-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K15ARKmkePJCS+Etw48iqnzowElP26ukKXUIJ58UeB1R7N6/WitVZgYrVKewX/dr 5eklaKSw4EEIL9hik2lF/A== 0000861255-01-500006.txt : 20010815 0000861255-01-500006.hdr.sgml : 20010815 ACCESSION NUMBER: 0000861255-01-500006 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OLYMPUS CAPITAL CORP CENTRAL INDEX KEY: 0000754019 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 232868925 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-19327-01 FILM NUMBER: 1711780 BUSINESS ADDRESS: STREET 1: MAIN AT WATER STREET STREET 2: P O BOX 472 CITY: COUDERSPORT STATE: PA ZIP: 16915-1141 BUSINESS PHONE: 8142749830 MAIL ADDRESS: STREET 1: MAINT AT WATER STREET STREET 2: P O BOX 472 CITY: COUDERSPORT STATE: PA ZIP: 16915 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OLYMPUS COMMUNICATIONS LP CENTRAL INDEX KEY: 0000861255 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 251622615 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-19327 FILM NUMBER: 1711781 BUSINESS ADDRESS: STREET 1: ONE NORTH MAIN STREET STREET 2: P O BOX 472 CITY: COUDERSPORT STATE: PA ZIP: 16915-1141 BUSINESS PHONE: 8142749830 MAIL ADDRESS: STREET 1: ONE NORTH MAIN STREET STREET 2: P O BOX 472 CITY: COUDERSPORT STATE: PA ZIP: 16915-1141 10-Q/A 1 o1qa0301.txt OLYMPUS COMMUNICATIONS LP AMENDED 10Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A (Amendment No. 1) X Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act - ---- of 1934 For the quarterly period ended March 31, 2001 Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ______________ to _____________ Commission File Number: 333-19327 OLYMPUS COMMUNICATIONS, L.P.* (Exact name of registrant as specified in its charter) Delaware 25-1622615 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) OLYMPUS CAPITAL CORPORATION* (Exact name of registrant as specified in its charter) Delaware 23-2868925 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) --------------------------------------------------------- One North Main Street Coudersport, PA 16915-1141 (Address of principal (Zip code) executive offices) 814-274-9830 (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 registrant was required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes X No __ - * Olympus Communications, L.P. and Olympus Capital Corporation meet the conditions set forth in General Instruction H (1)(a) and (b) to the Form 10-Q and are therefore filing with the reduced disclosure format.
OLYMPUS COMMUNICATIONS, L.P. AND SUBSIDIARIES TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Page Item 1. Financial Statements 3 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 15 SIGNATURES 16
SAFE HARBOR STATEMENT The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Certain information included in this Quarterly Report on Form 10-Q/A including Management's Discussion and Analysis of Financial Condition and Results of Operations, is forward-looking, such as information relating to the effects of future regulation, future capital commitments and the effects of competition. Such forward-looking information involves important risks and uncertainties that could significantly affect expected results in the future from those expressed in any forward-looking statements made by, or on behalf of, Olympus Communications, L.P. ("Olympus" and, collectively with its subsidiaries, the "Company"). These "forward looking statements" can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," "intends" or "anticipates" or the negative thereof or other variations thereon or comparable terminology or by discussions of strategy that involve risks or uncertainties. These risks and uncertainties include, but are not limited to, uncertainties relating to general business and economic conditions, acquisitions and divestitures, risks associated with the Company's growth and financings, the availability and cost of capital, government and regulatory policies, the pricing and availability of equipment, materials, inventories and programming, product acceptance, the Company's ability to execute on its various business plans and to construct, expand and upgrade its networks, risks associated with reliance on the performance and financial condition of vendors and customers, technological developments, and changes in the competitive environment in which the Company operates. Readers are cautioned that such forward-looking statements are only predictions, that no assurance can be given that any particular future results will be achieved, and that actual events or results may differ materially. For further information regarding those risks and uncertainties and their potential impact on the Company, see the prospectus and most recent prospectus supplement filed under Registration Statement No. 333-78027 of Adelphia Communications Corporation, under the heading "Risk Factors." In evaluating such statements, readers should specifically consider the various factors which could cause actual events or results to differ materially from those indicated by such forward-looking statements. Purpose of this Amendment on Form 10-Q/A This amendment on Form 10-Q/A is being filed to give effect to the restatement of the Company's financial statements included in Part I, Item 1, as discussed in Note 7 thereto. This Form 10-Q/A includes such restated financial statements and related notes thereto for the three months ended March 31, 2000 and as of December 31, 2000, and other information related to such restated financial statements. Except for Items 1 and 2 of Part I, no other information included in the original report on Form 10-Q is amended by this Form 10-Q/A. ITEM 1. Financial Statements
OLYMPUS COMMUNICATIONS, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands) December 31, March 31, 2000* 2001 ---------------- ----------------- ASSETS Cable systems, at cost, net of accumulated depreciation and amortization: Property, plant and equipment $ 502,205 $ 551,912 Intangible assets 637,177 687,649 ---------------- ----------------- Total cable systems 1,139,382 1,239,561 Cash and cash equivalents 5,773 4,682 Subscriber receivables - net 16,747 16,414 Prepaid expenses and other assets - net 26,927 25,783 ---------------- ----------------- Total $ 1,188,829 $ 1,286,440 ================ ================= LIABILITIES AND PARTNERS' EQUITY Subsidiary debt $ 245,750 $ 231,750 Parent debt 203,020 202,890 Other debt 115,593 116,238 Accounts payable 54,965 35,051 Subscriber advance payments and deposits 7,080 9,151 Accrued interest and other liabilities 38,828 44,668 Due to affiliates - net 15,778 74,018 Deferred income taxes 36,478 36,804 ---------------- ----------------- Total liabilities 717,492 750,570 ---------------- ----------------- Commitments and contingencies (Note 5) Partners' equity: Limited partners' interests 407,813 407,813 General partners' equity 63,524 128,057 ---------------- ----------------- Total partners' equity 471,337 535,870 ---------------- ----------------- Total $ 1,188,829 $ 1,286,440 ================ ================= * As restated, See Note 7. See the accompanying notes to condensed consolidated financial statements.
OLYMPUS COMMUNICATIONS, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands) Three Months Ended March 31, ---------------------------------- 2000* 2001 ---------------- ----------------- Revenues $ 62,866 $ 72,506 --------------- --------------- Operating expenses: Direct operating and programming 23,155 26,036 Selling, general and administrative 12,449 13,443 Depreciation and amortization 19,409 22,709 Management fees to managing affiliate 4,683 5,166 --------------- --------------- Total 59,696 67,354 --------------- --------------- Operating income 3,170 5,152 --------------- --------------- Other: Interest expense (13,073) (12,841) Interest expense - affiliates (313) (343) Gain on cable systems swap -- 73,009 Other (608) (104) --------------- --------------- Total (13,994) 59,721 --------------- --------------- (Loss) income before income taxes (10,824) 64,873 Income tax benefit (expense) 985 (340) --------------- --------------- Net (loss) income $ (9,839) $ 64,533 =============== =============== *As restated, see Note 7. See the accompanying notes to condensed consolidated financial statements.
OLYMPUS COMMUNICATIONS, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) Three Months Ended March 31, ---------------------------------- 2000* 2001 ----------------- ---------------- Cash flows from operating activities: Net (loss) income $ (9,839) $ 64,533 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 19,409 22,709 Non-cash interest.. 625 2,342 Deferred income taxes (985) 326 Gain on cable systems swap -- (73,009) Changes in operating assets and liabilities, net of effects of acquisitions, distributions and cable systems swap: Subscriber receivables 438 270 Prepaid expenses and other assets (1,505) 45 Accounts payable 4,759 (19,915) Subscriber advance payments and deposits 3,490 2,490 Accrued interest and other liabilities 6,090 4,118 -------------- -------------- Net cash provided by operating activities 22,482 3,909 -------------- -------------- Cash flows from investing activities: Acquisitions -- (1,189) Capital expenditures (33,041) (47,652) -------------- -------------- Cash used for investing activities (33,041) (48,841) -------------- -------------- Cash flows from financing activities: Proceeds from debt -- 25,000 Repayments of debt (14,374) (39,400) Amounts advanced from affiliates 27,156 58,241 Capital distributions (25) -- -------------- -------------- Net cash provided by financing activities 12,757 43,841 -------------- -------------- Increase (decrease) in cash and cash equivalents 2,198 (1,091) Cash and cash equivalents, beginning of period 4,192 5,773 -------------- -------------- Cash and cash equivalents, end of period $ 6,390 $ 4,682 ============== ============== *As restated, see Note 7. See the accompanying notes to condensed consolidated financial statements.
OLYMPUS COMMUNICATIONS, L.P. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Dollars in thousands) 1. The Partnership and Basis of Presentation Olympus Communications, L.P. ("Olympus" or the "Company") is a limited partnership, formed under the laws of Delaware, between ACC Operations, Inc. and ACC Holdings II, LLC, wholly-owned subsidiaries of Adelphia Communications Corporation (together with its subsidiaries "Adelphia"). Olympus' operations consist of providing telecommunications services primarily over its networks, which are commonly referred to as broadband networks because they can transmit large quantities of voice, video and data by way of digital or analog signals. Olympus Capital Corporation, a wholly-owned subsidiary of the Company, was formed solely for the purpose of serving as a co-issuer with Olympus Communications, L.P. of the 10 5/8% Senior Notes due 2006 (the "Senior Notes"). Olympus Capital Corporation has no substantial assets or liabilities and no operations of any kind and the Indenture, pursuant to which such Senior Notes were issued, limits Olympus Capital Corporation's ability to acquire or hold any significant assets or other properties or engage in any business activities other than in connection with the issuance of the Senior Notes. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions of Form 10-Q and Rule 10-01 of Regulation S-X. Such principles are applied on a basis consistent with those reflected in the December 31, 2000 Form 10-K Report of the Company filed with the Securities and Exchange Commission. The condensed consolidated financial statements contained herein should be read in conjunction with the consolidated financial statements and related notes contained in the Company's 2000 Annual Report on Form 10-K. In the opinion of management, the unaudited condensed consolidated financial statements contained herein include all adjustments (consisting of only recurring adjustments) necessary for a fair presentation of the results of operations for the interim periods presented. These interim results of operations are not necessarily indicative of results for future periods. 2. Significant Events Subsequent to the Annual Report On January 1, 2001, Adelphia and certain of its subsidiaries, including Olympus, closed the previously announced cable systems exchange with Comcast Corporation. As part of the transaction, Olympus added approximately 44,000 subscribers in Orange County, California. In exchange, Comcast Corporation received approximately 56,000 subscribers in Ft. Myers, Florida from Olympus. The cable systems exchange was recorded at fair value and purchase accounting was applied as of the date of the transaction. This transaction resulted in a gain of $73,009 and an increase to property, plant and equipment and intangibles of $16,778 and $57,063, respectively. The Company has made a preliminary allocation of the purchase accounting which is subject to final allocation. On January 1, 2001, Olympus distributed cable systems serving approximately 50,000 subscribers primarily in and around Orange County, Florida (the "Telesat" system) to Adelphia (the "January 2001 Distribution") (see Note 7). 3. Supplemental Financial Information Cash payments for interest were $5,827 and $4,341 for the three months ended March 31, 2000 and 2001, respectively. Accumulated depreciation of property, plant and equipment amounted to $239,243 and $245,950 at December 31, 2000 and March 31, 2001, respectively. Accumulated amortization of intangible assets amounted to $206,639 and $203,915 at December 31, 2000 and March 31, 2001, respectively. 4. Income Taxes Income tax benefit (expense) for the three months ended March 31, 2000 and 2001 was substantially comprised of deferred taxes. 5. Commitments and Contingencies Reference is made to Management's Discussion and Analysis of Financial Condition and Results of Operations and the Annual Report for a discussion of material commitments and contingencies. 6. Recent Accounting Pronouncements On January 1, 2001, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities". SFAS No. 133, as amended, establishes accounting and reporting standards requiring that every derivative instrument be recorded in the balance sheet as either an asset or liability measured at its fair value with changes in fair value reflected in the statement of operations or other comprehensive income. As of December 31, 2000 and March 31, 2001, the Company did not hold any derivative instruments. Accordingly, the adoption of this statement did not have an effect on the Company's consolidated results of operations or financial position. 7. Restatement Subsequent to the issuance of Olympus' March 31, 2001 condensed consolidated financial statements, management determined that because the cable systems distributed constituted businesses contained within separate legal entities under common control, the January 2001 Distribution should be reported in the condensed consolidated financial statements as a change in reporting entity. As a result, the condensed consolidated financial statements for the three months ended March 31, 2000 and as of December 31, 2000 have been restated to reflect the January 2001 Distribution for periods that the distributed systems and Olympus were under the common control of Adelphia. A summary of the significant effects of the January 2001 Distribution for all periods that the distributed systems and Olympus were under the common control of Adelphia is as follows:
As January previously 2001 Three months ended March 31, 2000 reported Distribution As restated -------------- ---------------- ----------------- Revenues $ 67,693 $ 4,827 $ 62,866 Total operating expenses 64,433 4,737 59,696 Operating income 3,260 90 3,170 (Loss) income before income taxes (10,750) 74 (10,824) Net (loss) income (9,765) 74 (9,839)
As January previously 2001 As of December 31, 2000 reported Distribution As restated -------------- ---------------- ----------------- Cable systems, at cost, net of accumulated depreciation and amortization $ 1,203,882 $ 64,500 $ 1,139,382 Total assets 1,256,331 67,502 1,188,829 Total liabilities 751,298 33,806 717,492 Total partners' equity 505,033 33,696 471,337
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Dollars in thousands) See Safe Harbor Statement following the table of contents, which section is incorporated by reference herein. As discussed in Note 7 to the condensed consolidated financial statements, subsequent to the issuance of Olympus' March 31, 2001 condensed consolidated financial statements, management determined that because the cable systems distributed constituted businesses contained within separate legal entities under common control, the January 2001 Distribution should be reported in the condensed consolidated financial statements as a change in reporting entity. As a result, the condensed consolidated financial statements for the three months ended March 31, 2000 and as of December 31, 2000 have been restated to reflect the January 2001 Distribution for periods that the distributed systems and Olympus were under the common control of Adelphia. The accompanying MD&A has been revised to reflect the effects of the restatement of the condensed consolidated financial statements as of December 31, 2000 and for the three months ended March 31, 2000. Introduction Olympus Communications, L.P. and subsidiaries ("Olympus" or the "Company") is a limited partnership, formed under the laws of Delaware, between ACC Operations, Inc. and ACC Holdings II, LLC, wholly-owned subsidiaries of Adelphia Communications Corporation ("Adelphia"). Olympus Capital Corporation, a wholly-owned subsidiary of the Company, was formed solely for the purpose of serving as a co-issuer with Olympus Communications, L.P. of the 10 5/8% Senior Notes due 2006 (the "Senior Notes"). Olympus Capital Corporation has no substantial assets or liabilities and no operations of any kind and the Indenture, pursuant to which such Senior Notes were issued, limits Olympus Capital Corporation's ability to acquire or hold any significant assets or other properties or engage in any business activities other than in connection with the issuance of the Senior Notes. Results of Operations Three Months Ended March 31, 2000 and 2001 Olympus earned substantially all of its revenues in the three months ended March 31, 2000 and 2001 from monthly subscriber fees for basic, satellite, digital, premium and ancillary services (such as installations and equipment rentals), local and national advertising sales, high speed data services, pay per view programming and electronic security monitoring services. The changes in Olympus' operating results for the three months ended March 31, 2001, compared to the same period of the prior year, were primarily the result of the continued roll-out of digital cable and high speed data services, growth in electronic security monitoring revenue and advertising revenue, vendor price increases for the Company's programming and expanding existing cable television operations. The high level of depreciation and amortization associated with acquisitions in recent years, the continuing upgrade and expansion of systems, and interest associated with financing activities will continue to have a negative impact on the reported results of operations. Olympus expects to report net losses for the foreseeable future. The following table sets forth certain cable television system data at the dates indicated.
March 31, ---------------------------------- Percent 2000 2001 Increase ---------------- ---------------- ----------- Homes Passed by Cable 872,912 897,797 2.9% Basic Subscribers 603,653 611,905 1.4%
The following table is derived from Olympus' condensed consolidated financial statements that are included in this Form 10-Q/A and sets forth the percentage relationship to revenues of the components of operating income contained in such financial statements for the periods indicated.
Three Months Ended March 31, ------------------------------- 2000 2001 ------------- ------------- Revenues 100.0% 100.00% Operating expenses: Direct operating and programming 36.8% 35.9% Selling, general and administrative 19.8% 18.5% Depreciation and amortization 30.9% 31.3% Management fees to managing affiliate 7.5% 7.1% ------------- ------------- Operating income 5.0% 7.2% ============= =============
Revenues The primary revenue sources, reflected as a percentage of total revenues, for the periods indicated were as follows:
Three Months Ended March 31, 2000 2001 ------------ ----------- Cable service and equipment 71% 63% Premium programming services 9% 9% Advertising sales and other services 20% 28%
Total revenues increased approximately 15.3% for the three month period ended March 31, 2001, compared with the same period of the prior year, primarily due to growth in digital cable and high speed data revenue, basic subscriber growth and growth in electronic security monitoring and advertising revenues. Direct Operating and Programming Expenses Direct operating and programming expenses, which are mainly basic and premium programming costs and technical expenses, increased 12.4% for the three month period ended March 31, 2001, compared with the same period of the prior year. Such increase was primarily due to increased operating expenses from increased technical costs associated with providing digital cable and high speed data services as well as increased basic and premium programming costs. Selling, General and Administrative Expenses These expenses, which are mainly comprised of costs related to system offices, customer service representatives, and sales and administrative employees, increased 8.0% for the three month period ended March 31, 2001 compared with the same period of the prior year. This increase was primarily due to incremental costs associated with providing new services, marketing expenses and wages. Depreciation and Amortization Depreciation and amortization was higher for the three month period ended March 31, 2001 compared with the same period of the prior year, primarily due to increased capital expenditures. Management Fees to Managing Affiliate Pursuant to the terms of the Company's Partnership Agreement, the Company pays to Adelphia, on a quarterly basis, an amount representing an allocation of the corporate overhead of Adelphia and its subsidiaries (as provided in the management agreement) with respect to the Company for such period, which allocation is based upon the ratio of the Company's cable subscribers to the total cable subscribers owned or managed by Adelphia. Management fees decreased as a percentage of revenues for the three month period ended March 31, 2001 as compared with the same period of the prior year, primarily due to revenues increasing proportionately at a higher rate than allocated corporate costs. Interest Expense Interest expense decreased 1.8% for the three month period ended March 31, 2001, compared with the same period of the prior year. This decrease was primarily due to a decrease in the average amount of debt outstanding as compared to the prior year. Interest Expense-Affiliates The Company is charged interest on advances due to Adelphia and other affiliates. Such advances were used by the Company for capital expenditures, repayment of debt and working capital. Interest expense-affiliates increased approximately 9.6% for the three month period ended March 31, 2001 compared with the same period of the prior year primarily due to increased average affiliate payables. Gain on Cable Systems Exchange On January 1, 2001, the Company swapped certain cable systems for certain cable systems owned by Comcast. The result of this transaction was a gain of approximately $73,000 for the three months ended March 31, 2001. Liquidity and Capital Resources The cable television business is capital intensive and typically requires continual financing for the construction, modernization, maintenance, expansion, and acquisition of cable systems. The Company historically has committed significant capital resources for these purposes. These expenditures were funded through long-term borrowings, advances from affiliates and internally generated funds. The Company's ability to generate cash to meet its future needs will depend generally on its results of operations and the continued availability of external financing. Capital expenditures for the three months ended March 31, 2000 and 2001 were $33,041 and $47,652, respectively. This increase was primarily due to increased investment related to the rebuilding of the Company's broadband network. The Company expects capital expenditures for the year ending December 31, 2001 to range from approximately $160,000 to $200,000. The Company generally has funded its working capital requirements, capital expenditures, and acquisitions through long-term borrowings, primarily from banks, issuance of public debt, advances from affiliates and internally generated funds. The Company generally has funded the principal and interest obligations on its long-term borrowings by refinancing the principal with new loans and by paying the interest out of internally generated funds. At March 31, 2001, the Company's total outstanding debt aggregated approximately $550,900, which included approximately $203,000 of parent debt, and approximately $347,900 of subsidiary and other debt. In addition, the Company had an aggregate of approximately $4,700 in cash and cash equivalents, and as of March 31, 2001, approximately $620,000 in unused credit lines with banks, $600,000 of which was also available to affiliates, part of which is subject to achieving certain levels of operating performance. At March 31, 2001, the Company has unused credit lines under reducing revolving credit facilities with revolver periods which expire through 2008. The Company's weighted average interest rate on subsidiary debt was approximately 6.84% and 6.15% at March 31, 2000 and 2001, respectively. The following table sets forth the scheduled reductions in principal under all agreements for indebtedness at December 31 for each of the next four years and nine months, based on amounts outstanding at March 31, 2001: Nine months ending December 31, 2001 $ 41,926 Year ending December 31, 2002 209,656 Year ending December 31, 2003 95,176 Year ending December 31, 2004 176 Year ending December 31, 2005 176
The Company plans to continue to explore and consider new commitments, arrangements or transactions to refinance existing debt, increase the Company's liquidity or decrease the Company's leverage. These could include, among other things, the future issuance of debt and the negotiation of new or amended credit facilities by the Company, or its subsidiaries. These could also include entering into acquisitions, joint ventures or other investment or financing activities, although no assurance can be given that any such transactions will be consummated. The Company's ability to borrow under current credit facilities and to enter into refinancings and new financings is limited by covenants contained in its subsidiaries' credit agreements, including covenants under which the ability to incur indebtedness is in part a function of applicable ratios of total debt to cash flow. The Company believes that cash and cash equivalents, internally generated funds, borrowings under existing credit facilities, advances from Adelphia or other affiliates and future financing sources will be sufficient to meet its short-term and long-term liquidity and capital requirements. Although in the past the Company has been able to refinance its indebtedness or obtain new financing, there can be no assurance that the Company will be able to do so in the future or that the terms of such financings would be favorable. Management believes that the telecommunications industry, including the cable television and telephone industries, continues to be in a period of consolidation characterized by mergers, joint ventures, acquisitions, system swaps, sales of all or part of cable companies or their assets, and other partnering and investment transactions of various structures and sizes involving cable or other telecommunications companies. The Company continues to evaluate new opportunities that allow for the expansion of its business through the acquisition of additional cable television systems in geographic proximity to its existing regional markets or in locations that can serve as a basis for new market areas. The Company, like other cable television companies, has participated from time to time and is participating in preliminary discussions with third parties regarding a variety of potential transactions, and the Company has considered and expects to continue to consider and explore potential transactions of various types with other cable and telecommunications companies. However, no assurances can be given as to whether any such transaction may be consummated or, if so, when. Regulatory and Competitive Matters The cable television operations of the Company may be adversely affected by changes and developments in governmental regulation, competitive forces and technology. The cable television industry and the Company are subject to extensive regulation at the federal, state and local levels. The 1992 Cable Act significantly expanded the scope of regulation of certain subscriber rates and a number of other matters in the cable industry, such as mandatory carriage of local broadcast stations and retransmission consent, and increased the administrative costs of complying with such regulations. The FCC has adopted rate regulations that establish, on a system-by-system basis, maximum allowable rates for (i) basic programming services based upon a benchmark methodology, and (ii) associated equipment and installation services based upon cost plus a reasonable profit. Under the FCC rules, franchising authorities are authorized to regulate rates for basic services and associated equipment and installation services. The Telecommunications Act of 1996 (the "1996 Act") ended FCC regulation of cable programming service tier rates on March 31, 1999. Rates for basic services are set pursuant to a benchmark formula. Alternatively, a cable operator may elect to use a cost-of-service methodology to show that rates for basic services are reasonable. Refunds with interest will be required to be paid by cable operators who are required to reduce regulated rates. The FCC has reserved the right to reduce or increase the benchmarks it has established. The rate regulations also limit increases in regulated rates to an inflation indexed amount plus increases in certain costs such as taxes, franchise fees, costs associated with specific franchise requirements and increased programming costs. Cost-based adjustments to these capped rates can also be made in the event a cable operator adds or deletes channels or completes a significant system rebuild or upgrade. Because of the limitation on rate increases for regulated services, future revenue growth from cable services will rely to a much greater extent than has been true in the past on increased revenues from unregulated services and new subscribers than from increases in previously unregulated rates. The FCC has adopted regulations implementing all of the requirements of the 1992 Cable Act. The FCC is also likely to continue to modify, clarify or refine the rate regulations. Olympus cannot predict the effect of future rulemaking proceedings or changes to the rate regulations. Cable television companies operate under franchises granted by local authorities, which are subject to renewal and renegotiation from time to time. Because such franchises are generally non-exclusive, there is a potential for competition with the systems from other operators of cable television systems, including public systems operated by municipal franchising authorities themselves, and from other distribution systems capable of delivering television programming to homes. The 1992 Cable Act and the 1996 Act contain provisions which encourage competition from such other sources. The Company cannot predict the extent to which competition will materialize from other cable television operators, local telephone companies, other distribution systems for delivering television programming to the home, or other potential competitors, or, if such competition materializes, the extent of its effect on the Company. The Company believes that the provision of video programming by telephone companies in competition with the Company's existing operations could have an adverse effect on the Company's financial condition and results of operations. At this time, the impact of any such effect is not known or estimable. The Company also competes with DBS service providers. DBS has been available to consumers since 1994. A single DBS satellite can provide more than 100 channels of programming. DBS service can be received virtually anywhere in the United States through the installation of a small outdoor antenna. DBS service is being heavily marketed on a nationwide basis by several service providers, some of which are now offering local programming channels. At this time, any impact of DBS competition on the Company's future results is not known or estimable. PART II - Other Information Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: None (b) Reports on Form 8-K: The Company did not file any reports on Form 8-K during the quarter ended March 31, 2001. ------------------------------------------------- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized. OLYMPUS COMMUNICATIONS, L.P. BY: ACC OPERATIONS, INC. Managing General Partner Date: August 14, 2001 By: /s/ Timothy J. Rigas -------------------- Timothy J. Rigas Executive Vice President, Treasurer, Principal Accounting Officer and Principal Financial Officer of ACC Operations, Inc. Date: August 14, 2001 OLYMPUS CAPITAL CORPORATION By: /s/ Timothy J. Rigas -------------------- Timothy J. Rigas Executive Vice President, Treasurer, Principal Accounting Officer and Principal Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----