<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 September 30, 2000
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-13333
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Enstar Income Program 1984-1, L.P.
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(Exact name of Registrant as specified in its charter)
Georgia 58-1581136
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
12444 Powerscourt Dr., Suite 100
St. Louis, Missouri 63131
-------------------------------- ---------------------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (314) 965-0555
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--------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
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 X No
--- ---
Exhibit Index located at Page E-1.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ENSTAR INCOME PROGRAM 1984-1, L.P.
CONDENSED BALANCE SHEETS
======================================
<TABLE>
<CAPTION>
December 31, September 30,
1999* 2000
----------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS:
Cash $ 1,963,500 $ 8,079,100
Accounts receivable, net of allowance for doubtful accounts of $700 and
$25,900, respectively 90,700 480,500
Insurance claim receivable 27,900 -
Prepaid expenses and other assets 160,300 118,200
Property, plant and equipment, net of accumulated
depreciation of $11,793,400 and $10,020,300, respectively 4,189,700 3,044,400
Franchise cost, net of accumulated
amortization of $127,400 and $24,800, respectively 53,000 57,300
Deferred loan costs and other deferred charges, net 52,800 38,700
----------------- -----------------
$ 6,537,900 $ 11,818,200
================= =================
LIABILITIES AND PARTNERSHIP CAPITAL
LIABILITIES:
Accounts payable $ 425,500 $ 303,500
Due to affiliates 1,217,700 1,842,800
----------------- -----------------
1,643,200 2,146,300
----------------- -----------------
PARTNERSHIP CAPITAL (DEFICIT):
General Partner (23,800) 26,300
Limited Partners 4,918,500 9,645,600
----------------- -----------------
TOTAL PARTNERSHIP CAPITAL 4,894,700 9,671,900
----------------- -----------------
$ 6,537,900 $ 11,818,200
================= =================
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
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*Agrees with audited balance sheet included in the Partnership's Annual Report
on Form 10-K
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<PAGE> 3
ENSTAR INCOME PROGRAM 1984-1, L.P.
CONDENSED STATEMENTS OF OPERATIONS
=======================================================
<TABLE>
<CAPTION>
Unaudited
-------------------------------------
Three months ended
September 30,
-------------------------------------
1999 2000
---------------- -----------------
REVENUES $ 1,285,500 $ 1,159,400
---------------- -----------------
<S> <C> <C>
OPERATING EXPENSES:
Service costs 504,500 476,500
General and administrative expenses 174,500 264,600
General partner management fees
and reimbursed expenses 155,500 150,100
Depreciation and amortization 201,700 223,800
---------------- -----------------
1,036,200 1,115,000
---------------- -----------------
OPERATING INCOME 249,300 44,400
---------------- -----------------
OTHER INCOME (EXPENSE):
Interest income 18,600 35,700
Interest expense (22,600) (18,500)
Loss on sale of fixed assets (2,100) -
Gain of sale of cable television systems - 4,234,700
---------------- -----------------
(6,100) 4,251,900
---------------- -----------------
NET INCOME $ 243,200 $ 4,296,300
================ =================
Net income allocated to General Partner $ 2,400 $ 43,000
================ =================
Net income allocated to Limited Partners $ 240,800 $ 4,253,300
================ =================
NET INCOME PER UNIT OF LIMITED
PARTNERSHIP INTEREST $ 8.04 $ 142.06
================ =================
AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD 29,940 29,940
================ =================
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
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<PAGE> 4
ENSTAR INCOME PROGRAM 1984-1, L.P.
CONDENSED STATEMENTS OF OPERATIONS
========================================================
<TABLE>
<CAPTION>
Unaudited
-------------------------------------
Nine months ended
September 30,
-------------------------------------
1999 2000
---------------- -----------------
REVENUES $ 3,835,600 $ 3,698,500
---------------- -----------------
<S> <C> <C>
OPERATING EXPENSES:
Service costs 1,438,100 1,267,600
General and administrative expenses 530,000 627,300
General partner management fees
and reimbursed expenses 454,800 459,600
Depreciation and amortization 643,300 649,600
---------------- -----------------
3,066,200 3,004,100
---------------- -----------------
OPERATING INCOME 769,400 694,400
---------------- -----------------
OTHER INCOME (EXPENSE):
Interest income 42,500 87,400
Interest expense (69,800) (53,900)
Loss on sale of fixed assets (2,100) -
Gain on sale of cable system - 4,210,300
Casualty gain - 79,800
---------------- -----------------
(29,400) 4,323,600
---------------- -----------------
NET INCOME $ 740,000 $ 5,018,000
================ =================
Net income allocated to General Partner $ 7,400 $ 50,200
================ =================
Net income allocated to Limited Partners $ 732,600 $ 4,967,800
================ =================
NET INCOME PER UNIT OF LIMITED
PARTNERSHIP INTEREST $ 24.47 $ 165.93
================ =================
AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD 29,940 29,940
================ =================
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
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<PAGE> 5
ENSTAR INCOME PROGRAM 1984-1, L.P.
CONDENSED STATEMENTS OF CASH FLOWS
==================================================
<TABLE>
<CAPTION>
Unaudited
-------------------------------------
Nine months ended
September 30,
-------------------------------------
1999 2000
---------------- -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 740,000 $ 5,018,000
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization 643,300 649,600
Amortization of deferred loan costs 22,300 22,400
Gain on sale of cable system - (4,210,300)
Changes in:
Receivables, prepaid expenses and other assets (155,700) (331,800)
Accounts payable and due to affiliates (129,800) 471,900
---------------- -----------------
Net cash from operating activities 1,120,100 1,619,800
---------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (553,700) (481,300)
Proceeds from sale of cable system - 5,250,000
Increase in intangible assets - (23,000)
---------------- -----------------
Net cash from investing activities (553,700) 4,745,700
---------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners - (240,800)
Deferred loan costs - (9,100)
---------------- -----------------
Net cash from financing activities - (249,900)
---------------- -----------------
INCREASE IN CASH 566,400 6,115,600
CASH AT BEGINNING OF PERIOD 1,036,000 1,963,500
---------------- -----------------
CASH AT END OF PERIOD $ 1,602,400 $ 8,079,100
================ =================
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
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<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 Enstar Income Program 1984-1, L.P. (the "Partnership") as of September 30,
2000, and for the three and nine months ended September 30, 2000 and 1999, are
unaudited. These condensed interim financial statements should be read in
conjunction with the audited financial statements and notes thereto included in
our latest Annual Report on Form 10-K. In the opinion of management, the
condensed interim financial 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 nine months
ended September 30, 2000, 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 (the
"Management Agreement") with Enstar Cable Corporation (the "Manager"), a wholly
owned subsidiary of Enstar Communications Corporation (ECC), the corporate
general partner, for a monthly management fee of 5% of gross revenues to the
Manager, excluding revenues from the sale of cable television systems or
franchises. Management fee expense approximated $58,000 and $184,900 for the
three and nine months ended September 30, 2000, respectively. For the three and
nine months ended September 30, 1999, management fee expense approximated
$64,300 and $191,800, respectively. Management fees are non-interest bearing.
The Management Agreement provides that the Partnership
reimburse 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. Additionally, Charter Communications Holding
Company, LLC and its affiliates (collectively, "Charter") provide other
management and operational services for the Partnership. Such services were
provided by Falcon Communications, L.P. and its affiliates (collectively,
"Falcon") prior to November 12, 1999. These expenses are charged to the
properties served based primarily on the Partnership's allocable share of
operational costs associated with services provided. The total amount charged to
the Partnership for these services approximated $92,100 and $274,700 for the
three and nine months ended September 30, 2000, respectively. For the three and
nine months ended September 30, 1999, the total amount charged to the
Partnership for these services approximated $91,300 and $263,100, respectively.
On September 30, 1997, ECC contributed $462,300 of previously
deferred management fees and reimbursed expenses as an equity contribution to
Enstar Finance Company, LLC, a subsidiary of ECC. The balance remains an
outstanding obligation of the Partnership. In the
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<PAGE> 7
ENSTAR INCOME PROGRAM 1984-1, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
==========================================================
normal course of business, the Partnership pays interest and principal to Enstar
Finance Company, LLC, its primary lender, when there are amounts outstanding
under the facility and pays a commitment fee on the unborrowed portion of its
facility.
Substantially all programming services have been purchased
through Charter since November 12, 1999. Before that time, substantially all
programming services were purchased through Falcon. Falcon charged the
Partnership for these costs based on an estimate of what ECC could negotiate for
such programming services for the 14 partnerships managed as a group. Charter
charges the Partnership for these costs based on its costs. The Partnership
recorded programming fee expense of $239,400 and $731,500 for the three and nine
months ended September 30, 2000, respectively. For the three and nine months
ended September 30, 1999, programming fee expense was $314,000 and $906,800,
respectively. Programming fees are included in service costs in the statements
of operations.
3. NET INCOME PER UNIT OF LIMITED PARTNERSHIP INTEREST
Net income per unit of limited partnership interest is based
on the average number of units outstanding during the periods presented. For
this purpose, net income has been allocated 99% to the Limited Partners and 1%
to the General Partner. The General Partner does not own units of partnership
interest in the Partnership, but rather holds a participation interest in the
income, losses and distributions of the Partnership.
4. SALE OF CABLE SYSTEMS
On June 21, 2000, (as amended on September 29, 2000) the
Partnership, together with certain affiliates, (collectively, the "Sellers")
entered into a purchase and sale agreement (the "Agreement") with Multimedia
Acquisition Corp., an affiliate of Gans Multimedia Partnership, (the
"Purchaser"). The Agreement provides for the Purchaser to acquire the assets
comprising the Partnership's cable systems serving Snowhill, North Carolina and
Brownsville, Tennessee, as well as certain assets of other affiliates.
The aggregate purchase price payable to the Sellers pursuant
to the Agreement is $27,621,500 in cash (subject to normal closing adjustments).
Of that amount, $13,691,119 (subject to closing adjustments) is payable to the
Partnership. The allocation of the purchase price among each of the Sellers was
assigned by the Purchaser for each of the systems.
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<PAGE> 8
ENSTAR INCOME PROGRAM 1984-1, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
=========================================================
The Purchaser's obligation to acquire the cable systems is
subject to numerous closing conditions, including without limitation: (a)
receipt of the necessary governmental consents to transfer franchises covering
an aggregate of 90% of the subscribers of all of the Sellers; (b) receipt of
certain other material consents and approvals required for the consummation of
the sale; (c) receipt of the necessary approvals of the Limited Partners of each
Seller; and (d) other standard closing conditions. With respect to clause (c)
above, completion of the transaction is contingent on the Limited Partners of
the Partnership and the other selling affiliates voting to approve the sale.
On August 31, 2000, the Partnership completed the first
closing of the sale of the Partnership's cable systems serving Kershaw, South
Carolina, in a separate transaction to an unrelated purchaser for $5,250,000
(subject to normal closing adjustments). The second close is scheduled to occur
November 30, 2000 to account for any working capital adjustments. The sale
resulted in a gain on sale of cable system of $4,210,300 for the nine months
ended September 30, 2000.
5. SUBSEQUENT EVENT
On October 10, 2000 a distribution of approximately $4,700,000
or $157 per limited partnership unit, less applicable state income tax, was made
resulting from the sale of the Partnership's cable systems serving Kershaw,
South Carolina, described above.
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<PAGE> 9
ENSTAR INCOME PROGRAM 1984-1, L.P.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
This report includes certain forward-looking statements
regarding, among other things, our future results of operations, regulatory
requirements, competition, capital needs and general business conditions
applicable to the Partnership. Such forward-looking statements involve risks and
uncertainties including, without limitation, the uncertainty of legislative and
regulatory changes and the rapid developments in the competitive environment
facing cable television operators such as the Partnership. In addition to the
information provided herein, reference is made to our Annual Report on Form 10-K
for the year ended December 31, 1999, for additional information regarding such
matters and the effect thereof on the Partnership's business.
RESULTS OF OPERATIONS
Revenues decreased from $1,285,500 to $1,159,400, or by 9.8%,
and from $3,835,600 to $3,698,500, or by 3.6%, for the three and nine months
ended September 30, 2000, as compared to the corresponding periods in 1999. Of
the $126,100 decrease for the three months ended September 30, 2000, $99,900
was due to decreases in the number of subscribers for basic, pay, tier, and
equipment rental services. A net decrease of $30,000 was due to reduced
promotional rates offered during the summer of 2000, offset by an increase in
regulated service rates implemented in 1999. These decreases were partially
offset by a $3,800 increase in other revenue producing items. Of the $137,100
decrease in revenues for the nine months ended September 30, 2000, $165,900 was
due to decreases in the number of subscribers for basic, pay, tier, and
equipment rental services. The decreases were partially offset by a $8,900 net
increase in regulated service rates that we implemented in 1999, offset by a
decrease due to reduced promotional rates offered during the summer of 2000,
and a $19,900 increase in other revenue producing items. As of September 30,
2000, the partnership had approximately 8,100 basic subscribers and 6,100
premium service units.
Effective with the acquisition of Falcon Communications, L.P.
(Falcon) by Charter Communications Holdings Company, LLC (Charter) on November
12, 1999, certain activities previously incurred at the Partnership and expensed
through service cost and general and administrative expense have been either
eliminated by Charter, or have been reimbursed by the Partnership based on
Charter's costs incurred. These reimbursed costs are included in general partner
management fees and reimbursed expenses on the Partnership's statements of
operations. The total of service costs, general and administrative expenses and
general partner management fees and reimbursed expenses increased from $834,500
to $891,200, or by 6.8%, and decreased from $2,422,900 to $2,354,500, or by
2.8%, for the three and nine months ended September 30, 2000, as compared to the
corresponding periods in 1999.
Service costs decreased from $504,500 to $476,500, or by 5.6%,
and from $1,438,100 to $1,267,600, or by 11.9%, for the three and nine months
ended September 30, 2000, as compared to the corresponding periods in 1999.
Service costs represent costs directly attributable to providing
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<PAGE> 10
ENSTAR INCOME PROGRAM 1984-1, L.P.
cable services to customers. The decrease was primarily due to decreases in
programming fees and increases in capitalization of labor and overhead costs due
to a greater number of capital projects during the first nine months of 2000. In
addition, certain costs incurred at the Partnership prior to the Charter
acquisition on November 12, 1999, are now incurred by Charter and reimbursed by
the Partnership, as discussed above. Programming fees decreased as a result of
lower rates that Charter has extended to the Partnership and a decrease in
subscribers. In addition, there were no September 2000 expenses relating to the
Kershaw system, as it was sold on August 31, 2000.
General and administrative expenses increased from $174,500 to
$264,600, or by 51.6%, and from $530,000 to $627,300, or by 18.4%, for the three
and nine months ended September 30, 2000, as compared to the corresponding
periods in 1999. The increase is due to increases in customer billing and bad
debt expenses.
General partner management fees and reimbursed expenses
decreased from $155,500 to $150,100, or by 3.5%, and increased from $454,800 to
$459,600, or by 1.1%, for the three and nine months ended September 30, 2000, as
compared to the corresponding periods in 1999. The decrease for the three months
ended September 30, 2000 was due to the sale of the Kershaw system in August,
2000. The increase for the nine months ended September 30, 2000, is attributable
to costs incurred by Charter that were previously incurred by the Partnership.
Depreciation and amortization expense increased from $201,700
to $223,800, or by 11.0%, and from $643,300 to $649,600, or by 1.0%, for the
three and nine months ended September 30, 2000, as compared to the corresponding
periods in 1999. The increase was primarily due to asset additions relating to
cable system upgrades.
Due to the factors described above, operating income decreased
from $249,300 to $44,400, or by 82.2%, and from $769,400 to $694,400, or by
9.7%, for the three and nine months ended September 30, 2000, as compared to the
corresponding periods in 1999.
Interest income increased from $18,600 to $35,700, or by
91.9%, and from $42,500 to $87,400, or by 105.6%, for the three and nine months
ended September 30, 2000, as compared to the corresponding periods in 1999,
primarily due to higher average cash balances available for investment during
2000.
Interest expense decreased from $22,600 to $18,500, or by
18.1%, and from $69,800 to $53,900, or by 22.8%, for the three and nine months
ended September 30, 2000, as compared to the corresponding periods in 1999,
primarily due to a reduction in commitment fees paid under our loan facility,
which was reduced on November 12, 1999.
Gain on sale of cable system of $4,234,700 and $4,210,300
for the three and nine months ended September 30, 2000, related to the sale of
our Kershaw system, completed on August 31, 2000.
Casualty gain was $0 and $79,800 for the three and nine months
ended September 30, 2000. This gain relates to an insurance reimbursement
received in the first quarter of 2000 for damages caused by Hurricane Floyd in
September 1999. The reimbursement was used for plant repairs and refunds to
customers for cable outages.
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<PAGE> 11
ENSTAR INCOME PROGRAM 1984-1, L.P.
Due to the factors described above, our net income increased
from $243,200 to $4,296,300, or by 1,666.6%, and from $740,000 to $5,018,000, or
by 578.1%, for the three and nine months ended September 30, 2000, as compared
to the corresponding periods in 1999.
Based on our experience in the cable television industry, we
believe that operating income before depreciation and amortization, or EBITDA,
and related measures of cash flow serve as important financial analysis tools
for measuring and comparing cable television companies in several areas, such as
liquidity, operating performance and leverage. EBITDA is not a measurement
determined under generally accepted accounting principles (GAAP) and does not
represent cash generated from operating activities in accordance with GAAP.
EBITDA should not be considered by the reader as an alternative to net income as
an indicator of financial performance or as an alternative to cash flows as a
measure of liquidity. In addition, the definition of EBITDA may not be identical
to similarly titled measures used by other companies. EBITDA as a percentage of
revenues increased from 23.1% to 35.1% and 36.3% to 36.8% during the three and
nine months ended September 30, 2000, as compared to the corresponding period in
1999. The increase was primarily due to decreases in personnel costs,
professional fees, and programming fees as described above. EBITDA decreased
from $451,000 to $268,200 or by 40.5%, and from $1,412,700 to $1,344,000, or by
4.9%, during the three and nine months ended September 30, 2000, as compared to
the corresponding period in 1999.
LIQUIDITY AND CAPITAL RESOURCES
Our primary objective is to distribute to our 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. In
general, these capital requirements involve expansion, improvement and upgrade
of our existing cable systems.
In accordance with the partnership agreement, the Enstar
Communications Corporation has implemented a plan for liquidating the
Partnership. On June 21, 2000, (as amended on September 29, 2000) the
Partnership, together with certain affiliates, (collectively, the "Sellers")
entered into a purchase and sale agreement (the "Agreement") with Multimedia
Acquisition Corp., an affiliate of Gans Multimedia Partnership, (the
"Purchaser"). The Agreement provides for the Purchaser to acquire the assets
comprising the Partnership's cable systems serving Snowhill, North Carolina and
Brownsville, Tennessee, as well as certain assets of other affiliates.
The aggregate purchase price payable to the Sellers pursuant
to the Agreement is $27,621,500 in cash (subject to normal closing adjustments).
Of that amount, $13,691,119 (subject to closing adjustments) is payable to the
Partnership. The allocation of the purchase price among each of the Sellers was
assigned by the Purchaser for each of the systems.
The Purchaser's obligation to acquire the cable systems is
subject to numerous closing conditions, including without limitation: (a)
receipt of the necessary governmental consents to transfer franchises covering
an aggregate of 90% of the subscribers of all of the Sellers; (b) receipt of
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<PAGE> 12
ENSTAR INCOME PROGRAM 1984-1, L.P.
certain other material consents and approvals required for the consummation of
the sale; (c) receipt of the necessary approvals of the Limited Partners of each
Seller; and (d) other standard closing conditions. With respect to clause (c)
above, completion of the transaction is contingent on the Limited Partners of
the Partnership and the other selling affiliates voting to approve the sale.
On August 31, 2000, the Partnership completed the first
closing of the sale of the Partnership's cable systems serving Kershaw, South
Carolina, in a separate transaction to an unrelated purchaser for $5,250,000
(subject to normal closing adjustments). The second close is scheduled to occur
November 30, 2000 to account for any working capital adjustments. The sale
resulted in a gain on sale of cable system of $4,210,300 for the nine months
ended September 30, 2000.
As of the date of this report, each of our systems requires
an upgrade, substantially all of the available channel capacity in our cable
television systems is being utilized. We presently estimate that the entire
upgrade program will cover 12 franchise areas and require aggregate capital
expenditures of approximately $8,300,000. Of the 12 franchise areas to be
upgraded, the upgrades are required with respect to eight franchise areas and
are projected to be completed by June 2000, December 2001 and February 2002.
These required upgrades are estimated to cost approximately $4,400,000. The
Partnership did not complete the first required upgrade by June 30, 2000 due to
the general partner's intention to sell the system located in Kershaw, South
Carolina. However, the Partnership has been granted an extension until December
2000 to complete this upgrade. If the franchise authority imposes the $100 per
day penalty for failing to timely complete the upgrade, it is not expected to
have a material adverse impact on our results of operations or financial
condition.
The Partnership relies upon the availability of cash generated
from operations and possible borrowings to fund its ongoing expenses, debt
service and capital requirements. Our capital expenditures were $481,300 for the
nine months ended September 30, 2000. We believe that possible borrowings under
our credit agreement together with cash flow from operations will be adequate to
fund capital expenditures and other liquidity requirements.
Our loan facility with Enstar Finance Company, LLC, has a
maximum loan commitment of $4,800,000. We pay a commitment fee of 0.5% to Enstar
Finance Company, LLC, on the unborrowed portion of the facility. We had no
outstanding borrowings under the facility as of September 30, 2000.
Our loan facility matures on August 31, 2001, at which time
all amounts then outstanding are due in full. Borrowings bear interest at the
lender's base rate (9.5% at September 30, 2000) plus 0.625%, or at an offshore
rate (6.74% at September 30, 2000) plus 1.875%. Under certain circumstances, we
are required to make mandatory prepayments, which permanently reduce the maximum
commitment under the loan facility. The loan facility contains certain financial
tests and other covenants including, among others, restrictions on incurrence of
indebtedness, investments, sales of assets, acquisitions and other covenants,
defaults and conditions. The loan facility does not restrict the payment of
distributions to partners unless an event of default exists thereunder or our
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<PAGE> 13
ENSTAR INCOME PROGRAM 1984-1, L.P.
ratio of debt to cash flow is greater than 4 to 1. However, due to the upgrade
program discussed above, the General Partner believes it is critical to conserve
cash and borrowing capacity and, consequently, has concluded that it would not
be prudent for the Partnership to resume paying distributions at this time.
The city of Covington, Tennessee rejected our franchise
renewal proposal in June 1999. The franchise agreement with the city expired in
1994 and we have continued to operate our cable system in Covington and pay
franchise fees to the city. In March 2000, Charter submitted another proposal to
the city on behalf of the Partnership that was subsequently rejected. At this
time, a municipal utility is moving forward with its plan to obtain financing
for construction of a system that would compete directly with the Partnership's
system. Construction is targeted to occur over an 18-month period. As it has
been proposed, the new system would be more technically advanced than the
Partnership's system and offer high speed internet access in addition to cable
television services. We believe that such a system, if built, would result in a
loss of our subscribers and have a significant adverse impact on the
partnership's financial condition and results of operations.
In January 2000, the franchise authority in Bolivar, Tennessee
authorized its municipal utility to construct and operate a competing cable
system in that franchise area. Our franchise agreement with the city expired in
1995. As we have in Covington, the Partnership has continued to operate our
cable system in Bolivar and pay franchise fees to the franchise authority.
Although the municipal utility has not obtained funds to build a cable system,
we believe that if a competing system were built, the loss of subscribers would
have an adverse impact on the Partnership's financial condition and results of
operations. Additionally, the loss of either franchise would constitute an event
of default under our loan agreement and would preclude us from borrowing under
our loan facility to finance our franchise-required rebuilds. This would require
the Partnership to identify alternative sources of financing. Enstar
Communications Corporation is assessing various strategies to mitigate the
impact of these potential overbuilds in the event that our systems are not sold
to third parties. As of September 30, 2000, there were approximately 1,700 and
1,200 basic subscribers in the cities of Covington and Bolivar, respectively.
Falcon purchased insurance coverage for all of the cable
television properties owned or managed by it to cover damage to cable
distribution plant and subscriber connections and against business interruptions
resulting from such damage. This coverage is subject to a significant annual
deductible which applies to all of the cable television properties formerly
owned or managed by Falcon through November 12, 1999, and currently managed by
Charter, including those of the Partnership. We have recorded a receivable of
approximately $107,700 for insurance recovery due to us under this policy.
Approximately 81% of our subscribers are served by our system
in Brownsville, Tennessee and neighboring communities. Significant damage to the
system due to seasonal weather conditions or other events could have a material
adverse effect on our liquidity and cash flows. We continue to purchase
insurance coverage in amounts our management views as appropriate for all other
property, liability, automobile, workers' compensation and other types of
insurable risks.
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<PAGE> 14
ENSTAR INCOME PROGRAM 1984-1, L.P.
Our operating activities provided $499,700 more cash in the
nine months ended September 30, 2000, than in the corresponding period of 1999.
Changes in accounts receivable and prepaid expenses used $176,100 more cash in
the first nine months of 2000, than in the corresponding period in 1999, due to
differences in the timing of receivable collections and the payment of prepaid
expenses. We used $601,700 less cash to pay liabilities owed to affiliates and
third party creditors during the nine months ended September 30, 2000, than in
the corresponding period in 1999, due to differences in the timing of payments.
Investing activities provided $5,299,400 more cash during the
nine months ended September 30, 2000, than in the corresponding period of 1999.
Capital expenditures decreased $72,000 in the first nine months on 2000, as
compared to the corresponding period in 1999. Proceeds from the sale of our
Kershaw cable system provided $5,250,000 during 2000. We used $23,000 more cash
to pay for certain intangible assets in the first nine months of 2000, than in
the corresponding period in 1999.
Financing activities used $249,900 more cash in the nine
months ended September 30, 2000, than in the corresponding period of 1999, due
to distribution to our partners and to deferred loan costs related to our
amended loan facility.
INFLATION
Certain of our expenses, such as those for wages and benefits,
equipment repair and replacement, and billing and marketing generally increase
with inflation. However, we do not believe that our financial results have been,
or will be, adversely affected by inflation in a material way, provided that we
are able to increase our service rates periodically, of which there can be no
assurance.
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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) Exhibits
10.1 Amendment dated September 29, 2000,
of the Asset Purchase Agreement dated
June 21, 2000, by and among
Multimedia Acquisition Corp., as
Buyer, and Enstar Income Program
1984-1, L.P., Enstar Income Program
IV-3, L.P., Enstar Income/Growth
Program Six-A, L.P., Enstar VII,
Enstar VIII and Enstar X, Ltd., as
Sellers.(1)
27.1 Financial Data Schedule.*
(b) Reports on Form 8-K
- None
-------
* Filed herewith
(1) Incorporated by reference to the report on Form 10-Q of Enstar Income/
Growth Program Six-A, L.P. filed on November 13, 2000 (File No. 00017687).
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<PAGE> 16
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: November 14, 2000 By: /s/ Kent D. Kalkwarf
---------------------
Kent D. Kalkwarf
Executive Vice President and Chief
Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
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<PAGE> 17
EXHIBIT INDEX
Exhibit
Number Description
10.1 Amendment dated September 29, 2000, of the Asset Purchase Agreement
dated June 21, 2000, by and among Multimedia Acquisition Corp., as
Buyer, and Enstar Income Program 1984-1, L.P., Enstar Income Program
IV-3, L.P., Enstar Income/Growth Program Six-A, L.P., Enstar VII,
Enstar VIII and Enstar X, Ltd., as Sellers (incorporated by reference
to the Current Report on Form 10-Q of Enstar Income/Growth Program
Six-A, L.P. filed on November 13, 2000, File No. 00017687).
27.1 Financial Data Schedule.
E-1
