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RESOLUTION
RE: TRANSFER AND ASSIGNMENT OF CABLE TV FRANCHISE FROM CHARTWELL CABLE
OF COLORADO, INC., TO GALAXY TELECOM, INC.
WHEREAS, the Board of County Commissioners of Weld County, Colorado, pursuant to
Colorado statute and the Weld County Home Rule Charter, is vested with the authority of
administering the affairs of Weld County, Colorado, and
WHEREAS, the Board of County Commissioners of Weld County, Colorado ("County")
approved and enacted Weld County Ordinance No. 94 on December 14, 1981, authorizing the
granting of cable TV franchises in Weld County, Colorado, and
WHEREAS, said Ordinance No. 94 was amended by Weld County Ordinance No. 94-A on
December 21, 1982, and Weld County Ordinance No. 94-B on February 12, 1985, and
WHEREAS, on December 19, 1988, County adopted a Resolution granting to Chartwell
Cable of Colorado, Inc. ("Chartwell") a cable television franchise, and
WHEREAS, on June 12, 1989, County approved a Resolution transferring said cable
television franchise to James Cable Partners, L.P., and
WHEREAS, on January 15, 1990, County adopted a Resolution approving the transfer of said
cable television franchise back to Chartwell, and
WHEREAS, Chartwell now desires to request the transfer its franchise to Galaxy TeleCom,
Inc., ("Galaxy") and Galaxy desires to assume all duties and obligations of Chartwell under the
franchise, and
WHEREAS, Galaxy will now hold the franchise directly, and
WHEREAS, County recognizes that Chartwell has been and Galaxy will be serving only a
small area in Weld County of less than 500 subscribers, and therefore, Galaxy has presented facts
sufficient to persuade County to invoke the WAIVER OF REQUIREMENTS Section of said
Ordinance No. 94-A, and
WHEREAS, the application by Galaxy requesting the approval of the transfer of the franchise
is complete.
NOW, THEREFORE, BE IT RESOLVED by the Board of County Commissioners of Weld
County, Colorado:
SECTION 1
County hereby consents to the assumption by Galaxy of all of the duties and obligations
under the franchise.
941292
ea; CA; NcOocyc rl j 6u(o-xy ORD94
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Weld County CO Clerk & Recorder 0.00
RE: CHANGE OWNERSHIP OF CABLE TV FRANCHISE TO GALAXY TELECOM, INC.
PAGE 2
SECTION 2
County acknowledges that as of the date hereof, the franchise is in full force and effect, the
same as is held by, and the rights and privileges granted thereunder, inuring the benefit of Chartwell,
and that to the best of the knowledge of the Board of County Commissioners, Chartwell is in full
compliance with the franchise.
SECTION 3
That the approval hereby granted is given pursuant to the terms and provisions of the
franchise, but do not, however, constitute and shall not be construed to constitute a disclaimer or
waiver of any rights granted or any duties or obligations imposed by the franchise, except has
provided herein.
SECTION 4
That the Board of County Commissioners hereby approves and consents to the following
exception, pursuant to the WAIVER OF REQUIREMENTS section of said Ordinance No. 94-A:
Section C of heading "Company Services" shall be waived, unless
and until there are a total of 1,000 subscribers on the system.
SECTION 5
That the franchise originally held by Chartwell was duly and legally adopted and approved
by the County, and that said franchise is hereby validated, ratified, and confirmed.
SECTION 6
That Galaxy shall be controlled at all times during its operation, installation, and maintenance
of the system pursuant to the franchise by all provisions of said Ordinance No. 94, as amended, and
that any such terms of said ordinance are incorporated herein as if fully restated.
SECTION 7
That Galaxy shall not assign the franchise granted herein, or any right or interest contained
therein, without the written consent of County; provided, however, that Galaxy has the right to
assign, mortgage, or pledge the franchise as collateral security for any loan to purchase and/or
operate the cable television system.
941292
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RE: CHANGE OWNERSHIP OF CABLE TV FRANCHISE TO GALAXY TELECOM, INC.
PAGE 3
SECTION 8
That the sections of this Resolution are hereby declared to be severable, and if any section,
provision, or any part hereof shall be held to be unconstitutional or invalid or unenforceable, such
section, provision, or part shall be fully severable and this Resolution shall be construed and
enforced as if such section, provision, or part never comprise a part hereof and the remaining
sections, provisions, and parts hereof shall remain in full force and effect and shall not be affected
by any unconstitutional or invalid or unenforceable section, provision, or part, or by its severance
herefrom.
SECTION 9
That the transfer of this franchise shall become effective upon signature of this Resolution.
The above and foregoing Resolution was, on motion duly made and seconded, adopted by
the following vote on the 21st day of December, A.D., 1994.
A J 1/! BOARD OF COUNTY COMMISSIONERS
ATTEST: '' ,/ /r .aiet WELD COUNTY, COLORADO
Weld County Clerk to the Board
W. sterL� n \
By: a-r,tiet
H.
Deputy Clerk to thetoa?tf Pro-Te
APPRO AS t
/George/E. Baxter
unty Attorney nstance L. Harl;ert J �">
lyik64-14. 'GL /IAA-t'4�1
Barbara J. Kirkmeyer
941292
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HEARING CERTIFICATION
DOCKET NO. 94-89
RE: CHANGE OF OWNERSHIP OF CABLE TELEVISION FRANCHISE FROM
CHARTWELL CABLE OF COLORADO, INC., TO GALAXY TELECOM, INC.
A public hearing was conducted on December 19, 1994, at 9:00 a.m., with the following
present:
Commissioner W. H. Webster, Chairman
Commissioner Dale K. Hall, Pro-Tern
Commissioner George E. Baxter
Commissioner Constance L. Harbert
Commissioner Barbara J. Kirkmeyer
Also present:
Acting Clerk to the Board, Carol Harding
County Attorney, Bruce Barker
Director of Finance and Administration, Donald Warden
The following business was transacted:
I hereby certify that pursuant to a notice dated December 9, 1994, and duly published
December 10, 1994, in the Greeley Tribune and December 15, 1994, in the Windsor Beacon,
a public hearing was conducted to consider the request of Galaxy TeleCom, Inc., for a
change of ownership for the cable television franchise now granted to Chartwell Cable of
Colorado, Inc. Bruce Barker, County Attorney, made this a matter of record. Mr. Barker
reviewed with the Board a map delineating the current franchise area and stated the
application is complete with the exception of a request of waiver and statement of
compliance from Galaxy TeleCom, Inc. Ward Webb, Divisional Vice President, Galaxy
TeleCom, Inc., explained Galaxy has been in business for 15 years operating small, rural
systems. It has approximately 20,000 customers in Kentucky, Illinois and Texas and is
presently purchasing a system near Lyons. Mr. Barker mentioned the application had
unaudited financial reports attached and Mr. Ward explained part of the purchase agreement
includes a change of name from Galaxy Cablevision to Galaxy TeleCom, Inc.. He said
audited financial reports for Galaxy Cablevision will be supplied. In response to
Commissioner Kirkmeyer, Mr. Ward reiterated the company has been in business for 15
years and is not a broker. He said the operations and management teams are highly
experienced in the industry and there are no immediate plans to change any services or
rates. Responding to Commissioner Hall, Mr. Ward explained a satellite data
communications system was recently installed, with a corresponding device in each service
vehicle which allows tracking of customer information and calls for service through an
automatic interface with the billing program. In response to a question from Commissioner
Harbert, Mr. Ward stated there is an 800 number to be called for service and hours of
operation are 7:30 a.m. through 7:30 p.m., Mountain States Time. The individual providing
the service calls will not change. Commissioner Hall questioned the financial statements
provided by the applicant, which show a deficit. Mr. Ward explained the cable television
business is handled differently than other businesses, and he stated Galaxy could provide
any number of references or brokers and bankers to attest to the availability of funds. Clint
Ober, Chartwell Cable of Colorado, Inc., explained the main reason the deficit appears is
because of heavy depreciation on the front end of the business. He said equipment is
depreciated over a seven- to ten-year period, while the life of the equipment is 15 years or
more, thereby creating a deficit in those earlier years. Mr. Ober stated the value is there, but
it is being depreciated at a high rate as a tax sheltering method. In response to
Commissioner Harbert, Mr. Warden reiterated there are no immediate plans to change
services, rates, or add new subscribers other than to fit growth. Mr. Barker pointed out only
a five-percent increase is allowed without approval by the Board. There was no public
testimony offered concerning this matter. Commissioner Harbert moved to approve the
transfer of the cable television franchise from Chartwell Cable of Colorado, Inc., to Galaxy
ORD94
RE: HEARING CERTIFICATION - GALAXY TELECOM, INC.
PAGE 2
TeleCom, Inc., and to waive the requirement of Ordinance #94, Company Services, Section
C, regarding equipment for local production and presentation of cablecast programs, with the
condition Galaxy provides a letter requesting said waiver. Seconded by Commissioner
Baxter, the motion carried unanimously.
This Certification was approved on the 21st day of December, 1994.
APPROVED:
ATTEST: O ,n Egv /t BOARD OF COUNTY COMMISSIONERS
d h& �_O�l WELD COUNTY z CO ORADO
Weld Co t e oar Lit/tiPt-V
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By/ !+ 1 m 4 4 4d - Webste , C airma
Deputy Cle t the Boat
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Dale K. all, Pro- em
TAPE #94-49
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eorge E�axter
DOCKET#94-89 /
Constance L. Harbert
ORD94 ditistm
i��i�
rbara J. Kirkmeyer
ORD94
NOTICE
Pursuant to Weld County Ordinance No. 94, as amended, a public hearing will be held in the
chambers of the Board of County Commissioners of Weld County, Colorado, First Floor, Weld
County Centennial Center, 915 Tenth Street, Greeley, Colorado, at the time indicated below, for the
consideration of a change of ownership to Galaxy TeleCom, Inc., for the cable television franchise
now granted to Chartwell Cable of Colorado, Inc.
Application materials may be examined in the Office of the Clerk to the Board of County
Commissioners of Weld County, located in the Weld County Centennial Center, 915 Tenth Street,
Third Floor, Greeley, Colorado.
The hearing will be recorded by tape recording. It is the responsibility of any person desiring the
presence of a court reporter to make a record of the proceedings to arrange for the presence of the
court reporter and pay for all costs associated therewith.
DOCKET# 94-89 APPLICANT:
Galaxy TeleCom, Inc.
1220 N. Main Street
Sikeston, Montana 63801
DATE: December 19, 1994
TIME: 9:00 a.m.
REQUEST: Change of ownership of cable television franchise from Chartwell Cable of Colorado,
Inc., to Galaxy TeleCom, Inc.
BOARD OF COUNTY COMMISSIONERS
WELD COUNTY, COLORADO
BY: DONALD D. WARDEN
WELD COUNTY CLERK TO THE BOARD
BY: CAROL HARDING
DEPUTY CLERK TO THE BOARD
DATED: December 9, 1994
PUBLISHED: December 10, 1994 in the Greeley Tribune
December 15, 1994 in the Windosr Beacon
Affidavit of Publication
STATE OF COLORADO
ss.
County of Weld,
I, Anita C Fletcher of
said County of Weld, being duly sworn, say that I am
an advertising clerk of
THE GREELEY DAILY TRIBUNE, and
THE GREELEY REPUBLICAN
that the same is a daily newspaper of general
circulation and printed and published in the City of
Greeley, in said county and state; that the notice or
advertisement, of which the annexed is a true copy, has
been published in said daily newspaper for consecutive
(days) X4 ; that the notice was published in the
regular and entire issue of every number of said
• newspaper during the period and time of publication of
r,.nl Mtawru xewey.wt^ a e ni CNN*esti.in said notice, and in the newspaper proper and not in a
MW ,t.
Tenth Stree,Greeley, obrado,at the time Indicated below,for the cone supplement thereof; that the first publication of said
sideration of a change ownership to Galaxy TeleCom,Inc.,for the
cable television franchise now granted to Chartwell Cable of Colorado, notice was contained in the issue of said newspaper
Inp' bearing date
Board of County
nial Commissionerster, of We 9 County,
e 1 Third located
In Greel Id
ey Tenth
Colotado.
The hearing will be recorded by tape recording.It is the responsiNity of
any person desiring the presence of a court reporter to make a record of
the proceedings to arrange for to presence of the court reporter and pay day of Derpmher A.D. 19 94-
for all cods associated therewith.
DOCKET 991-89 APPLICANT: and the last publication thereof; in the issue of said
InClC Melelnareec' newspaper bearing date the
Sikeston,Montana 83801
DATE:December 10,-1904 Tenth
TIME:9dxl aim
REQUEST:Change of ownerahlp of cable television franchise from
Chariwell Cable of Colorado,Inc.,to Galaxy TeleCom,Inc.
BOARDOF COUNTY TYMCOLONERS day of December _A.D. 19 94'
WELD N
BY:DONALD D.WARDEN that said The Greeley Daily Tribune and The Greeley
WELD COUNTY CLERK TO THE BOARD
BNG
DEPUTY CE:C ROLH RDING Republican, has been published continuously and
Lynter uninterruptedly during the period of at least six
6Ze'gl y months next prior to the first issue thereof contained
said notice or advertisement above referred to; that said
newspaper has been admitted to the United States
mails as second-class matter under the provisions of the
Act of March 3, 1879, or any amendments thereof; and
that said newspaper is a daily newspaper duly qualified
for publishing legal notices and advertisements within
the meaning of the laws of the State of Colorado.
December 10, 1994
Total Charge: $33.00
Advertising Clerk
Subscribed and sworn to before me this
10th day of _December A.D. 19 94
My commission expires 7- 2f-99 LL_��
Yt P
Notary Public
Galaxy
..: cablevis on
December 19, 1994
VIA FAX NO. 303-352-0242
Mr. Bruce T. Barker
Weld County Attorney
915 Tenth St.
Greeley, CO 80632
Dear Mr. Barker:
Please accept the following as our request for a waiver of the
following requirements under the Weld County Cable Television
Franchise Ordinance #94.
Because our system will serve less than 500 subscribers, we
hereby request a variance from:
Company Service, Section C:
Equipment for local production and presentation of
cablecast programs.
Galaxy Cablevision is looking forward to serving Weld County
residents.
Sincerely,
Thomas M. Morris
Vice President
Operations
TMM: jlw
1220 North Main Street • Sikeston, Missouri 63801 • (314) 471-5022
94102
Galaxy „ •
:':: cablevision -
-LD COUNTY
ATTORNEY'S Oi RICE
December 19, 1994
VIA FEDERAL EXPRESS
Mr. Bruce T. Barker
Weld County Attorney
915 Tenth St.
Greeley, CO 80632
Dear Mr. Barker:
Enclosed is our 1993 Annual Report. The Auditor's Report
starts on page 15 . As Mr. Webb indicated, the name of our company
will change but the same management and operating staff will remain
in place.
We trust that this information is sufficient. If you find that
other information is needed, please let me know.
Sincerely,
Thomas M. Morris
Vice President
Operations
TMM: jlw
1220 North Main Street • Sikeston, Missouri 63801 • (314) 471-5022
941292
Galaxy Cablevision, L.P. (Galaxy,or the partnership),
is a publicly traded limited partnership that owns and
operates cable television systems in the south central
United States. Galaxy serves approximately 161
communities and unincorporated areas in Arkansas,
Illinois, Kentucky, Louisiana,Tennessee and Texas.
Most of its systems can deliver 54 channels;all can
deliver at least 32 channels. Galaxy operates
approximately 2,650 miles of cable plant,and it
provides service to 56,975 basic customers with about
Corporate 40,000 premium subscriptions. In February, 1994,
Profile Galaxy signed an asset purchase agreement with
Friendship Cable to sell certain cable TV systems that
now serve approximately 34,100 subscribers.
Through its 16.5%equity investment in Charter
Wireless Cable Holdings, L.L.C. (Charter Holdings),
the majority stockholder of CableMaxx, Inc.,Galaxy
holds an indirect 9.7%equity position in CableMaxx,
Inc.,a publicly held wireless cable television company
in Texas. Galaxy expects that its percentage interest
in Charter Holdings and its indirect interest in
CableMaxx will be reduced to approximately 14.6%
and 8.5%, respectively,if certain option leases are
exercised. Galaxy Cablevision Management, L.P.,is •the managing general partner of Galaxy Cablevision, i
L.P. Members of Galaxy's management have been in
the cable television business for more than two
decades. --
I„ l -H
� l
Contents
1. Financial Highlights
2. Letter to Our Unitholders
6. A New Era of Competition
8. Management's Discussion
&Analysis
15. Independent Auditor's
Report
16. Financial Statements
19. Notes to Financial
Statements
24. The Managing General
Partner
•
12 Months Ended December 31 1993 1992 1991 1990
Subscription Services Revenue $19,557,695 $18,033,956 $17,055,911 $15,819,163
Operating Expenses:
System Operations(exclusive of depreciation
and amortization shown separately below) 7,815,508 7,103,663 6,811,486 6,595,156
Selling,general and administrative 5,633 356 5,185,794 5,123,308 5,211,425
Operating Income Before Depreciation and
Amortization $ 6,108,831 $ 5,744,499 $ 5,121,117 $ 4,012,582
Depreciation and Amortization 6,507,632 7,351,197 7,479,195 7,511,129
Financial Operating Loss (398,801) (1,606,698) (2,358,078) (3,498,547)
Highlights Gain on Sales of Cable Television Systems — — 2,895,901 —
Interest Income 145,591 193,215 73,894 —
Interest Expense (1,979,481) (2,152,635) (2,515,363) (2,561,369)
Other Income(Expense) (7,464) (19,907) 31,565 39,283
Net Loss $(2,940,004) $(3,586,025) $(1,872,081) $(6,020,633)
Net Loss per Limited Partnership
Unit $ (1.36) $ (1.66) $ (.87) $ (2.79)
Declared Cash Distributions per Limited
Partnership Unit $ 0 $ 1.05 $ 1.40 $ 1.40
At Year End
Total Assets $26,686,270 $31,429,502 $34,326,100 $40,264,577
Total Liabilities 29,552,853 31,356,081 28,394,835 29,492,588
Partners'Capital (2,866,583) 73,421 5,931,265 10,771,989
Number of Subscribers 56,975 54,900 51,480 54,100
-- _ -- n 60,000
i
f-56,000 - -- . _ Millions
T --_ - _ -7
L_ _
- _140000 _ - - _ - -i6
-
--t so,aoo _ -- / ---I-4
Ill_
__} 20,000 / / 1 ____--f 3
f- 10 000 -� 2 11 to o
90 1 90
fi4,100 '91 $4,012,582 91
51 d80 02 $5,121,117 g2
54900 93 Y $5,]44,489 •93
56,975 $6,108,831
Number of Subscribers Operating Income
Before Depreciation and Amortization
1?ni• , 1 ,
1
Nineteen ninety-three was the seventh year of operation for Galaxy Cablevision, L.P. During the
year,the Partnership took measures that management believed would achieve a higher market
value for its unitholders. Galaxy estimates that its market price is closer to the underlying asset
value of its assets. The Partnership announced the sale of certain cable properties, and
CableMaxx, Inc., in which Galaxy now has a 9.7%indirect interest,completed an initial public
offering of its common stock. Like other cable TV companies, Galaxy also spent considerable time
complying with the new cable TV regulations issued by the Federal Communications Commissions
(FCC) during 1993. Additional regulations have been announced in 1994.
Letter To Our The new regulations restrict cable TV companies from raising basic cable TV rates. During the
Unitholders changing regulatory environment, our employees did an excellent job of telling our subscribers
about the regulations as well as marketing premium offerings and other services. Our subscriber
count increased by 4%during 1993;additionally,the average revenue per cable TV subscriber
rose ($29.14 in 1993,versus $28.26 in 1992).
Results
For the 12 months ended December 31, 1993, Galaxy had revenues of$19.6 million, an increase
of 8%over the $18.0 million in revenues reported in 1992. Our subscribers grew from 54,900 to
56,975 during 1993.
Operating income before depreciation and amortization (or cash flow from operations) is one of
the cable TV industry's accepted measures of financial performance. In 1993,this figure amounted
to $6.1 million, versus $5.7 million in 1992, an increase of 6%. Despite Galaxy's increased
revenues, cash generation has been slowed by the rate freeze imposed by the FCC.
Depreciation and amortization expenses were $6.5 million in 1993,versus $7.4 million in 1992.
This decline was a direct result of the expiration of the five-year depreciation allowance for assets
originally purchased by Galaxy early in the partnership tenure. After depreciation and
amortization expenses,we reported a net loss of$2.9 million in 1993, versus a net loss of$3.6
million in 1992. Included in this figure was a $699,849 amount that reflects Galaxy's
proportionate share of the 1993 net loss of CableMaxx during the four-quarter period ended
December 31, 1993. Galaxy's 1993 loss was equivalent to $1.36 per limited partner unit, versus a
net loss of$1.66 per unit in the previous year.
Proposed Sale of Cable Properties
On January 3, 1994, Galaxy Cablevision, L.P.,announced the signing of two separate letters of
intent to sell certain cable television systems. This advanced Galaxy's previously stated intention to
further maximize value for our unitholders.
Galaxy intends to sell the assets of its systems in Arkansas, Louisiana and northeast Texas,which
rj serve 34,100 subscribers,to Friendship Cable of Texas, Inc., a division of Buford Television, Inc.
On March 23, 1994, Galaxy signed a definitive Asset Purchase Agreement for this transaction.
The Agreement calls for the closing to take place on or before September 30, 1994,for an
aggregate purchase price of$42,625,000.
2 942232: :.:
Galaxy's board of directors believes that the proposed sale is in the best interest of our partnership.
The sale is subject to standard conditions including the approval by 51%of the outstanding Galaxy
units. Galaxy intends to use the proceeds from the sale to reduce long-term debt and to make cash
distributions to unitholders.
In a separate letter in January 1994, Galaxy expressed its intent to sell to Time Warner Cable
Ventures,a division of Time Warner Entertainment, L.P.,the Galaxy cable television systems in the
Austin,Texas, market,which serve about 5,400 subscribers. On March 23, 1994, Galaxy
announced that this proposed transaction had been terminated to allow Time Warner to analyze the
effect of the recent FCC regulations upon the systems.
The initial rounds of bidding have been completed for Galaxy's remaining systems in Kentucky,
Illinois,Tennessee and Texas. The final round of bidding for these properties is expected to be
concluded in May 1994.
CableMaxx Initial Public Offering
On November 19, 1993, CableMaxx, Inc.,sold 3.5 million shares of common stock priced at
$12.00 per share in an initial public offering. Galaxy's 16.5%ownership position in Charter
Wireless Cable Holders, L.L.C. gives its a 9.7%indirect equity holding in CableMaxx. Galaxy
expects that its percentage ownership of Charter Holdings and its indirect interest in CableMaxx will
be reduced to approximately 14.6%and 8.5%, respectively, if CableMaxx's options to purchase
additional wireless operations are exercised and closed.
Since its public offering in November, 1993,the CableMaxx stock has ranged between $8 1/4
and $13 3/4 in price. Galaxy's cost for the Charter Holdings investment was approximately $3
million.
Galaxy Management, Inc. (a company owned by Tommy L. Gleason and Tommy L. Gleason,Jr.),
was the operator of the CableMaxx properties from December 1992 (when the properties were
acquired by Charter) until the time of the CableMaxx stock offering. Galaxy continues to provide
some services to CableMaxx. However, CableMaxx now has its own management group,which
includes two members of the Galaxy management team: Tommy L. Gleason,Jr., president, chief
executive officer and director of CableMaxx;and Ronald L. Voss,director of CableMaxx.
3 941292
FCC Regulation
The new cable TV rate regulations issued by the FCC as a consequence of the Cable Television
Consumer Protection and Competition Act of 1992 became effective on September 1, 1993. The
new rules are extremely restrictive as to rates charged by cable TV operators for basic services and
equipment. Since April 5, 1993, cable operators have not been allowed to raise rates on basic
cable TV services or to pass increased costs onto subscribers. Although most of Galaxy's rates were
not subject to the 1993 regulations or were lower than the 1993 benchmark rate, the company is
still not permitted to increase its basic rates. Meanwhile, costs for programming, labor and other
necessities have risen. The regulations have negatively affected cash flow for the entire cable TV
industry. They are complex, expensive, subjective and burdensome.
Compliance with the FCC's varied new regulations has raised our costs somewhat,and the new
requirements have created many challenges in dealing with customers. Although we were proactive
in informing our customers about the regulations,the newly mandated billing procedures and
retransmission consent still caused them some confusion and inconvenience. Galaxy employees had
to be extensively trained to answer customer inquires. Fortunately, Galaxy has many employees
with broad experience in cable TV. Our well-developed infrastructure also allowed us to bring
capable people into the regulatory area, so we have been able to implement the regulations
effectively while continuing to run our cable TV systems economically.
The Coalition of Small Systems Operators,to which Galaxy belongs, has been actively lobbying
before the FCC and Congress for reconsideration and rate relief. The coalition represents cable
television systems with 1,000 or fewer subscribers. Most of Galaxy's systems fall into this class. The
coalition's intent is to mitigate the effects that these burdensome regulations have on the small
systems. The new regulations do not differentiate between metropolitan systems and systems with
low-density populations and thus have not allowed for the higher inherent costs of the smaller
systems. Small towns do not have access to the many ancillary sources of income and operating
efficiencies that bring economies of scale to metropolitan areas. In 1993, small cable television
operators were granted a stay to allow the FCC to further study the situation and reexamine the
assumptions that it applied to small cable television operators. The stay was lifted in February 1994,
and there will be some administrative relief for small operators.
On February 22, 1994,the FCC announced that it plans to roll back cable TV rates by an average
of 7%, in addition to the 10% rollback implemented in 1993. The new regulations primarily affect
only basic cable TV rates. The FCC has indicated that companies whose basic rates are below the
benchmark levels will not have to cut them further. The new regulations were released March 31,
1994, but Galaxy's management has yet not determined the full impact of these regulations on
Galaxy.
1 4 941292
_
Systems Expenditures
The uncertainty generated by new cable TV regulations and the proposed sales of our cable TV
properties caused us to delay some expenditures in our ongoing capital improvement program.
Galaxy spent$1.2 million to upgrade and maintain its systems in 1993,versus $2.35 million in
1992. An important capital project in 1993 was the installation of a new satellite-based dispatch
system. We are adding fiber optic cable incrementally to increase the capacity of our broadband
network. In the future, we will strive to make cost-effective investments in new technologies that will
benefit our cable TV customers.
Outlook
Because the cash-flow and asset-value focus of publicly held limited partnerships is less familiar to
investors than the earning-per-share focus of publicly held corporations, management believes
Galaxy's units have had difficulty receiving recognition in the marketplace. Additionally,tax laws
affecting publicly traded limited partnerships have changed in recent years,and partnerships have
become less attractive investment vehicles. With two recent events (the initial public offering of
CableMaxx stock and the proposed sale of certain Galaxy cable TV systems),the price of Galaxy's
units have now moved more closely to the level management estimates as the Partnership's
underlying asset value.
Galaxy continues to explore its options for managing the remaining assets of the Partnership. These
options include the sale of some or all of the remaining assets(Galaxy has listed all systems for sale
with an independent broker),the continued operation of the remaining assets under the existing
limited partnership structure,and the conversion of the limited partnership to a corporation.
The members of Galaxy's management team has worked together for more than a decade.
Galaxy's expertise is in small systems. An important key to our success is the quality of our service.
We intend to increase our subscribers in any systems we may retain through active marketing and
attractive ancillary service offerings.
r
Tommy L. Gleason,Jr.
President
Galaxy Cablevision Management, Inc.
General Partner of the Managing General Partner of Galaxy Cablevision, L.P.
March 31, 1994
A Convergence of Technologies The cable TV industry is expected to look quite
different in several years. Consolidation in the
The technologies of video,telecommunications, industry will continue. Cable TV operators will
and computers are rapidly converging. be expected to deliver a wide spectrum of
Mergers, partnerships and alliances among entertainment and information services.
industry players are bringing together the Systems will eventually all be addressable,
technical skills, management capabilities and capable of ordering pay-per-view programming
asset bases of several industries. on demand. Customers will have more choices
about what to buy. They will also be able to
A New Era The cable TV industry has a dynamic future. block programming they don't want. Packages
of Competition The increased use of fiber optics is quickly offered to cable TV viewers will be much more
expanding its capabilities. The reliability of specifically targeted to consumer interests and
cable TV systems and their signal quality have convenience.
already improved markedly with the
deployment of fiber optic cable. This Future offerings for cable TV subscribers will
technology also provides substantially greater probably include video-on-demand, high
channel capacity. The cost of fiber optic cable, definition TV,video games, home banking,
which can carry vast amounts of information, home messaging, expanded on-line video
continues to decline. shopping, high-speed data networking,
interactive educational programming, electronic
The cable TV industry is a central factor in the newspapers and a variety of telephone
digital-based, high-speed, high-capacity services.
information superhighway,which will permit
interactive communication. In the future,cable The investment by cable TV companies in fiber
TV consumers will receive a wider array of TV optic technology gives them the technical
offerings because of newer technologies, a capability to enter the telephone business.
changed regulatory climate and increasingly Small towns that are close to each other can be
sophisticated public demands for entertainment, linked by fiber. This cost-effective technology
information and communications. Digital enables cable TV systems to introduce two-way
compression technology,which greatly communication. It will often be more efficient
increases the capacity available to the end for telephone companies to use a cable
user, is becoming a reality. The expanded company's network in a small town than to build
channel capacity will enable a cable TV separate plant. The degree to which cable TV
operator to offer as many as 500 channels and companies move into telecommunications will
to provide significantly more selective TV depend on regulation changes in that area.
viewing.
Galaxy's Service to Subscribers
The cable TV industry has historically been
resourceful in realizing revenue opportunities. Galaxy specializes in providing cable TV
Cable TV companies' sizable customer base services to small communities. Part of Galaxy's
provides them with a substantial potential for success in rural areas has come from using a
revenue and cash flow growth. The customer clustered approach. Galaxy purchases systems
base is capable of being leveraged with many between current franchise territories and links
products available on the information them into one service area. Once Galaxy has
superhighway. There is an increasing emphasis enough systems in a given geographic region, it
on ancillary sources of income such as can achieve further efficiencies by eliminating
advertising, home shopping networks and multiple head-ends and by upgrading the
pay-per-view channels. These services are less systems to provide enhanced services.
regulated under federal laws and can help to
offset inflationary costs.
One of the most important aspects of the new path on microwave frequencies. Subscribers
cable TV regulation is customer service. capture the signals with small rooftop antennas
Galaxy prides itself on providing dependable, on homes or businesses.
timely and courteous service that is significantly
better than the industry standard. A customer A wireless cable TV system is ideal for reaching
service manager is available in each regional homes in sparsely populated areas. Systems
office to take care of inquiries and problems. typically cover broad geographic territories.
Galaxy's customers are systematically Subscribers receive the same programming that
contacted by customer service representatives they would get from traditional cable
to determine whether the initial installation went companies.
well,to see whether the billing information is
correct and understandable and to ascertain A wireless cable TV system generally has a
whether customers are satisfied with Galaxy's more economical fixed-cost structure than a
service. The company takes care of customer's coaxial cable system, because it does not
requests quickly. It has an excellent subscriber require the complex distribution system of
retention rate. coaxial cable and amplifiers. Thus,it has a
lower break-even subscriber level. This allows
To improve services and gain efficiencies, wireless cable rates to be set lower than
Galaxy further consolidated its service centers coaxial cable rates.
in 1993. All of its Texas, Louisiana and
Arkansas systems are now served by one CableMaxx has operated a wireless cable TV
center, and the remaining systems are served by system in Austin,Texas, since 1992. It
a second center. The center consolidation has launched its San Antonio,Texas, system in
allowed Galaxy to upgrade its service by March 1993. As of December 31, 1993,
extending its hours and more effectively training CableMaxx was providing service to 18,014
its staff. subscribers in its Austin and San Antonio
systems.
In 1993, Galaxy installed a satellite-based
dispatch system. The company has installed CableMaxx focuses its marketing on
small satellite transmission units in its trucks,so households that do not have access to hardwire
that messages can be sent between dispatchers cable, but it also offers service to people who
and technicians. By monitoring the vehicles, have access to cable but are currently
dispatchers can tell subscribers when a nonsubscribers and to those who already
technician will arrive. Technicians can also be purchase cable service from another provider.
rerouted to deal with emergency problems. CableMaxx has addressable technology in its
They have access to central office information systems, and it offers a variety of pay-per-view
at the front line,which lets them provide better channels.
service to their customers. The dispatch system
creates many efficiencies in labor and the CableMaxx realized $38 million in net
vehicle use. It allows Galaxy to serve its proceeds from the November 1993 initial
customers effectively with fewer offices in public equity offering. CableMaxx has options
broader geographic areas. This makes a big to purchase the channel leases of the
difference in running a rural cable TV business. Temple/Killeen,Texas,wireless cable TV
system. The company also has options to
CableMaxx acquire other wireless cable TV licenses in
Waco, Sherman/Denison and other Texas
markets.
CableMaxx, Inc., develops, owns and operates
wireless cable television systems. A wireless
system is an alternative to a traditional coaxial
cable system. It transmits signals from a
centrally located tower along a line-of-sight-
... mm s�y9
7 292
Results of Operations
The following table sets forth the percentage relationship of selected income statement items to
subscription service revenues for the years ended December 31, 1993, 1992 and 1991:
Years Ended December 31,
1993 1992 1991
Subscription Services Revenue 100% 100% 100%
Operating Expenses (68.8) (68.2) (70.0)
(exclusive of depreciation and amortization)
r Operating Income 31.2 31.8 30.0
Managements (before depreciation and amortization)
Discussion and Depreciation (31.0) (38.6) (41.5)
Analysis of Amortization (2.3) (2.2) (2.4)
Financial
Operating Loss (2.1) (9.0) (13.9)
Condition and Other Income(expense):
Results of Gains on sale of cable television systems,net 17.0
Operations Interest Income .7 1.1 .4
Equity in loss of Investee (3.5)
Interest Expense (10.1) (11.9) (14.7)
Other(expense)income,net (.1) .2
Net Loss (15.0)% (19.9)% (11.0)%
Operating income (before depreciation and amortization) should not be construed as an alternative
to operating income or cash flows from operating activities as shown in the financial statements
included herein and should not be interpreted as the only measure of Galaxy's operating
performance.
Year Ended December 31, 1993 Compared to Year Ended December 31, 1992.
The Partnership generated subscription services revenue of$19,557,695 in 1993 versus
$18,033,956 in 1992, an increase of$1,523,739 or 8.4%. The increase in revenue was due
primarily to the addition of over 2,000 subscribers within existing systems and an increase in
average monthly revenue per subscriber from $28.26 in 1992 to $29.14 in 1993. The higher
average subscriber revenue reflects an increase in premium channel subscriptions in 1993 and
basic rate increases in some systems during the first four months of 1993. The rate regulations
adopted by the FCC in April 1993 did not have a material impact on the Partnership's revenue
during 1993 primarily due to exemptions for operations of systems with under 1,000 subscribers.
However, additional rate regulations issued in 1994 may have an impact on the Partnership's cable
television rates. Due to such regulatory developments,as well as continued technological advances
and other factors,there can be no assurance that the Partnership will be able to increase its cable
television rates in the future,as it has done from time to time in the past.
The Partnership had operating expenses before depreciation and amortization of$13,448,864 in
1993 versus $12,289,457 in 1992,an increase of$1,159,407 or 9.4%. The increase in operating
expenses (exclusive of depreciation and amortization)was due primarily to the addition of new
subscribers within existing systems and,to a lesser extent, an increase in administrative expenses due
to changes in government regulation. Operating expenses (exclusive of depreciation and
amortization) as a percentage of revenue increased to 68.8%in 1993 from 68.2%in 1992. This
increase was due principally to an increase of$595,530 in fees paid to programmers (from
$3,530,862 in 1992 to $4,126,392 in 1993),which effectively reduced the Partnership's margin
8
on its service revenue. Selling, general and administrative expenses as a percent of revenue
remained relatively constant in 1993 and 1992. The Partnership shares office space and
administrative and certain operations personnel with other cable television companies affiliated with
the General Partners, including CableMaxx, Inc. Expenses are allocated directly when they are
clearly attributable to a specific party. The remaining expenses are allocated pro rata based on the
respective number of subscribers of each party. Management believes that this allocation method is
reasonable and that the Partnership's expenses would have been slightly higher on a stand-alone
basis. Such allocated expenses for personnel and other expenses were $763,750 for 1993 and
$323,022 for 1992. The increase in allocated expenses was due to the inclusion of certain
administrative costs associated with CableMaxx which were not categorized as a related-party
expense until December 1992.
Depreciation and amortization was $6,507,632 in 1993 versus $7,351,197 in 1992, a decrease of
$843,565 or 11.5%. The decline in depreciation was a direct result of the maturity of the five-year
assets originally purchased by the Partnership in 1987, offset slightly by additional depreciation on
purchased equipment and system upgrades.
The Partnership had an operating loss of$398,801 in 1993 as compared to an operating loss of
$1,606,698 in 1992, a decrease of $1,207,897 or 75.2%, primarily as a result of the decline in
depreciation and amortization. The Partnership reported a net loss of$2,940,004 (or$1.36 per
Unit) for 1993, as compared to a net loss of$3,586,025 (or$1.66 per Unit)for 1992, a decrease
in net loss of$646,021,or 18.0%
Interest expense was $1,979,481 in 1993 versus $2,152,635 in 1992, a decrease of$173,154 or
8.0%. The decrease in interest expense was due to lower interest rates on borrowings and a
reduction in the principal balance of the Partnership's revolving credit and term loan from
$26,420,000 as of December 31, 1992 to $24,961,250 as of December 31, 1993.
The equity in loss of investee in 1993 reflects the Partnership's proportionate share of a full year of
net loss of CableMaxx, Inc. ("CableMaxx"),the majority-owned subsidiary of Charter Wireless
Holdings, L.L.C. ("Charter Holdings") in which Galaxy owns an equity interest. CableMaxx first
commenced operation in December 1992. As of December 31, 1992,the Partnership owned a
14%equity interest in Charter Holdings. On February 16, 1993,the Partnership raised its
ownership interest in Charter Holdings to approximately 16.5% by purchasing an additional 2.5%
equity interest for $375,000. In November 1993, CableMaxx completed an initial public offering,
which generated an estimated $38,200,000 in net proceeds to CableMaxx. The effect of the
offering was to dilute the Partnership's indirect interest in CableMaxx to approximately 9.7%. The
Partnership uses the equity method of accounting for its investment in Charter Holdings.
At the time of the original acquisition of the CableMaxx operations in December 1992, CableMaxx
executed agreements ("Option Agreements") with the sellers of such operations("Sellers")whereby
it acquired options (the "Options") to purchase wireless cable systems in Amarillo,Athens, Lubbock,
Sherman-Dennison,Temple-Killeen,and Waco,Texas. In accordance with the Option Agreements
and a separate and concurrently executed agreement with Sellers,the Partnership assumed the
responsibility of maintaining FCC licenses, channel leases,tower leases, maintenance contracts,and
related insurance contracts for the systems subject to the Options during the option period. Under
the Option Agreements,the Partnership will be reimbursed for such expenses if the Options are
44. 9 9412iin
exercised and close. Such expenses totaled $232,892 as of December 31, 1993. If the Options
are exercised and close, Galaxy's ownership interest in Charter Holdings will be reduced from
16.5%to approximately 14.6%and its indirect interest in CableMaxx will be reduced from 9.7%to
approximately 8.5%.
Year Ended December 31, 1992 Compared to Year Ended December 31, 1991.
The Partnership generated subscription services revenue of$18,033,956 in 1992 versus
$17,055,911 in 1991, an increase of$978,045 or 5.7%. The increase in revenue was due
primarily to revenue from new subscribers within existing systems and from higher average monthly
revenue per existing subscriber. These higher averages were achieved mainly through basic service
rate increases coordinated with channel additions, system upgrades and improvements,and
increased subscriptions of premium channels. Marketing efforts concentrated on increasing the
market penetration in the existing regions served by Galaxy.
The Partnership had operating expenses before depreciation and amortization of$12,289,457 in
1992 versus$11,934,794 in 1991, an increase of$354,663 or 3.0%. The increase in operating
expenses (exclusive of depreciation and amortization)was due primarily to an increase in
programming,advertising, professional services and employee health insurance expenses. This
increase was partially offset by decreases in travel expenses. Operating expenses(exclusive of
depreciation and amortization) as a percentage of revenues decreased to 68.2%in 1992 from
70.0% in 1991. This decrease was primarily because rate increases and successful marketing
programs caused revenues to increase at a greater rate than expenses.
Depreciation and amortization was $7,351,197 in 1992 versus$7,479,195 in 1991, a decrease of
$127,998 or 1.7%. The annual decrease in depreciation and amortization due to the aging of the
systems was partially offset by additional depreciation and amortization related to the new capital
expenditures for upgrades to existing systems and purchases of equipment.
The Partnership had an operating loss of$1,606,698 in 1992 versus an operating loss of
$2,358,078 in 1991,a decrease of$751,380 or 32.0%. Because total operating expenses as a
percentage of revenues decreased to 109%in 1992 from 113.9%in 1991, loss from operations as
a percentage of revenues decreased by 4.9%to 9.0%in 1992.
Interest expense was $2,152,635 in 1992 versus $2,515,363 in 1991,a decrease of$362,728
or 14.4%. The decrease in interest expense was primarily due to lower interest rates. This decrease
was partially offset by an increase in the principal balance of the Partnership's revolving credit and
term loan which increased to $26,420,000 as of December 31, 1993 from $24,812,500 as of
December 31, 1991.
The Partnership had a $2,895,901 gain on sales of cable systems in 1991 and made no sales of
cable systems in 1992. The 1991 net gain resulted from the $2,968,686 gain on the sale by the
Partnership of the Waxahachie Region cable systems in June 1991 and the $72,785 loss on the
sale by the Partnership of the Porterville system in the Louisiana-Arkansas Region in May 1991.
e 10 941292
Subscriber Activity and Relations
The following table illustrates subscriber activity in 1991, 1992 and 1993:
Subscribers
Number of Subscriber on December 31,1990 54,100
Subscribers Lost through Systems Sold in 1991 (4,980)
Additional Subscribers in Existing Systems in 1991 2,360
Number of Subscribers on December 31,1991 51,480
Additional Subscribers from Systems Purchased in 1992 420
Additional Subscribers in Existing Systems in 1992 3,000
Number of Subscribers on December 31,1992 54,900
Additional Subscriber in Existing Systems in 1993 ,075
Number of Subscribers on December 31,1993 56,975
As the preceding table indicates,the Partnership gained approximately 2,360, 3,000 and 2,075
new subscribers in its existing systems during 1991, 1992 and 1993, respectively.
From 1991 through 1993,the Partnership's systems received basic rate increases and service and
rate realignments. Due to recent regulatory developments, as well as continued technological
advances and other factors,there can be no assurance that the Partnership will be able to increase
its rates in the future, as it has done from time to time in the past.
Liquidity and Capital Resources
As of December 31, 1993,the Partnership had $475,345 in cash deposited primarily in
noninterest-bearing accounts.
Accounts payable and accrued liabilities decreased from $3,182,708 at December 31, 1992 to
$2,921,253 at December 31, 1993. Subscriber receivables increased from $188,840 as of
December 31, 1992 to $201,849 as of December 31, 1993. Management does not believe the
changes in these items has had a material effect on the Partnership's cash flow.
As of December 31, 1993,the Partnership's debt consisted of: a note payable of$226,071 to Star
Cable T.V., Inc.,which has been calculated to have a present value of$210,921;a note payable of
$114,000 to Jim Parks in connection with the acquisition of Glenmora cable system,which is
payable in seven installments with the balance due June 23, 2000;indebtedness in the amount of
$1,345,429 in connection with building construction costs and the acquisition of vehicles and
equipment;and total borrowings of$24,961,250 under a Revolving Credit and Term Loan
Agreement("Loan Agreement") with Fleet National Bank. The loan proceeds, along with cash flow
from operations,were used primarily to fund $1,676,575 in upgrades of existing systems and
purchases of other property and equipment in 1993. The maximum credit commitment available
under the Loan Agreement was $25,158,500 as of December 31, 1993. The applicable interest
rate under the Loan Agreement was 6.4%per annum at December 31, 1993.
9412
,
: # _
On August 27, 1993, Fleet National Bank amended the amortization schedule under the Loan
Agreement. The revised amortization schedule is as follows:
Year New Schedule Old Schedule Difference
1994 $1,675,000 $2,675,000 $1,000,000
1995 2,500,000 3,920,000 1,420,000
1996 3,700,000 4,545,000 845,000
1997 4,900,000 5,600,000 700,000
1998 12,186,250 8,221,250 (3,965,000)
$ 0
The Partnership Agreement authorizes the Partnership to borrow a maximum of 50%of the greater
of the aggregate cost or fair market value of the Partnership's assets. Within these limits, the
Partnership may borrow to finance working capital needs, capital expenditures and acquisitions of
cable television systems. Borrowings on any individual cable television property may be less than,
or may exceed, 50%of its cost or fair market value. The fair market value of the Partnership's assets
could be less than the cost of such assets and thus borrowings could be higher that 50%of the then
current fair market value of such assets. Partnership borrowings may be secured by mortgages or
other interests on properties held by the Partnership. The Partnership Agreement also authorizes the
issurance of notes, debentures and other debt securities in connection with the borrowings by the
Partnership.
In 1993, the Partnership announced that its cable television systems were being listed for sale. The
proceeds from any sale of cable systems will be used to reduce long-term debt and make
distributions to Unitholders as the Managing General Partner determines. Pursuant to a May 1992
amendment to Galaxy's Loan Agreement,distributions to Unitholders are limited to $1,000,000 per
year. Management anticipates that if the debt under the Loan Agreement were reduced, the amount
of permitted distributions would be increased. However, there can be no assurance that any of the
Partnership's systems will be sold. Prior to the completion of any sale and, in the event any of the
systems are not sold,the liquidity needs of the Partnership in 1994 are expected to be satisfied by
net cash flow from operations and additional borrowings, if necessary. If Galaxy is unable to
successfully negotiate additional borrowings,Galaxy may be forced to reduce capital expenditures
in order to maintain liquidity for operating needs of remaining systems. Galaxy cannot predict the
amount of additional borrowings, if any, that would be obtained. Because of the material change in
the regulatory climate for cable television,the Managing General Partner does not currently expect
Fleet National Bank to change its position limiting distributions to Unitholders absent a reduction of
the Partnership's debt.
The Partnership plans to spend up to an aggregate of approximately $1,750,000 in 1994 to
upgrade and add subscribers in its existing cable television systems and to purchase vehicles and
equipment. The Partnership does not make material contractual upgrade commitments until sufficient
funds become available. Thus,the actual amount of capital expenditures may be reduced if net
cash flow from operations and borrowings are not sufficient to cover projected capital expenditures.
Approximately $1,209,184 was expended in 1993 for system upgrades, channel additions and the
addition of new subscribers and approximately $467,391 was expended for purchases of and
improvements to the Partnership's offices, computers, furniture and equipment,and vehicles.
The costs of materials and supplies, programming, salaries and benefits, and general and
administrative expenses have generally increased due to inflation. Although the Partnership is
unable to determine precisely the effects of inflation on its operations,the Partnership has attempted
to offset any such effects by increasing the number of subscribers of basic, premium, and other cable
television services.
' R tit 12 292
As of December 31, 1993,the Partnership had invested $3,030,175 (before deducting Galaxy's
portion of the investee's net loss and exclusive of any distributions with respect to such investment) in
Charter Holdings,which owns a majority of CableMaxx, Inc.,the wireless cable system operator.
Under the terms of the governing documents of Charter Holdings, Galaxy's ability to transfer or
liquidate this investment is limited.
Rate Regulation
Under the FCC's revised benchmark regulations adopted in February 1994, Galaxy may be
required to reduce basic rates in certain of its cable systems by seven percent(7%) (in addition to
the required ten percent(10%) reduction adopted in 1993) from September 1992 levels, or to the
new benchmark,whichever is less. The benchmark has not yet been established. Cable operators,
however, may adjust their regulated rates to reflect external costs and inflation. The FCC has also
extablished interim rules for determining rates on an alternative cost-of-service basis. Final
cost-of-service standards have not yet been issued. Although these rate regulation rules have been
appealed,the Partnership is unable to predict whether the rules will be upheld on appeal. Galaxy
currently anticipates adjusting its rate structure in many of the affected systems in which the rates are
not at or below the benchmark to reflect Galaxy's cost-of-service for such systems,which
management believes will minimize the effects of the regulation. The Partnership's ability to minimize
the effects of the rate regulation through cost-of-service rates, however,will depend upon the final
cost-of-service standards to be adopted by the FCC and the capacity of the FCC to efficiently
process cost-of-service showings submitted by cable television operators. Management also intends
to focus on increasing premium programming subscriptions in existing systems, as such programming
is not subject to the recent rate regulation. Due to restrictions the FCC has placed on "a la carte"
pricing packages, Galaxy may also realign the rate and service structure in certain systems,which
could decrease revenues in those systems.
Based upon currently available information, management does not believe the recent rate regulation
will have a material impact on the Partnership's financial condition or results of operations. Because
the FCC's final cost-of-service and benchmark regulations have not been issued, however, it is
difficult to determine the actual effect of the rate regulation. Thus,there can be no assurance that
the Partnership will be able to increase its cable television rates in the future.
Possible Sale of Systems
In 1993, Galaxy announced that certain of its cable television systems were being listed for sale
and retained Waller Capital Corporation ("Waller") to serve as the Partnership's broker in
connection with the sale of all of its cable systems. Waller has solicited offers with respect to all of
Galaxy's systems. The Partnership will pay Waller a brokerage fee based on the total purchase
price of any completed sale. In the event all of the transactions described below close, such
brokerage fee would be approximately $815,000.
In March 1994,Galaxy entered into a definitive Asset Purchase Agreement(effective February 21,
1994) to sell all of the Northeast Texas and Arkansas-Louisiana Region systems,which consist of
approximately 34,100 basic subscribers (approximately 60%of the Partnership's total basic
subscribers),to Friendship Cable of Texas, Inc.,an affiliate of Buford Television, Inc.,for a purchase
price of$42,625,000,or approximately $1,250 per basic subscriber(subject to adjustment). The
purchaser has deposited $1,000,000 into an escrow account,which amount may be retained by
Galaxy if the transaction does not close by reason of default by the other party. The closing is
' 13, 9#14
subject to standard conditions, including the approval of the holders of a majority of the
Partnership's Units. Galaxy expects to call a special meeting of Unitholders and to solicit proxies for
approval of the transaction. If Unitholder approval is obtained and all other conditions are satisfied,
Galaxy anticipates the sale will close by September 30, 1994.
In December 1993, Galaxy signed a letter of intent with Time Warner Cable Ventures,a division of
Time Warner Entertainment, L.P., regarding the sale of all of Galaxy's cable systems in the Central
Texas Region (excluding the Cameron,Texas area),which consist of approximately 5,400 basic
subscribers (approximately 9%of the Partnership's total basic subscribers), for a purchase price of
$8,000,000, or approximately $1,500 per basic subscriber(subject to adjustment). No definitive
agreement has been signed and negotiations have been terminated without obligation so that Time
Warner may analyze the effect of the FCC rate regulation on those systems.
Galaxy has also received expressions of interest to purchase Galaxy's Kentucky Region systems and
the Cameron, Texas area systems, including an offer to purchase both systems from Galaxy
Management, Inc., a corporation owned by Tommy L. Gleason and Tommy L. Gleason,Jr. Galaxy
expects to receive final offers on both systems in April 1994. In the management accepts any offers
to purchase such systems,the sale of the systems may be subject to Unitholder approval,among
other conditions.
The Partnership intends to use the net proceeds from any sales to reduce long-term debt and to make
distributions to Unitholders,as determined by the Managing General Partner. The completion of all
of the transactions described above would result in the sale of all of Galaxy's cable television
systems. However, no assurance can be given that any of such transactions will be completed. In
the event all of the systems are sold, management may consider a liquidation of the remaining assets
of the Partnership, which would include Galaxy's investment in Charter Wireless Holdings, L.L.C. and
the note receivable from Harron Communications Corporation. If not all of the systems are sold,
management may consider other alternatives, including the conversion of the Partnership to a
corporation.
Future Accounting Changes
In November 1992,the Financial Accounting Standards Board (FASB") issued SFAS No. 112
(Employer's Accounting for Postemployment Benefits). As the Partnership does not provide
postemployment benefits to its employees, the Statement will not have any effect on the Partnership's
financial statements.
In December 1991,the FASB issued SFAS No. 107(Disclosures about Fair Value of Financial
Instruments). The Statement is effective for fiscal years ending after December 15, 1992, except for
entities with less than $150 million in total assets in the current balance sheet. For those entities,the
effective date is for fiscal years ending December 15, 1995. This Statement will not change the
requirements for recognition, measurement or classification of financial instruments in the
Partnership's financial statements.
Tg 14
94
Galaxy Cablevision, L.P.:
We have audited the accompanying balance sheets of Galaxy Cablevision, L.P.
(the "Partnership") as of December 31, 1993 and 1992, and the related statements of
operations, partners' capital (deficiency in assets) and cash flows for each of the three years in
the period ended December 31, 1993. Our audits also included the financial statement
schedules listed in the Index at Item 8. These financial statements and financial statement
schedules are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements and financial statement schedules based on
Independent our audits.
Auditor's Report 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, such financial statements present fairly, in all material respects,the financial
position of Galaxy Cablevision, L.P. at December 31, 1993 and 1992,and the results of its
operations and its cash Flows for each of the three years in the period ended December 31,
1993 in conformity with generally accepted accounting principles. Also, in our opinion, such
financial statement schedules,when considered in relation to the basic financial statements
taken as a whole, present fairly in all material respects the information set forth therein.
DELOITTE&TOUCHE
Saint Louis, Missouri
January 28, 1994 (except for Note 10, (paragraph 5) and Note 12 (paragraph 3),as to
which the dates are February 21 and 22, 1994, respectively)
y,;- _ 15 944292
Galaxy Cablevision,L.P.
Assets December 31,
Property and Equipment -------Notes 1993 __ 1992
Land and Land Improvements 1,3,10
Buildings and Building Improvements $ 124,000 $ 124,000
Cable Television Systems 1,026,103 1,027,267
Vehicles and Equipment 52,674,070 51,524,585
Total _ 4,306,242 _ 3,988,509
Less Accumulated Depreciation and Amortization 58,130,415 56,664,361
Balance Sheets Property and Equipment-Net 39,275,974 33,394,828
Cash 18,854,441 23,269,533
Subscriber Receivables 475,345 695,665
Prepaid Expenses and Other Assets 201,849 188,840 428
Due from Affiliates-Net 818,568 621,428
Investment in Affiliate 583,549 76,323
4 2,330,326 2,714,496
Notes Receivable 10
Franchise Costs-Net 1,574,806 1,587,710
1,2,3 1,594,567 1,928,395
Organization Costs-Net 1,2,7 7
Loan Acquistion Costs-Net 113,572 148,091
Total Assets 1'2 _ 139,247 199,021
$26,686,270 $31,429,502
Liabilities and Partners' Capital
(Deficiency in Assets)
Liabilities: ——-------._—.—,—
Notes Payable 5
Accounts Payable $26,631,600 $28,090,493
Accrued Expenses and Other Liabilities 1,337,444 1,608,923
Distributions to Partners 1,583,809 1,573,785
Total Liabilities 9 _ _ 82,880
29,552,853 31,356,081_
Partners'Capital(Deficiency in Assets): 1
General Partners
Limited Partners,2,150,000 Partnership Units issued, (367,405) (338,005)
2,142,000 Outstanding in 1993 and 1992
Repurchased Limited Partnership Units,8,000 2,676,996 5,587,600
in 1993 and 1992
Total Limited Partners (140,628) (140,628)
Excess of Purchase Price Over Cost of Assets 2,536,368 5,446,972
Acquired from Entities Under Common Control
Total Partners'Capital(Deficiency in Assets) _(5,035,546) (5,035,546)
(2,866,583) 73,421
Total Liabilities and Partners'Capital(Deficiency in Assets)
$26,686,270 $31,429,502
See accompanying notes to financial statements.
16 944
Galaxy Cablevision,L.P. For Years Ended December 31,
Notes 1993 1992 1991
Subscription Services Revenue 1 $19,557,695 $18,033,956 $17,055,911
Operating Expenses:
System Operations(exclusive of depreciation g15,508 7,103,663 6,811,486
and amortization shown separately below) 7,815,508
Selling,General and Administrative:
Related Party 6,7 1,946,826 1,393,055 1,324,925
Other 3,686,530 3,792,739 3,798,383
5,633,356 _ 5,185,794 5,123,308
Statements of Depreciation Expense 6,066,978 6,948,581 7,078,547
Operations Amortization Expense 440,654 402,616 _ 400,648
Total Operating Expenses 19,956,496 19,640,654 19,413,989
Operating Loss (398,801) (1,606,698) (2,358,078)
Gains on Sales of Cable Television Systems,Net 10 2,895,901
Equity in Loss of Investee 4 (699,849)
Interest Income 145,591 193,215 73,894
Interest Expense (1,979,481) (2,152,635) (2,515,363)
Other(Expense)Income,Net (7,464) (19,907) 31,565
Net Loss $(2,940,004) $(3,586,025) $(1,872,081)
Allocation of Net Loss 1
General Partners $ (29,400) $ (35,860 $ (18,721)
Limited Partners $(2,910,604) $(3,550,165) $(1,853,360)
Net Loss Per Limited Partnership Unit 1 $ (1.36) $ (1.66) $ (.87)
Weighted Average Number of
Limited Partnership Units Outstanding 1 2,142,000 2,142,000_ _ 2,140,970
See accompanying notes to financial statements.
Excess
Purchase Price
Over Cost of
Statements Purchased or Assets
Galaxy Cablevision,L.P. Reissued Acquired From
of Partners Limited Entities Under
Capital For Years Ended General Limited Partnership Common
December 31,1993,1992 and 1991 Partners Partners Units Control Total
(Deficiency in Balance at December 31,1990 $(230,428) $16,237,625 $(199,662) $(5,035,546) $10,771,989
Assets) (1,872,081)
Net loss for 1991 (18,721) (1,853,360)
Issuance of 4,000 limited partnership units 59,034 59,034
Distributions to partners(Note 9) _ (30,277) (2,997,400) (3,027,677)
Balance at December 31,1991 (279,426) 11,386,865 (140,628) (5,035,546) 5,931,265
Net loss for 1992 (35,860) (3,550,165) (3,586,025)
Distributions to partners(Note 9) (22,719) (2,249,100) _ (2,271,819)
Balance at December 31,1992 (338,005) 5,587,600 (140,628) (5,035,546) 73,421
Net loss for 1993 (29,400) (2,910,604) (2,940,004)
Balance at December 31,1993 $(367,405) $(2,676,996) $(140,628) $(5,035,546) $(2,866,583)
See accompanying notes to financial statements,
ve fr Ft
17 16SIFs
Galaxy Cablevision,L.P. For the Years Ended December 31,
1993 1992 1991
Cash Rows From Operating Activities:
Net Loss $(2,940,004) $(3,586,025) $(1,872,081)
Adjustments to reconcile net loss to net cash flow
provided by operating activities:
Depreciation and amortization 6,507,632 7,351,197 7,479,195
Gain on sale of cable systems (2,895,901)
(Gain)loss on sale of property,plant and equipment,net 19,991 90 (25,846)
Equity in loss of investee 699,849
Statements of Net change in assets and liabilities:
Cash Flows Trade accounts receivable (13,009) (42,523) 41,845
Prepaid expenses and other assets (209,675) (246,429) 83,467
Due from affiliates,net (507,226) 69,692 (618,476)
Accounts payable (271,479) 684,038 137,406
Accrued expenses and other liabilities 10,024 616,427 (272,612)
Net Cash provided by operating activities 3,296,103 4,846,377 2,056,997
Cash Flows From Investing Activities:
Acquisitions of cable systems: •
Property and equipment (293,279)
Franchises (97,759)
Investment in Affiliate (375,000) (714,496)
Net distribution from affiliate 59,321
Upgrade of cable television systems (1,209,184) (2,346,160) (1,825,495)
Purchases of property and equipment (467,391) (561,578) (782,153)
Proceeds from sales of other assets 4,700 108,010
Proceeds from sales of cable systems 5,995,928
Escrow deposit (2,000,000)
Proceeds from note receivable repayments 12,904 12,290
Net Cash(used)provided by investing activities (1,974,650) (4,000,982) 1,496,290
Cash Flows From Financing Activities:
Proceeds from borrowings 805,561 2,957,440 5,607,994
Repayments of borrowings (2,264,454) (693,677) (6,129,408)
Payment of distributions (82,880) (2,998,801) (2,996,000)
Net Cash flow(used)provided by financing activities (1,541,773) (735,038) (3,517,414)
(Decrease)Increase in Cash (220,320) 110,357 35,873
Cash at Beginning of the Period 695,665 585,308 549,435
Cash at End of the Period $ 475,345 $ 695,665 $ 585,308
Supplemental Information:
Cash paid for interest $1,799,356 $2,153,832 $2,681,255
Noncash Investing and Financing Activities:
Issuance of limited partnership units in connection with
the upgrade of cable systems $ 59,034
Note receivable for the sale of cable systems $1,600,000
Initial capital contribution for investment in affiliate
funded with escrow deposit $2,000,000
Note payable for the acquisition of cable systems $ 124,000
See accompanying notes to financial statements.
18
Galaxy Cablevision,L.P. Property and Equipment
For the years ended December 31, 1993, 1992,and 1991. Property and equipment is stated on the basis of cost.
Property and equipment purchased from entities Formerly
1.Summary of Significant Accounting operated by affiliates of the General Partners(the"Galaxy
Policies and Other Information. Companies")is recorded at the adjusted historical cost of
Formation of Partnership and Basis of Presentation the affiliate. The excess of the purchase price of these
Galaxy Cablevision,L.P.("Galaxy"or the"Partnership")is a assets over the adjusted historical cost basis of such assets
limited partnership formed under the laws of the State of has been recorded as a distribution to the Galaxy
Delaware. The General Partners of the Partnership are Companies for financial statement purposes,as such
Tommy L.Gleason,Jr.and Galaxy Cablevision entities are under the common control of the General
Management,L.P.(the"General Partners"). The purpose of Partners of Galaxy Cablevision,L.P.
Notes to the Partnership is to develop and operate cable television
("CATV")systems. The Partnership acquired its initial CATV Depreciation is provided on a straight-line basis over the
Financial systems in a purchase transaction on March 19, 1987,and following estimated useful lives,beginning when the assets
Statements began operations of those systems on that date. are placed in service:
Cable television systems
The capitalization of the Partnership is set forth in the and equipment 5 to 10 years
accompanying Statements of Partners'Capital(Deficiency Buildings and
in Assets). On March 19, 1987,the Partnership sold improvements 15 years
2,150,000 Units of Limited Partnership Interests("Units")at Vehicles 3 to 5 years
$20 per Unit representing an aggregate gross sales price
of$43,000,000. Net proceeds to the Partnership(net of Investment in Affiliate
underwriting commissions,legal,accounting and other At December 31, 1992,the investment is carried at cost,
syndication costs)were$39,248,154. No limited partner which includes the Partnership's initial capital contribution
is obligated to make any additional contribution to and related acquisition costs. Subsequent to December 31,
partnership capital. The General Partners purchased their 1992,the Partnership increased its investment and,
interests in the Partnership by contributing$2,000 to accordingly,during 1993 accounted for this investment
partnership capital. using the equity method of accounting.
Distributions of Cash Flow from Operations Franchise Costs
Distributions,if any,of cash flow from operations,as defined Franchise costs are amortized on a straight-line basis over
in the Galaxy Cablevision,L.P.Partnership Agreement(the the remaining terms of the franchises which ranged from
"Partnership Agreement"),are allocated 1%to the General ten to fifteen years at acquisition.
Partners and 99%to the Unitholders and are paid to
Unitholders of record. Organization Costs
Organization costs are amortized on a straight-line basis
Distributions on Sale or Refinancing of Cable over ten years.
Television Systems
Cash distributions upon sale or refinancing of a cable Loan Acquisition Costs
television system(other than upon dissolution)are made as Loan acquisition costs ore amortized on a straight-line basis
follows: first,99%to all Unitholders until they have over the life of the loan.
received an amount equal to the capital contribution
attributable to the Units;second,to all Unitholders until they Subscription Services Revenues
have received(together with all previous distributions of Subscription services revenue is recorded in the month the
cash flow from operations)an amount equal to at least a service is provided.
10%per annum return,calculated on a cumulative and
noncompounded basis on the adjusted capital contribution Net Loss per Limited Partnership Unit
attributable to the Units;and the remainder,60%to all Net loss per limited partnership unit is computed based on
Unitholders and 40%to the General Partners. the weighted average number of units outstanding.
The General Partners may reinvest any proceeds from a Reclassifications
sale or refinancing of cable television systems then owned Certain amounts included in the 1992 and 1991 financial
by the Partnership in other cable television systems,but will statements have been reclassified to conform to the 1993
not reinvest any such proceeds unless sufficient cash is first presentation.
distributed to Unitholders to pay any federal income tax
liability created by the sale or refinancing,assuming a 33%
marginal tax rate for all Unitholders.
Cash distributions upon the dissolution of the Partnership
will generally be made in the same manner as cash
distributions on refinancing or sale of cable television
systems,subject to certain adjustments required to cause
distributions to be allocated in accordance with positive
capital account balances.
deg �
19 941411
tit s
2. Franchise, Organization and Loan Sellers whereby it acquired options to purchase wireless
Acquisition Costs cable systems("Option Cable Systems")in Amarillo,
Franchise,organization and loan acquisition costs consist of Athens,Lubbock,Sherman-Dennison,Temple-Killeen,and
the following at December 31, 1993 and 1992: Waco,Texas. In accordance with the Option Agreements
1993 1992 and a separate and concurrently executed agreement with
Franchise Costs Sellers(the"Maintenance Agreement"),the Partnership
Cost $3,462,200 $3,462,765 assumed the responsibility of maintaining FCC licenses,
Less Accumulated channel leases,tower leases,maintenance contracts,and
Amortization (1,867,633) (1,534,370) related insurance contracts For the Option Cable Systems
Net $1,594,567 $1,928,395 during the option period. Under the Option Agreements,
--. — the Partnership will be reimbursed For such expenses by
Organization Costs Charter Cable Corporation if the options are exercised and
Notes to
Cost $ 351,799 $ 351,115 close. Such expenses are$232,892 as of December 31,
Financial Less Accumulated 1993. This amount is included in amounts due from
Amortization (238,227) (203,024) affiliates.
Statements Net $ 113,572 $ 148,091
Loan Acquisition Costs As of December 31, 1992,the Partnership owned 14%of
the Charter Holdings and carried its investment at cost,
Cost $ 329,182 $ 317,333
Less Accumulated which includes the initial capital contribution and related
Amortization (189,935) (118,312) acquisition costs.
Net $ 139,247 $ 199,021
— On February 16, 1993,the Partnership raised its ownership
interest in Charter Holdings to approximately 16.5%by
3.Acquisitions of Cable Systems purchasing an additional 2.5%equity interest for
On June 23, 1992,Galaxy acquired substantially all of $375,000. During 1993,Charter Cable Corporation
the assets of the Glenmora,Louisiana cable system from changed its name to CableMaxx,Inc. In November 1993,
Jim Parks,d/b/a Glenmora Cablevision. The total CableMaxx,Inc.,a majority-owned subsidiary and the only
purchase price for the system was$515,000,of which asset of Charter Holdings,completed an initial public
$391,000 was paid in cash and the remainder in the form offering of 3.5 million shares of common stock. At
of a$124,000 note,payable in installments over eight December 31, 1993,the Partnership owned 16.5%equity
years with interest at 6.5%per annum. The acquisition has interest in Charter Holdings. IF the options described above
been accounted for as a purchase. Accordingly,the results ore exercised and close,Galaxy's ownership interest in
of operations of the acquired system has been included in Charter Holdings will be reduced from 16.5%to
the results of the operations of the Partnership since the approximately 14.6%.
acquisition date. The excess of acquisition costs over the
fair value of the net tangible assets acquired is recorded as The summarized unaudited financial information pertaining
franchise costs. The Partnership did not acquire any CATV to Charter Holdings is as follows:
systems in 1993 or 1991.
December 31,1993
Property and Equipment-Net $15,406,979
4. Investment in Affiliate Other Assets
In December 1992,the Partnership entered into an 39,996,014
agreement with Charterhouse Equity Partners,L.P.,Northern Total Assets $55,402,993
&Midland Norminees Limited,Galaxy Management,Inc., Total Liabilities $ 6,633,360
and Supreme Cable Co.,Inc.whereby together they would Year Ended
Form Charter Wireless Cable Holdings,L.L.C.("Charter December 31,1993
Holdings"),pursuant to the Delaware Limited Liability Revenue $ 5,177,195
Company Act,and Charter Cable Corporation,a wholly Operating Loss before
owned subsidiary of Charter Holdings,for the purpose of Depreciation and Amortization
directly or indirectly acquiring,owning and operating a
p $ 1,581,832
Multichannel Multipoint Distribution Service("MMDS"). Net Loss $ 4,590,526
The Partnership was credited for a$2 million initial capital 5. Notes Payable
contribution to,and received a 14%equity interest in, Notes payable consist of the following at December 31,
Charter Holdings based on escrow deposits made pursuant 1993 and 1992:
to an initial acquisition agreement which was terminated _ _ 1.993 _ 1992
and replaced by the above-mentioned agreement. Revolving credit and term
loan agreement $24,961,250 $26,420,000
Charter Cable Corporation executed an agreement("Asset Acquisition debt 324,921 525,385
Purchase Agreement")to acquire from Supreme Cable Co., Installment notes payable
and CableMaxx,Inc.(collectively,"Sellers")certain wireless related to the quip itton of
television assets consisting of an existing MMDS system in builing con construction
and
Y building i e at 8.5%
Austin and an MMDS system to be constructed in and bearing interest to
around San Antonio,Texas. Charter Cable Corporation 10.5%,payable through 1995 1,345,429 1,145,108
also executed agreements("Option Agreements")with $26,631,600 $28,090,493
t.w.ua.rtn At 4 - 20
In July 1990,the Partnership entered into a Revolving The aggregate maturities on notes payable as of December
Credit and Term Loan Agreement with Fleet National Bank 31, 1993 are as follows:
which was amended August 1, 1991,May 15, 1992 and Year Banks Acquisition Debt Total
August 27, 1993(the"Agreement"). The Agreement is a - -.
1994 $ 2,54,54 2,675 $220,921 $ 2,763,596
reducing revolver which provides for principal payments 1995 2,717,874 10,000 2,727,874
and borrowings up to a maximum commitment of 1996 3,772,964 15,000 3,787,964
$25,158,500 as of December 31, 1993. The maximum 1997 4,929,899 20,000 4,949,899
credit commitments and amounts outstanding under the 1998 6,307,205 20,000 6,327,205
revolver reduce at varying amounts stated in the Thereafter 6,036,062 39,000 6,075,062
Agreement on a quarterly basis with full maturity of the Total $26,306,679 $324,921 $26,631,600
revolver on December 31, 1998. ------- -- -- ---
The Agreement provides that the Partnership may select 6. Management Compensation
among various interest rate options. Interest on the and Fees
outstanding borrowings may be at the bank's prime rate Under the terms of the Partnership Agreement and the
plus one and one-half percent or the bank's cost of funds management agreement between the Partnership and
plus three percent. At December 31, 1993,interest under Galaxy Cablevision Management,L.P.(the"Managing
the Agreement is calculated based on the bank's cost of General Partner"),the Managing General Partner is
funds plus three percent and is payable quarterly. The responsibe for managing the business affairs of the
interest rate at December 31, 1993 was 6.4%per annum. Partnership.
In addition,the Partnership must pay a commitment fee of
one-half of one percent per annum for the unborrowed The Partnership pays the Managing General Partner a
portion of the committed funds,if any. Substantially all of minimum management fee of 4 1/2%of the gross revenue
the assets of the Partnership and all issued and outstanding of the Partnership(not including revenue from the sales of
general partnership interests of the Partnership and of the cable television systems)for such services. Such
General Partner of the Managing General Partner,an management fee will be increased by 1%of such gross
affiliated entitly,are pledged as collateral under the revenue for fiscal periods in which the Partnership
Agreement. distributes to the Unitholders amounts(which must be
distributed only from cash flow from operations begining
The Agreement requires the Partnership to comply with 1991)which equal or exceed$1.30 per Unit plus an
various restrictive covenants, the more significant of which additional 10%per Unit per annum for each calendar year
are: a) to maintain certain net operating income levels,as after 1987 until such distributions equal$2.00 per Unit per
defined,and operating ratios,as defined,and b) to annum. Management fees for the years ended December
maintain certain average numbers of suscribers in its cable 31, 1993, 1992 and 1991 approximated$880,000,
television systems. Other provisions of the Agreement $811,000 and$766,000,respectively. In addition,the
place restrictions on,among other things,additional Partnership reimburses the Managing General Partner for
borrowings,expenditures for certain property and certain of its direct and indirect expenses allocable to the
equipment,sales of cable television systems and the operations of the Partnership(See Note 7).
amount of distributions to Unitholders.
7. Related Party Transactions
In 1987,the Partnership purchased certain assets from Star Upon the closing of the March 19, 1987 public offering of
Cable T.V.,Inc.for an aggregate amount of$4,162,500, Units,the Partnership paid to the Managing General
of which$2,997,000 was paid in cash,with the remainder Partner an organization fee of$250,000 for services
in the form of a$1,165,500 noninterest-bearing deferred rendered by management personnel and other employees
purchase money obligation,payable in installments over of the Managing General Partner and its affiliates in
seven years beginning in 1988. For financial statement connection with the preparation and the negotiation of
purposes,interest has been imputed at an annual interest documents related to the organization of the Partnership
rate of 10%,resulting in the principal portion of this and the negotiation of the terms of the offering. This
obligation being computed as$210,921 and$401,385 amount is included in Organization Costs.
as of December 31, 1993 and 1992,respectively.
The Partnership pays Galaxy Cablevision Management,
On June 23, 1992,Galaxy acquired substantially all of Inc.(the General Partner of the Managing General Partner)
the assets of the Glenmora,Louisiana cable system from brokerage fees for services rendered by it in selecting,
Jim Parks,d/b/a Glenmora Cablevision. The total negotiating and arranging for the acquisition or sale of
purchase price for the system,was$515,000,of which cable television systems. The amounts are included in the
$391,000 was paid in cash and the remainder in the form cost basis of the acquired cable systems and the investment.
of a$124,000 note,payable in installments over eight Brokerage fees for the years ended December 31, 1992
years with interest at 6.5%per annum,resulting in balances and 1991 were$114,400 and$49,000,respectively.
of$114,000 and$124,000 as of December 31, 1993 There were no brokerage fees paid during the year ended
and 1992,respectively. December 31,1993.
The installment notes are payable to a bank for which The Partnership has historically shared office space and
Tommy L.Gleason,Jr.,a general partner of Galaxy administrative and certain operations personnel with other
Cablevision,L.P.,serves as a director. cable television companies affiliated with the General
21 4111 .-,
Partners. Expenses are allocated directly when they are 10. Sales of Cable Television Systems
clearly attributable to a specific party. The remaining On May 24, 1991,the Partnership sold the 370 subscriber
expenses are allocated pro rata based on the respective cable television system in Porterville,Louisiana for
number of subscribers of each party. Management believes $500,000,or approximately$1,350 per subscriber,
that this allocation method and the resulting expenses are resulting in a loss on sale of$72,785. The Partnership
reasonable. Such allocated expenses for personnel and received$400,000 in cash at closing and a note for the
other expenses For the years ended December 31, 1993, remaining$100,000 payable in seven annual installments
1992 and 1991 were$763,750,$323,022 and of approximately$17,000 each,including accumulated
$231,816,respectively. Such allocated expenses interest calculated at 5%per annum.
increased due to the inclusion of certain administrative cost
which were not categorized as a related-party expense until On June 27, 1991,the Partnership sold all of the cable
Notes to December 1992. television systems in the Waxahachie region in Texas for
$7,400,000,or approximately$1,600 per subscriber,
Financial The Partnership uses related entities to provide installation resulting in a gain on the sale of$2,968,686. The
services,technicians and a construction labor force and air Partnership received$5,900,000 in cash and$1,500,000
Statements
travel services. Such capitalized expenditures related to in a promissory note which is subordinated to any debt of
technicians and construction labor for the years ended the purchaser which might be secured by the cable
December 31, 1993 and 1991 were$15,526 and television systems in the Waxahachie region,up to a
$17,776,respectively. There were no capitalized maximum of 70%of the purchase price excluding the value
expenditures for installation services,technicians or of the real estate. The principal amount plus accumulated
construction labor force to related entities in 1992. Travel interest calculated at 9.5%per annum is due in five years.
expenses to related entities for the years ended December In return,the Partnership delivered 4,610 subscribers and
31, 1993, 1992 and 1991 were$185,212,$107,718 and an agreement not to compete in the region for three years.
$188,129,respectively. In addition,travel expenditures of
$196,515,associated with a related entity,were Under the Revenue Act of 1987,certain publicly-traded
capitalized in the cost basis of the investment in affiliate in partnerships are taxed as corporations,subject to a
1992. In addition,the Partnership leases certain office delayed effective date for partnerships that were publicly
space and equipment from related entities. Such lease traded on December 17, 1987 The provisions taxing
expense for the years ended December 31, 1993, 1992 publicly-traded partnerships in existence on December 17,
and 1991 was$117,776,$151,200 and$136,600, 1987 as corporations are applicable to taxable years
respectively. Management believes that these transactions beginning after December 31, 1997. In light of the
with related entities are on terms at least as favorable as impending tax as a corporation,the Partnership continues
those prices and terms being offered generally in the same to consider various alternatives to its current ownership
marketplace by unrelated entities For goods and services structure,including the sale of part of or all of its assets and
and as nearly identical as possible in regard to quality, the conversion of the Partnership to a corporation.
technical advancement and availabilty.
In early 1993,the Partnership retained Waller Capital
8. Income Taxes Corporation to serve as the Partnership's broker in
No federal income taxes are reflected in the financial connection with the sale of all of its cable systems. The
statements of the Partnership. The Unitholders of the Partnership intends to use the net proceeds from any sale to
Partnership must report their allocable shares of the profits reduce long-term debt and to make distributions to
and losses of the Partnership in their individual income tax Unitholders,as determined by the Managing General
returns. At December 31, 1993,the net difference between Partner. In the event all of the systems are sold,
the tax bases and reported amounts of the Partnership's management may consider a liquidation of the remaining
assets and liabilities is approximately$7,900,000. assets of the Partnership. If not all of the systems are sold,
management may consider other alternatives,including the
9. Distributions to Partners conversion of the Partnership to a corporation.
The Managing General Partner of the Partnership
approved distributions to Unitholders during 1992 and In March 1994,the Partnership entered into a definitive
1991 as follows: Asset Purchase Agreement(effective February 21, 1994)to
General sell all of the Northeast Texas and Arkansas-Louisiana
Record Date Per Unit Unitholders Partners Region systems,which consist of approximately 34,100
April4,1991 $ .35 $ 748,300 $ 7,558 basic subscribers(approximately 60%of the Partnership's
July 10,1991 .35 749,700 7,573 total basic subscribers as of December 31, 1993),to
September 30,1991 .35 749,700 7,573 Friendship Cable of Texas,Inc,an affiliate of Buford
.ter January 15,1992 .35 749,700 7,573 Television,Inc.,for a purchase price of$42,625,000,or
rn $2,997,400 $ 30,277
approximately$1,250 per basic subcriber(subject to
•cl adjustment). The purchaser has deposited$1,000,000
R/ March 31,1992 $ .35 $ 749,700 $ 7,573 into an escrow account,which amount may be retained by
June 30,1992 .35 749,700 7,573 the Partnership if the transaction does not close by reason
• September 30,1992 .35 749,700 7,573 of default by the purchaser. The closing is subject to
$2,249,100 $ 22,719 standard conditions,including the approval of the holders
No distributions to llnithalders were declared for the fourth of a majority of the Partnership's Units. The Partnership
quarter of 1992 or for the year ended December 31,1993.
22
f-u;
_
expects to call a special meeting of Unitholders and to 12. Rate Regulation
solicit proxies for approval of the transaction. If Unitholder On October 5, 1992,Congress passed the Cable
approval is obtained and all other conditions are satisfied, Television Consumer Protection and Competition Act of
the Partnership anticipates the sale will close by September 1992(the"1992 Act"),which,among other things,
30, 1994. authorizes the FCC to set standards for government
authorities to regulate the rates for certain cable television
In December 1993,the Partnership signed a letter of intent services and equipment,and gives local broadcast stations
with Time Warner Cable Ventures,a division of Time the option to elect mandatory carriage or require
Warner Entertainment,L.P.,regarding the sale of all of the retransmission consent.
Partnership's cable systems in the Central Texas Region
(excluding the Cameron,Texas area),which consist of On April 1, 1993,the FCC,implementing the rate
approximately 5,400 basic subscribers(approximately 9% regulation provisions of the 1992 Act,adopted
of the Partnership's total basic subscribers as of December comprehensive new federal standards for local regulation
31, 1993),for a purchase price of$8,000,000,or of cable rates. The new rules became effective on
approximately$1,500 per basic subscriber(subject to September I, 1993,and ore designed to ensure that rates
adjustment). No definitive agreement has been signed and changed by a cable operator not subject to effective
negotiations have been terminated without obligation so competition are comparable to rates that would be
that Time Warner may analyze the effect of the recent charged if the cable operator were subject to effective
Federal Communications Commission's rate regulation on competition. Rates for basic service(the lowest tier offering
those systems. all broadcast signals,except superstitions,and certain
access channels)and equipment used to receive basic
The Partnership has also received expressions of interest to service may be regulated locally once a franchising
purchase the Partnership's Kentucky Region systems and the authority is certified by the FCC and has adopted rate
Cameron,Texas area systems,including an offer to regulation standards and procedures that comply with FCC
purchase both systems from Galaxy Management,Inc.,a requirements. The FCC may regulate rates for cable
corporation owned by Tommy L.Gleason and Tommy L. programming services(not carried on the basic tier)upon
Gleason,Jr. The Partnership expects to receive final offers showings by franchising authorities or subscribers that the
on both systems in April 1994. In the event Galaxy accepts cable operator's rates for these services are unreasonable.
any offers to purchase such systems,the sale of the systems Rates for video programming offered on a per-channel or
may be subject to Unitholder approval,among other per-program basis,including discounted packages of these
conditions. offerings,are generally not subject to regulation. The
regulated cable service revenues of cable operators which
11. Commitments are not yet subject to rate regulation have been frozen by
The future minimum lease payments,under noncancellable the FCC until May 15, 1994.
operating leases,principally for equipment and office
space,at December 31, 1993,are as follows: The FCC's initial rate regulations required cable systems
operating above a price benchmark average to reduce
Year _ Related Party Other Total rates from their September 30, 1992 level by ten percent
1994 $158,400 $ 31,942 $ 190,342 (10%). Under revised benchmark regulations adopted on
1995 19,692 19,692 February 22, 1994,but not yet in effect,regulated cable
1996 19,692 19,692 systems will be required to reduce rates by an additional
1997 11,005 11,005 seven percent(7%)from September 1992 levels,or to the
1998 4,800 4,800 new benchmark,whichever is less. Cable operators may
Thereafter 45,200 45,200 adjust their regulated rates to reflect external costs and
Total $158,400 $132,331 $$290,731 inflation. The FCC's regulations also establish interim rules
2
for determining rates on an alternative cost-of-service basis.
The Partnership rents office space from Galaxy Cablevision The FCC's rate regulation rules have been appealed. The
Management,Inc.(the General Partner of the Managing Partnership is unable to predict whether the rules will be
General Partner)on a month-to-month basis under an upheld on appeal. Galaxy currently anticipates adjusting
agreement expiring December 31, 1994. Total rent its rate structure in many of the affected systems to reflect
expense for these noncancellable and month-to-month Galaxy's cost of service for such systems to minimize the
operating leases for the years ended December 31, 1993, effect of
the rate
a ula regulations. In addition,due to restrictions
1992 and 1991 approximated$248,000,$257,000 and placed pricing packages,
$237,000,respectively. Galaxy may realign the rate and service structure in certain
systems,which could decrease revenues in those systems.
The Partnership also rents tower sites and space on utility Based upon currently available information,management
poles under leases which are generally less than one year does not believe the recent rate regulation will have a
or under agreements that are generally terminable on short material impact on the Partnership's financial condition or •
*. ..
notice. Tower and pole rent expense for the years ended results of operations. Because the FCC's final
December 31, 1993, 1992 and 1991 approximated cost-of-service and benchmark regulations have not been
$505,000,$452,000 and$471,000,respectively. issued,however,it is difficult to determine the actual effect
of the rate regulation.
4 '
•
23 941292
Tommy L. Gleason
. Chief Executive Officer, Secretary and Chairman of the Board
,jam Gleason has served as CEO and chairman of the board of Galaxy Cablevision
if• ` j.=. Management, Inc.since it's formation in 1986. In the late 1950s, Gleason owned
°,7-, and operated a TV station in Salina, Kansas. He pioneered one of the first cable TV
systems in Nebraska in 1961. Over the past three decades,Gleason built,owned
and eventually sold rural cable TV systems in Nebraska,Texas and Missouri. He
.� also has purchased,built,owned,operated and sold radio stations in Nebraska
over the past four decades.
The Managing Tommy L. Gleason,Jr.
General * President and Director
Partner , ,. :» Gleason has served as president of Galaxy Cablevision Management, Inc.since
1986 and as the individual general partner of Galaxy Cablevision Management,
L.P. He became a licensed engineer in 1964 and worked as a field engineer for
various cable systems in the 1960s and 1970s. He formed his own firm in 1974 to
build cable systems throughout the Midwest and Texas. In 1979, he joined his
w'._ tY father,Tommy L.Gleason, in building small-town cable TV systems. Gleason is also
president,CEO and a director of CableMaxx, Inc.
,w..
• Ronald Voss
r +a ea ae Vice President,Corporate Development
i..,t
f;Ti Voss has been Galaxy's vice president of corporate development since 1986.
He is responsible for initiating acquisitions and dispositions of cable properties and
is involved in the franchising and licensing process. For over 20 years,before he
joined a predecessor company of Galaxy in 1981,he was active in radio and
television as a producer and broadcaster. Voss is also a director of CableMaxx, Inc.
J. Keith Davidson
,,
t a Chief Financial Officer
Davidson joined Galaxy Cablevision Management, Inc.as chief financial
officer and assistant secretary in 1986. He has been associated with Galaxy's
predecessor companies since 1981,and holds a Bachelor of Science Degree
' in Business Administration.
James M. Gleason
Director of Office Administration
4 k
k After graduating from college with a degree in business administration
" in 1987,Gleason joined Galaxy as director of office administration.
His responsibilities include the management of customer service and billing,
employee training and office operations.
a rq i i ix::\.
-0- 'm Terry M. Cordova
Vice President of Engineering
ii ' p* After graduating from college in 1985 with a degree in electrical engineering
a '1:.‘": ....1.,..4 technology,Cordova joined Galaxy as a systems engineer and became Vice
President of Engineering in 1993. His responsibilities in his current position of
MK hhh vice president of engineering include the management of all technical
operations.
24
Galaxy Cablevision Management, Inc. Headquarters
General Partner of the Managing General Galaxy
aCablevision, L.P.
Partner 1220 North
Sikeston, Missouri 63801
Tommy L. Gleason (314) 471-3080
Chairman of the Board,Secretary&Director
Auditors
Tommy L. Gleason,Jr. Deloitte &Touche
President&Director One City Centre
St. Louis, Missouri 63101
Ronald L.Voss
Vice-President,Corporate Development Directors and Bryan
Legal
l Cave
Officers J. Keith Davidson 211 North Broadway
Chief Financial Officer St. Louis, Missouri 63102
James M.Gleason
Director of Office Administration Tt
ransfer Boatmens Agenrust Company
Terry M. Cordova 510 Locust
Vice President of Engineering St. Louis, Missouri 63101
•
Daniel A. Burkhardt Unit Listing
Director Units of Limited Partnership Interest in Galaxy
Cablevision, L.P. are traded on the American
James W. Swenson Stock Exchange. AMEX symbol: GTV
Director
William H. Straw
Director
J Cover photo of Galaxy Vll satellite,the industry's newest cable-dedicated spacecraft,
courtesy of Hughes Space and Communications Company IHSC)• .
k dtoCoesulmms,Sikeston
Priming Company,Sikeston
a
OFFICE OF COUNTY ATTORNEI
jeti
PHONE(303)356-4000 EXT. 439
P.O. BOX 194:
GREELEY, COLORADO 8063wilp .
C.
COLORADO December 9, 1994
Bryan L. McDougal
64 E. 6400 South, Suite 330
Murray, UT 84107-7202
FACSIMILE: (801) 262-9231
RE: Additional Information for Requested
Transfer of Cable Television Franchise from
Chartwell Cable of Colorado, Inc., to Galaxy
TeleCom, Inc.
Dear Mr. McDougal:
As we discussed in our telephone conversation, I respectfully request some additional information
regarding the requested transfer of cable television franchise from Chartwell Cable of Colorado,Inc.,
to Galaxy TeleCom, Inc. That information is as follows:
1. Additional information regarding FCC 394 Application:
A. The answer in the application to Section I, Part I, to (B) is "no". As required
by the application, we need additional information to explain why the answer
is no.
B. We need additional information for Section II, Part II, to (any plans to change
the current terms and conditions of the service and operations of the system as
a consequence of the transaction for which approval is sought).
C. Section II,Number 2 on page 3 of the application requires information for each
individual listed as to the number of shares owned(d), number of votes(e), and
percentage of votes (f). Please list that information for both James Gleason and
Keith Davidson.
941292
Bryan L. McDougal
Page 2
December 9, 1994
The FCC 394 Application covers most of the information which is listed in the section entitled
"APPLICATION", found on pages 10 through 15 of Weld County Ordinance 94. I would like to
have, however, the following information:
A.(2) A description of Galaxy's proposed operation, including, but not limited to:
business hours, operating staff, maintenance procedures, management and marketing
staff compliment and procedures, rules of operation for public access, statement of
services to be provided, a description of the system design, and proposed
programming.
A.(4) A statement explaining any assistance, in terms of personnel, equipment or
capacity, to be designated for the programming or programming assistance for the
public, educational, and governmental access channels. It is my understanding that
Galaxy will request a waiver for this requirement. Such request should be stated.
A.(5) A statement of the applicants proposed rates and conformity with Ordinance
94, as amended.
A. (6) A statement that Galaxy TeleCom,Inc., is a corporation duly register with the
Colorado Secretary of State's Office. Furthermore, I wish to have the additional
information for 6(d): a full disclosure of the ownership of the facilities to be used in
rendering the service.
A.(13) A new statement as to whether the applicant or any of its officers or directors
has, in the past, been convicted of any felony.
A.(16) A description of the boundaries of the proposed area of service and areas
adjacent thereto.
Enclosed is a copy of your December 14, 1989 letter regarding the transfer of cable television
franchise from James Partners to Chartwell Cable of Colorado, Inc. I believe that the letter which
you will now provide should take the same form as your December 14, 1989 letter.
Finally, I wish to have audited financial statements for Galaxy for the year 1993, if available. Please
ask Galaxy to send me this information as soon as possible.
Also enclosed is a copy of the notice of the hearing on December 19, 1994 at 9 a.m., which will be
published in the Greeley Tribune and the Windsor Beacon; and copies of the request for waiver and
statement of compliance with Ordinance 94, as amended, dated January 2, 1994. I respectfully
941292
Bryan L. McDougal
Page 3
December 9, 1994
request that you provide me with a new request for waiver and statement of compliance signed by
Galaxy being in the same form as the previous ones.
Please feel free to call me at (303) 356-4000, extension 4390, if you have any questions regarding
this letter.
I look forward to seeing a representative from Galaxy TeleCom,Inc., at the hearing on December 19,
1994.
Your ly,
ruce T. Barker
Weld County Attorn y
BTB/db:cable
Enclosures
941292
(
' 7
Chartwell
5299 DTC Boulevard
Suite 260
Englewood. CO 80111
303/694-1700
FAX 694-0070 DEC 1 . 1939
•
�• . •
December 14 , 1989
Bruce T. Barker
Assistant Weld County Attorney
Office of County Attorney
P . O . Box 1948
Greeley, Colorado 80632
RE : TRANSFER OF CABLE TELEVISION FRANCHISE TO
CHARTWELL OF COLORADO, INC .
Dear Mr. Barker:
Enclosed is the completed Application For Weld County
Cable Television Franchise Transfer that you reqested in your
letter of December 5 , 1989 . The application sets forth the
information required under pages 10 through 15 of Ordinance 94 .
The financial information is set forth in the Form 10-K enclosed.
The information required under Ordinance 94-B for
Section "A" , subsection " 16 " , relating to the area encompassed by
the proposed cable system, is identical to the information on the
maps previously submitted by Chartwell and James previously.
Please advise me if any additional information is
necessary prior to placing this matter on the Board ' s agenda.
Very truly your,
a L. McDougal, re ident
Chartwell Cable of Colorado, Inc .
941292
Chartwell Cad of Colorado , Inc.
5299 DTC Blvd., Suite 260
Englewood, CO 80111
( 303 ) 843-0301
APPLICATION FOR WELD COUNTY
CABLE TELEVISION FRANCHISE TRANSFER
The following is to provide information in accordance with the
requirements under Weld County Ordinance #94 -- APPLICATION
Section pages 10-14 :
A. ( 1 ) Applicant: Chartwell Cable of Colorado, Inc .
5299 DTC Blvd. , Suite 260
Englewood, CO 80111
Application
Date : December 14 , 1989
( 2 ) Proposed Chartwell ' s present system
System: comes from Del Camino and
extends to Enchanted Hills and
Casa Grande Estates Sub-
divisions . Activation is set
for early 1990 .
Business Office : 9 am - 5 pm Weekdays
Hours : excluding holidays
Staff : Manager Technician: Don Heck
Clerk: Suzette McAtee
Maintenance General : On-going planned
Procedures : System. Maintenance Program
that incorporates the highest of
CATV technical standards . Customer
repairs completed within 24 hours .
Outages worked on and repaired
immediately -- 24 hours a day, 7
days a week.
Management- The system will always have a
Marketing: full-time manager. Also,
additional management and marketing
support will be provided by the
regional office in Englewood, CO .
Most marketing procedures will be
in the area of direct sales and
direct mail . Direct sales will
mainly involve contacting the
potential subscriber at the time of
installation.
Public Access : A channel will be set aside for use
by the public and will conform to
the County guidelines. However, a
waiver is requested from providing
941212 any public access equipment until
the system reaches a level of 1000
Sex. :es The systemk itially will consist
Provided: of 22 channels of programming with
a capacity of 36 . Also , the system
will be designed for 450 MHz which
will give it the eventual capacity
to over 50 channels . The proposed
programming will consist of the
primary Denver Off-Air stations and
approximately 15 National Basic
Cable services that will include at
least three premium channels, i . e . ,
HBO , Showtime and Disney. ( See
attached Channel Line-up. )
( 3) Automated Basically, all CATV headend
Services : services are automated .
( 4 ) Production The Company is requesting a waiver
Facilities and from the production facilities
• Assistance : requirement. However, channel
space will be allocated to the
County government, local school
district and surrounding community.
The Company pledges its assistance
whenever possible by providing its
local staff and facilities for any
programming that the County,
schools or community provides . The
Company will provide the
distribution equipment necessary,
such as modulators or receivers.
( 5 ) Rates Per Month: Basic ( 18 channels ) $15 . 95
Premium (HBO/Disney/Showtime ) :
1 Premium 9 . 95
2 Premium 8 . 95
3 Premium 8 . 95
Additional Outlets FREE
Remote Control Units 2 . 95
One-Time Charges :
Connection 25 . 00
Added Outlet Connection 15 . 00
Miscellaneous at time and materials
Motel/Hotel/Commercial - variable
Converter Deposit
Manual 20 . 00
Remote 50 . 00
( 6 ) Company Chartwell Cable of Colorado, Inc .
Structure : a Colorado corporation qualified to
do business in the State of
Colorado .
Ownership: The full ownership of the system
and its facilities is:
Chartwell Cable of Colorado, Inc .
( 7 ) Applicant See attached "Form 10-K" .
Relationships :
941292
( 8 ) Franchises : See attached "Form 10-K" .
AMENDMENT TO WELD COUNTY CABLE TELEVISION APPLICATION
Officers and Directors: See attached "Background" .
6 ( d) Ownership: The System will be owned 100% by:
Chartwell Cable of Colorado , Inc .
5299 DTC Blvd. , Suite 260
Englewood, CO 80111
( 303) 694-1700
Local Office : The System ' s local office is
located within the required
30 miles from the system and
its address is:
187 S . E . 14th Street
Loveland, CO 80537
Toll Free The System ' s toll free number for
Number: subscribers is 1-800-955-1515 and
will be fully operational before
the franchise is approved.
941292
( 10 ) TeL. ical The System , .11 be 36 Channel
Description: Capacity, 330 MHz with the future
expansion possibility of 50
channels and 450 MHz . It will
operate from its main headend
facility located in the River
Valley Village Mobil Home Park in
Del Camino at the Junction of Hwy.
119 and I-25 . The System will run
24 hours a day, and although no
studio equipment will be available ,
the County, School District or
members of the local community may
use the allotted system facilities
at any time with reasonable notice .
( 11 ) Technical Staff The Senior Technical Staff
Statement: Statement as to the System' s
compliance with this Ordinance is
hereby attached.
( 12 ) Franchises Held: See attached "Subscribers" .
( 13 ) Statement: The applicant, nor none of its
officers or directors , has , in the
past, been convicted of a felony.
( 14 ) Experience : See attached "Background" and
"Subscribers" .
( 15 ) Renewal: Does not apply.
( 16 ) System Boundaries : (map previously submitted by James
Cable Partners LP )
Del Camino area at Hwy. 119 & I-25
then east along Hwy. 119 to
Enchanted HIlls and Casa Grande
Estates .
These are the primary areas we wish
to serve now. However, we will be
applying for the Head franchise and
if we receive it we will want to
serve the outlying area along with
the -areas needed to get there with
our lines . We also would like to
serve a few scattered areas within
the County once we complete our
feasibility studies .
We will serve the residents within
the system boundaries in accordance
with the guidelines set forth in
the franchise ordinance under the
"DEFINITIONS" Section Item "T" ,
page 5 .
941292 1
Chartwell
5299 OTC Boulevard
Suite 260
Englewood. CO 80111
- _ lcxjp
303/694-1700
FAX 694-0070
January 2 , 1990
•
Clerk & Recorder
Weld County
P . O . Box 758
Greeley, Colorado 80632
Dear Madams and Sirs,
Please accept the following as our request for a waiver of the
following requirements under the Weld County Cable Television
Franchise Ordinance #94 .
Because our system will serve less than 500 subscribers , we
hereby request. a variance from :
Company Services , Section C :
Equipment for local production and presentation
of cablecast programs .
Chartwell Cable of Colorado , Inc . is looking forward to serving
Weld County residents .
Sincerely,
• _—Bryan,McDougal
President
WP\MB1\WELD .
941292
•
Chartwell
5299 DTC Boulevard
Suite 260
• Englewood. CO 80111
3031694-1700
FAX 694-0070
•
January 2 , 1990
TO WHOM IT MAY CONCERN
I , Bryan McDougal , im my position as President for Chartwell
Cable of Colorado , Inc . , do hereby state that I have reviewed
Weld County Ordinances , #94 , #94A, #94B in their entirety.
I hereby declare that Chartwell Cable of Colorado , Inc . ' s planned
cable system ( network) will meet all requirements set forth in
the above stated ordinances .
-,f • _ 71';
Bryan McDou'ga
President /
•
WP\MB 1 \0RD
941292 I
Bryan L. McDougal
Attorney and Counselor at Law
Utah and Colorado
64 East 6400 South, Suite 330 Telephone: 801 /269-8900
Murray, Utah 84107-7202 FAX: 801 /262-9231
Priority Mail
n R C:3
November 22, 199 if G ' ''`'s ', �'
Bruce T. Barker, Assistant County Attorney L_„\
N U l� 8 1994
Office of Weld County AttorneyP.O. 1948 ELD COUNTY
Greeley,xCO 80632 ATTORNE7 'b OFFICE
Re: Requested Transfer of Cable Television Franchise
From Chartwell Cable of Colorado, Inc. to
Galaxy TeleCom, Inc. / Draft Resolution
Dear Mr. Barker:
Enclosed is the requested transfer Resolution regarding the transfer of the
franchise from Chartwell to Galaxy. Please review and call me if you have any questions.
If you have any concerns I would be happy to set up a conference call with Tom Morris,
Vice President of Operations for Galaxy.
If every thing appears in order please advise how we should proceed. I thank
you in advance for your cooperation and assistance. Any help you could provide in
expediting this matter would be greatly appreciated.
Very truly yours,
Bryan L. McDougal
Attorney for Chartwell Cable
of Colorado, Inc.
ddm
Enclosure
941292
Gaaxy
l
.:.:. cablevision
December 15, 1994
Via Fax Number: 801-262-9231
Mr. Bruce T. Barker
Weld County Attorney
P.O. Box 1948
Greeley, CO 80632
Dear Mr. Barker:
Enclosed is information requested by you in your letter to Mr.
McDougal dated December 9, 1994. Our present plans are to operate
and maintain the cable system in Weld County that is presently
owned by Chartwell. No changes are planned or anticipated in the
foreseeable future in the operation of the system or services
offered.
If at some point changes are planned we would share these plans
with the County officials.
If you need further information please let us know. We look
forward to working with you.
Sincerely,Cittn4
Thomas M. Morris
Vice President
operations
TMM: jlw
1220 North Main Street • Sikeston, Missouri 63801 • (314) 471-5022
941292
APPLICATION FOR WELD COUNTY
CABLE TELEVISION FRANCHISE TRANSFER
ADDENDUM TO FORM FCC 394
A. ( 1) Applicant: Galaxy Telecom, Inc. , DBA Galaxy
Cablevision
1220 North Main Street
Sikeston, Missouri 63801
(314) 471-5022
Application Date: November 1, 1994 as listed on
Form FCC 394
(2 ) Proposed System: Galaxy Cablevision will operate and
maintain the same cable system that
Chartwell Cable is presently
operating in Weld County, CO.
Business Hours: Regional Customer Service Center:
7: 30 a.m. - 7 : 00 p.m. CST weekdays,
8 : 00 a.m. - 5 : 00 p.m. weekends,
excluding holidays.
Customer toll free number:
1-800-Enjoy T.V.
(363-6988 )
Divisional Vice President:Ward Webb
Business Manager: Laurie Berry
Customer Service Manager:
Treka Hargrove
Technical Manager: Jim Higbee
Service Technicians available
daily.
Maintenance
Procedures: General: on-going system
maintenance program that
incorporates the highest of CATV
Technical Standards in accordance
with FCC Rules and Regulations.
Customer repairs completed within
24 hours. System outages worked on
and repaired immediately--24 hours
a day, 7 days a week.
Management-
Marketing: The System Division will have a
full time marketing manager. Most
marketing procedures will
incorporate direct sales. Direct
sales will involve contacting
potential subscribers.
941292
APPLICATION FOR WELD COUNTY
CABLE TELEVISION FRANCHISE TRANSFER
ADDENDUM TO FORM FCC 394
Public Access: A channel will be set aside for PEG
(Public, Educational, Government)
use by Weld County. However, a
waiver is requested from providing
any equipment for this channel .
Service Provided: Galaxy Cablevision will provide the
same channels that Chartwell Cable
is presently providing.
(3) Automated
Services: CATV Headend equipment is basically
automated.
(4) Production Galaxy Cablevision is requesting a
Facilities and waiver from this requirement.
Assistance: However, channel space will be
allocated as stated under "Public
Access. " Galaxy will provide
technical assistance from its
engineering department.
(5 ) Rates: Presently, Galaxy will continue the
same service rates as now charged
by Chartwell Cable.
(6 ) Company Application has been filed with
Structure: the State of Colorado for
certificate to do business in the
State. Certificate will be filed
at the time that the notice of the
sale has been completed and said
notice has been submitted to
Weld County.
Ownership: See page 3 of Form FCC 394.
( 7) Applicant See Form FCC 394.
Relationships:
(8 ) Franchises: Weld County, CO
Larimer County, CO
(9) Audited Not available, see attachments
Statements: to form FCC 394.
( 10) Technical Galaxy will operate the same cable
Description: system that is presently operated
by Chartwell.
941292
APPLICATION FOR WELD COUNTY
CABLE TELEVISION FRANCHISE TRANSFER
ADDENDUM TO FORM FCC 394
( 11 ) Technical Staff Statement is attached.
Statement:
( 12 ) Statement: The applicant or none of its
officers or directors have been
convicted of a felony.
( 13 ) Technical See exhibit 12 attached to
Experience: Form FCC 394.
( 14) Renewal: Does not apply.
( 15) System Galaxy will keep the same system
Boundaries: boundaries as Chartwell presently
keeps in Weld County.
941292
Galaxy
•
cablevuw��
December 15, 1994
I, Mark D. Anderson, Director of Technical Operations, hereby
state that the Cable Television systems that Galaxy Cablevision
is purchasing from Chartwell Cable meet the requirements set
forth in Ordinances 94, 94A, 94B as long as requested waivers are
granted.
Sincerely,
a k D. Anderson
1220 North Main Street • Sikeston, Missouri 63801 • (314) 471-5022
941292.
Additional Information Regarding FCC 394 Application
A. Section I, Part I, B. - See exhibit number 2, attached to
Form FCC 394. Item B is marked no as Exhibit Number 2 is a
summary of the Asset Purchase Agreement, not the entire
agreement. Entire agreement is not submitted because of
confidential and proprietary information.
B. Section II, Part II - an exhibit was not submitted as no
changes in the current terms and conditions of the service are
anticipated at this time.
C. Section II, Number II, page 3 - please see attached new
Section.
Misc.
Audited Financial Statement for 1993 not available at this
time, please see part 1. Financial Information attached to Form
FCC 394.
941292
Federal Communications Commission
Washington,D.C. 20554 Approved by OMB
FCC 394 306045:1
Expires 08'31:96
APPLICATION FOR FRANCHISE AUTHORITY
CONSENT TO ASSIGNMENT OR TRANSFER OF CONTROL
OF CABLE TELEVISION FRANCHISE
FOR FRANCHISE AUTHORITY USE ONLY
SECTION I. GENERAL INFORMATION
DATE 11/01/94 1. Community Unit Identification Number: CO 0423
2. Application for: l l Assignment of Franchise Transfer of Control
3. Franchising authority:
Weld County, CO
4. Identify community where the system/franchise that is the subject of the assignment or transfer of control is located:
Weld County, CO
S. Date system was acquired or (for system's constructed by the transferor/assignor) the date on
which service was provided to the first subscriber in the franchise area: December, 1988
6. Proposed effective date of closing of the transaction assigning or transferring ownership of the on or before
system to transfereeJassignee:
12/31/94
7. Attach as an Exhibit a schedule of any and all additional information or material filed with this Exhibit No.
application that is identified in the franchise as required to be provided to the franchising
authority when requesting its approval of the type of transaction that is the subject of this
application.
PART I - TRANSFEROR/ASSIGNOR
1. Indicate the name, mailing address, and telephone number of the transferor/assignor.
Legal name of.Transferor/Assignor(if individual, list last name first)
Chartwell Cable of Colorado, Inc.
'.ssumed name used for doing business (if any)
Chartwell Cable
.tailing street address or P.O. Box
P.O. Box 819
:ity State ZIP Code Telephone No. (include area code)
Evergreen Colorado 80439 (303) 674-7783
2.(a) Attach as an Exhibit a copy of the contract or agreement that provides for the assignment or Exhibit No_
transferof control (including any exhibits or schedules thereto necessary in order to understand the 2 - . -
terms thereof). If there is only an oral agreement, reduce the terms to writing and attach.
(Confidential trade, business, pricing or marketing information, or other information not otherwise -
publicly available, may be redacted).
1 sl Does the contract submitted in response to (a) above embody the full and complete agree; son) vc7 y ! No
between the transferor/assignor and the transferee/assignee?
If No, explain in an Exhibit. -
Echir,l No.
941292
PART II - IRANSFEREE/ASSIGNEE
1.(a) Indicate the name, mailing address,and telephone number of the transfereeiassignee.
•
Legal name of Transferee/Assignee(if individual, list last name first)
Galaxy Telecom, Inc.
kssumed name used for doing business (if any)
Galaxy Cablevision
Nailing street address or P.O. Box
1220 North Main Street
:ity State ZIP Code Telephone No. (include area code)
Sikeston MO 63801 (314) 471-3080
(b) Indicate the name, mailing address,and telephone number of person to contact, if other than transferee/assignee.
Name of contact person(list last name first)
Kej h Davidson
=irm or company name(if any)
•
Galaxy TeleCom, Inc.
.tailing street address or P.O. Box
1220 North Main St.
:ity State ZIP Code Telephone No. (include area code)
Sikeston MO 63801 (3141 471-3080
(c) Attach as an Exhibit the name,mailing address,and telephone number of each additional person who Exhibit No.
should be contacted, if any.
(d) Indicate the address where the system's records will be maintained.
Street address
1220 North Main St.
City State ZIP Code
Sikeston MO 63801
2. Indicate on an attached exhibit any plans to change the current terms and conditions of service and Exhibit No.
operations of the system as a consequence of the transaction for which approval is sought.
«< 69.o 1 19999, �, 941292
Or�ab3
SECFION I. TRANSFEREE'S/ASSIGNEE'S LEGAL QUALIFICATIONS
1. Transferee/Assignee is:
ITCorporation a. Jurisdiction of incorporation: d. Name and address of registered agent in
Delaware jurisdiction:
b. Date of incorporation: CSC
01/21/92 P.O. Box 591
c. For profit or not-for-profit: Willmington, Delaware 19899-0591
For profit
nL• imited Partnership a. Jurisdiction in which formed: c. Name and address of registered agent in
jurisdiction:
b. Date of formation:
nG• eneral Partnership a: Jurisdiction whose laws govern formation: b. Date of formation:
n Individual
El O• ther. Describe in an Exhibit. Exhibit No.
2. List the transferee/assignee, and, if the transferee/assignee is not a natural person, each of its officers, directors, stockholders
beneficially holding more than 5% of the outstanding voting shares, general partners, and limited partners holding an equity
interest of more than 5%. Use only one column for each individual or entity. Attach additional pages if necessary. (Read
carefully—the lettered items below refer to corresponding lines in the following table.)
(a) Name, residence, occupation or principal business, and principal place of business. (If other than an individual, also show
name, address and citizenship of natural person authorized to vote the voting securities of the applicant that it holds.) List the
applicant first, officers, next,then directors and,thereafter, remaining stockholders and/or partners.
(b)Citizenship.
(c) Relationship to the transferee/assignee(e.g.,officer, director, etc.).
(d) Number of shares or nature of partnersihp interest.
(e)Number of votes.
(f) Percentage of votes.
•
(a) Spectrum Equity Investors, LP TA Assoc. LP Galaxy
Galaxy Telecom, Inc
1220 N. Main St. 125 High Street 125 High St. Management,Inc
Sikeston, MO 63801 Boston, MA 02110 Boston, MA 1220 Main St.
02110 Sikeston, MO
63801
I(b) United States United States United States
)(c) Shareholder
Shareholder Shareholder
(d) 100,000 —
176,000 20,000
(e) 100,000
176,000 20,000
i ( 349,
59% 7%
(CC 394(Pale 33
Oa-fob-L.1-1993
941292
If thz applicant is a corporation or a limited partnership, is the transferee/assignee formed under the X Yes I i No
lasss of, or duly qualified to transact business in, the State or other jurisdiction in which the system
operates?
If the answer is No, explain in an Exhibit. Exhibit No.
Has the transferee/assignee had any interest in or in connection with an application which has been Yes X No
dismissed or denied by any franchise authority?
If the answer is Yes, describe circumstances in an Exhibit. Exhibit No.
Has an adverse finding been made or an adverse final action been taken by any court or Yes X No
administrative body with respect to the transferee/assignee in a civil, criminal or administrative
proceeding, brought under the provisions of any law or regulation related to the following: any
felony; revocation, suspension or involuntary transfer of any authorization (including cable
franchises) to provide video programming services; mass media related antitrust or unfair
competition; fradulent statements to another governmental unit; or employment discrimination?
If the answer is Yes, attach as an Exhibit a full description of the persons and matter(s) involved, Exhibit No.
including an identification of any court or administrative body and any proceeding (by dates and file
numbers, if applicable), and the disposition of such proceeding.
Are there any documents, instruments, contracts or understandings relating to ownership or future Yes I X ! No
ownership rights with respect to any attributable interest as described in Question 2 (including, but
not limited to, non-voting stock interests, beneficial stock ownership interests, options, warrants,
debentures)?
If Yes, provide particulars in an Exhibit.
Do documents, instruments, agreements or understandings for the pledge of stock of the X Yes 1 No
transferee/assignee, as security for loans or contractual performance, provide that: (a) voting rights
will remain with the applicant, even in the event of default on the obligation; (b) in the event of
default, there will be either a private or public sale of the stock and (c) prior to the exercise of any
ownership rights by a purchaser at a sale described in (b), any prior consent of the FCC and/or of the -
franchising authority, if required pursuant to federal, state or local law or pursuant to the terms of
the franchise agreement will be obtained?
If No, attach as an Exhibit a full explanation. Exhibit No.
ECTION III - TRANSFEREE'S/ASSIGNEE'S FINANCIAL QUALIFICATIONS
• The transferee/assignee certifies that it has sufficient net liquid assets on hand or available from X Yes No
committed resources to consummate the transaction and operate the facilities for three months.
• Attach as an Exhibit the most recent financial statements, prepared in accordance with generally Exhibit No. I. ._
accepted accounting principles, including a balance sheet and income statement for at least one full 11 _J
year, for the tranfseree/assignee or parent entity that has been prepared in the ordinary course of
business, if any such financial statements are routinely prepared. Such statements, if not otherwise
publicly available, may be marked CONFIDENTIAL and will be maintained as confidential by the
franchise authority and its agents to the extent permissible under local law.
ECTION IV - TRANSFEREE'S/ASSIGNEE'S TECHNICAL QUALIFICATIONS
el forth in an Exhibit a narrative account of the transferee's/assignee's technical qualifications, experience EshLbit �o
nd expertise regarding cable television systems, including, but not limited to, summary information about 12
ppropriate management personnel that will be involved in the systems management and operations. The t
ransfereelassignee may, but need not, list a representative sample of cable systems currently or formerly
owned or operated.
941292
SECTION V- CERTIFICATIONS
Part I - Transferor/Assignor
All the statements made in the application and attached exhibits are considered material representations, and all the Exhibits are a
material part hereof and are incorporated herein as if set out in full in the application.
•
I CERTIFY that the statements in this application are true Sgrwwre /J complete and correct to the best of my knowledge and belief and /_/are made made in good faith. !/ J
4:1:4
•
WILLFUL FALSE STATEMENTS MADE ON THIS FORM ARE Date I / S / 9 y
PUNISHABLE BY FINE AND/OR IMPRISONMENT. U.S. CODE,
TITLE 18, SECTION 1001.
Print full name
A. Clinton Ober
Check appropriate classification:
x Individual n Corporate Officer
General Partner (Indicate rifle) n Other. Explain:
Precirlant
Part II - Transferee/Assignee
All the statements made in the application and attached Exhibits are considered material representations, and all the Exhibits are a
material part hereof and are incorporated herein as if set out in hill in the application.
The transferee/assignee certifies that he/she:
(a) Has a current copy of the FCC's Rules governing cable television systems.
(b) Has a current copy of the franchise that is the subject of this application, and of any applicable state laws or local ordinances and
related regulations.
(c) Will -use• its best efforts to comply with the terms of the franchise and applicable state laws or local ordinances and related
regulations, and to effect changes, as promptly as practicable, in the operation of the system, if any changes are necessary to cure any
violations thereof or defaults thereunder presently in effect or ongoing.
I CERTIFY that the statements in this application are true Sig"'fOfe
complete and correct to the best of my knowledge and belief and
are made in good faith.
I��
SE STATEMENTS MADE ON THIS FORM ARE
PUNISHABLE WILLFUL LBY FINE AND/OR IMPRISONMENT. U.S. CODE, D J I t 1
TITLE 18, SECTION 1001.
Print full name
James M. Gleason -i
Check appropriate classification: —.
Individual General Partner X Corporate Office
(Indicate Title) f I Other. Explain:
Chief Operating Officer
941292
EXHIBIT 2
PART I
SUMMARY OF THE ASSET PURCHASE AGREEMENT
BETWEEN CHARTWELL CABLE OF COLORADO, INC.
AND GALAXY TELECOM, INC.
1. Galaxy Telecom, Inc. is purchasing all the assets relating
to the cable television systems that Chartwell Cable of
Colorado, Inc. now serves in Larimer & Weld County,
Colorado.
2 . The assets exclude any cash, corporate books and records,
tax refunds, etc.
3 . The purchase price shall be increased or decreased, as
required, to effectuate the proration of income and
expenses .
4. The Seller represents and warrants to the Buyer certain
items, the more significant of which are as follows :
a. The Corporation is duly organized and in good standing.
b. The performance of the asset purchase agreement shall
be authorized by the required consent of Seller 's
stockholders.
c. Certain exhibits are attached to the asset purchase
agreement which list the cable franchises, real
property, items of personal property, consents,
contracts, etc.
d. The systems have 79 miles of plant; 1 , 500 homes; and at
least 833 basic subscribers.
e. There are certain representations and warranties
relating to environmental matters relative to the real
property.
f. There are no claims, legal actions, etc . that would
have a materially adverse affect on the systems .
g. Seller has complied materially with the franchises and
all contracts, and same should not have a materially
adverse affect on the systems .
941292
Representations and Warranties of Buyer
1 . Buyer is a Delaware corporation duly organized and in good
standing.
2 . The execution, delivery and performance of the agreement by
Buyer has been duly authorized by all necessary action on
the part of Buyer.
3 . The sale is subject to obtaining the consents of franchises
and other authorities.
4. There is no claim, legal action, etc. which would give any
third party the right to be involved in the transaction.
Covenants of Seller
Covenants of the Seller are those which Seller:
1 . Shall not do, as follows:
a. Modify or amend any material agreement in excess of
$10, 000 in any one case, or $100, 00 in the aggregate .
b. Do any act or fail to do any act which might result in
adverse modification of any of the cable franchises .
2 . Shall do, as follows:
a. Allow Buyer reasonable access and maintain the assets
in good condition.
b. Use its best efforts to obtain consents necessary to
comply with all rules and regulations applicable to the
operation of the systems .
Non-competition Agreement
Seller will deliver to Buyer a non-competition agreement
containing terms and conditions that it shall not compete with
Seller within a specified range of the systems for a period of
five years.
Anti-trust Laws
Buyer and Seller will each make whatever filings are required
under the Hart-Scott-Rodino Act .
Conditions to Obligations of Buyer and Seller
There are standard conditions of a cable television asset
purchase agreement which relate primarily to items already
2
941292
discussed above.
Closing
The closing shall take place on or before December 31, 1994.
Deliveries of Buyer and Seller
Both Buyer and Seller are obligated to deliver such items as
bills or sale, consents, a certificate, copies of franchises and
contracts, opinions of counsels, purchase price, assumption
agreements, etc .
Rights of Buyer and Seller upon Termination or Breach
The agreement contains a discussion of termination and other
amendments to the contract which are standard in cable television
asset purchase agreements.
Miscellaneous
Parties to the agreement are listed, together with their names,
addresses and telephone numbers.
3
941292
EXHIBIT 11
SECTION III
2 . Attached are financial statements of Galaxy Cablevision, L. P. ,
our current company. Galaxy Management, Inc . , or its
assignee, is a new entity with no past results.
Also attached is a pro forma Balance Sheet of Galaxy
Telecom/Galaxy Management, Inc.
941292
PART I. FINANCIAL INFORMATION
CONFIDENTIAL
ITEM 1.--FINANCIAL STATEMENTS
GALAXY CABLEVISION, L.P.
BALANCE SHEETS
ASSETS
March 31, December 31,
1994 -1993
(unaudited)
PROPERTY AND EQUIPMENT:
Land and land improvements $ 134, 500 $ 124,000
Buildings and building improvements 1, 026,379 1, 026, 103
Cable television systems 53, 261,455 52, 674,070
Vehicles and equipment 4,500 , 850 4 , 306, 242
Subtotal 58, 923, 184 58, 130,415
Less accumulated depreciation (40, 847 , 322 ) (39 , 275, 974 )
PROPERTY AND EQUIPMENT-NET 18,075, 862 18 , 854, 441
CASH 368, 540 475,345 _
SUBSCRIBER RECEIVABLES 282, 965 201,849
PREPAID EXPENSES AND OTHER ASSETS 816, 432 818,568
DUE FROM AFFILIATES-NET 929 , 131 583, 549
INVESTMENT IN AFFILIATE 2, 140, 622 ; 2, 330,326
NOTES RECEIVABLE 1, 574, 806 1, 574,806
FRANCHISE COSTS-NET 1, 501, 201 1, 594, 567
ORGANIZATION COSTS-NET 105 , 847 113, 572
LOAN ACQUISITION COSTS-NET 106, 941 139, 247
TOTAL ASSETS 25 , 902 , 347 $26 , 686,270
See notes to financial statements.
3
941292
GALAXY CABLEVISION, L.P.
BALANCE SHEETS (Continued)
LIABILITIES AND PARTNERS' CAPITAL (DEFICIENCY IN ASSETS)
March 31, December 31,
1994 1993
(unaudited)
LIABILITIES:
Notes Payable $ 26, 124, 132 $26, 631, 600
Accounts Payable 1, 744, 654 1, 337, 444
Accrued expense and other
liabilities 1 , 559,292 1 , 583 , 809
Total liabilities 29 , 428,078 29 ,552 , 853
PARTNERS' CAPITAL (DEFICIENCY IN ASSETS) :
General Partners (373, 996 ) (367, 405)
Limited Partners-2, 150, 000
partnership units issued,
2, 142, 000 outstanding at March
31, 1994 and December 31, 1993 2, 024, 439 2, 676 , 996
Repurchased limited partnership
units, 8, 000 at March 31, 1994
and December 31 , 1993 ( 140, 628 ) ( 140 , 628 )
Total Limited Partners 1,883, 811 2 , 536 , 368
Excess of purchase price over cost
of assets acquired from entities
under common control (5 , 035, 546 ) ( 5, 035 , 546 )
Total Partners ' Capital
(Deficiency in Assets) (3 ,525, 731 ) ( 2, 866 , 583 )
TOTAL LIABILITIES AND PARTNERS'
CAPITAL (DEFICIENCY IN ASSETS) $25 , 902, 347 $26 , 686 , 270
See notes to financial statements.
4
941292 '
GALAXY CABLEVISION, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended
March 31,
1994 1993
SUBSCRIPTION SERVICES REVENUE $5,043 , 918 $4, 772 , 533
OPERATING EXPENSES:
Systems operations (exclusive of
depreciation and amortization
expense shown separately below)
Related Party 12, 003 15, 545
Other 2 ,007 , 022 1 , 866, 362
Sellin 2,019 , 025 1, 881, 907
g, general and administrative
Related Party 422, 274 395, 843
Other 998 , 166 949, 404
1, 420, 440 1, 345, 247
Depreciation Expense 1, 602, 256 1, 776, 772
Amortization Expense 133, 396 110,080
1, 735, 652 1, 886, 852
Total operating expenses 5 , 175 , 117 5 , 114, 006
OPERATING LOSS ( 131, 199) (341, 473 )
EQUITY IN LOSS OF INVESTEE ( 189, 704) ( 101, 157 )
INTEREST INCOME 36, 059: 37, 089
OTHER INCOME (EXPENSE) 34, 912 (3, 538 )
INTEREST EXPENSE (409 , 216 ) ( 520, 906 )
NET LOSS $ (659 , 148
L $ ( 929 , 985 )
ALLOCATION OF NET LOSS
General Partners $ (6 , 591) $ ( 9, 300 )
Limited Partners $ (652 , 557) $ ( 920, 685)
NET LOSS PER LIMITED PARTNERSHIP UNIT $ (0 .30) $ (0 . 43 )_
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 2, 142 , 000 2 , 142 , 000
See notes to financial statement.
5
941292
GALAXY CABLEVISION, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended
March 31,
1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (659, 148 )
$ (929, 985)
Adjustments to reconcile net loss
to net cash flow provided by
operating activities:
Depreciation and amortization 1,735, 652 1, 886, 852
(Gain) Loss on sale of assets (27,382) 584
Equity in loss of investee 189, 704 101, 157
Net changes in assets and liabilities:
Subscriber receivables (81, 116) ( 119, 328 )
Prepaid expenses and other assets 2, 136 ( 188, 084)
Due to affiliate - net (345,582 ) ( 186, 010 )
Accounts payable 407, 210 110, 008
Accrued expenses and
other liabilities (24, 517 ) (79, 988 )
Net cash provided by operating
activities 1, 196, 957 595 , 206
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets 27, 382 400
Upgrade of cable TV systems (587, 385 ) ( 322 , 010 )
Purchase of vehicles and
equipment (236, 291) ( 136 , 604 )
Investments in Affiliates 0 (431 , 000 )
Net cash used by investing
activities (796, 294) (889 , 214)
6
941292
GALAXY CABLEVISION, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued)
For the Three Months Ended
March 31,
1994 1993
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings
Repayments of borrowings 0 434,281
(507 , 468 ) (725 ,062 )
Net cash used by financing
activities (507 , 468 )
(290, 781 )
DECREASE IN CASH ( 106,805 )
(584, 789 )
CASH AT BEGINNING OF THE PERIOD
475 , 345 695 , 665
CASH AT END OF THE PERIOD $ 368,540
$ 110, 876
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest $ 474,522
$ 558,343
See notes to financial statements.
7
941292
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941292
EXHIBIT l?
TECHNICAL QUALIFICATIONS
Galaxy Cablevision, headquartered in Sikeston
engages' since the 1970 's, in the building, firing, a, has been
operating of cable systems in the Midwest, SouSouthrCen and
Southwest United States. Over the next twenty-f vnyrar, and
ive systems were built, acquired and operated in Missouri, Illinois,n
Kentucky, Texas, Indiana, Tennessee and Alabama, In 1986, s
acquired STAR CATV with over 30, 000 customers in Texas and
Galaxy
Louisiana. Today, Galaxy operates cable systems in small
communities and rural areas, in a five state area with over
58 , 000 customers. Galaxy has become the leader in providing
service to rural America. In order to fulfill its objectives,
Galaxy introduced the "Cluster Concept" of regionally located
management teams and systems and through the use of microwave
hubs and fiber optics we have been able to maintain the latest
advancements in technology.
Galaxy has a strong management team with many years of
experience. Mr. Tommy Gleason has served as CEO and Chairman of
the board. In the late 1950 's, Mr. Gleason owned and operated a
systems in TV station in Kansas. He pioneered one of the first cable TV 61 . Over Gleason hasNbuuraska in ilt, owned9and operated past cable
three decades o Mr.
the country. systems throughout
Mr. Tommy Gleason Jr. , has served as President of Galaxy
Cablevision Management, Inc. , and as general partner of Galaxy
Cablevision Management, L.P. He became a licensed engineer in
1964 . In 1974 he formed his own company and built cable systems
throughout the Midwest and Texas .
Mr. Terry Cordova is the Vice President of Engineering. He
joined Galaxy in 1985 after graduating from college with a degree
in Electrical Engineering. He is responsible for the management
of the technical operations .
Mr. James Gleason, Chief Operating Officer has been with Galaxy
since 1987, he holds a Business Administration degree . Prior to
his present position Mr. Gleason was involved in the
administration operations, computer information services, and
customer service training aspects of the business.
In addition, Mr. Ward Webb is the District Vice President of
Operations. He has been with Galaxy since 1980 . He attended
Murray State University and served in the Avionics/Electronics
area of the United States Navy. After being honorably
discharged, Mr. Webb returned home to Western Kentucky. He is
responsible for all aspects of the operations in Illinois,
Kentucky and Tennessee.
941292
Page 2
Each regional office employs local engineers and technicians that
are responsible for the day to day technical and service
requirements of each system. Customer service is centralized at
each regional office to better serve our customers.
941292
Bryan L. McDougal
Attorney and Counselor at Law
Utah and Colorado
64 East 6400 South, Suite 330 Telephone: 801 /269-8900
Murray, Utah 84107-7202 FAX: 801 /262-9231
November 16, 1994 ".710,P,41
Bruce T. Barker, Assistant County Attorney !: N0V 1 8 1994 f ;
t.
Office of Weld County Attorney rte Li
P.O. Box 1948 ELG COUNTY
Greeley, CO 80632 ATTORNEY'S OFFICE
Re: Requested Transfer of Cable Television Franchise
From Chartwell Cable of Colorado, Inc. to
Galaxy TeleCom, Inc.
Dear Mr. Barker:
As we discussed on the phone, Chartwell Cable of Colorado, Inc.
("Chartwell") has entered into an Asset Purchase Agreement whereby Chartwell's cable
television systems in Weld County and Larimer County are to be sold to Galaxy TeleCom,
Inc.. Chartwell's cable operation in Weld County is governed by Ordinances #94, 94-B and
94-B. Chartwell hereby requests Weld County's permission to transfer and assign its rights
and obligations under those ordinances.
Pursuant to the applicable ordinances and FCC provisions regarding the sale
and transfer of cable television franchises, I am submitting herewith a fully executed form
FCC 394 entitled APPLICATION FOR FRANCHISE AUTHORITY CONSENT TO
ASSIGNMENT OR TRANSFER OF CONTROL OF CABLE TELEVISION FRANCHISE.
I beleive Form 394 sets forth all of the information to be provided under the
terms of the ordinances. As you will no doubt conclude, upon your review of the FCC 394,
Galaxy TeleCom, Inc. ("Galaxy") is well qualified, both technically and financially.
Finally, Galaxy advises that there are some additional transfer documents that
Galaxy will submit with regard to the financing of the acquisition. These documents are
being prepared and are forthcoming. I will forward the additional documents to you as soon
as I receive them so they may be considered together with the above listed items.
Please advise how you wish to proceed. Both Chartwell and Galaxy would be
happy to appear at any required hearing or meeting at your convenience. Your immediate
941292
Bruce T. Barker, Assistant County Attorney
Office of the Weld County Attorney
November 15, 1994
Page 2
attention to this matter would be appreciated as both parties are anxious to conclude their
transaction.
Very truly yours,
ryan L. McDougal
ddm
Enclosure
cc: A. Clinton Ober, President (Chartwell) (w/o enclosure)
J. Keith Davidson, CFO (Galaxy) (w/o enclosure)
941292
Federal Communications Commission
Washington,D.C. 20554 Approved by O448
FCC 394 3040-0573
Expires 08,11:1/966
APPLICATION FOR FRANCHISE AUTHORITY
CONSENT TO ASSIGNMENT OR TRANSFER OF CONTROL
OF CABLE TELEVISION FRANCHISE
FOR FRANCHISE AUTHORITY USE ONLY
SECTION I. GENERAL INFORMATION
DATE 11/01/94 1. Community Unit Identification Number: CO 0423
2. Application for: n Assignment of Franchise Transfer of Control
3. Franchising authority:
Weld County, CO
4. Identify community where the system/franchise that is the subject of the assignment or transfer of control is located:
Weld County, CO
5. Date system was acquired or (for system's constructed by the transferor/assignor) the date on
which service was provided to the first subscriber in the franchise area:
December, 1988
6. Proposed effective date of closing of the transaction assigning or transferring ownership of the on or before
system to transferee/assignee: 12/31/94
7- Attach as an Exhibit a schedule of any and all additional information or material filed with this Exhibit No.
application that is identified in the franchise as required to be provided to the franchising
authority when requesting its approval of the type of transaction that is the subject of this
application.
PART I - TRANSFEROR/ASSIGNOR
1. Indicate the name, mailing address, and telephone number of the transferor/assignor.Legal name of Transferor/Assignor(if individual, list last name first)
Chartwell Cable of Colorado, Inc. - -
Assumed name used for doing business(if any)
Chartwell Cable
Mailing street address or P.O. Box
P.O. Box 819
City State ZIP Code Telephone No. (include area code)
Evergreen Colorado 80439 (303) 674-7783
2.(a) Attach as an Exhibit a copy of the contract or agreement that provides for the assignment or Exhibit No.
transfer of control (including any exhibits or schedules thereto necessary in order to understand the 2 -
terms thereof). If there is only an oral agreement, reduce the terms to writing and attach.
(Confidential trade, business, pricing or mari<eting information, or other information not otherwise
publicly available, may be redacted).
(b) Does the contract submitted in response to (a) above embody the full and complete agreement Yes X I No
between the transferor/assignor and the transferee/assignee?
If No, explain in an Exhibit.
Exhibit No. I
941292
•
PART II - fRANSFEREE/ASSIGNEE
1.(a) Indicate the name,mailing address,and telephone number of the transfereeiassignee.
Legal name of Transferee/Assignee(if individual, list last name first)
Galaxy Telecom, Inc. •
Assumed name used for doing business(if any)
Galaxy Cablevision
•
Mailing street address or P.O. Box
1220 North Main Street
City State ZIP Code Telephone.No. (include area code)
Sikeston MO 63801 (314) 471-3080
(b) Indicate the name, mailing address,and telephone number of person to contact,if other than transferee/assignee.
Name of contact person(list last name first)
Keith Davidson
Firm or company name(if any)
Galaxy Telecom, Inc.
Mailing street address or P.O. Box
1220 North Main St.
City State ZIP Code Telephone No.(include area code)
Sikeston MO 63801 (314) 471-3080
(c) Attach as an Exhibit the name,mailing address,and telephone number of each additional person who Exhibit No.
should be contacted, if any.
(d) Indicate the address where the system's records will be maintained.
Street address
1220 North Main St.
City State ZIP Code
Sikeston MO ' 63801
2- Indicate on an attached exhibit any plans to change the current terms and conditions of service and Exhibit No.
operations of the system as a consequence of the transaction for which approval is sought.
FCC 394(Page 2)
Ouobo 1991
941292
SECTION I. TRANSFEREE'S/ASSIGNEE'S LEGAL QUALIFICATIONS
1. Transferee/Assignee is:
® Corporation a. Jurisdiction of incorporation: d. Name and address of registered agent in
Delaware jurisdiction:
b. Date of incorporation:
1/21/92 . CSC
c. For profit or not-for-profit: P.O. Box 591
For profit Willmington, Delaware 19899-0591
�-7
I 1 Limited Partnership a. Jurisdiction in which formed:
Name and address of registered agent in
jurisdiction:
b. Date of formation:
❑ -General Partnership f a: Jurisdiction whose laws govern formation: b. Date of formation:
t I Individual
❑ Other. Describe in an Exhibit.
Exhibit No.
2. List the transferee/assignee, and, if the transferee/assignee is not a natural person, each of its officers, directors, stockholders
beneficially holding more than 5% of the outstanding voting shares, general partners, and limited partners holding an equity
interest of more than 5%. Use only one column for each individual or entity. Attach additional pages if necessary. (Read
carefully—the lettered items below refer to corresponding lines in the following table.)
(a) Name, residence, occupation or principal business, and principal place of business. (If other than an individual, also show
name, address and citizenship of natural person authorized to vote the voting securities of the applicant that it holds.) List the
applicant first,officers,next,then directors and,thereafter, remaining stockholders and/or partners.
(b)Citizenship.
(c) Relationship to the transferee/assignee(e.g.,officer,director, etc.). '
(d) Number of shares or nature of partnersihp interest.
(e) Number of votes.
(f) Percentage of votes.
(a)
Galaxy Telecom, Inc. James Gleason Keith Davidson
1220 N. Main St. Sikeston, MO Sikeston, MO
Sikeston, MO 63801 COO VPF
b)
United States United States
U
Chief Operating Officer VP of Finance
d)
e)
I)
(cc a , :.ii- n
941292
3. If tho applicant is a corporation or a limited partnership, is the transferee/assignee formed under the X Yes I I No
laws cif, or duly qualified to transact business in, the State or other jurisdiction in which the system
operates?
If the answer is No, explain in an Exhibit. Exhibit No.
4. Has the transferee/assignee had any interest in or in connection with an application which has been Yes X No
dismissed or denied by any franchise authority?
If the answer is Yes,describe circumstances in an Exhibit. Exhibit No.
5. Has an adverse finding been made or an adverse final action been taken by any court or Yes IX I No
administrative body with respect to the transferee/assignee in a civil, criminal or administrative
proceeding, brought under the provisions of any law or regulation related to the following: any
felony; revocation, suspension or involuntary transfer of any authorization (including cable
franchises) to provide video programming services; mass media related antitrust or unfair
competition; fradulent statements to another governmental unit; or employment discrimination?
If the answer is Yes, attach as an Exhibit a full description of the persons and matter(s) involved, Exhibit No.
including an identification of any court or administrative body and any proceeding (by dates and file
numbers, if applicable), and the disposition of such proceeding.
6 Are there any documents, instruments, contracts or understandings relating to ownership or future Yes I X I No
ownership rights with respect to any attributable interest as described in Question 2 (including, but
not limited to, non-voting stock interests, beneficial stock ownership interests, options, warrants,
debentures)?
If Yes, provide particulars in an Exhibit.
7. Do documents, instruments, agreements or understandings for the pledge of stock of the X Yes I No
transferee/assignee, as security for loans or contractual performance, provide that: (a) voting rights
will remain with the applicant, even in the event of default on the obligation; (b) in the event of
default, there will be either a private or public sale of the stock: and (c) prior to the exercise of any
ownership rights by a purchaser at a sale described in (b), any prior consent of the FCC and/or of the
franchising authority, if required pursuant to federal, state or local law or pursuant to the terms of
the franchise agreement will be obtained?
If No, attach as an Exhibit a full explanation. Exhibit No.
SECTION Ill - TRANSFEREE'S/ASSIGNEE'S FINANCIAL QUALIFICATIONS
1. The transferee/assignee certifies that it has sufficient net liquid assets on hand or available from X Yes No
committed resources to consummate the transaction and operate the facilities for three months.
2. Attach as an Exhibit the most recent financial statements, prepared in accordance with generally Exhibit No.
accepted accounting principles, including a balance sheet and income statement for at least one full 11
year, for the tranfferee/assignee or parent entity that has been prepared in the ordinary course of
business, if any such financial statements are routinely prepared. Such statements, if not otherwise
publicly available, may be marked CONFIDENTIAL and will be maintained as confidential by the
franchise authority and its agents to the extent permissible under local law.
SECTION IV - TRANSFEREE'S/ASSIGNEE'S TECHNICAL QUALIFICATIONS
Set forth in an Exhibit a narrative account of the transferee's/assignee's technical qualifications, experience Exhibit No
and expertise regarding cable television systems, including, but not limited to, summary information about 12
appropriate management personnel that will be involved in the systems management and operations. The - -- - -
transferee/assignee may, but need not, list a representative sample nt cable systems currently or formerly
owned or operated.
r« 941292
O<I0Lc. X99)
SECTION V-CERTIFICATIONS
Part I -Transferor/Assignor
All the statements made in the application and attached exhibits are considered material representations, and all the Exhibits are a
material part hereof and are incorporated herein as if set out in full in the application.
•
I CERTIcomplete
that the statements oe t in this pledge and are true, Signature
and correct to the best of my knowledge and belief an
are made in good faith.
WILLFUL FALSE STATEMENTS MADE ON THIS FORM ARE Date /s / 7 Y
PUNISHABLE BY FINE AND/OR IMPRISONMENT. U.S. CODE,
TITLE 18,SECTION 1001. Print full name
A. Clinton Ober
Check_ appropriate classification:
Individual n General Partner ri
Corporate Officer �""-�
(Indicate Title) I I Other. Explain:
PrPGidant
Part II -Transferee/Assignee
All the statements made in the application and attached Exhibits are considered material representations, and all the Exhibits are a
material part hereof and are incorporated herein as if set out in full in the application.
The transferee/assignee certifies that he/she:
(a) Has a current copy of the FCC's Rules governing cable television systems.
(b) Has a current copy of the franchise that is the subject of this application, and of any applicable state laws or local ordinances and
related regulations.
,
(c) Will Lie its best efforts to comply with the terms of the franchise and applicable state laws or local ordinances and related
regulations, and to effect changes, as promptly as practicable, in the operation of the system, if any changes are necessary to cure any
violations thereof or defaults thereunder presently in effect or ongoing.I _
CERTIFY that the statements in this application are true Signature
complete and correct to the best of my knowledge and belief and
are made in good faith.
WILLFUL FALSE STATEMENTS MADE ON THIS FORM ARE o e ( 1 2111
PUNISHABLE BY FINE AND/OR IMPRISONMENT. U.S. CODE,
TITLE 18,SECTION 1001. Print full name
James M. Gleason -
Check appropriate classification:
IIndividual GeneralU K Pa X Corporate Officer
(Indicate Title) n Other. Explain:
Chief Operating Officer
cc o.,,
941:242
EXHIBIT 2
PART I
•
SUMMARY OF THE ASSET PURCHASE AGREEMENT
BETWEEN CHARTWELL CABLE OF COLORADO, INC.
AND GALAXY TELECOM, INC.
1. Galaxy Telecom, Inc. is purchasing all the assets relating
to the cable television systems that Chartwell Cable of
Colorado, Inc. now serves in Larimer & Weld County,
Colorado.
2 . The assets exclude any cash, corporate books and records,
tax refunds, etc.
3. The purchase price shall be increased or decreased, as
required, to effectuate the proration of income and
expenses.
4. The Seller represents and warrants to the Buyer certain
items, the more significant of which are as follows:
a. The Corporation is duly organized and in good standing.
b. The performance of the asset purchase agreement shall
be authorized by the required consent of Seller's
stockholders.
c . Certain exhibits are attached to the asset purchase
agreement which list the cable franchises, real
property, items of personal property, consents,
contracts, etc.
d. The systems have 79 miles of plant; 1, 500 homes; and at
least 833 basic subscribers.
e. There are certain representations and warranties
relating to environmental matters relative to the real
property.
f . There are no claims, legal actions, etc. that would
have a materially adverse affect on the systems.
g. Seller has complied materially with the franchises and
all contracts, and same should not have a materially
adverse affect on the systems.
941292
Representations and Warranties of Buyer
1. Buyer is a Delaware corporation duly organized and in good
standing.
2 . The execution, delivery and performance of the agreement by
Buyer has been duly authorized by all necessary action on
the part of Buyer.
3 . The sale is subject to obtaining the consents of franchises
and other authorities.
4. There is no claim, legal action, etc. which would give any
third party the right to be involved in the transaction.
. Covenants of Seller
Covenants of the Seller are those which Seller:
1 . Shall not do, as follows:
a. Modify or amend any material agreement in excess of
$10, 000 in any one case, or $100, 00 in the aggregate.
b. Do any act or fail to do any act which might result in
adverse modification of any of the cable franchises.
2 . Shall do, as follows:
a. Allow Buyer reasonable access and maintain the assets
in good condition.
b. Use its best efforts to obtain consents necessary to
comply with all rules and regulations applicable to the
operation of the systems.
Non-competition Agreement
Seller will deliver to Buyer a non-competition agreement
containing terms and conditions that it shall not compete with
Seller within a specified range of the systems for a period of
five years.
Anti-trust Laws
Buyer and Seller will each make whatever filings are required
under the Hart-Scott-Rodino Act.
Conditions to Obligations of Buyer and Seller
There are standard conditions of a cable television asset
purchase agreement which relate primarily to items already
2
941292
discussed above.
Closing
The closing shall take place on or before December 31, 1994.
Deliveries of Buyer and Seller
Both Buyer and Seller are obligated to deliver such items as
bills or sale, consents, a certificate, copies of franchises and
contracts, opinions of counsels, purchase price, assumption
agreements, etc.
Rights of Buyer and Seller upon Termination or Breach
The agreement contains a discussion of termination and other
amendments to the contract which are standard in cable television
asset purchase agreements.
Miscellaneous
Parties to the agreement are listed, together with their names,
addresses and telephone numbers.
3
941292
Ni
EXHIBIT 11
SECTION III
2 . Attached are financial statements of Galaxy Cablevision, L.P. ,
our current company. Galaxy Management, Inc. , or its
assignee, is a new entity with no past results.
Also attached is a pro forma Balance Sheet of Galaxy
TeleCom/Galaxy Management, Inc.
941292
PART I. FINANCIAL INFORMATION
CONFIDENTIAL
ITEM 1.--FINANCIAL STATEMENTS
GALAXY CABLEVISION, L.P.
BALANCE SHEETS
ASSETS
March 31, December 31,
1994 -1993
(unaudited)
PROPERTY AND EQUIPMENT:
Land and land improvements $ 134,500 $ 124,000
Buildings and building improvements 1,026,379 1,026, 103
Cable television systems 53,261,455 52, 674,070
Vehicles and equipment 4,500,850 4,306,242
Subtotal 58, 923,184 58, 130,415
Less accumulated depreciation (40,847,322) (39, 275, 974)
PROPERTY AND EQUIPMENT-NET 18,075, 862 18,854,441
CASH 368,540 475,345
SUBSCRIBER RECEIVABLES 282, 965 201,849
PREPAID EXPENSES AND OTHER ASSETS 816,432 818,568
DUE FROM AFFILIATES-NET 929, 131 583,549
INVESTMENT IN AFFILIATE 2, 140, 622; 2,330,326
NOTES RECEIVABLE 1,574,806 1,574, 806
FRANCHISE COSTS-NET 1,501,201 1, 594,567
ORGANIZATION COSTS-NET 105,847 113,572
LOAN ACQUISITION COSTS-NET 106, 941 139,247
TOTAL ASSETS $25,902 ,347 $26, 686, 270
See notes to financial statements.
3
941292
GALAXY CABLEVISION, L.P.
BALANCE SHEETS (Continued)
LIABILITIES AND PARTNERS' CAPITAL (DEFICIENCY IN ASSETS)
March 31, December 31,
1994 1993
(unaudited)
LIABILITIES:
Notes Payable $ 26, 124, 132 $26, 631, 600
Accounts Payable 1,744, 654 1,337,444
Accrued expense and other
liabilities 1,559, 292 1,583,809
Total liabilities 29,428,078 29,552, 853
PARTNERS' CAPITAL (DEFICIENCY IN ASSETS) :
General Partners (373, 996) (367, 405 )
Limited Partners-2, 150,000
partnership units issued,
2, 142,000 outstanding at March
31, 1994 and December 31, 1993 2,024,439 2, 676, 996
Repurchased limited partnership
units, 8,000 at March 31, 1994
and December 31, 1993 ( 140, 628 ) ( 140 , 628 )
Total Limited Partners 1, 883,811 2 ,536 ,368
Excess of purchase price over cost
of assets acquired from entities
under common control (5,035, 546) (5,035 ,546)
Total Partners' Capital
(Deficiency in Assets) (3 ,525, 731) (2,866,583)
TOTAL LIABILITIES AND PARTNERS'
CAPITAL (DEFICIENCY IN ASSETS) $25, 902,347 $26, 686, 270
See notes to financial statements.
4
941292
GALAXY CABLEVISION, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended
March 31,
1994 1993
SUBSCRIPTION SERVICES REVENUE $5,043, 918 $4, 772,533
OPERATING EXPENSES:
Systems operations (exclusive of
depreciation and amortization
expense shown separately below)
Related Party 12,003 15,545
Other 2,007 ,022 1,866,362
2,019,025 1,881,907
Selling, general and administrative
Related Party 422, 274 395,843
Other 998, 166 949 ,404
1,420,440 1, 345,247
Depreciation Expense 1, 602, 256 1, 776, 772
Amortization Expense 133, 396 110,080
1, 735, 652 1, 886,852
Total operating expenses 5, 175 , 117 5, 114,006
OPERATING LOSS ( 131, 199) (341,473 )
EQUITY IN LOSS OF INVESTEE ( 189, 704) ( 101, 157)
INTEREST INCOME 36, 059 37,089
OTHER INCOME (EXPENSE) 34, 912 (3,538 )
INTEREST EXPENSE (409, 216) (520, 906 )
NET LOSS $ (659, 148)
ALLOCATION OF NET LOSS
General Partners $ (6, 591)
Limited Partners $ (652, 557) $ (920 685
NET LOSS PER LIMITED PARTNERSHIP UNIT $ (0.30)
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 2, 142, 000 2, 142, 000
See notes to financial statement.
5
941292
GALAXY CABLEVISION, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended
March 31,
1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (659, 148) $ (929, 985)
Adjustments to reconcile net loss
to net cash flow provided by
operating activities:
Depreciation and amortization 1, 735,652 1,886,852
(Gain) Loss on sale of assets (27,382) 584
Equity in loss of investee 189, 704 101, 157
Net changes in assets and liabilities:
Subscriber receivables (81, 116) (119, 328)
Prepaid expenses and other assets 2, 136 (188,084)
Due to affiliate - net (345,582) (186,010)
Accounts payable 407,210 110, 008
Accrued expenses and
other liabilities (24, 517) (79, 988)
Net cash provided by operating
activities 1, 196 , 957 595, 206
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets 27,382 400
Upgrade of cable TV systems (587, 385) (322, 010)
Purchase of vehicles and
equipment (236,291) (136, 604)
Investments in Affiliates 0 (431, 000)
Net cash used by investing
activities (796, 294) (889, 214)
6
941292
GALAXY CABLEVISION, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued)
For the Three Months Ended
March 31,
1994 1993
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 0 434,281
Repayments of borrowings (507,468) (725,062)
Net cash used by financing
activities (507, 468 ) (290, 781 )
DECREASE IN CASH (106,805) (584, 789)
CASH AT BEGINNING OF THE PERIOD 475, 345 695 , 665
CASH AT END OF THE PERIOD $ 368,540 $ 110, 876
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest S 474,522 r $ 558,343
See notes to financial statements.
7
941292
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941292
941292
EXHIBIT 12
TECHNICAL OUALIFICATIONS
Galaxy Cablevision, headquartered in Sikeston, Missouri, has been
engage' since the 1970 's, in the building, acquiring, and
operating of cable systems in the Midwest, South Central, and
Southwest United States. Over the next twenty-five years, cable
systems were built, acquired and operated in Missouri, Illinois,
Kentucky, Texas, Indiana, Tennessee and Alabama. In 1986, Galaxy
acquired STAR CATV with over 30, 000 customers in Texas and
Louisiana. Today, Galaxy operates cable systems in small
communities and rural areas, in a five state area with over
58, 000 customers. Galaxy has become the leader in providing
service to rural America. In order to fulfill its objectives,
- Galaxy introduced the "Cluster Concept" of regionally located
management teams and systems and through the use of microwave
hubs and fiber optics we have been able to maintain the latest
advancements in technology.
Galaxy has a strong management team with many years of
experience. Mr. Tommy Gleason has served as CEO and Chairman of
the board. In the late 1950 's, Mr. Gleason owned and operated a
TV station in Kansas. He pioneered one of the first cable TV
systems in Nebraska in 1961. Over the past three decades Mr.
Gleason has built, owned and operated cable systems throughout
the country.
Mr. Tommy Gleason Jr. , has served as President of Galaxy
Cablevision Management, Inc. , and as general partner of Galaxy
Cablevision Management, L.P. He became a licensed engineer in
1964. In 1974 he formed his own company and built cable systems
throughout the Midwest and Texas.
Mr. Terry Cordova is the Vice President of Engineering. He
joined Galaxy in 1985 after graduating from college with a degree
in Electrical Engineering. He is responsible for the management
of the technical operations.
Mr. James Gleason, Chief Operating Officer has been with Galaxy
since 1987, he holds a Business Administration degree. Prior to
his present position Mr. Gleason was involved in the
administration operations, computer information services, and
customer service training aspects of the business.
In addition, Mr. Ward Webb is the District Vice President of
Operations. He has been with Galaxy since 1980 . He attended
Murray State University and served in the Avionics/Electronics
area of the United States Navy. After being honorably
discharged, Mr. Webb returned home to Western Kentucky. He is
responsible for all aspects of the operations in Illinois,
Kentucky and Tennessee .
941292
Page 2
Each regional office employs local engineers and technicians that
are responsible for the day to day technical and service
requirements of each system. Customer service is centralized at
each regional office to better serve our customers.
941212
Hello