<PAGE>
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, 1999
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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 0-14505
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Enstar Income Program II-2, L.P.
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(Exact name of Registrant as specified in its charter)
Georgia 58-1628872
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
10900 Wilshire Boulevard - 15th Floor
Los Angeles, California 90024
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (310) 824-9990
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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 ___
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<PAGE>
PART I - FINANCIAL INFORMATION
ENSTAR INCOME PROGRAM II-2, L.P.
CONDENSED BALANCE SHEETS
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<TABLE>
<CAPTION>
December 31, September 30,
1998* 1999
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(Unaudited)
<S> <C> <C>
ASSETS:
Cash $ 4,468,300 $ 5,225,300
Accounts receivable, less allowance of $3,400 and
$5,700 for possible losses 87,900 69,300
Prepaid expenses and other assets 306,100 403,800
Property, plant and equipment, less accumulated
depreciation and amortization of $7,490,400 and $7,832,600 2,758,600 2,610,600
Franchise cost, net of accumulated
amortization of $1,225,900 and $1,303,400 169,000 96,100
Deferred charges, net 7,400 1,800
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$ 7,797,300 $ 8,406,900
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LIABILITIES AND PARTNERSHIP CAPITAL
LIABILITIES:
Accounts payable $ 273,100 $ 280,900
Due to affiliates 332,300 61,400
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TOTAL LIABILITIES 605,400 342,300
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COMMITMENTS AND CONTINGENCIES
PARTNERSHIP CAPITAL (DEFICIT):
General partners (1,800) 6,900
Limited partners 7,193,700 8,057,700
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TOTAL PARTNERSHIP CAPITAL 7,191,900 8,064,600
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$ 7,797,300 $ 8,406,900
============ =============
</TABLE>
*As presented in the audited financial statements.
See accompanying notes to condensed financial statements.
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<PAGE>
ENSTAR INCOME PROGRAM II-2, L.P.
CONDENSED STATEMENTS OF OPERATIONS
======================================
<TABLE>
<CAPTION>
Unaudited
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Three months ended
September 30,
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1998 1999
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<S> <C> <C>
REVENUES $ 981,600 $ 980,900
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OPERATING EXPENSES:
Service costs 306,500 352,100
General and administrative expenses 90,400 116,600
General Partner management fees
and reimbursed expenses 143,500 137,700
Depreciation and amortization 161,200 162,600
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701,600 769,000
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OPERATING INCOME 280,000 211,900
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OTHER INCOME (EXPENSE):
Interest income 47,300 60,700
Interest expense (4,500) (2,800)
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42,800 57,900
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NET INCOME $ 322,800 $ 269,800
================ =================
Net income allocated to General Partners $ 3,200 $ 2,700
================ =================
Net income allocated to Limited Partners $ 319,600 $ 267,100
================ =================
NET INCOME PER UNIT OF LIMITED
PARTNERSHIP INTEREST $ 10.70 $ 8.94
================ =================
AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD 29,880 29,880
================ =================
</TABLE>
See accompanying notes to condensed financial statements.
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<PAGE>
ENSTAR INCOME PROGRAM II-2, L.P.
CONDENSED STATEMENTS OF OPERATIONS
======================================
<TABLE>
<CAPTION>
Unaudited
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Nine months ended
September 30,
-------------------------------------
1998 1999
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<S> <C> <C>
REVENUES $ 2,986,300 $ 2,940,200
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OPERATING EXPENSES:
Service costs 932,600 973,400
General and administrative expenses 320,300 366,900
General Partner management fees
and reimbursed expenses 423,600 401,600
Depreciation and amortization 510,200 475,200
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2,186,700 2,217,100
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OPERATING INCOME 799,600 723,100
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OTHER INCOME (EXPENSE):
Interest income 127,900 160,700
Interest expense (10,900) (11,100)
Gain on sale of cable assets 6,400 -
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123,400 149,600
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NET INCOME $ 923,000 $ 872,700
================ =================
Net income allocated to General Partners $ 9,200 $ 8,700
================ =================
Net income allocated to Limited Partners $ 913,800 $ 864,000
================ =================
NET INCOME PER UNIT OF LIMITED
PARTNERSHIP INTEREST $ 30.58 $ 28.92
================ =================
AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD 29,880 29,880
================ =================
</TABLE>
See accompanying notes to condensed financial statements.
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<PAGE>
ENSTAR INCOME PROGRAM II-2, L.P.
STATEMENTS OF CASH FLOWS
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<TABLE>
<CAPTION>
Unaudited
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Nine months ended
September 30,
-------------------------------------
1998 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 923,000 $ 872,700
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 510,200 475,200
Decrease from changes in:
Accounts receivable, prepaid expenses and other assets (144,400) (79,100)
Accounts payable and due to affiliates (260,600) (263,100)
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Net cash provided by operating activities 1,028,200 1,005,700
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (212,200) (244,000)
Increase in intangible assets (6,900) (4,700)
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Net cash used in investing activities (219,100) (248,700)
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INCREASE IN CASH 809,100 757,000
CASH AT BEGINNING OF PERIOD 3,078,800 4,468,300
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CASH AT END OF PERIOD $ 3,887,900 $ 5,225,300
================ =================
</TABLE>
See accompanying notes to condensed financial statements.
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<PAGE>
ENSTAR INCOME PROGRAM II-2, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
=======================================
1. INTERIM FINANCIAL STATEMENTS
The accompanying condensed interim financial statements for the
three and nine months ended September 30, 1999 and 1998 are unaudited. These
condensed interim financial statements should 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 nine months ended
September 30, 1999 are not necessarily indicative of results for the entire
year.
2. TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES
The Partnership has a management and service agreement with a wholly
owned subsidiary of the Corporate 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 fee expense approximated
$49,000 and $147,000 for the three and nine months ended September 30, 1999.
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 Corporate General Partner and its subsidiary are
charged a proportionate share of these expenses. The Corporate General
Partner has contracted with Falcon Communications, L.P. ("FCLP"), an
affiliated partnership, to provide corporate management services for the
Partnership. 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 $88,700 and $254,600 for the three and nine
months ended September 30, 1999. Management fees and reimbursed expenses due
the Corporate General Partner are non-interest bearing.
The Partnership also receives certain system operating management
services from an affiliate of the Corporate General Partner in addition to
the Manager due to the fact that there are no such employees directly
employed by one of the Partnership's cable systems. The Partnership
reimburses the affiliate for its allocable share of the affiliate's
operational costs. The total amount charged to the Partnership for these
costs approximated $16,400 and $46,100 for the three and nine months ended
September 30, 1999. No management fee is payable to the affiliate by the
Partnership and there is no duplication of reimbursed expenses and costs paid
to the Manager.
Substantially all programming services have been purchased through
FCLP. FCLP, in the normal course of business, purchases cable programming
services from certain affiliated program suppliers. Such purchases of
programming services are made on behalf of the Partnership and the other
partnerships managed by the Corporate General Partner as well as for FCLP's
own cable television operations. FCLP charges the Partnership for these
services based on an estimate of what the Corporate General Partner could
negotiate for such programming services for the 15 partnerships
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<PAGE>
ENSTAR INCOME PROGRAM II-2, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
=======================================
2. TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES (CONTINUED)
managed by the Corporate General Partner as a group. The Partnership recorded
programming fee expense of $248,400 and $707,800 for the three and nine
months ended September 30, 1999. Programming fees are included in service
costs in the statements of operations.
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 have been allocated 99% to
the Limited Partners and 1% to the General Partners. The General Partners do
not own units of partnership interest in the Partnership, but rather hold a
participation interest in the income, losses and distributions of the
Partnership.
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<PAGE>
ENSTAR INCOME PROGRAM II-2, L.P.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
The Cable Television Consumer Protection and Competition Act of 1992
(the "1992 Cable Act") required the Federal Communications Commission ("FCC")
to, among other things, implement extensive regulation of the rates charged
by cable television systems for basic and programming service tiers,
installation, and customer premises equipment leasing. Compliance with those
rate regulations has had a negative impact on the Partnership's revenues and
cash flow. The Telecommunications Act of 1996 (the "1996 Telecom Act")
substantially changed the competitive and regulatory environment for cable
television and telecommunications service providers. Among other changes, the
1996 Telecom Act ended the regulation of cable programming service tier rates
on March 31, 1999. There can be no assurance as to what, if any, further
action may be taken by the FCC, Congress or any other regulatory authority or
court, or the effect thereof on the Partnership's business. Accordingly, the
Partnership's historical financial results as described below are not
necessarily indicative of future performance.
This Report includes certain forward-looking statements regarding,
among other things, 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 the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1998 for additional
information regarding such matters and the effect thereof on the
Partnership's business.
RESULTS OF OPERATIONS
The Partnership's revenues decreased from $981,600 to $980,900, or
by less than 1.0%, and from $2,986,300 to $2,940,200, or by 1.5%, for the
three and nine months ended September 30, 1999 as compared to the
corresponding periods in 1998. Of the $700 decrease in revenues for the three
months ended September 30, 1999, $27,600 was due to decreases in the number
of subscriptions for basic, premium, tier and equipment rental services and
$7,100 was due to decreases in other revenue producing items. The decrease
was largely offset by a $34,000 increase due to increases in regulated
service rates that were implemented by the Partnership in June 1999. Of the
$46,100 decrease in revenues for the nine months ended September 30, 1999,
$72,800 was due to decreases in the number of subscriptions for basic,
premium, tier and equipment rental services. The decrease was partially
offset by a $25,500 increase due to increases in regulated service rates as
described above, partially offset by decreases in certain regulated rates
during March 1998. Other revenue producing items increased by $1,200. As of
September 30, 1999, the Partnership had approximately 8,800 basic subscribers
and 1,700 premium service units.
Service costs increased from $306,500 to $352,100, or by 14.9%, and
from $932,600 to $973,400, or by less than 4.4%, for the three and nine
months ended September 30, 1999 as compared to the corresponding periods in
1998. Service costs represent costs directly attributable to providing cable
services to customers. The increases were primarily due to higher programming
fees and
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<PAGE>
ENSTAR INCOME PROGRAM II-2, L.P.
RESULTS OF OPERATIONS (CONTINUED)
personnel costs. Programming fees increased as a result of higher rates
charged by program suppliers. Personnel costs increased due to staff
additions and wage increases.
General and administrative expenses increased from $90,400 to
$116,600, or by 29.0%, and from $320,300 to $366,900, or by 14.5%, for the
three and nine months ended September 30, 1999 as compared to the
corresponding periods in 1998. The increases were primarily due to higher
insurance premiums. The three months' increase was also due to higher
professional fees, including audit fees, and marketing expenses.
Management fees and reimbursed expenses decreased from $143,500 to
$137,700, or by 4.0%, and from $423,600 to $401,600, or by 5.2%, for the
three and nine months ended September 30, 1999 as compared to the
corresponding periods in 1998. Management fees decreased in direct relation
to decreased revenues as described above. Reimbursed expenses decreased
primarily due to lower personnel costs allocated by the Corporate General
Partner resulting from staff reductions.
Depreciation and amortization expense increased from $161,200 to
$162,600, or by less than 1.0%, and decreased from $510,200 to $475,200, or
by 6.9%, respectively, for the three and nine months ended September 30, 1999
as compared to the corresponding periods in 1998. The quarterly increase was
due to an increase in depreciation related to the impact of plant asset
additions. The nine months' decrease was primarily due to the impact of
certain plant assets becoming fully depreciated.
Operating income decreased from $280,000 to $211,900, or by 24.3%,
and from $799,600 to $723,100, or by 9.6%, for the three and nine months
ended September 30, 1999 as compared to the equivalent periods in 1998. The
decreases were primarily due to increases in programming fees and insurance
premiums as described above. The nine months' decrease was also due to
decreases in revenues.
Interest income, net of interest expense, increased from $42,800 to
$57,900, or by 35.3% and from $117,000 to $149,600, or by 27.9%, for the
three and nine months ended September 30, 1999 as compared to the
corresponding periods in 1998. The increases were primarily due to higher
average cash balances available for investment.
Due to the factors described above, the Partnership's net income
decreased from $322,800 to $269,800, or by 16.4%, and from $923,000 to
$872,700, or by 5.4%, respectively, for the three and nine months ended
September 30, 1999 as compared to the corresponding periods in 1998.
Based on its experience in the cable television industry, the
Partnership believes that operating income before depreciation and
amortization ("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
decreased from 44.9% to 38.2% and 43.9% to 40.8% during the three and nine
months ended September 30, 1999
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<PAGE>
ENSTAR INCOME PROGRAM II-2, L.P.
RESULTS OF OPERATIONS (CONTINUED)
as compared to the corresponding periods in 1998. The decrease was primarily
due to higher programming fees and insurance premiums as described above.
EBITDA decreased from $441,200 to $374,500, or by 15.1%, and from $1,309,800
to $1,198,300, or by 8.5%, during the three and nine months ended September
30, 1999 as compared to the corresponding periods in 1998.
LIQUIDITY AND CAPITAL RESOURCES
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.
Based on its belief that the market for cable systems has generally
improved, the Corporate General Partner had been evaluating strategies for
liquidating the Partnership. These strategies included the potential sale of
substantially all of the Partnership's assets to third parties and/or
affiliates of the Corporate General Partner, and the subsequent liquidation
of the Partnership. On May 26, 1999, Charter Communications ("Charter")
signed an agreement to acquire all of the cable television assets of FCLP and
to acquire Enstar Communications Corporation, the Partnership's Corporate
General Partner. The Corporate General Partner and Charter have decided to
implement a strategy for liquidating the Partnership that involves selling
its systems to third parties. Accordingly, the Corporate General Partner has
entered into an agreement with a cable broker regarding the sale of the
systems, although no assurance can be given regarding the likelihood, if any,
of receiving appropriate offers to purchase the systems. Any such sale and
corresponding liquidation will not close before the sale of the Corporate
General Partner to Charter.
Following the close of all pending transactions, Charter will serve
approximately 6.2 million customers and will be the nation's fourth largest
cable operator. Headquartered in St. Louis, Missouri, Charter was acquired by
Paul G. Allen in 1998. More information about Charter can be accessed on the
Internet at www.chartercom.com.
At September 30, 1999, the Partnership had no debt outstanding. The
Partnership relies upon the availability of cash generated from operations to
fund its ongoing expenses and capital requirements. The Partnership is
required to rebuild its Jerseyville, Illinois cable system at an estimated
total cost of approximately $94,800 under a provision of its franchise
agreement. The Partnership is also rebuilding portions of its cable systems
in surrounding communities at an estimated additional cost of approximately
$1,968,900. Project costs related to the required rebuild in Jerseyville
approximated $90,200 from inception through September 30, 1999 and rebuild
costs in the surrounding communities amounted to $1,880,300 from inception
through September 30, 1999. Construction is substantially complete; however,
the Partnership is budgeted to spend approximately $100,000 for equipment to
launch new channels in the Jerseyville system in the fourth quarter of 1999.
Other capital expenditures budgeted for 1999 include $486,800 for replacement
and upgrade of other assets. Such expenditures approximated $240,600 in the
first nine months of 1999. Additionally, the Partnership is required to
upgrade its cable plant in Malden, Missouri at an estimated cost of
approximately $1,800,000, the start of which is dependent upon obtaining a
renewal of the franchise agreement for that community. The Partnership also
has tentative plans for a project in 2001 to upgrade its Pana, Illinois cable
system at an estimated cost of approximately $1.1 million.
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<PAGE>
ENSTAR INCOME PROGRAM II-2, L.P.
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The Corporate General Partner believes that cash flow from
operations will be adequate to meet the Partnership's current liquidity
requirements, including the funding for capital expenditures discussed above.
However, as a result of such liquidity requirements, the Corporate General
Partner has concluded that it is not prudent for the Partnership to resume
paying distributions at this time.
In October 1998, FCLP reinstated third party insurance coverage for
all of the cable television properties owned or managed by FCLP 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 owned or managed by FCLP.
Approximately 72% of the Partnership's subscribers are served by its
system in Hillsboro, Illinois and neighboring communities. Significant damage
to the system due to seasonal weather conditions or other events could have a
material adverse effect on the Partnership's liquidity and cash flows. The
Partnership continues to purchase insurance coverage in amounts its
management views as appropriate for all other property, liability,
automobile, workers' compensation and other types of insurable risks.
YEAR 2000
During the third quarter of 1999, FCLP, on behalf of the Corporate
General Partner, continued its identification, evaluation and remediation of
the Partnership's Year 2000 business risks associated with operations
directly under the control of the Partnership and those risks that are
dependent on third parties related to its exposure to computer systems, to
operating equipment which is date sensitive and to the interface systems of
its vendors and service providers. The evaluation has focused on
identification, assessment and remediation of systems and equipment that may
fail to distinguish between the year 1900 and the year 2000 and, as a result,
may cease to operate or may operate improperly when dates after December 31,
1999 are introduced. Most of the Partnership's exposure to Year 2000 issues
is dependent in large part on third parties. Failure to identify and
remediate a critical Year 2000 issue could result in an interruption of
services to customers or in the interruption of critical business functions,
either of which could result in a material adverse impact on the
Partnership's financial results.
FCLP concluded that certain of the Partnership's internal
information systems were not Year 2000 compliant and elected to replace such
software and hardware with applications and equipment certified by the
vendors as Year 2000 compliant. FCLP installed the new systems in the first
quarter of 1999. The cost of the implementation, including replacement
software and hardware, has been borne by FCLP. FCLP is continuing to utilize
internal and external resources to extend the functionality of the new
systems. The Partnership does not believe that any other significant
information technology projects affecting the Partnership have been delayed
due to efforts to identify or address Year 2000 issues.
Additionally, FCLP has continued to inventory the Partnership's
internal operating and revenue generating equipment to identify items that
need to be upgraded or replaced and has surveyed cable equipment
manufacturers to determine which of their models require upgrade or
replacement to become Year 2000 compliant. Identification and evaluation,
while ongoing, are substantially
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<PAGE>
ENSTAR INCOME PROGRAM II-2, L.P.
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
completed and a plan has been developed to remediate or replace non-compliant
equipment. Of the total number of potentially non-compliant items identified
in the inventory, all were evaluated during the assessment stage,
approximately 8.5% are in the remediation planning phase and 91.5% are in the
implementation stage. FCLP conducted limited testing of systems, software and
equipment in the third quarter of 1999 and placed significant reliance on
test results provided by AT&T Broadband & Internet Services, an affiliate of
FCLP. The cost of such replacement or remediation to the Partnership is
currently estimated to be $10,000, all of which had been incurred as of
September 30, 1999. FCLP has also substantially completed the assessment and
replacement or remediation of the majority of the Partnership's internal
equipment containing embedded computer chips.
FCLP has continued to survey the Partnership's significant third
party vendors and service suppliers to determine the extent to which the
Partnership's interface systems are vulnerable should those third parties
fail to solve their own Year 2000 problems on a timely basis. The Partnership
is heavily dependent on third parties and these parties are themselves
heavily dependent on technology. For example, if a television broadcaster or
cable programmer encounters Year 2000 problems that impede its ability to
deliver its programming, the Partnership will be unable to provide that
programming to its cable customers, which would result in a loss of revenues,
although the Partnership would attempt to provide its customers with
alternative program services. Virtually all of the Partnership's most
critical equipment vendors have responded to the surveys regarding the Year
2000 compliance of their products and indicated that they are already
compliant or have indicated their intent to be compliant. Additional
compliance information has been obtained for specific products from vendor
Web sites, interviews, on-site visits, system interface testing and industry
group participation. Among the most significant third party service providers
upon which the Partnership relies are programming suppliers, power and
telephone companies, various banking institutions and the Partnership's
customer billing service. The Partnership has taken steps to attempt to
satisfy itself that the third parties on which it is heavily reliant are Year
2000 compliant and have developed satisfactory contingency plans, or that
alternative means of meeting the Partnership's business requirements are
available. However, the Partnership can predict neither the likelihood of
successful compliance nor the direct or indirect costs to the Partnership of
non-compliance by those third parties or of securing such services from
alternate compliant third parties.
FCLP believes that it has established an effective program to
resolve all significant Year 2000 issues in its control in a timely manner.
As noted above, however, while FCLP has substantially completed all phases of
the Partnership's remediation program, it is dependent on third parties whose
progress is not within its control. Disruptions experienced by third parties
with which the Partnership does business as well as by the economy generally
could also materially adversely affect the Partnership. The amount of
potential liability and lost revenue cannot be reasonably estimated at this
time.
FCLP has focused its efforts on identification and remediation of
the Partnership's Year 2000 exposures and has developed specific contingency
plans in the event it does not successfully complete its remaining
remediation as anticipated or experiences unforeseen problems. Considerable
effort has been directed toward distinguishing between those contingencies
with a greater probability of occurring from those whose occurrence is
considered remote, and on those systems whose failure poses
-12-
<PAGE>
ENSTAR INCOME PROGRAM II-2, L.P.
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
a material risk to the Partnership's results of operations and financial
condition. FCLP has also examined the Partnership's business interruption
strategies to evaluate whether they would satisfactorily meet the demands of
failures arising from Year 2000 related problems. FCLP intends to examine the
Partnership's status periodically to determine the necessity of establishing
and implementing such contingency plans or additional strategies, which could
involve, among other things, manual workarounds, adjusting staffing
strategies and sharing resources.
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
Operating activities provided $22,500 less cash in the nine months
ended September 30, 1999 than in the corresponding period of 1998. Changes in
accounts receivable and prepaid expenses used $65,300 less cash in the first
nine months of 1999 due to differences in the timing of receivable
collections and in the payment of prepaid expenses. The Partnership used
$2,500 less cash for the payment of amounts owed to affiliates and
third-party creditors in the 1999 period due to differences in the timing of
payments.
Investing activities used $29,600 more cash in the nine months ended
September 30, 1999 than in the corresponding nine months of 1998, due to a
$31,800 increase in expenditures for tangible assets partially offset by a
$2,200 decrease in spending for intangible assets.
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. However, the Partnership does not believe
that its financial results have been, or will be, adversely affected by
inflation in a material way, provided that Partnership is able to increase
its service rates periodically, of which there can be no assurance.
-13-
<PAGE>
ENSTAR INCOME PROGRAM II-2, L.P.
PART II. OTHER INFORMATION
ITEMS 1-5. Not applicable.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27.1 Financial Data Schedule
(b) No reports on Form 8-K were filed during the
quarter for which this report is filed.
<PAGE>
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 II-2, L.P.
A GEORGIA LIMITED PARTNERSHIP
--------------------------------
(Registrant)
By: ENSTAR COMMUNICATIONS CORPORATION
General Partner
Date: November 11, 1999 By: /s/ MICHAEL K. MENEREY
-------------------------
Michael K. Menerey,
Executive Vice President,
Chief Financial Officer and
Secretary
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT SEPTEMBER 30, 1999, AND THE STATEMENTS OF OPERATIONS FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 5,225,300
<SECURITIES> 0
<RECEIVABLES> 75,000
<ALLOWANCES> 5,700
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 10,443,200
<DEPRECIATION> 7,832,600
<TOTAL-ASSETS> 8,406,900
<CURRENT-LIABILITIES> 342,300
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 8,406,900
<SALES> 0
<TOTAL-REVENUES> 2,940,200
<CGS> 0
<TOTAL-COSTS> 2,217,100
<OTHER-EXPENSES> (160,700)
<LOSS-PROVISION> 26,700
<INTEREST-EXPENSE> 11,100
<INCOME-PRETAX> 872,700
<INCOME-TAX> 0
<INCOME-CONTINUING> 872,700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 872,700
<EPS-BASIC> 28.92
<EPS-DILUTED> 0
</TABLE>
