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PagF Two <br />In the notes to the pro forma balance sheet it is noted <br />that Dowden Partners is purchasing the DCI systems for a price <br />of $43,437,915. The purchase will be financed as follows: <br />Bar.iston Cable Investors, L.P. <br />contributions $11,550,000 <br />Dowden Communications Investors, <br />L.P. contributions 4,500,000 <br />Senior debt 29,000,000 <br />TOTAL $43,050,000 <br />As a -result of this transaction, it is projected that the total <br />assets of Dowden Partners will equal $48,140,117. Total assets <br />under the DCI balance sheet total $25,204,083. In comparing <br />total assets of each of the balance sheets, it is noted that <br />Dowden Partners has approximately twice the capitalization of <br />DCI. Included in this capitalization it is noted that the Dowden <br />Partners' balance sheet will show total equity of $16,050,000 <br />compared to a deficiency of $2,131,009 for DCI. This comparison <br />alone indicates that the financial condition of Dowden Partners <br />is strong( than that of DCI due to the partnership contributions <br />made by t,ie Dowden Communications Investors, L.P. and Bariston <br />Cable Investors, L.P. totaling $16,050,000. This significant <br />level of equity contributions has resulted in the Dowden Partners' <br />balance sheet showing a stronger cash position than that of <br />the DCI balance sheet. The Dowden Partners' pro forma balance <br />sheet indicates that $925,860 of cash will be on hand for <br />operations compared to $13,775 for DCI. <br />The Dowden Partners' balance sheet also indicates a lower <br />debt/equity ratio when compared to that of DCI. Subsequent <br />to the transaction it is projected that with $29,000,000 of <br />senior debt and $16,050,000 of equity a debt to equity ratio <br />of 1.8 will exist. Debt to equity ratios in many cable companies <br />approximate three to five to one. Using this ratio, it appears <br />that the financial condition of Dowden Partners is favorable <br />compared to industry standards and more favorable than DCI's <br />debt to equity ratio which approximates at least 3.3 when <br />factoring out the accumulated deficits of $9,521,472. <br />Based upon the analysis of the Dowden Partners' pro forma <br />balance sheet -iated December 1, 1986 (unaudited) disclosed in <br />Exhibit 5 of the offering document, it appears that the financial <br />condition of Dowden Partners will be better than that of DCI <br />due to the following: <br />1. Total assets of Dowden Partners are twice that of DCI. <br />2. The debt to equity ratio for Dowden Partners approximates <br />1.8 which is under the norm for the cable industry and is lower <br />that the ratio of DCI (e•�en when factoring out accumulated <br />deficits to date). <br />