PHOENIX ASSOCIATES - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2002

	Commission File Numbers:		333-63677-02
			333-63677-01
			333-63677



Coaxial Communications of Central Ohio, Inc. Phoenix Associates Insight Communications of Central Ohio, LLC
(Exact name of registrants as specified in their charters)

Ohio Florida Delaware		31-0975825 59-1798351 13-4017803
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

c/o Insight Communications Company, Inc. 810 7th Avenue New York, New York 10019
(Address of principal executive offices, including zip code)

(917) 286-2300
(Registrants’ telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Coaxial Communications of Central Ohio, Inc.	Not Applicable
Phoenix Associates	Not Applicable
Insight Communications of Central Ohio, LLC	Not Applicable

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

The accompanying unaudited consolidated financial statements have been prepared in accordance with the requirements of Form 10-Q and, therefore, do not include all information and footnotes required by accounting principles generally accepted in the United States. However, in our opinion, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of operations for the relevant periods have been made. Results for the interim periods are not necessarily indicative of the results to be expected for the year. These financial statements should be read in conjunction with the summary of significant accounting policies and the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2001.

COAXIAL COMMUNICATIONS OF CENTRAL OHIO, INC.
BALANCE SHEETS
(in thousands)

		September 30, 2002			December 31, 2001

		*(unaudited)*
Assets
Investments		$	7,384		$	19,328
Dividend receivable			1,750			5,250

	Total current assets		9,134			24,578
Deferred financing costs, net			2,444			2,915
Investment in affiliate			190,220			185,713

	Total assets	$	201,798		$	213,206

Liabilities and shareholders’ equity
Accrued interest		$	1,750		$	5,250

	Total current liabilities		1,750			5,250
Senior notes, including $105.6 million to be paid by Phoenix Associates			140,000			140,000

	Total liabilities		141,750			145,250
Commitments and contingencies
Shareholders’ equity:
Common stock; $1 par value; 2,000 shares authorized; 1,080 shares issued and outstanding as of September 30, 2002 and December 31, 2001			1			1
Paid in capital			11,501			11,501
In-substance allocation of proceeds related to senior notes to be paid by Phoenix Associates			(59,707	)		(70,263	)
Retained earnings			118,369			124,889
Accumulated other comprehensive income (loss)			(10,116	)		1,828

	Total shareholders’ equity		60,048			67,956

	Total liabilities and shareholders’ equity	$	201,798		$	213,206

See accompanying notes

COAXIAL COMMUNICATIONS OF CENTRAL OHIO, INC.
STATEMENTS OF OPERATIONS
(unaudited)
(in thousands)

			Three months ended September 30,						Nine months ended September 30,

			2002			2001			2002			2001

Expenses:
Amortization			$	157		$	157		$	471		$	471
Other income (expense):
	Interest expense			(3,500	)		(3,500	)		(10,500	)		(10,500	)
	Dividend on preferred interests			5,050			4,848			15,007			14,421

		Total other income, net		1,550			1,348			4,507			3,921

Net income			$	1,393		$	1,191		$	4,036		$	3,450

See accompanying notes

COAXIAL COMMUNICATIONS OF CENTRAL OHIO, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)

			Nine months ended September 30,

			2002			2001

Operating activities:
	Net income		$	4,036		$	3,450
	Adjustments to reconcile net income to net cash used in operating activities:
		Amortization		471			471
		Interest expense assumed by affiliate		7,917			7,917
		Accrued interest		(861	)		(861	)
		Dividend on preferred interest		(15,007	)		(14,421	)

	Net cash used in operating activities			(3,444	)		(3,444	)

Financing activities:
	Capital distributions			(10,556	)		(10,556	)
	Proceeds from dividend on preferred interest			14,000			14,000

	Net cash provided by financing activities			3,444			3,444

Net change in cash				—			—
Cash, beginning of period				—			—

Cash, end of period			$	—		$	—

See accompanying notes

COAXIAL COMMUNICATIONS OF CENTRAL OHIO, INC.
NOTES TO FINANCIAL STATEMENTS

1. Organization and Basis of Presentation

Coaxial Communications of Central Ohio, Inc. (the “Company” or “Coaxial Inc.”), an Ohio corporation, through its ownership of preferred interests, has a 30% voting interest in Insight Communications of Central Ohio, LLC (“Insight Ohio”). Insight Ohio operates a cable television system that provides basic and expanded cable television services to homes in the eastern parts of Columbus, Ohio and surrounding areas. Prior to August 8, 2000, the Company owned 100% of the voting interest in Insight Ohio and therefore consolidated the financial statements of Insight Ohio for periods prior to such date. In connection with the contribution of the Company’s cable system (the “System”), the issuance of the Senior Notes and the issuance of the Senior Discount Notes by the Company’s majority shareholder, Coaxial LLC, during 1998 the three individuals who previously owned the outstanding stock of the Company contributed their stock to three separate limited liability companies. Accordingly, the Company is a subsidiary of Coaxial LLC, which owns 67½% of its outstanding stock.

Other related entities affiliated with the Company in addition to Coaxial LLC, include Coaxial DJM LLC, Coaxial DSM LLC, (collectively, the “Coaxial Entities”), Phoenix Associates (“Phoenix”), Coaxial Financing Corp., Coaxial Associates of Columbus I and Coaxial Associates of Columbus II.

The Company and Phoenix are co-issuers of the Senior Notes. The ability of the Company and Phoenix to make scheduled payments with respect to the Senior Notes is dependent on the financial and operating performance of Insight Ohio. The required distributions on the Series A preferred equity interest to the Company is designed to provide the cash flow necessary to service the debt requirements on the Senior Notes.

2. Responsibility for Interim Financial Statements

The accompanying unaudited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnote disclosures required by accounting principles generally accepted in the United States for complete financial statements.

In management’s opinion, the financial statements reflect all adjustments considered necessary for a fair statement of the results of operations and financial position for the interim periods presented. All such adjustments are of a normal recurring nature. These unaudited interim financial statements should be read in conjunction with the audited consolidated financial statements and notes to consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2001.

COAXIAL COMMUNICATIONS OF CENTRAL OHIO, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

2. Responsibility for Interim Financial Statements (continued)

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the three and nine months ended September 30, 2002 are not necessarily indicative of the results to be expected for the year ending December 31, 2002 or any other interim period.

3. Comprehensive Loss

Comprehensive loss totaled $607,000 and $7.9 million for the three and nine months ended September 30, 2002 and $4.8 million and $631,000 for the three and nine months ended September 30, 2001, respectively. The Company owns common stock that is classified as available-for-sale and reported at market value, with unrealized gains and losses recorded as accumulated other comprehensive income or loss in the accompanying balance sheets.

PHOENIX ASSOCIATES
BALANCE SHEETS
(in thousands)

		September 30, 2002			December 31, 2001

		*(unaudited)*
Assets
Interest receivable		$	648		$	531
Due from related party			406			406
Notes receivable -- related parties			550			550

	Total current assets		1,604			1,487
Deferred financing costs, net			2,444			2,915

	Total assets	$	4,048		$	4,402

Liabilities and partners’ deficit
Accrued interest		$	1,750		$	5,250

	Total current liabilities		1,750			5,250
Senior notes, including $34.4 million to be paid by Coaxial Communications of Central Ohio, Inc.			140,000			140,000

	Total liabilities		141,750			145,250
Commitments and contingencies
Partners’ deficit:
In-substance allocation of proceeds related to senior notes to be paid by Coaxial Communications of Central Ohio, Inc.			(19,433	)		(22,877	)
Partners’ accumulated deficit			(118,269	)		(117,971	)

	Total partners’ deficit		(137,702	)		(140,848	)

	Total liabilities and partners’ deficit	$	4,048		$	4,402

See accompanying notes

PHOENIX ASSOCIATES
STATEMENTS OF OPERATIONS
(unaudited)
(in thousands)

			Three months ended September 30,						Nine months ended September 30,

			2002			2001			2002			2001

Expenses:
	Amortization		$	(157	)	$	(157	)	$	(471	)	$	(471	)
Interest income (expense):
	Interest income–related parties			39			39			117			117
	Interest expense			(3,500	)		(3,500	)		(10,500	)		(10,500	)

		Total interest expense, net		(3,461	)		(3,461	)		(10,383	)		(10,383	)