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