<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
(MARK ONE)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
------------------------------------
OR
/ / 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 0-13333
ENSTAR INCOME PROGRAM 1984-1, L.P.
--------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
Georgia 58-1581136
--------------------------------------------------------------------------------------------------------
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
</TABLE>
10900 WILSHIRE BOULEVARD, 15TH FLOOR, LOS ANGELES, CA 90024
--------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (310)824-9990
-----------------------------
--------------------------------------------------------------------------------
FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT.
Indicate by check (X) 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 X No
----- -----
<PAGE> 2
PART I - FINANCIAL INFORMATION
ENSTAR INCOME PROGRAM 1984-1, L.P.
CONDENSED BALANCE SHEETS
========================
<TABLE>
<CAPTION>
December 31, June 30,
1994* 1995
------------ -----------
(unaudited)
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 1,169,700 $ 1,530,400
Receivables, less allowance of $6,000
and $7,300 for possible losses 76,400 69,400
Prepaid expenses and other 35,300 40,400
Cable materials, equipment and supplies 65,900 70,600
Property, plant and equipment, less accumulated depreciation
and amortization of $8,537,200 and $9,098,700 2,745,000 2,411,000
Franchise cost, net of accumulated
amortization of $171,600 and $184,600 82,600 81,100
Deferred loan costs, organization costs
and deferred charges, net 21,800 51,700
------------ -----------
$ 4,196,700 $ 4,254,600
============ ===========
LIABILITIES AND PARTNERSHIP CAPITAL (DEFICIT)
LIABILITIES:
Note payable $ 3,011,000 $ 2,661,000
Accounts payable 424,400 487,300
Due to affiliates 915,800 1,035,800
------------ -----------
TOTAL LIABILITIES 4,351,200 4,184,100
------------ -----------
COMMITMENTS AND CONTINGENCIES
PARTNERSHIP CAPITAL (DEFICIT)
General partner (74,200) (72,100)
Limited partners (80,300) 142,600
------------ -----------
TOTAL PARTNERSHIP CAPITAL (DEFICIT) (154,500) 70,500
------------ -----------
$ 4,196,700 $ 4,254,600
============ ===========
</TABLE>
*As presented in the audited financial statements.
See accompanying notes to condensed financial statements
-2-
<PAGE> 3
ENSTAR INCOME PROGRAM 1984-1, L.P.
CONDENSED STATEMENTS OF OPERATIONS
==================================
<TABLE>
<CAPTION>
Unaudited
----------------------------
Three months ended
June 30,
----------------------------
1994 1995
----------- -----------
<S> <C> <C>
REVENUES $ 1,139,900 $ 1,228,200
----------- -----------
OPERATING EXPENSES:
Service costs 428,500 457,000
General and administrative expenses 169,700 163,700
General Partner management fees
and reimbursed expenses 153,100 143,900
Depreciation and amortization 299,200 301,300
----------- -----------
1,050,500 1,065,900
----------- -----------
OPERATING INCOME 89,400 162,300
----------- -----------
OTHER INCOME (EXPENSE):
Interest income 5,900 13,800
Interest expense (70,500) (72,900)
----------- -----------
(64,600) (59,100)
----------- -----------
NET INCOME $ 24,800 $ 103,200
=========== ===========
NET INCOME PER UNIT OF LIMITED
PARTNERSHIP INTEREST $ .82 $ 3.41
=========== ===========
AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD 29,940 29,940
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
-3-
<PAGE> 4
ENSTAR INCOME PROGRAM 1984-1, L.P.
CONDENSED STATEMENTS OF OPERATIONS
==================================
<TABLE>
<CAPTION>
Unaudited
----------------------------
Six months ended
June 30,
----------------------------
1994 1995
----------- -----------
<S> <C> <C>
REVENUES $ 2,256,400 $ 2,410,000
----------- -----------
OPERATING EXPENSES:
Service costs 852,900 895,300
General and administrative expenses 312,200 285,300
General Partner management fees
and reimbursed expenses 293,900 281,100
Depreciation and amortization 595,100 607,000
----------- -----------
2,054,100 2,068,700
----------- -----------
OPERATING INCOME 202,300 341,300
----------- -----------
OTHER INCOME (EXPENSE):
Interest income 10,700 25,200
Interest expense (132,600) (141,500)
----------- -----------
(121,900) (116,300)
----------- -----------
NET INCOME $ 80,400 $ 225,000
=========== ===========
NET INCOME PER UNIT OF LIMITED
PARTNERSHIP INTEREST $ 2.66 $ 7.44
=========== ===========
AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD 29,940 29,940
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
-4-
<PAGE> 5
ENSTAR INCOME PROGRAM 1984-1, L.P.
STATEMENTS OF CASH FLOWS
========================
<TABLE>
<CAPTION>
Unaudited
----------------------------
Six months ended
June 30,
----------------------------
1994 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 80,400 $ 225,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 595,100 607,000
Amortization of deferred loan costs 1,800 1,000
Increase (decrease) from changes in:
Accounts receivable, prepaid expenses
and other assets (82,900) (2,800)
Deferred loan costs (700) (31,000)
Accounts payable and due to affiliates 8,500 182,900
----------- -----------
Net cash provided by operating activities 602,200 982,100
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (202,100) (250,000)
Increase in intangible assets (12,300) (21,400)
----------- -----------
Net cash used in investing activities (214,400) (271,400)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt (350,000) (350,000)
----------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS 37,800 360,700
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 734,500 1,169,700
----------- -----------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 772,300 $ 1,530,400
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
-5-
<PAGE> 6
ENSTAR INCOME PROGRAM 1984-1, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
=======================================
1. INTERIM FINANCIAL STATEMENTS
The accompanying condensed interim financial statements for the three
and six months ended June 30, 1995 and 1994 are unaudited. It is suggested that
these condensed interim financial statements be read in conjunction with the
audited financial statements and notes thereto included in the Partnership's
latest Annual Report on Form 10-K. In the opinion of management, such statements
reflect all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the results of such periods. The results of
operations for the three and six months ended June 30, 1995 are not necessarily
indicative of results for the entire year.
2. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
The Partnership has a management and service agreement with a wholly
owned subsidiary of the General Partner (the "Manager") for a monthly management
fee of 5% of revenues, excluding revenues from the sale of cable television
systems or franchises. Management fees approximated $61,400 and $120,500 for the
three and six months ended June 30, 1995, respectively.
In addition to the monthly management fee described above, the
Partnership reimburses the Manager for direct expenses incurred on behalf of the
Partnership and for the Partnership's allocable share of operational costs
associated with services provided by the Manager. All cable television
properties managed by the General Partner and its subsidiary are charged a
proportionate share of these expenses. Corporate office allocations and district
office expenses are charged to the properties served based primarily on the
respective percentage of basic subscribers or homes passed (dwelling units
within a system) within the designated service areas. The total amount charged
to the Partnership for these services approximated $82,500 and $160,600 for the
three and six months ended June 30, 1995, respectively. Management fees and
reimbursed expenses due the General Partner are non-interest bearing.
Certain programming services have been purchased through an affiliate
of the Partnership. In turn, the affiliate charges the Partnership for these
costs based on an estimate of what the Partnership could negotiate for such
programming services on a stand-alone basis. The Partnership paid the affiliate
$283,700 and $555,400 for programming services for the three and six months
ended June 30, 1995, respectively. Programming fees are included in service
costs in the statements of operations for the three and six months ended June
30, 1995 and 1994.
-6-
<PAGE> 7
ENSTAR INCOME PROGRAM 1984-1, L.P.
3. EARNINGS PER UNIT OF LIMITED PARTNERSHIP INTEREST
Earnings and losses per unit of limited partnership interest is based
on the average number of units outstanding during the periods presented. For
this purpose, earnings and losses are allocated 99% to the limited partners and
1% to the general partner.
4. RECLASSIFICATIONS
Certain 1994 amounts have been reclassified to conform to the 1995
presentation.
-7-
<PAGE> 8
ENSTAR INCOME PROGRAM 1984-1, L.P.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
INTRODUCTION
On February 22, 1994, the Federal Communications Commission (the "FCC")
announced significant amendments to its regulations implementing certain
provisions of the 1992 Cable Act, including those relating to rate regulation
which had previously become effective on September 1, 1993. The amended rate
regulations became effective during the quarter ended September 30, 1994.
Additional amendments were adopted November 10, 1994 and became effective
January 1, 1995. Compliance with these rules has had, and will most likely
continue to have, a significant negative impact on the Partnership's revenues
and cash flow. Based on certain recent FCC decisions that have been released,
however, the Partnership's management presently believes that revenues for the
first six months of 1995 fully reflect the impact of the 1992 Cable Act.
Nonetheless, management expects that certain costs, including programming costs,
will continue to rise at a rate in excess of that which the Partnership will be
permitted to pass on to its customers. Furthermore, given events since the
enactment of the 1992 Cable Act, there can be no assurance as to what, if any,
future action may be taken by Congress, the FCC or any other regulatory
authority or court, or the effect thereof on the Partnership's business.
Specifically, the FCC recently issued a proposal that may allow cable operators
to file abbreviated cost of service filings for system rebuilds and upgrades,
providing for additional rate increases related to significant capital
expenditures. There is also legislation currently being debated in Congress that
could significantly revise the 1992 Cable Act, although there can be no
certainty as to the final provisions of such legislation, or whether it will
become law.
In addition to the information set forth in this report, reference is
made to the Partnership's Annual Report on Form 10-K for the year ended December
31, 1994 for additional information regarding regulatory matters and the effect
thereof on the Partnership's business.
RESULTS OF OPERATIONS
The Partnership's revenues increased by $88,300, or by 7.8%, and by
$153,600, or by 6.8%, for the three and six months ended June 30, 1995 as
compared to the corresponding periods in 1994. Of the three months' increase,
$66,800 was due to increases in the number of subscriptions for service, $23,900
was due to increases in unregulated rates charged to customers for premium
services, $12,000 was due to increases in regulated service rates permitted
under the 1992 Cable Act that were implemented by the Partnership in April 1995
and $3,400 resulted from other revenue producing items. These increases were
partially offset by rate decreases implemented in September 1994 to comply with
the 1992 Cable Act, estimated by the Partnership to be approximately $17,800. Of
the six months' increase, $125,600 was due to increases in the number of
subscriptions for service, $37,200 was due to increases in unregulated
-8-
<PAGE> 9
ENSTAR INCOME PROGRAM 1984-1, L.P.
RESULT OF OPERATIONS (CONT.)
rates charged to customers for premium services, $14,500 resulted from other
revenue producing items and $12,000 was due to increases in regulated service
rates permitted under the 1992 Cable Act that were implemented by the
Partnership in April 1995. These increases were partially offset by rate
decreases implemented in September 1994 to comply with the 1992 Cable Act,
estimated by the Partnership to be approximately $35,700.
Service costs increased by $28,500, or by 6.7%, and by $42,400, or by
5.0%, for the three and six months ended June 30, 1995 as compared to the
corresponding periods in 1994. Service costs represent costs directly
attributable to providing cable services to customers. Of the three months'
increase, $32,900 was related to increased programming fees charged by program
suppliers and $4,300 was related to higher pole rent expense, partially offset
by an $11,400 decrease in repair and maintenance expense. Of the six months'
increase, $57,500 was related to increased programming fees charged by program
suppliers and $8,900 was related to higher pole rent expense, partially offset
by a $24,800 decrease in repair and maintenance expense. The increases in
programming expense were also due to expanded programming usage relating to
retransmission consent arrangements implemented to comply with the 1992 Cable
Act.
General and administrative expenses decreased by $6,000, or by 3.5%,
and by $26,900, or by 8.6%, for the three and six months ended June 30, 1995 as
compared to the corresponding periods in 1994. Of the three months' decrease,
$16,100 was due to lower marketing expense, $9,800 was due to increased
capitalization of labor and overhead expense based on greater construction
activity and $8,100 was due to a decrease in personnel costs. These decreases
were partially offset by an $11,100 increase in professional fees. Of the six
months' decrease, $14,900 was due to lower marketing expense, $8,700 was due to
a decrease in bad debt expense, $7,300 was due to increased capitalization of
labor and overhead expense and $5,100 was due to lower personnel costs. These
decreases were partially offset by a $9,000 increase in professional fees.
Management fees and reimbursed expenses decreased by $9,200, or by
6.0%, and by $12,800, or by 4.4%, for the three and six months ended June 30,
1995 as compared to the corresponding periods in 1994 due to lower reimbursable
expenses allocated by the General Partner. Reimbursed expenses decreased due to
lower allocated personnel costs, computer service and consulting fees, property
taxes, and postage, telephone and marketing costs for the three and six months
ended June 30 1995. Management fees increased by $4,400, or by 7.7%, and by
$7,700, or by 6.8%, in direct relation to increased revenues.
Depreciation and amortization expense remained relatively unchanged for
the three months ended June 30, 1995 and increased by $11,900 for the six months
ended June 30, 1995 as compared to the corresponding periods in 1994. The
increase in the six month period was due to the depreciation and amortization of
asset additions, partially offset by the effect of certain intangible assets
becoming fully amortized.
-9-
<PAGE> 10
ENSTAR INCOME PROGRAM 1984-1, L.P.
RESULT OF OPERATIONS (CONCLUDED)
Operating income increased by $72,900, or by 81.5%, and by $139,000, or
by 68.7%, for the three and six months ended June 30, 1995 as compared to the
corresponding periods in 1994, primarily due to increased revenues and decreases
in marketing expense, repair and maintenance expense and reimbursed expenses as
described above.
Interest income increased by $7,900 and by $14,500 for the three and
six months ended June 30, 1995 as compared to the corresponding periods in 1994,
due to higher cash balances available for investment and higher interest rates
earned on invested funds.
Interest expense increased by $2,400, or by 3.4%, and by $8,900, or by
6.7%, for the three and six months ended June 30, 1995 compared to the
corresponding periods in 1994, due to an increase in the average interest rate
paid on borrowings (10% and 9.8% for the three and six month periods in 1995
versus 6.9% and 6.5% for the corresponding periods in 1994).
Due to the factors described above, the Partnership's net income
increased by $78,400 and $144,600 for the three and six months ended June 30,
1995 compared to the equivalent periods in 1994.
LIQUIDITY AND CAPITAL RESOURCES
As previously stated, the FCC's amended rate regulation rules were
implemented during the quarter ended September 30, 1994. Compliance with these
rules has had, and most likely will continue to have, a significant negative
impact on the Partnership's revenues and cash flow.
The Partnership's primary objective, having invested its net offering
proceeds in cable systems, is to distribute to its partners all available cash
flow from operations and proceeds from the sale of cable systems, if any, after
providing for expenses, debt service and capital requirements relating to the
expansion, improvement and upgrade of its cable systems. The Partnership
currently relies exclusively on the availability of cash generated from
operations to fund its ongoing expenses, debt service and capital requirements.
In general, these requirements involve expansion, improvement and upgrade of the
Partnership's existing cable systems. Due to the fact that the Partnership is
currently not able to incur additional borrowings under its note payable and the
adverse impact of the 1992 Cable Act on the Partnership's business, there can be
no assurance that the Partnership's cash flow will be adequate to meet its
liquidity requirements, including necessary capital expenditures. As a result,
the Partnership may need to borrow in the future, if such borrowings are
available on terms acceptable to the Partnership, of which there can be no
assurance.
In March 1995, the Partnership reached an agreement with its lender to
extend the maturity of its existing note payable for an additional year to March
31, 1996. The terms and conditions of the
-10-
<PAGE> 11
ENSTAR INCOME PROGRAM 1984-1, L.P.
LIQUIDITY AND CAPITAL RESOURCES (CONCLUDED)
new note agreement are substantially the same as the previous agreement. The
Partnership is required to continue to make quarterly payments of interest
together with principal payments of $175,000 through June 30, 1995, and $225,000
through December 31, 1995, with a final installment due March 31, 1996. In
addition, the Partnership is limited in the amount it can pay in cash to the
General Partner for management fees and reimbursed expenses. Any excess amounts
will be deferred and paid as soon as this restriction is removed. As of June 30,
1995, an aggregate of $855,200 due the General Partner had been deferred. The
Partnership paid the lender a fee in 1995 of approximately $28,000 for the
amendment to its note payable.
The Partnership has executed a non-binding letter agreement to sell the
Snow Hill, North Carolina system and is currently negotiating the asset sale
agreement. Completion of the sale is subject to, among other things, the
execution of the asset sale agreement and regulatory approvals, and there can be
no assurance that the sale will be completed. The sale of this system would
permit the Partnership to repay its bank debt and the General Partner believes
that the Partnership may then be able to obtain financing to rebuild and upgrade
its remaining systems. Management would evaluate the feasibility of resuming the
payment of distributions at that time.
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
Operating activities provided $379,900 more cash in the six months
ended June 30, 1995 than in the prior year period. Changes in accounts payable
and due to affiliates provided $174,400 more cash due to a decrease in the
payment of amounts owed to the General Partner and third party creditors.
Partnership operations generated $155,700 more cash after adding back non-cash
depreciation and amortization charges. Decreases in accounts receivable balances
used $80,100 less cash in the first six months of 1995 than in the comparable
1994 period. The Partnership used $30,300 more cash to pay loan costs related to
its loan amendment in the six months ended June 30, 1995.
The Partnership used $57,000 more cash in investing activities during
the six months ended June 30, 1995 than in the corresponding six months of 1994
due to a $47,900 increase in capital expenditures and a $9,100 increase in
expenditures for intangible assets.
Operating income before depreciation and amortization (EBITDA) as a
percentage of revenues increased from 34.1% in the second quarter of 1994 to
37.8% in the second quarter of 1995. EBITDA increased from 35.3% during the
first six months of 1994 to 39.4% in the comparable 1995 period. The three and
six months' increases were caused by higher revenues and lower repair and
maintenance expense and marketing costs as described above. EBITDA increased
from $388,600 to $463,600, or by 19.3%, during the three months ended June 30,
1995 compared to the corresponding period in 1994. EBITDA increased from
$797,400 to $948,300, or by 18.9%, during the first six months of 1995 compared
to the first six months of 1994.
-11-
<PAGE> 12
ENSTAR INCOME PROGRAM 1984-1, L.P.
INFLATION
Certain of the Partnership's expenses, such as those for wages and
benefits, equipment repair and replacement and billing and marketing generally
increase with inflation. The Partnership does not believe that its financial
results have been, or will be, adversely affected by inflation, provided that it
is able to increase its service rates periodically, of which there can be no
assurance due to the re-regulation of rates charged for certain cable services.
-12-
<PAGE> 13
ENSTAR INCOME PROGRAM 1984-1, L.P.
PART II. OTHER INFORMATION
ITEMS 1-5. Not applicable.
ITEM 6. Exhibits and Reports on Form 8-K
(a) None
(b) No reports on Form 8-K were filed during the
quarter for which this report was filed.
-13-
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ENSTAR INCOME PROGRAM 1984-1, L.P.
a GEORGIA LIMITED PARTNERSHIP
(Registrant)
By: ENSTAR COMMUNICATIONS CORPORATION
General Partner
Date: August 9, 1995 By: /s/ Michael K. Menerey
------------------------
Michael K. Menerey,
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT JUNE 30, 1995, AND THE STATEMENTS OF OPERATIONS FOR THE SIX MONTHS
ENDED JUNE 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,530,400
<SECURITIES> 0
<RECEIVABLES> 76,700
<ALLOWANCES> 7,300
<INVENTORY> 70,600
<CURRENT-ASSETS> 0
<PP&E> 11,509,700
<DEPRECIATION> 9,098,700
<TOTAL-ASSETS> 4,254,600
<CURRENT-LIABILITIES> 1,523,000
<BONDS> 2,661,000
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,254,600
<SALES> 0
<TOTAL-REVENUES> 2,410,000
<CGS> 0
<TOTAL-COSTS> 2,068,700
<OTHER-EXPENSES> (25,300)
<LOSS-PROVISION> 11,500
<INTEREST-EXPENSE> 141,500
<INCOME-PRETAX> 225,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 225,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 225,000
<EPS-PRIMARY> 7.44
<EPS-DILUTED> 0
</TABLE>
