be filed by Item 601 of Regulation S-K:
27 Financial Data Schedule.
(b) Reports on Form 8-K - None
<PAGE>13
CABLEVISION INVESTMENT OF DETROIT, INC.
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1995
SIGNATURE
Pursuant to the Requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CABLEVISION INVESTMENT OF DETROIT, INC.
/s/ LAWRENCE S. SMITH
---------------------------------------
Lawrence S. Smith
Senior Vice President
Accounting and Administration
(Chief Accounting Officer)
Date: November 14, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed statement of operations and condensed balance sheet and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000806003
<NAME> CABLEVISION INVESTMENT OF DETROIT, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 106
<SECURITIES> 0
<RECEIVABLES> 1,005
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,111
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 15,663
<CURRENT-LIABILITIES> 8
<BONDS> 0
<COMMON> 10
0
0
<OTHER-SE> 8,306
<TOTAL-LIABILITY-AND-EQUITY> 15,663
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (1,117)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,384)
<INCOME-TAX> (484)
<INCOME-CONTINUING> (900)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (900)
<EPS-PRIMARY> (.90)
<EPS-DILUTED> (.90)
</TABLE>
