Item 2. Properties
Norfolk Radio
Registrant's radio station, WMXN-FM in Norfolk, Virginia leases
its office and studio space under a ten year lease. The station
also leases space on a tower for its broadcast antenna and space
in a building that houses its transmission equipment.
WMXN-FM owns its office furniture, studio equipment, and
transmission equipment.
WMXN-FM holds a license from the FCC that is used in connection
with broadcasting operations at the station.
Other Properties
Paradigm and BBAD operate out of leased office space in
California. Paradigm and BBAD own their office furniture and
office equipment. Registrant believes that the properties leased
by Paradigm and BBAD and the furniture and equipment owned by
those companies are in reasonably good condition and are adequate
for the operation of the company.
TCS owns the land and studio buildings at each of its three
locations (Columbus, Georgia; Terre Haute, Indiana; and St.
Joseph, Missouri) as well as broadcasting transmitters, antennas
and towers at each location. In addition, TCS owns technical
broadcasting equipment as well as the furniture and fixtures at
TCS's three stations.
Registrant believes that the properties owned by the stations and
the other equipment and furniture and fixtures owned are in
reasonably good condition and are adequate for the operations of
the stations.
The physical assets of Registrant's remaining investments are not
included in the consolidated balance sheet of Registrant.
Item 3.
Item 3. Legal Proceedings
Refer to "Item 1. Business - Maryland Cable Corp." for
information regarding the bankruptcy filing made by Maryland
Cable Corp. and Maryland Cable Holdings Corp.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters which required a vote during the fourth
quarter of the fiscal year covered by this report.
Part II
Item 5.
Item 5. Market for Registrant's Common Stock and Stockholder
Matters
A public market for Registrant's Units does not now exist, and it
is not anticipated that such a market will develop in the future.
Accordingly, accurate information as to the market value of a
Unit at any given date is not available.
As of January 16, 1995, the number of owners of Units was 14,920.
Effective November 9, 1992, Registrant was advised that Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch" or
"MLPF&S") introduced a new limited partnership secondary service
through Merrill Lynch's Limited Partnership Secondary Transaction
Department ("LPSTD"). This service will assist Merrill Lynch
clients wishing to buy or sell Registrant Units.
Beginning with December 1994 client account statements, MLPF&S
implemented new guidelines for valuing limited partnerships and
other direct investments reported on client account statements.
As a result, MLPF&S no longer reports general partner estimates
of limited partnership net asset value on its client account
statements, although Registrant's general partner may continue to
provide its estimate of net asset value in quarterly reports to
unit holders. Pursuant to the new guidelines, estimated values
for limited partnership investments will be provided annually to
MLPF&S by independent valuation services. The estimated values
will be based on financial and other information available to the
independent services on the prior August 15th. MLPF&S clients
may contact their Merrill Lynch Financial Consultants or
telephone the number provided to them on their account statements
to obtain a general description of the methodology used by the
independent valuation services to determine their estimates of
value. The estimated values provided by the independent services
are not market values and Unit holders may not be able to sell on
their MLPF&S statements upon a sale. In addition, Unit holders
may not realize the amount shown on their account statements upon
the liquidation of Registrant over its remaining life.
Registrant does not distribute dividends, but rather
Distributable Cash From Operations, Distributable Refinancing
Proceeds, and Distributable Sale Proceeds, to the extent
available. On June 6, 1989, Registrant made a federal tax
allowance cash distribution in an amount equal to 33% of the 1988
federal taxable income to all limited partners owning Units in
1988 in proportion to their federal taxable income from the
ownership of Units. The total amount distributed was $2,040,121.
In the fourth quarter of 1994, Registrant made a cash
distribution of $8,971,760 to its Limited Partners and $90,624 to
its General Partner following the disposition of Maryland Cable.
Item 6.
Item 6. Selected Financial Data
Certain items have been restated to conform to 1994 presentation
for discontinued operations.
Item 7.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
At December 31, 1994, Registrant had $1,752,059 in cash and cash
equivalents.
In the fourth quarter of 1994, Registrant distributed $8,971,760
to its Limited Partners and $90,624 to its General Partner
following the disposition of Maryland Cable.
At December 31, 1993, Registrant had $3,739,678 in cash and cash
equivalents.
During 1994, Registrant continued its operations phase while
selling or disposing of a significant portion of its investments.
Registrant consummated the disposition of Maryland Cable on
September 30, 1994 and the sale of the Windsor Cable Systems on
May 18, 1994. In addition, Registrant consummated the sale of
WMXN-FM on February 21, 1995. Registrant is currently marketing
TCS for potential sale in 1995. The status of Registrants'
investments is discussed in more detail below. Refer to "Item 8.
Item 8. Financial Statements and Supplementary Data
ML Media Opportunity Partners, L.P.
Independent Auditors' Report
Consolidated Balance Sheets as of December 31, 1994 and December 31, 1993
Consolidated Statements of Operations for the years ended December 31, 1994, December 31, 1993 and December 31, 1992
Consolidated Statements of Cash Flows for the years ended December 31, 1994, December 31, 1993 and December 31, 1992
Consolidated Statements of Changes in Partners' Deficit for the years ended December 31, 1994, December 31, 1993 and December 31, 1992
Notes to Consolidated Financial Statements for the years ended December 31, 1994, December 31, 1993 and December 31, 1992
Schedule III - Condensed Financial Information of Registrant as of December 31, 1994, December 31, 1993 and December 31, 1992
INDEPENDENT AUDITORS' REPORT
ML Media Opportunity Partners, L.P.:
We have audited the accompanying consolidated financial
statements and the related financial statement schedule of ML
Media Opportunity Partners, L.P. (the "Partnership") and its
affiliated entities, listed in the accompanying table of
contents. These consolidated financial statements and financial
statement schedule are the responsibility of the Partnership's
general partner. Our responsibility is to express an opinion on
the consolidated financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by the general partner, 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 consolidated financial statements present
fairly, in all material respects, the financial position of the
Partnership and its affiliated entities at December 31, 1994 and
1993 and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1994 in
conformity with generally accepted accounting principles. Also,
in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial
statements taken as a whole, present fairly in all material
respect the information set forth therein.
INDEPENDENT AUDITORS' REPORT (continued)
The accompanying consolidated financial statements and financial
statement schedule have been prepared assuming that the
Partnership will continue as a going concern. As discussed in
Note 2 to the consolidated financial statements, the Partnership
has sold or is in the process of selling or disposing of a
significant portion of its investments. In addition, the
Partnership was in default under the TCS Television Partners,
L.P. ("TCS") note agreements and will be unable to satisfy its
ongoing debt obligations under these agreements. The Partnership
has decided to pursue a sale of the TCS stations. These
circumstances raise substantial doubt about the Partnership's
ability to continue as a going concern. Management's plans
concerning these matters are also described in Note 2.
Accordingly, the consolidated financial statements and financial
statement schedule do not include adjustments that might result
from the outcome of the uncertainties referred to herein.
/s/ Deloitte & Touche LLP
New York, New York
March 9, 1995
(Continued on the following page)
Supplemental Disclosure of Non-Cash Investing and Financing
Activities:
Effective in 1992, the Partnership controlled the operations of
Paradigm and consolidated its ownership interest in Paradigm.
Effective in 1993, the Partnership controlled the operations of
TCS and as a result consolidated TCS's total assets and total
liabilities.
Effective July 1, 1993, the Partnership sold the business and
assets of IMPLP and Intelidata.
Effective September 30, 1993, Maryland Cable consummated the sale
of the Leesburg System.
See Notes to Consolidated Financial Statements.
ML MEDIA OPPORTUNITY PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, DECEMBER 31, 1993, AND
DECEMBER 31, 1992
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ML Media Opportunity Partners, L.P. (the "Partnership"), was
formed and the Certificate of Limited Partnership was filed under
the Delaware Revised Uniform Limited Partnership Act on June 23,
1987. Operations commenced on March 23, 1988 with the first
closing of the sale of units of limited partnership interest.
Media Opportunity Management Partners (the "General Partner") is
a joint venture, organized as a general partnership under New
York law, between RP Opportunity Management, L.P., a limited
partnership under Delaware law, and ML Opportunity Management
Inc., a Delaware corporation and an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. The General Partner was
formed for the purpose of acting as general partner of the
Partnership. The General Partner's total capital contribution
was $1,132,800 at December 31, 1994 which represents 1% of the
total Partnership capital contributions.
Pursuant to the terms of the Amended and Restated Agreement of
Limited Partnership, the General Partner is liable for all
general obligations of the Partnership to the extent not paid by
the Partnership. The limited partners are not liable for the
obligations of the Partnership in excess of the amount of their
contributed capital.
The purpose of the Partnership is to acquire, finance, hold,
develop, improve, maintain, operate, lease, sell, exchange,
dispose of and otherwise invest in and deal with media businesses
and direct and indirect interests therein.
As of December 31, 1994, the Partnership's primary investments
consisted of:
99% ownership of ML Cable Partners, which had held a
participation in the senior bank debt of Maryland Cable (see
Note 2);
Ownership of 351,665 shares of common stock (an ownership
percentage of approximately 2.4%) of Western Wireless
Corporation ("WWC"), a cellular telecommunications operator
based in California; (see Note 6)
51.005% ownership of TCS Television Partners, L.P. ("TCS"),
which owns (i) 20% of the outstanding common stock of Fabri
Development Corporation, which in turn owns and operates two
network affiliated television stations serving Terre Haute,
Indiana and St. Joseph, Missouri, and (ii) 100% of the
outstanding common stock of TCS Television, Inc., which in
turn owns the 80% of the outstanding common stock of Fabri
Development Corporation not owned by TCS, as well as 100% of
the outstanding common stock of Avant Development
Corporation, which owns and operates a network affiliated
television station serving Columbus, Georgia;
100% ownership of WMXN-FM ("WMXN-FM"), a radio station in
Norfolk, Virginia; (sold on February 21, 1995)
50% ownership of Paradigm Entertainment, L.P. ("Paradigm"),
a California based company involved in the production of
television and cable programming (see Note 6 regarding the
allocation of profits and losses) which owns approximately
52% of Bob Banner Associates Development ("BBAD") based upon
capital contributions;
36.8% ownership of Media Ventures Investments, Ltd.
("Investments", formerly Media Ventures International
Limited, "Media Ventures"), a United Kingdom corporation
formed to develop or acquire European media and
entertainment companies; and a 13.8% ownership of MV
Technology Limited ("MVT").
Basis of Accounting and Fiscal Year
The Partnership's records are maintained on the accrual basis of
accounting for financial reporting and tax purposes.
Investments, MVT, and GCC are accounted for on the cost method of
accounting. The Partnership carried its interest in Investments
under the equity method of accounting in 1992 and prior years.
The Partnership carried its interest in Paradigm under the equity
method of accounting in 1991. The fiscal year of the Partnership
shall be the calendar year.
See Note 3 regarding the discontinued operations of TCS, WMXN-FM
and Paradigm/BBAD.
Certain 1992 and 1993 items have been reclassified to conform to
1994 presentation for discontinued operations.
Barter Transactions
As is customary in the broadcasting industry, the Partnership
engages in the bartering of commercial air time for various goods
and services. Barter transactions are recorded based on the fair
market value of the products and/or services received. The goods
and services are capitalized or expensed as appropriate when
received or utilized. Revenues are recognized when the
commercial spots are aired. All such revenues and expenses are
included in the Partnership's loss from discontinued operations.
Broadcast Program Rights
The Partnership's television stations' broadcast program rights
represent license agreements for the right to broadcast programs
which are available at the balance sheet date. Amortization is
recorded on a straight-line basis over the period of the license
agreements or upon run usage. Amortization is included in the
Partnership's loss from discontinued operations.
Property and Depreciation
Property, plant and equipment is stated at cost, less accumulated
depreciation, and is included in the net liabilities of the
Partnership's discontinued operations. Property, plant and
equipment is depreciated using the straight-line method over the
following estimated useful lives:
Buildings 30 years Other 5-7 years
Expenditures for maintenance and repairs are charged to operating
expense as incurred, and improvements, replacement equipment and
additions are capitalized and depreciated over the remaining life
of the assets.
Intangible Assets and Deferred Charges
Intangible assets and deferred charges are being amortized on a
straight-line basis over various periods as follows:
Goodwill approximately 20-40 years Franchise life of the franchise Other Intangibles various Deferred Charges 3-10 years
Intangible assets, deferred charges and related amortization are
included in the Partnership's net liabilities from discontinued
operations and loss from discontinued operations, respectively.
Asset Impairment
The Partnership assesses the impairment of assets on a regular
basis or immediately upon the occurrence of a significant event
in the marketplace or an event that directly impacts its assets.
The methodology varies depending on the type of asset but
typically consists of comparing the net book value of the asset
to either: (1) the undiscounted expected future cash flows
generated by the asset, and/or (2) the current market values
obtained from industry sources.
If the net book value of a particular asset is materially higher
than the estimated net realizable value, and the asset is
considered to be permanently impaired, the Partnership will write-
down the net book value of the asset accordingly; however, the
Partnership does not write its assets down to a value below the
asset-related non-recourse debt. The Partnership relies on
industry sources and its experience in the particular marketplace
to determine whether an asset impairment is other than temporary.
Income Taxes
No provision for income taxes has been made for the Partnership
because all income and losses are allocated to the partners for
inclusion in their respective tax returns. However, the
Partnership owns corporations which are consolidated in the
accompanying financial statements which are taxable entities.
Effective January 1, 1993, the corporations owned by the
Partnership adopted Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes" ("SFAS No. 109"). For the
corporations owned by the Partnership which are consolidated in
the accompanying financial statements, SFAS No. 109 requires the
recognition of deferred income taxes for the tax consequences of
differences between the bases of assets and liabilities for
income tax and financial statement reporting, based on enacted
tax laws. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be
realized. For the Partnership, SFAS No. 109 requires the
disclosure of the difference between the tax bases and the
reported amounts of the Partnership's assets and liabilities (see
Note 9).
Statement of Cash Flows
Short-term investments which have an original maturity of ninety
days or less are considered cash equivalents. Interest paid in
1994, 1993 and 1992 was $3,424,172, $10,708,585 and $10,192,232,
respectively.
Statement of Financial Accounting Standards No. 112
Effective January 1, 1994, the Partnership adopted Statement of
Financial Accounting Standards No. 112, "Employers' Accounting
for Postemployment Benefits" ("SFAS No. 112"). This
pronouncement establishes accounting standards for employers who
provide benefits to former or inactive employees after
employment, but before retirement. These benefits include, but
are not limited to, salary-continuation, disability related
benefits including workers' compensation, and continuation of
health care and life insurance benefits. The statement requires
employers to accrue the obligations associated with service
rendered to date for employee benefits accumulated or vested
where payment is probable and can be reasonably estimated. The
effect of the adoption of SFAS No. 112 was not material to the
Partnership's financial position or results of operations as of
and for the year ending December 31, 1994.
2. Liquidity
At December 31, 1994, the Partnership had $1,752,059 in cash and
cash equivalents.
At December 31, 1993, the Partnership had $3,739,678 in cash and
cash equivalents.
In the fourth quarter of 1994, the Partnership distributed
$8,971,760 to its Limited Partners and $90,624 to its General
Partner following the disposition of Maryland Cable (see below).
During 1994, the Partnership continued its operations phase while
selling or disposing of a significant portion of its investments.
The Partnership consummated the disposition of Maryland Cable on
September 30, 1994 and the sale of the Windsor Cable Systems on
May 18, 1994. In addition, the Partnership consummated the sale
of WMXN-FM on February 21, 1995. The Partnership is currently
marketing TCS for potential sale in 1995 and, on January 13,
1995, entered into a non-binding letter of intent to sell the
stock of Avant Development Corporation, the corporation which
owns television station WRBL-TV (see below). The status of the
Partnership's investments is discussed in more detail below.
During 1995, the Partnership will attempt to sell or otherwise
dispose of all of its remaining investments in media properties,
and then liquidate; however, there can be no assurance that the
Partnership will be successful in completing such actions prior
to December 31, 1995.
Disposition of Maryland Cable
On September 30, 1994, the Amended Prepackaged Plan of
Reorganization of Maryland Cable and Holdings (the "Prepackaged
Plan") was consummated. Pursuant to the Prepackaged Plan,
Maryland Cable and Holdings were liquidated into Maryland Cable
Partners, L.P., a newly formed limited partnership ("Newco"). As
a result of the liquidation, Newco acquired all of the assets of
Maryland Cable, subject to all of the liabilities of Maryland
Cable that were not discharged pursuant to the Prepackaged Plan.
Under the Prepackaged Plan, the Partnership received a 4.9%
interest in Newco in satisfaction of (i) the $3,600,000 in
subordinated promissory notes held by the Partnership, plus
accrued interest thereon, (ii) the $5,379,833 in deferred
management fees payable to the Partnership, and (iii) certain
other amounts payable to the Partnership. The Partnership
immediately exercised its right to sell its 4.9% interest in
Newco to the Water Street Corporate Recovery Fund I, L.P. (the
holder of 85% of the outstanding principal amount of the 15-3/8%
Subordinated Discount Notes due 1998 of Maryland Cable) and
certain other holders of the Notes for an aggregate price of
$2,846,423. Upon the consummation of the Prepackaged Plan, ML
Cable Partners, which is 99% owned by the Partnership, received
payment in full of the unpaid portion of the $6,830,000
participation in the senior bank debt of Maryland Cable held by
ML Cable Partners, together with accrued interest thereon. In
addition, MultiVision Cable TV Corp. received a payment of
$500,000 in partial settlement of severance and other costs
relating to the termination of MultiVision as manager of the
Maryland Cable cable systems. The Partnership recognized a gain
for financial reporting purposes on the disposition of Maryland
Cable of approximately $130 million. Such gain resulted
primarily from forgiveness of debt at the subsidiary level and is
classified as an extraordinary gain on the Partnership's
Consolidated Statements of Operations.
Included in this gain is a $450,000 management fee which the
Partnership is entitled to receive for managing the Maryland
Cable Systems from January 1, 1994 through September 30, 1994.
Sale of Windsor
On May 18, 1994, the Partnership completed the sale of the assets
of the Windsor Systems to Tar River Communications Inc. ("Tar
River") for $3,443,200, subject to post-closing adjustments. At
closing, the Partnership repaid the $2,050,058 of principal and
interest then due under the Windsor Note, as required by the
terms of the Windsor Note. In addition, as required by the Asset
Purchase Agreement with Tar River, at closing, $342,160 was
placed into two separate escrow accounts to cover the potential
costs of improving pole attachments as well as other possible
post-closing expenses. A significant portion of the remaining
$1,050,982 of sale proceeds will be used to cover certain pre-
closing liabilities to third parties, as well as the final
closing costs of the transaction, such as legal fees. The
Partnership recognized a gain of $600,000 for financial reporting
purposes on the sale of the Windsor Systems.
WMXN-FM
During 1994, WMXN-FM generated sufficient revenues, through the
LMA (see below) to cover its operating costs (before management
fees).
The Partnership entered into an Option Agreement, effective
January 25, 1994, with US Radio , Inc. ("US Inc."), a Delaware
corporation, and an affiliated entity, US Radio, L.P. ("US
Radio"), a Delaware limited partnership, neither of which is
affiliated with the Partnership. Pursuant to the Option
Agreement, the Partnership granted US Inc. an option (the
"Call"), exercisable at any time prior to January 15, 1995, to
purchase substantially all of the assets of WMXN-FM (the
"Assets") for a cash price of $3.5 million. On September 23,
1994, US Inc. exercised the Call. On October 24, 1994, the
Partnership and US Radio of Norfolk, Inc. ("US Norfolk"), an
affiliate of US Inc. to which US Inc. assigned its option to
purchase WMXN-FM, filed an application with the FCC requesting
assignment of the license of WMXN-FM from the Partnership to US
Norfolk.
Following receipt of FCC approval, on February 21, 1995, US
Norfolk purchased WMXN-FM for approximately $3.5 million, subject
to future adjustment based on a post-closing accounting
reconciliation between US Norfolk and the Partnership required by
the Asset Purchase Agreement. The Partnership does not currently
anticipate that such potential future adjustment will be
material. Following payment of a transaction fee to a third
party unaffiliated with the Partnership, approximately $3.3
million was remitted to the Partnership. In addition, on March
7, 1995 approximately $400,000 was returned to the Partnership
from WMXN-FM's cash balances.
Effective January 31, 1994, the Partnership entered into a Time
Brokerage Agreement (the "LMA") with US Radio. The LMA called
for the Partnership to make broadcasting time available on WMXN-
FM to US Radio and for US Radio to provide radio programs to be
broadcast on WMXN-FM, subject to certain terms and conditions,
including the rules and regulations of the FCC. In exchange for
providing broadcasting time to US Radio, the Partnership received
a monthly fee approximately equal to its cost of operating WMXN-
FM. The LMA continued until the consummation of the acquisition
of WMXN-FM by US Norfolk (see below).
TCS
Although the broadcast television industry experienced overall
growth in advertising revenues in 1994, TCS was in default of
covenants under its note agreements as of December 31, 1994, and
failed to make scheduled principal payments totalling $2,300,000
on February 28, 1994, May 31, 1994, August 31, 1994 and November
30, 1994. In addition, TCS did not make a required principal
payment of $575,000 due February 28, 1995. TCS also expects to
default on the majority of its scheduled principal payments for
the remainder of 1995. TCS engaged in discussions with its note
holders regarding a potential restructuring of TCS's note
agreements, but ultimately decided to pursue a sale of the TCS
stations. The Partnership engaged Furman Selz Incorporated to
assist in marketing the TCS television stations for sale. The
marketing of the sale of such stations commenced in December of
1994. It is the Partnership's intention to actively pursue a
sale of the TCS television stations. On January 13, 1995, the
Partnership entered into a non-binding letter of intent to sell
the stock of Avant Development Corporation ("Avant"), a 100%-
owned corporate subsidiary of TCS, Inc. which owns WRBL-TV. The
sale of Avant is subject to negotiation of a definitive purchase
and sale agreement and numerous other conditions. The ultimate
transfer of the license of WRBL-TV to a potential buyer, via the
sale of the stock of Avant, will also be subject to the prior
approval of the FCC. The Partnership may not ultimately be able
to reach a final agreement with potential purchasers on terms
acceptable to the Partnership. During the process of marketing
the TCS television stations, while TCS remains in default, the
note holders have the option to exercise their rights under the
notes, which rights include the right to foreclose on the stock
of the operating subsidiaries that own the three TCS stations,
but not the other assets of the Partnership. Whether or not the
Partnership is able to sell the TCS television stations, it is
unlikely that the Partnership will recover more than a nominal
amount of its investment in TCS.
Refer to Note 4 for further information regarding TCS's debt.
During the fourth quarter of 1992, TCS concluded that there had
been an impairment of the value of the enterprise and, as a
result, wrote-down its intangible assets (goodwill) by a total of
$6 million, which resulted in the Partnership's $2,460,000 share
of this write-down for financial reporting purposes.
Paradigm
Paradigm and/or BBAD are not currently producing television
programs, and the Partnership has not advanced any funds to
Paradigm and/or BBAD since the second quarter of 1992. Paradigm
and/or BBAD took several steps in 1992 and 1993 to reduce
operating costs, primarily by reducing the number, and
compensation, of employees. However, Paradigm and/or BBAD did
not operate profitably during 1993, and were dependent on outside
sources, primarily Bob Banner Associates Inc. ("Associates") to
finance BBAD's monthly operating costs. The Partnership elected
not to fund such operating costs. The Partnership has no
obligation to advance any additional funds to Paradigm and/or
BBAD and actively sought a strategic partner that would share in
meeting Paradigm's and/or BBAD's potential future funding needs,
but was unable to identify such a partner. Paradigm and/or BBAD
have no liability for borrowed funds. The Partnership has agreed
in principle with Associates on the terms of an agreement under
which Paradigm would retain the three television movies and the
series developed by it, and the other projects and program
concepts developed by Paradigm and/or BBAD would be assigned to
Associates, and Paradigm would retain a percentage interest in
all such projects and concepts. It is the Partnership's
intention, following the execution of a definitive agreement
encompassing these terms, to attempt to sell its interest in
Paradigm and/or BBAD. However, it is unlikely that the
Partnership will recover more than a nominal portion, if any, of
its original investment in Paradigm and/or BBAD. Due in part to
the Partnership's unwillingness to advance additional funds to
fund the continuing operating losses and possible winding down of
Paradigm's and BBAD's operating activities, the Partnership
recorded in the second quarter of 1993 a writedown of
approximately $516,000 of certain assets of Paradigm and BBAD to
reduce the Partnership's net investment to a net realizable value
of zero.
GCC/WWC
Refer to Note 6 for information regarding GCC/WWC.
Investments, EMP, Ltd. and MVT
Refer to Note 6 for information regarding Investments, EMP, Ltd.,
and MVT.
IMP/Intelidata
Effective July 1, 1993, the Partnership entered into three
transactions to sell the business and assets of IMPLP/IMPI and
Intelidata. In two separate transactions, the Partnership sold
the entire business and substantially all of the assets of
IMPLP/IMPI and a portion of the business and assets of Intelidata
to Phillips Business Information, Inc. ("PBI") for future
consideration based on the revenues of IMPLP/IMPI and the portion
of the Intelidata business acquired by PBI. PBI is not
affiliated with the Partnership. At closing, PBI made advances
of $100,000 and $150,000 to IMPLP/IMPI and Intelidata,
respectively, which advances would be recoverable by PBI from any
future consideration payable by PBI to the Partnership. In
addition, PBI agreed to assume certain liabilities of IMPLP/IMPI
and Intelidata.
In the third transaction, the Partnership sold the remaining
business and assets of Intelidata, which were not sold to PBI, to
Romtec plc ("Romtec") in exchange for future consideration, based
on both the amount of assets and liabilities transferred to
Romtec and the combined profits of the portion of the Intelidata
business acquired by Romtec and another, existing division of
Romtec. In addition, certain liabilities of Intelidata were
assumed by Romtec. Romtec is not affiliated with the
Partnership.
As a result of the above transactions, the Partnership recorded a
writedown of approximately $364,000 of certain assets of
IMPLP/IMPI/Intelidata in the second quarter of 1993 to reduce the
Partnership's net investment to a net realizable value of zero.
Subsequent to the sale of the businesses, the Partnership
advanced net additional funds totaling approximately $0.1 million
to IMPLP/IMPI and Intelidata to fund cash shortfalls resulting
from the pre-sale claims of certain creditors. The Partnership
anticipates that it may make additional such advances to
IMPLP/IMPI and Intelidata during 1995. The total of any the
Partnership obligations to fund such advances, including certain
contractual obligations, is not currently anticipated to exceed
the amount of the writedown. It is unlikely that the Partnership
will recover any portion of its investment in
IMPLP/IMPI/Intelidata.
Summary
In summary of the Partnership's liquidity status, the
approximately $1,750,000 the Partnership has available for
working capital may be utilized to support anticipated funding
needs or possible restructurings as appropriate, of its
investments. The Partnership has no contractual commitment to
advance funds to any of its existing investments.
3. DISCONTINUED OPERATIONS
Cable Television Systems Segment
Due to the disposition of Windsor and Maryland Cable, discussed
in Note 2, the Partnership has presented its Cable Television
Systems Segment (comprised of Maryland Cable and Windsor) as
discontinued operations. The December 31, 1993 Consolidated
Balance Sheet and the December 31, 1993 and 1992 Consolidated
Statements of Operations and Consolidated Statements of Cash
Flows have been restated to present such discontinued operations.
The net liabilities of the discontinued operations of this
segment on the Consolidated Balance Sheets are comprised of the
following:
Summarized results of the discontinued operations of this segment
on the Consolidated Statements of Operations are as follows:
Any losses incurred by this segment subsequent to March 31, 1994
have been offset against the gain on disposition for the year
ended December 31, 1994.
Production Segment
Due to the expected disposition of Paradigm in 1995, the
Partnership's Production Segment is presented as discontinued
operations at December 31, 1994. The December 31, 1993
Consolidated Balance Sheet and the December 31, 1993 and 1992
Consolidated Statement of Operations and Consolidated Statement
of Cash Flows have been restated to present such discontinued
operations.
The net liabilities of the discontinued operations of this
segment on the Consolidated Balance Sheets are comprised of the
following:
Summarized results of the discontinued operations of this segment
on the Consolidated Statements of Operations are as follows:
Television and Radio Station Segment
Due to the disposition of WMXN-FM (see Note 2) on February 21,
1995 and the Partnership's decision to sell TCS, the Partnership
has presented its Television and Radio Station Segment (comprised
of WMXN-FM and TCS) as discontinued operations. The December 31,
1993 Consolidated Balance Sheet and the December 31, 1993 and
1992 Consolidated Statements of Operations and Consolidated
Statements of Cash Flows, have been restated to present such
discontinued operations.
The net liabilities of discontinued operations of this segment on
the Consolidated Balance Sheets are comprised of the following:
Summarized results of the discontinued operations of this segment
on the Consolidated Statements of Operations are as follows:
TCS was accounted for under the equity method through March 26,
1993.
The Partnership expects to recognize a gain on the disposition of
its Television and Radio Station Segment and will record such
gain on upon consummation of the disposal.
Business Information Services Segment
Effective July 1, 1993, the Partnership sold the business and
assets of IMPLP/IMPI and Intelidata (the Business Information
Services Segment). The results of the Business Information
Services Segment have been reported separately in the December
1993 and 1992 Consolidated Statements of Operations as
discontinued operations. Summarized results of the discontinued
operations of this segment are as follows:
4. BORROWINGS
At December 31, 1994 and December 31, 1993 the aggregate amount
of borrowings reflected on the balance sheets of the Partnership;
(included in the net liabilities of the discontinued operations
of the Television and Radio Station Segment) is detailed as
follows:
A-B-C)On June 1, 1990, TCS entered into note purchase agreements
with a group of insurance companies which provided for
senior secured borrowings of $35 million (the "Senior
Secured Notes") and subordinated secured borrowings of $10
million (the "Subordinated Notes"). These commitments, as
restructured (see below), require mandatory payments each
year until 1997. The agreements contain covenants that
include requirements to maintain certain financial tests and
ratios (including notes to cash flow ratio and interest to
cash flow ratio) and restrictions and limitations on capital
expenditures, sale of assets, consulting fees, corporate
overhead, investments, and leases.
TCS also entered into a security and pledge agreement dated
as of June 1, 1990 with a bank, whereby it is a condition to
the purchasers' obligation under the note purchase
agreements that TCS grant to the security trustee a security
interest in and lien upon (i) all of the capital stock of
each corporation which owns or operates one or more of TCS's
stations and (ii) all of TCS's present and future right,
title and interest in the subsidiary notes, to secure TCS's
indenture obligations.
On December 14, 1992, TCS negotiated agreements to amend its
note agreements. TCS had been unable to generate sufficient
funds from operations to fully meet its obligations under
its note purchase agreements. The Senior Secured Notes and
the Subordinated Notes were amended to reschedule principal
payments. In addition, the amended agreements contain
certain options for required prepayments and restrictions
requiring excess cash to be paid based upon a calculation
outlined in the agreements. As payment for a transaction
fee, the senior lenders were issued additional notes due May
31, 1997, in the amount of $350,000 (the "Senior Secured Fee
Notes"). Also, upon sale of the TCS stations or retirement
of the debt, the subordinated lenders will receive
compensation equal to 20% (or 25% in some circumstances) of
the value of the assets of TCS after subtracting all
outstanding debt. All previous defaults under the Senior
Secured Notes and the Subordinated Notes were waived.
Under the amended note agreements, the Senior Secured Notes
and the Senior Secured Fee Notes accrue interest at the rate
of 10.69% per annum payable on the last day of February,
May, August and November. However, TCS has the option to
defer payment of interest on the Senior Secured Fee Notes
until May 31, 1997. All interest so deferred will be
compounded quarterly at the stated rate of 10.69%. In
addition, the amended loan agreement required accrued
interest due through December 14, 1992 on the Subordinated
Note of $1,326,804 to be reclassified into the original
Subordinated Note amount of $10,000,000. The restated
Subordinated Note total of $11,326,804 accrues interest at
the rate of 12.69% per annum compounded quarterly on the
15th of March, June, September and December until either
certain conditions are met (refer to the amended note
agreement for specific conditions), or until December 15,
1995.
See Note 2 regarding defaults under the amended TCS loan
agreements.
At December 31, 1994, the annual aggregate amounts of
principal payments required for the borrowings reflected in
the consolidated balance sheet of the Partnership are,
unless accelerated as discussed in Note 2, as follows:
Based upon the restrictions of debt as described above,
approximately $54 million of assets (which are included in
Net Liabilities of Discontinued Operations on the
accompanying Consolidated Balance Sheets) are restricted
from distribution by the entities in which the Partnership
has an interest.
5. TRANSACTIONS WITH THE GENERAL PARTNER AND ITS AFFILIATES
During the years ended December 31, 1994, 1993, and 1992, the
Partnership incurred the following expenses in connection with
services provided by the General Partner and its affiliates:
In addition, the Partnership, through the Windsor Systems and
Maryland Cable, entered into an agreement with MultiVision, an
affiliate of the General Partner, whereby MultiVision provided
the Windsor Systems (through June 29, 1992) and Maryland Cable
(through its sale in 1994) with certain administrative services.
The reimbursed cost to the Windsor Systems and Maryland Cable for
these services amounted to $848,067 for the year ended December
31, 1994, $977,414 for the year ended December 31, 1993, and
$936,356 for the year ended December 31, 1992. These costs do
not include programming costs that were charged to the Windsor
Systems and Maryland Cable under a cost allocation agreement. In
addition, MultiVision Cable TV Corp. received a payment of
$500,000 in partial settlement of severance and other costs
relating to the termination of MultiVision as manager of the
Maryland Cable Systems. Effective June 30, 1992, the Partnership
entered into a management agreement with Cablevision Systems
Corporation, which is not affiliated with the Partnership, to
manage the day-to-day operations and maintain the books and
records of the Windsor Systems through the sale of the Windsor
Systems in 1994. These responsibilities were subject to the
direction and control of the General Partner.
The total customer base managed by MultiVision declined
significantly during 1992 as a result of divestitures by
companies other than the Partnership, which had utilized the
managerial services of MultiVision, leading to slightly higher
programming prices for all its managed systems, including the
Maryland Cable and Windsor Systems.
6. OTHER INVESTMENTS
GCC/WWC
On May 24, 1989, the Partnership entered into a subscription and
purchase agreement (the "Subscription Agreement") to purchase
500,000 shares of Series A Convertible Preferred Stock
("Preferred Stock") of General Cellular Corporation ("GCC") at
$30 per share, for a total subscription of $15 million. GCC was
a California-based owner and operator of cellular telephone
systems.
In 1990, the Partnership wrote down the value of its preferred
stock in GCC of $15,000,000, because of GCC's inability at that
time to raise the financing critical to its viability as a going
concern.
On March 17, 1992, a plan of reorganization under Chapter 11 of
the U.S. Bankruptcy Code became effective, in which GCC was
recapitalized by an investor group. As part of the plan of
reorganization, GCC's outstanding debt was reduced from
approximately $97 million to $20 million. Under the plan, the
Partnership's 500,000 shares of Preferred Stock were converted to
199,281 shares of common stock, prior to the effect of the
Partnership's exercise of rights pursuant to a rights offering.
The rights offering provided that existing shareholders,
including the Partnership, could purchase additional ownership in
GCC. Each right consisted of the right to purchase from GCC a
unit consisting of one share of common stock and $9.09 in
principal amount of senior notes, for a total unit price of
$19.09. On March 4, 1992, the Partnership exercised 52,384
rights, for a total price of $1,000,011. By exercising these
rights, the Partnership purchased: a) 52,384 shares of common
stock of GCC, which increased the Partnership's ownership
position in GCC to 251,665 shares; and b) senior notes with a
face value of $476,171. On August 19, 1992, GCC redeemed the
senior notes, repaying to the Partnership $476,171, plus accrued
interest.
On October 26, 1992, GCC completed a second rights offering
pursuant to which existing shareholders, including the
Partnership, were issued rights to purchase one additional share
of common stock for each 1.75 shares owned, for a price of
$10.00. The Partnership purchased 100,000 additional shares for
an investment of $1,000,000. In addition, the Partnership sold
43,809 rights to purchase shares for a price of $120,000 to an
unaffiliated entity. Additionally, effective November 3, 1993,
the Partnership sold 61,160 rights to purchase shares for a price
of $100,000 to several unaffiliated entities. GCC raised
$25,281,000 in the offering to assist it in completing its
business plan of purchasing and operating clusters of cellular
systems in certain geographic areas.
On January 20, 1994, the majority stockholders of GCC and certain
holders of interest in MARKETS Cellular Limited Partnership
("Markets"), and PN Cellular, Inc. ("PNCI") executed a Memorandum
of Intention (the "Memorandum") pursuant to which the parties
thereto expressed their intent to effect a proposed business
combination of GCC and Markets.
The Partnership executed an Exchange Agreement and Plan of Merger
("Agreement"), dated July 20, 1994, to which the majority
stockholders of GCC and the majority owners of Markets are
parties. Pursuant to the Agreement, the Partnership exchanged
its shares in GCC for an equal number of shares in Western
Wireless Corporation ("WWC"), a new company which was organized
to own the equity interest of GCC and Markets. Following the
consummation of the business combination on July 29, 1994, WWC
became the owner of 100% of the Partnership interests in Markets
and approximately 95% of the outstanding common stock of GCC.
WWC holds and operates cellular licenses covering approximately
5.6 million net pops (defined as the population in an area
covered by a cellular franchise) including pending acquisitions.
The Partnership's shares represent approximately 2.4% of WWC.
The parties have entered into a stockholders agreement containing
certain restrictions on transfer, registration rights and
corporate governance provisions.
TCS
On January 17, 1990, the Partnership entered into a limited
partnership agreement with Riverdale Media Corporation
("Riverdale"), forming TCS. The agreement was subsequently
amended to include Commonwealth Capital Partners, L.P.
("Commonwealth") as a limited partner. Initially, Riverdale was
the general partner of TCS, and owned 20.01% of the entity. The
Partnership and Commonwealth were limited partners owning 41% and
38.99%, respectively. Riverdale contracted with ML Media
Opportunity Consulting Partners, a wholly-owned subsidiary of the
Partnership, to provide management services for TCS.
On June 19, 1990, TCS completed its acquisition of three network
affiliated television stations; WRBL-TV, the CBS affiliate
serving Columbus, Georgia; WTWO-TV, the NBC affiliate serving
Terre Haute, Indiana; and KQTV-TV, the ABC affiliate serving St.
Joseph, Missouri (the "TCS Stations").
The purchase price of $49 million, a non-compete payment of $7
million, and starting working capital and closing costs of
approximately $5 million were funded by the sale by TCS of senior
notes totaling $35 million and subordinated notes totaling $10
million, and equity of $16 million. The Partnership's total
equity contribution and incurred costs were approximately $8.3
million as of December 31, 1994 (including approximately $170,000
noted below). In addition, the Partnership had loaned TCS
approximately $400,000 for working capital purposes during 1991.
On December 14, 1992, the Partnership concluded agreements to
restructure the debt and ownership arrangements of TCS.
Concurrent with the new debt arrangements (as detailed in Note
5), the equity partners in TCS agreed to seek regulatory approval
to alter the ownership structure of the company. On March 26,
1993, the Partnership was granted such approval by the FCC. As a
result, on March 26, 1993, the Partnership and Commonwealth
purchased the 20.01% ownership interest held by Riverdale. On
March 26, 1993, a wholly-owned subsidiary of the Partnership
became the new sole general partner of TCS and the Partnership's
total ownership interest in TCS increased from 41% to 51.005% (1%
of which is the general partner interest). The Partnership
utilized approximately $170,000 of its working capital reserve to
acquire the additional 10.005% interest.
Refer to Note 2 regarding defaults under TCS loan agreements, and
to Note 3 regarding the discontinued operations of TCS.
Paradigm/BBAD
On May 31, 1991, the Partnership, Productions, GLP Co. and
Associates entered into a new agreement (the "Revised Paradigm
Agreement") that amended the original Paradigm Agreement. Under
the terms of the Revised Paradigm Agreement, effective June 16,
1991 the general partner interests of GLP Co. and Associates in
Paradigm were converted to limited partner interests. GLP Co.
and Associates each retained their 25% ownership in Paradigm and
the Partnership retained its 50% beneficial interest. Under the
terms of the Revised Paradigm Agreement, Paradigm retained
ownership of all program concepts developed by Paradigm prior to
June 15, 1991, but assigned the task of further developing these
program concepts to GLP Co. and/or Associates as independent
contractors. Per the Revised Paradigm Agreement, if GLP Co. or
Associates were to develop any new program concepts during the
period in which they were acting as independent contractors for
Paradigm, GLP Co. or Associates would be required to offer
Paradigm the right to finance the production of such program
concepts. Regardless of Paradigm's decision to finance the
further development of the new program concepts, Paradigm would
receive a share of the profits and fees, if any, from such new
program concepts.
The consulting agreements described above expired on December 31,
1991. Effective with the expiration, Associates continued,
without a formal agreement, to develop projects to offer to
Paradigm. As was the case under the Revised Paradigm Agreement,
the Partnership had the option of financing such projects in
return for equity interests in such projects. During 1992, the
Partnership advanced approximately $1.0 million to Paradigm to
fund Paradigm's operations and the production of its television
programs. Offsetting these advances during 1992, Paradigm
returned to the Partnership $2.5 million of such advances, which
Paradigm received from broadcasters as fees for movies produced.
Effective June 23, 1992, Paradigm formed a general partnership
with Associates to start a new production company, BBAD. Pursuant
to this new general partnership arrangement between Paradigm and
Associates, during 1992 Paradigm advanced approximately $942,000
and Associates advanced approximately $457,000 to fund BBAD's
operations and the development of certain programming concepts.
Initially, Paradigm owned 67% and Associates owned 33% of BBAD,
based on their capital contributions to BBAD. In addition,
Associates contributed an additional approximately $0.7 million
and Paradigm contributed approximately $0.3 million from existing
cash balances during 1993 to fund BBAD's operations. As of
December 31, 1994, the Partnership had advanced a total of
approximately $7.5 million to Paradigm (net of funds returned by
Paradigm).
Through the end of 1993, Paradigm had produced three television
movies which had aired as well as one syndicated series (which
was discontinued after thirteen episodes), and BBAD had produced
one television movie which had aired and one series. BBAD had
also developed other program concepts which may be produced as
either movies or series for television.
Refer to Note 2 and 3 for further information regarding Paradigm
and BBAD.
Investments, EMP, Ltd., and MVT
On September 1, 1989, the Partnership entered into various
agreements with Peter Clark ("Clark") and Alan Morris ("Morris")
to form U.K. entities (the "Media Ventures Companies") that would
develop and invest in media businesses in Europe. Pursuant to
the terms of these agreements, the Partnership advanced $2.0
million to Investments and its predecessors between 1989 and
December 31, 1991. During 1991, and following the Partnership's
decision not to advance additional funds to the Media Ventures
Companies beyond the Partnership's initial $2.0 million
commitment, the Media Ventures Companies secured funding from a
third party, ALP Enterprises, Inc. ("ALP Enterprises") to allow
the Media Ventures Companies to continue their operations. Due
to: (i) the Partnership's unwillingness to advance additional
funds to the Media Ventures Companies; and (ii) the Media
Ventures Companies' resultant reliance on funding from ALP
Enterprises, the Partnership's ownership in the Media Ventures
Companies was diluted -- through a number of restructurings of
the ownership of the Media Ventures Companies -- as ALP
Enterprises advanced funds to the Media Ventures Companies.
As of December 31, 1993, the Media Ventures Companies had
started, or made investments in, a number of media businesses,
including an investment in 1992 in Teletext U.K., Ltd.
("Teletext"), a newly formed U.K. corporation organized to
acquire U.K. franchise rights to provide data in text form to
television viewers via television broadcast sidebands. The
investment of the Media Ventures Companies in Teletext was
initially held by European Media Partners, Ltd. ("EMP, Ltd."),
the primary operating holding company organized by the Media
Ventures Companies. Following a July 30, 1993 restructuring,
EMP, Ltd. was owned 13.8% by the Partnership, 45.6% by Clarendon
(a company controlled by the founders and management of the Media
Ventures Companies), and 40.6% by ALP Enterprises. The
Partnership also owned 36.8% of the common stock of Investments
(which was, and remains essentially inactive), ALP Enterprises
owned 13.8%, Clarendon owned 41.4% and Charles Dawson (who
manages a business in which the Media Ventures Companies have an
investment) owned 8.0%.
During 1994, the Media Ventures Companies continued to distribute
television programs and to monitor the Teletext investment held
by MVT (see below) while attempting to expand the operations of
the Media Ventures Companies into new areas of European media.
Investments, MVT, EMP, Ltd. and their affiliates are currently
reliant on their cash balances, existing operations, and/or
additional funding from ALP Enterprises or other, as yet
unidentified, financing sources to fund their continuing
operations. The Partnership expects to advance no further funds
to Investments, MVT or their affiliates beyond those funds
already advanced by the Partnership.
Effective August 12, 1994, the Partnership and EMP, Ltd.
restructured the ownership of EMP, Ltd. and certain of its
subsidiaries in order to enable EMP, Ltd. to attract additional
capital from ALP Enterprises and other potential third party
investors. In the restructuring, based on certain
representations from EMP, Ltd. and ALP Enterprises, the
Partnership sold to Clarendon and ALP Enterprises for nominal
consideration the Partnership's shares in EMP, Ltd.
Simultaneously, the Partnership and EMP, Ltd. entered into an
agreement whereby EMP, Ltd.'s 10% interest in Teletext was
transferred, together with a pound sterling 350,000 loan
(approximately $543,000 at then-current exchange rates) from EMP, Ltd.
to a newly formed entity, MVT. After the transfer, the Partnership
owns 13.8% of the issued common shares of MVT, while EMP, Ltd. owns the
remaining 86.2%. MVT's sole purpose is to manage its 10%
interest in Teletext. The Partnership has the right to require
EMP, Ltd. to purchase the Partnership's interest in MVT at any
time between December 31, 1994 and December 31, 1997. EMP, Ltd.
has the right to require the Partnership to sell the
Partnership's interest in MVT to EMP, Ltd. at any time between
September 30, 1995 and September 30, 1998. MVT will pay an
annual fee to EMP, Ltd. for management services provided by EMP,
Ltd. in connection with overseeing MVT's investment in Teletext.
Following the restructuring, the Partnership no longer has any
interest in EMP, Ltd. The Partnership elected not to advance
further funds to investments or MVT. It is likely the
Partnership will not recover the majority of its $2 million
investment in Investments either from Investments or from MVT.
7. SUMMARIZED FINANCIAL INFORMATION OF EQUITY AFFILIATES
The following table presents summarized financial information of
the Partnership's investment in Investments, which was accounted
for under the equity method in 1992 only:
8. FAIR MARKET VALUE
Statement of Financial Accounting Standards No. 107, "Disclosures
about Fair Value of Financial Instruments", requires companies to
report the fair value of certain on- and off-balance sheet assets
and liabilities which are defined as financial instruments.
Considerable judgment is necessarily required in interpreting data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Partnership could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
Assets, including cash and cash equivalents and accounts receivable, and liabilities, such as trade payables, are carried at amounts which approximate fair value.
Borrowings
As of December 31, 1994, due to the uncertainty of the Partnership's ability to meet its obligations under the TCS notes and the uncertainty relating to the ultimate outcome of the Partnership's efforts to sell the TCS television stations, the General Partner considers the estimation of the fair market value of the TCS debt obligations (included in net liabilities of discontinued operations in the accompanying consolidated balance sheets) to be impracticable.
As of December 31, 1993, considering the uncertainty of the Partnership's ability to meet its obligations under the Amended Credit Agreement, Senior Subordinated Discount Notes, Windsor Note, and the TCS notes, management believed that using the Partnership's future cash flows related to debt-service to estimate the fair value of these loans was not appropriate. In addition, because of the uncertainty related to the ultimate outcome of the Partnership's restructuring efforts (see Note 2), the General Partner considered estimation of the fair value of these loans based on collateral value and other methods to be impracticable.
Other Financial Instruments
The Partnership owns 351,665 shares of common stock of WWC (see Note 6). It is not practicable to estimate the fair value of this investment because of the lack of a quoted market price and the inability to estimate fair value without incurring excessive costs. The approximate $1.3 million carrying amount as of December 31, 1994 and December 31, 1993, represents the adjusted cost of the investment, which management believes is not impaired. No dividends were received during the years ended December 31, 1994 and December 31, 1993.
9. ACCOUNTING FOR INCOME TAXES
As discussed in Note 1, the corporations owned by the Partnership adopted SFAS No. 109 effective January 1, 1993. The cumulative effect of this change in accounting principle was immaterial and there was no effect on the provision for income taxes in the year of adoption.
Certain entities owned by the Partnership are taxable entities and thus are required under SFAS No. 109 to recognize deferred income taxes. The components of the net deferred tax asset (included in the net liabilities of discontinued operations in the accompanying consolidated balance sheets) at December 31, 1994 and 1993 are as follows:
The change in the net deferred tax asset for the year ended December 31, 1994 consisted of a reduction of approximately $39.1 million due to the disposition of Maryland Cable and an increase of approximately $.5 million due primarily to an increase in the net operating loss carryforward. The entire net change was offset by a corresponding reduction in the valuation allowance.
The change in the net deferred tax asset for the year ended December 31, 1993 amounted to an increase of approximately $10,400,000 due to an increase in the net operating loss carryforward offset by a corresponding reduction due to a change in the valuation allowance.
No provision for income taxes was required for the year ended December 31, 1992.
At December 31, 1994, the taxable entities have available net operating loss carryforwards which may be applied against future taxable income. Such net operating loss carryforwards expire at various dates from 2007 through 2009.
For the Partnership, the differences between the tax bases of assets and liabilities and the reported amounts at December 31, 1994 and 1993 are as follows:
10. MINORITY INTEREST
Paradigm/BBAD
The Partnership's consolidated financial statements include 100% of the assets, liabilities and results of operations of Paradigm and its affiliate, BBAD. The Partnership holds a 50% interest in Paradigm and owns approximately 52% in BBAD through Paradigm based upon capital contributions. The remaining approximately 48% of BBAD is owned by Associates, an entity which is not otherwise affiliated with the Partnership except as a 25% limited partner in Paradigm. The Partnership's net loss was decreased by approximately $27,000 and $518,000 for the years ended December 31, 1994 and December 31, 1993, respectively as a result of the minority interest in BBAD. Minority interest is presented along with the discontinued operations of the Production segment of the consolidated financial statements.
TCS
As discussed in Note 6, on March 26, 1993, the Partnership's total ownership interest in TCS increased to 51.005% and thus the Partnership has included TCS in the consolidated financial statements as of December 31, 1994 and December 31, 1993.
No minority interest has been recorded for the periods ended or as of December 31, 1994 and December 31, 1993 due to cumulative losses which have been incurred and the lack of an obligation on the part of the minority shareholder to fund such losses.
ML MEDIA OPPORTUNITY PARTNERS, L.P. AS OF DECEMBER 31, 1994 AND DECEMBER 31, 1993
SCHEDULE III CONDENSED FINANCIAL INFORMATION OF REGISTRANT
ML Media Opportunity Partners, L.P. Condensed Balance Sheets as of December 31, 1994 and December 31, 1993
See Notes to Condensed Financial Statements.
SCHEDULE III CONDENSED FINANCIAL INFORMATION OF REGISTRANT Cont'd
ML Media Opportunity Partners, L.P. Condensed Statements of Operations For the Years Ended December 31, 1994, December 31, 1993, and December 31, 1992
See Notes to Condensed Financial Statements.
SCHEDULE III CONDENSED FINANCIAL INFORMATION OF REGISTRANT Cont'd
ML Media Opportunity Partners, L.P. Condensed Statements of Operations For the Years Ended December 31, 1994, December 31, 1993, and December 31, 1992
See Notes to Condensed Financial Statements.
SCHEDULE III CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Cont'd)
ML Media Opportunity Partners, L.P. Condensed Statements of Cash Flow For the Years Ended December 31, 1994, December 31, 1993, and December 31, 1992
SCHEDULE III CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Cont'd)
ML Media Opportunity Partners, L.P. Condensed Statements of Cash Flow For the Years Ended December 31, 1994, December 31, 1993, and December 31, 1992
See Notes to Condensed Financial Statements.
Schedule III CONDENSED FINANCIAL INFORMATION OF REGISTRANT Cont'd
ML Media Opportunity Partners, L.P. Notes To Condensed Financial Statements For the Years Ended December 31, 1994 December 31, 1993, and December 31, 1992
1. Organization
ML Media Opportunity Partners, L.P. (the "Partnership") wholly owns WMXN-FM, holds a 50% interest in Paradigm, a 13.8% interest in MVT, a 93.5% interest in IMPLP/IMPI, a 100% interest in Intelidata and 51.005% interest in TCS. All of the preceding investments and the Partnership's other majority-owned subsidiaries shall herein be referred to as the "Subsidiaries." The Partnership carries its interest in GCC at cost.
Certain 1992 and 1993 items have been reclassified to conform to 1994 presentation for discontinued operations.
2. Investment in Subsidiaries
The Partnership's investment in the Subsidiaries is accounted for under the equity method in the accompanying condensed financial statements.
The following is a summary of the financial position and results of operations of the Subsidiaries (included in consolidated financial statements).
Schedule III CONDENSED FINANCIAL INFORMATION OF REGISTRANT
ML MEDIA OPPORTUNITY PARTNERS, L.P. NOTES TO CONDENSED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1994 DECEMBER 31, 1993, AND DECEMBER 31, 1992
3. Cash and Cash Equivalents
At December 31, 1994, the Partnership had $1,752,059 in cash and cash equivalents of which $1,672,365 was invested in commercial paper. In addition, the Partnership had $79,694 invested in cash and demand deposits.
At December 31, 1993, the Partnership had $3,521,683 in cash and cash equivalents of which $597,467 was invested in banker acceptances and $2,854,509 was invested in commercial paper. In addition, the Partnership had $69,707 invested in cash and demand deposits.
Item 9.
Item 9. Changes in and Disagreement with Accountants and Accounting and Financial Disclosure
None. Part III
Item 10.
Item 10. Directors and Executive Officers of the Partnership
Registrant has no executive officers or directors. The General Partner manages the Registrant's affairs and has general responsibility and authority in all matters affecting its business. The responsibilities of the General Partner are carried out either by executive officers of EHR Opportunity Management, Inc. and IMP Opportunity Management, Inc. as general partners of RP Opportunity Management, L.P. or executive officers of ML Opportunity Management Inc., acting on behalf of the General Partner. The executive officers and directors of RP Opportunity Management, L.P. and ML Opportunity Management Inc. are:
RP Opportunity Management, L.P. (the "Management Company")
Served in Present Name Capacity Since (1) Position Held
Director and President I. Martin Pompadur 6/15/87 IMP Opportunity Management
Executive Vice President Elizabeth McNey Yates 4/01/88 IMP Opportunity Management
ML Opportunity Management Inc. ("MLOM")
Served in Present Name Capacity Since (1) Position Held
Kevin K. Albert 2/19/91 President 6/22/87 Director
Robert F. Aufenanger 2/02/93 Executive Vice President 3/28/88 Director
Robert W. Seitz 2/02/93 Vice President 2/01/93 Director
James K. Mason 2/01/93 Director
Steven N. Baumgarten 3/07/94 Vice President
David G. Cohen 3/07/94 Treasurer
(1) Directors hold office until their successors are elected and qualified. All executive officers serve at the pleasure of the Board of Directors of the respective entity.
I. Martin Pompadur, 59, is the Chairman and Chief Executive Officer of GP Station Partners which is the General Partner of Television Station Partners, L.P. a private limited partnership that owns and operates four network affiliated television stations. He is the Chairman and Chief Executive Officer of PBTV, Inc., the Managing General Partner of Northeastern Television Investors Limited Partnership, a private limited partnership which owns and operates WBRE-TV, a network affiliated station in Wilkes-Barre Scranton, Pennsylvania. Mr. Pompadur also is a Chairman and Chief Executive Officer of U.S. Cable Partners, a general partner of U.S. Cable Television Group, L.P. ("U.S. Cable") which owns and operates cable systems in ten states. He is also the President and a Director of RP Media Management ("RPMM"), a joint venture which is a partner in Media Management Partners ("MMP"), an affiliate of the General Partner and the general partner of ML Media Partners, L.P., which presently owns two network affiliated television stations, several cable television systems and several radio stations. Mr. Pompadur is the Chief Executive Officer of ML Media Partners, L.P. Mr. Pompadur is also Chief Executive Officer of MultiVision Cable TV Corp. ("MultiVision"), a cable television multiple system operator ("MSO") organized in January 1988 and owned principally by Mr. Pompadur to provide MSO services to cable television systems acquired by entities under his control. Mr. Pompadur is a principal owner, member of the Board of Directors and Secretary of Caribbean International News Corporation ("Caribbean"). Caribbean owns and publishes EL Vocero, the largest Spanish language daily newspaper in the U.S.
Elizabeth McNey Yates, 32, Executive Vice President of RP Opportunity Management, L.P., joined RP Companies Inc., an entity controlled by Mr. Pompadur, in April 1988 and has senior executive responsibilities in the areas of finance, operations, administration and acquisitions. Ms. Yates is an Executive Vice President of RPMM and Senior Vice President of MMP.
Kevin K. Albert, 42, a Managing Director of Merrill Lynch Investment Banking Group ("ML Investment Banking"), joined Merrill Lynch in 1981. Mr. Albert works in the Equity Private Placement Group and is involved in structuring and placing a diversified array of private equity financings including common stock, preferred stock, limited partnership interests and other equity-related securities. Mr. Albert is also a director of Maiden Lane Partners, Inc. ("Maiden Lane"), an affiliate of the General Partner and the general partner of Liberty Equipment Investors - 1983; a director of Whitehall Partners Inc. ("Whitehall"), an affiliate of MLOM and the general partner of Liberty Equipment Investors L.P. - 1984; a director of ML Media Management Inc. ("ML Media"), an affiliate of MLOM and a joint venturer of Media Management Partners, the general partner of ML Media Partners, L.P.; a director of ML Film Entertainment Inc. ("ML Film"), an affiliate of MLOM and the managing general partner of the general partners of Delphi Film Associates II, III, IV, V and ML Delphi Premier Partners, L.P.; a director of MLL Antiquities Inc. ("MLL Antiquities"), an affiliate of MLOM and the administrative general partner of The Athena Fund II, L.P.; a director of ML Mezzanine II Inc. ("ML Mezzanine II"), an affiliate of MLOM and sole general partner of the managing general partner of ML-Lee Acquisition Fund II, L.P. and ML-Lee Acquisition Fund (Retirement Accounts) II, L.P.; a director of ML Mezzanine Inc. ("ML Mezzanine"), an affiliate of MLOM and the sole general partner of the managing general partner of ML-Lee Acquisition Fund, L.P.; a director of Merrill Lynch Venture Capital Inc. ("ML Venture"), an affiliate of MLOM and the general partner of the Managing General Partner of ML Venture Partners I, L.P. ("Venture I"), ML Venture Partners II, L.P. ("Venture II"), and ML Oklahoma Venture Partners Limited Partnership ("Oklahoma"); a director of Merrill Lynch R&D Management Inc. ("ML R&D"), an affiliate of MLOM and the general partner of the General Partner of ML Technology Ventures, L.P.; and a director of MLL Collectibles Inc. ("MLL Collectibles"), an affiliate of MLOM and the administrative general partner of The NFA World Coin Fund, L.P. Mr. Albert also serves as an independent general partner of Venture I and Venture II.
Robert F. Aufenanger, 41, a Vice President of Merrill Lynch & Co. Corporate Strategy, Credit and Research and a Director of the Partnership Management Department, joined Merrill Lynch in 1980. Mr. Aufenanger is responsible for the ongoing management of the operations of the equipment and project related limited partnerships for which subsidiaries of ML Leasing Equipment Corp., an affiliate of Merrill Lynch, are general partners. Mr. Aufenanger is also a director of Maiden Lane, Whitehall, ML Media, ML Film, MLL Antiquities, ML Venture, ML R&D, MLL Collectibles and ML Mezzanine and ML Mezzanine II.
Robert W. Seitz, 48, is a First Vice President of Merrill Lynch & Co. Corporate Strategy, Credit and Research and a Managing Director within the Corporate Credit Division of Merrill Lynch, joined Merrill Lynch in 1981. Mr. Seitz is the Private Client Senior Credit Officer and also is responsible for the firm's Partnership Management and Asset Recovery Management Departments. Mr. Seitz is also a director of Maiden Lane, Whitehall, ML Media, ML Venture, ML R&D, ML Film, MLL Antiquities, and MLL Collectibles.
James K. Mason, 42, a Managing Director of ML Investment Banking, is a senior member of the Telecom, Media and Technology group. He joined Merrill Lynch Investment Banking in 1978. Mr. Mason is responsible for advising Merrill Lynch's entertainment and media industry clients on such matters as financings, divestitures, restructurings, mergers and acquisitions. Mr. Mason is also a director of ML Media.
Steven N. Baumgarten, 39, a Vice President of Merrill Lynch & Co. Corporate Strategy, Credit and Research, joined Merrill Lynch in 1986. Mr. Baumgarten shares responsibility for the ongoing management of the operations of the equipment and project related limited partnerships for which subsidiaries of ML Leasing Equipment Corp., an affiliate of Merrill Lynch, are general partners. Mr. Baumgarten is also a director of ML Film.
David G. Cohen, 32, an Assistant Vice President of Merrill Lynch & Co. Corporate Strategy, Credit and Research, joined Merrill Lynch in 1987. Mr. Cohen's responsibilities include controllership and financial management functions for certain partnerships for which subsidiaries of ML Leasing Equipment Corp., an affiliate of Merrill Lynch, are general partners.
Mr. Pompadur and Ms. Yates were each executive officers of Maryland Cable Corp. and Maryland Cable Holdings Corp. at and during the two years prior to the filing by Maryland Cable and Holdings on March 10, 1994 of a consolidated plan of reorganization under Chapter 11 of the United States Bankruptcy Code with the United States Bankruptcy Court for the Southern District of New York. For more information regarding such filings, refer to "Item 1. Business -- Maryland Cable Corp.".
Mr. Aufenanger is an executive officer of Mid-Miami Diagnostics Inc. ("Mid-Miami Inc."). On October 28, 1994 both Mid-Miami Inc. and Mid-Miami Diagnostics, L.P. filed voluntary petitions for protection from creditors under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York.
Item 11.
Item 11. Executive Compensation
Registrant does not pay the executive officers or directors of the General Partner any remuneration. The General Partner does not presently pay any remuneration to any of its executive officers or directors. See Note 5 to the Financial Statements included in Item 8 hereof, however, for sums paid by Registrant to affiliates for the years ended December 31, 1994, December 31, 1993 and December 31, 1992.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
As of February 1, 1995, no person was known by the Registrant to be the beneficial owner of more than 5 percent of the Units.
To the knowledge of the General Partner, as of February 1, 1995, the officers and directors of the General Partner in aggregate own less than .01% of the outstanding common stock of Merrill Lynch & Co., Inc.
IMP Opportunity Management, Inc. is 100% owned by Mr. I. Martin Pompadur.
Item 13.
Item 13. Certain Relationships and Related Transactions
Refer to Note 5 to the Financial Statements included in Item 8 hereof, and in Item 1 for a description of the relationship of the General Partner and its affiliates to Registrant and its subsidiaries.
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Financial Statements, Financial Statement Schedules and Exhibits
Financial Statements and Financial Statement Schedules
See Item 8. "Financial Statements and Supplementary Data".
(b) Reports on Form 8-K
On October 17, 1994, Registrant filed a report on Form 8-K discussing the consummation of the amended Prepackaged Plan of Reorganization of Maryland Cable and Holders.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ML MEDIA OPPORTUNITY PARTNERS, L.P. By: Media Opportunity Management Partners General Partner
By: ML Opportunity Management Inc.
Dated: March 17, 1995 /s/ Kevin K. Albert Kevin K. Albert President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Registrant in the capacities and on the dates indicated.
RP OPPORTUNITY MANAGEMENT, L.P.
By: IMP Opportunity Management Inc. a general partner
Signature Title Date
/s/ I. Martin Pompadur Director and March 17, 1995 (I. Martin Pompadur) President(principal executive officer of the Registrant)
ML OPPORTUNITY MANAGEMENT INC. ("MLOM")
Signature Title Date
Each with respect to MLOM unless otherwise noted)
/s/ Kevin K. Albert Director and March 17, 1995 (Kevin K. Albert) President
/s/ Robert F. Aufenanger Director and March 17, 1995 (Robert F. Aufenanger) Executive Vice President
/s/ James K. Mason Director March 17, 1995 (James K. Mason)
/s/ Robert W. Seitz Director and Vice March 17, 1995 (Robert W. Seitz) President
/s/ David G. Cohen Treasurer March 17, 1995 (David G. Cohen) (principal accounting officer and principal financial officer of the Registrant)