<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to Section 240.14a-12
ENSTAR INCOME PROGRAM II-2, L.P.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
ENSTAR INCOME PROGRAM II-2, L.P.
C/O ENSTAR COMMUNICATIONS CORPORATION
12444 POWERSCOURT DRIVE, SUITE 100
ST. LOUIS, MISSOURI 63131
September 14, 2000
To the Limited Partners of Enstar Income Program II-2, L.P.:
The attached report (the "Report") is being provided to you pursuant
to Rule 14a-12 under the Securities Exchange Act of 1934 as "build-up material"
relative to a consent solicitation presently contemplated by Enstar
Communications Corporation ("Enstar Communications"), the general partner of
Enstar Income Program II-2, L.P. ("Enstar II-2").
THE REPORT IS NOT A PROXY STATEMENT OR A CONSENT STATEMENT. ENSTAR
COMMUNICATIONS EXPECTS THAT IT WILL FILE A CONSENT STATEMENT WITH THE SECURITIES
AND EXCHANGE COMMISSION IN THE NEAR FUTURE. WHEN YOU RECEIVE IT, PLEASE READ THE
CONSENT STATEMENT CAREFULLY, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT
ENSTAR COMMUNICATIONS AND THE PROPOSAL IT WILL BE ASKING THE LIMITED PARTNERS TO
APPROVE. THE CONSENT STATEMENT WILL BE MAILED TO THE LIMITED PARTNERS AFTER IT
HAS BEEN FILED IN DEFINITIVE FORM WITH THE SECURITIES AND EXCHANGE COMMISSION.
YOU MAY OBTAIN A FREE COPY OF THE CONSENT STATEMENT, WHEN IT BECOMES
AVAILABLE, AT THE SEC'S WEB SITE AT http://www.sec.gov. A FREE COPY OF THE
ATTACHED REPORT IS ALSO AVAILABLE AT THE SEC'S WEB SITE. YOU MAY ALSO OBTAIN A
FREE COPY OF THE CONSENT STATEMENT (WHEN IT IS AVAILABLE) AND OF THE ATTACHED
REPORT FROM ENSTAR COMMUNICATIONS CORPORATION, 12444 POWERSCOURT DRIVE, SUITE
100, ST. LOUIS, MISSOURI, 63131, ATTENTION: MS. CAROL WOLF, MANAGER OF
PARTNERSHIP RELATIONS; OR CALL MS. WOLF AT (314) 543-2389 OR RALPH KELLY AT
(314) 543-2388.
The participants in the solicitation and their equity interests in
Enstar II-2 are:
<TABLE>
<CAPTION>
NAME AND ADDRESS CAPACITY OF AMOUNT AND NATURE OF
OF PARTICIPANT PARTICIPANT BENEFICIAL OWNERSHIP
-------------- ----------- --------------------
<S> <C> <C>
1. Enstar Income Program II-2, L.P. Registrant Not applicable
c/o Enstar Communications
Corporation
12444 Powerscourt Drive
Suite 100
St. Louis, Missouri 63131
2. Enstar Communications Corporation General Partner 0.5% partnership
12444 Powerscourt Drive interest
Suite 100
St. Louis, Missouri 63131
</TABLE>
<PAGE> 3
ENSTAR INCOME PROGRAM II-2, L.P.
C/O ENSTAR COMMUNICATIONS CORPORATION
12444 POWERSCOURT DRIVE, SUITE 100
ST. LOUIS, MISSOURI 63131
QUARTERLY REPORT
Dear Limited Partner:
As the general partner of Enstar Income Program II-2, L.P., ("Enstar
II-2" or the "Partnership"), we are pleased to enclose the Partnership's
Quarterly Report on Form 10-Q for the three months ended June 30, 2000.
We are further pleased to announce that as of August 8, 2000, the
Partnership (together with eight other Enstar-affiliated partnerships) entered
into a comprehensive Asset Purchase Agreement with Multimedia Acquisition Corp.
(an affiliate of Gans Multimedia Partnership), pursuant to which Multimedia
would purchase substantially all of the cable television systems and other
operating assets of each of those selling partnerships, including Enstar II-2,
for a combined aggregate purchase price of $94,929,400, of which $15,530,400
would be paid to Enstar II-2, subject to closing adjustments. Neither Multimedia
nor Gans is affiliated with the Partnership or any affiliate of the Partnership.
The Multimedia agreement is the result of an extensive process we
began in 1999 to engage a respected industry broker, identify prospective
purchasers of the selling partnerships' cable systems and to negotiate a
definitive purchase agreement covering all or substantially all of those assets.
Of the bids received, Multimedia offered the most favorable price and other
terms.
Multimedia's obligation to purchase the selling partnerships' cable
system assets, including Enstar II-2's, is contingent on (i) each and every
selling partnership obtaining the approval of its respective limited partners;
and (ii) the grantors of the franchises covering 90% of the selling
partnerships' aggregate number of subscribers consenting to the assignment of
those franchises to Multimedia. We anticipate that this process will require
several months.
Following the sale to Multimedia, we would repay the Partnership's
debts, fund required reserves, and terminate the Partnership by making
liquidating cash distributions to its partners in accordance with the
liquidation provisions of the partnership agreement. We presently expect that
the liquidating distributions to the limited partners would approximate $660 per
Unit (subject to closing adjustments and federal and state taxes).
We presently expect that the sale to Multimedia would close in the
first quarter of 2001 and anticipate making the initial liquidating distribution
approximately 60 days after the closing. We also expect that after required
closing adjustments are completed (which we expect to occur
<PAGE> 4
approximately 6 months after the closing), final liquidating distributions would
be made of any remaining funds.
The liquidating distributions and time-frames contemplated above are
estimates, only. There is no assurance that the expected sale of the
Partnership's assets will close within the time period indicated, if at all, or
that the liquidating distributions will not differ substantially from those set
forth above.
As noted in the cover letter to this Report, at this time we are not
soliciting your consent to or approval of the Multimedia sale and subsequent
liquidation. We will seek your consent only through a formal Consent
Solicitation Statement that we must file with the Securities and Exchange
Commission before we send it to you. We are now in the process of preparing the
Consent Solicitation Statement and at this time expect to send it (together with
appropriate consent cards) to you within the next several weeks. When you
receive our Consent Solicitation Statement, please read it carefully before you
vote, because it will contain important information pertinent to the General
Partner, the Partnership, the Multimedia sale, the reasons for it, the
liquidation and distribution process and voting procedures.
ENSTAR COMMUNICATIONS CORPORATION
General Partner
<PAGE> 5
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, 2000
-------------------------
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 0-14505
---------
Enstar Income Program II-2, L.P.
--------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Georgia 58-1628872
-------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
12444 Powerscourt Dr., Suite 100
St. Louis, Missouri 63131
---------------------------------------- -----------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (314) 965-0555
--------------
--------------------------------------------------------------------------------
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> 6
PART I - FINANCIAL INFORMATION
ENSTAR INCOME PROGRAM II-2, L.P.
CONDENSED BALANCE SHEETS
============================================
<TABLE>
<CAPTION>
December 31, June 30,
1999* 2000
--------------- ------------
(Unaudited
<S> <C> <C>
ASSETS:
Cash $ 5,752,700 $ 7,108,100
Accounts receivable, net of allowance for doubtful accounts of $2,200
and $6,400, respectively 74,600 115,800
Prepaid expenses and other assets 107,200 95,400
Property, plant and equipment, net of accumulated
depreciation of $7,943,000 and $8,152,500, respectively 2,883,000 2,749,400
Franchise cost, net of accumulated
amortization of $1,329,300 and $1,371,800, respectively 72,500 30,000
Deferred charges, net 700 400
------------- -------------
$ 8,890,700 $ 10,099,100
============= =============
LIABILITIES AND PARTNERSHIP CAPITAL
LIABILITIES:
Accounts payable $ 239,600 $ 194,900
Due to affiliates 257,200 711,800
------------- -------------
496,800 906,700
------------- -------------
PARTNERSHIP CAPITAL:
General Partner 10,200 18,200
Limited Partners 8,383,700 9,174,200
------------- -------------
TOTAL PARTNERSHIP CAPITAL 8,393,900 9,192,400
------------- -------------
$ 8,890,700 $ 10,099,100
============= =============
</TABLE>
The accompanying notes are an integral part of these condensed
financial statements.
-------
* Agrees with audited balance sheet included in the Partnership's Annual Report
on Form 10-K
-2-
<PAGE> 7
ENSTAR INCOME PROGRAM II-2, L.P.
CONDENSED STATEMENTS OF OPERATIONS
=========================================
<TABLE>
<CAPTION>
Unaudited
---------------------------------
Three months ended
June 30,
---------------------------------
1999 2000
-------------- ---------------
<S> <C> <C>
REVENUES $ 990,300 $ 973,400
-------------- ---------------
OPERATING EXPENSES:
Service costs 290,600 286,200
General and administrative expenses 133,700 94,000
General partner management fees
and reimbursed expenses 133,800 144,500
Depreciation and amortization 156,800 130,900
-------------- ---------------
714,900 655,600
-------------- ---------------
OPERATING INCOME 275,400 317,800
-------------- ---------------
OTHER INCOME (EXPENSE):
Interest income 51,000 93,800
Interest expense (4,700) (3,000)
-------------- ---------------
46,300 90,800
-------------- ---------------
NET INCOME $ 321,700 $ 408,600
============== ===============
Net income allocated to General Partner $ 3,000 $ 4,100
============== ===============
Net income allocated to Limited Partners $ 318,700 $ 404,500
============== ===============
NET INCOME PER UNIT OF LIMITED
PARTNERSHIP INTEREST $ 10.67 $ 13.54
============== ===============
AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD 29,880 29,880
============== ===============
</TABLE>
The accompanying notes are an integral part of these condensed
financial statements.
-3-
<PAGE> 8
ENSTAR INCOME PROGRAM II-2, L.P.
CONDENSED STATEMENTS OF OPERATIONS
============================================
<TABLE>
<CAPTION>
Unaudited
-------------------------------------
Six months ended
June 30,
-------------------------------------
1999 2000
---------------- -----------------
<S> <C> <C>
REVENUES $ 1,959,300 $ 1,957,700
---------------- -----------------
OPERATING EXPENSES:
Service costs 621,300 586,200
General and administrative expenses 250,300 165,700
General partner management fees
and reimbursed expenses 263,900 308,500
Depreciation and amortization 312,600 260,000
---------------- -----------------
1,448,100 1,320,400
---------------- -----------------
OPERATING INCOME 511,200 637,300
---------------- -----------------
OTHER INCOME (EXPENSE):
Interest income 100,000 168,400
Interest expense (8,300) (7,200)
---------------- -----------------
91,700 161,200
---------------- -----------------
NET INCOME $ 602,900 $ 798,500
================ =================
Net income allocated to General Partner $ 6,000 $ 8,000
================ =================
Net income allocated to Limited Partners $ 596,900 $ 790,500
================ =================
NET INCOME PER UNIT OF LIMITED
PARTNERSHIP INTEREST $ 19.98 $ 26.46
================ =================
AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD 29,880 29,880
================ =================
</TABLE>
The accompanying notes are an integral part of these condensed
financial statements.
-4-
<PAGE> 9
ENSTAR INCOME PROGRAM II-2, L.P.
CONDENSED STATEMENTS OF CASH FLOWS
============================================
<TABLE>
<CAPTION>
Unaudited
----------------------------
Six months ended
June, 30
----------------------------
1999 2000
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 602,900 $ 798,500
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization 312,600 260,000
Changes in:
Accounts receivable, prepaid expenses and other assets (91,300) (29,400)
Accounts payable and due to affiliates 36,500 409,900
------------ ------------
Net cash from operating activities 860,700 1,439,000
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (96,800) (83,600)
Increase in intangible assets (1,900) -
------------ ------------
Net cash from investing activities (98,700) (83,600)
INCREASE IN CASH 762,000 1,355,400
CASH AT BEGINNING OF PERIOD 4,468,300 5,752,700
------------ ------------
CASH AT END OF PERIOD $ 5,230,300 $ 7,108,100
============ ============
</TABLE>
The accompanying notes are an integral part of these condensed
financial statements.
-5-
<PAGE> 10
ENSTAR INCOME PROGRAM II-2, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
============================================
1. INTERIM FINANCIAL STATEMENTS
The accompanying condensed interim financial statements for
Enstar Income Program II-2, L.P. (the "Partnership") as of June 30, 2000 and for
the three and six months ended June 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 six months ended June 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, pursuant to which the Partnership pays a monthly management fee
of 5% of gross revenues to the Manager. Management fee expense approximated
$48,700 and $97,900 for the three and six months ended June 30, 2000,
respectively. For the three and six months ended June 30, 1999, management fee
expense approximated $49,500 and $98,000, respectively. Management fees are
non-interest bearing.
In addition to the monthly management fee, the Management
Agreement also 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 that 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 the services
provided. The total amount charged to the Partnership for these services was
$95,800 and $210,600 for the three and six months ended June 30, 2000,
respectively. For the three and six months ended June 30, 1999, the total amount
charged to the Partnership for these services was $84,300 and $165,900,
respectively.
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 15 partnerships managed as a group. Charter
charges the Partnership for these costs based on its costs. The Partnership
recorded programming fee expense of $175,100 and $374,900 for the three and six
months ended June 30, 2000, respectively. For the three and six months ended
June 30, 1999, programming fee expense was $233,700 and $459,400, respectively.
-6-
<PAGE> 11
ENSTAR INCOME PROGRAM II-2, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS - (CONTINUED)
============================================
The Partnership provides cable television signals to certain
cable systems in neighboring communities that are owned by other partnerships
managed by ECC. Such services are provided without fee.
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. SUBSEQUENT EVENT
On August 8, 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 Hillsboro, Illinois and Malden, Missouri, as well as certain assets of
other affiliates.
The aggregate purchase price payable to the Sellers pursuant
to the Agreement is $94,929,400 in cash (subject to normal closing adjustments).
Of that amount, $15,530,400 (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
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.
-7-
<PAGE> 12
ENSTAR INCOME PROGRAM II-2, 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
Our revenues decreased from $990,300 to $973,400, or by 1.7%,
and from $1,959,300 to $1,957,700, or less than 1%, for the three and six months
ended June 30, 2000, as compared to the corresponding periods in 1999. Of the
$16,900 decrease for the three months ended June 30, 2000, approximately $33,500
was due to a decrease in the number of subscribers and $27,700 was due to
decreases in other revenue producing items. The decrease was partially offset by
a $44,300 increase in regulated service rates. Of the $1,600 decrease in
revenues for the six months ended June 30, 2000, $55,400 was due to a decrease
in the number of subscribers and $28,900 was due to decreases in other revenue
producing items. The decreases were partially offset by a $82,700 increase in
regulated service rates. As of June 30, 2000, we had approximately 8,500 basic
subscribers and 1,400 premium service units.
Effective with the acquisition of Falcon Communications, L.P.
(Falcon) by Charter Communications Holdings Company, LLC 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 decreased from $558,100 to $524,700, or
by 6.0%, and from $1,135,500 to $1,060,400, or by 6.6%, for the three and six
months ended June 30, 2000, as compared to the corresponding periods in 1999.
Our service costs decreased from $290,600 to $286,200, or by
1.5%, and from $621,300 to $586,200, or by 5.6%, for the three and six months
ended June 30, 2000, as compared to the corresponding periods in 1999. Service
costs represent costs directly attributable to providing cable services to
customers. The decrease was primarily due to decreases in programming fees,
personnel costs and certain costs incurred by the Partnership prior to the
Charter acquisition that 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 us and a decrease in subscribers.
-8-
<PAGE> 13
ENSTAR INCOME PROGRAM II-2, L.P.
Our general and administrative expenses decreased from
$133,700 to $94,000, or by 29.7%, and from $250,300 to $165,700, or by 33.8%,
for the three and six months ended June 30, 2000, as compared to the
corresponding periods in 1999, primarily due to decreases in marketing expenses
and certain costs incurred by us prior to the Charter acquisition on November
12, 1999 that are now incurred by Charter and reimbursed by us, as discussed
above.
General partner management fees and reimbursed expenses
increased from $133,800 to $144,500, or by 8.0%, and from $263,900 to $308,500,
or by 16.9%, for the three and six months ended June 30, 2000, as compared to
the corresponding periods in 1999. As discussed above, Charter now performs
certain management and operational functions formerly performed by us. This has
resulted in us having more reimbursable costs and lower service costs and
general and administrative expenses.
Depreciation and amortization expense decreased from $156,800
to $130,900, or by 16.5%, and from $312,600 to $260,000, or by 16.8%, for the
three and six months ended June 30, 2000, as compared to the corresponding
periods in 1999. The decrease is due to some fixed assets being fully
depreciated.
Operating income increased from $275,400 to $317,800, or by
15.4%, and from $511,200 to $637,300, or by 24.7%, for the three and six months
ended June 30, 2000, as compared to the equivalent periods in 1999, primarily
due to decreased programming fees and depreciation and amortization as described
above.
Interest income, net of interest expense, increased from
$46,300 to $90,800, or by 96.1%, and from $91,700 to $161,200, or by 75.8%, for
the three and six months ended June 30, 2000, as compared to the corresponding
periods in 1999, primarily due to higher average cash balances available for
investment and due to higher average interest rates earned during 2000.
Due to the factors described above, our net income increased
from $321,700 to $408,600, or by 27.0%, and from $602,900 to $798,500, or by
32.4%, for the three and six months ended June 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 43.6% to 46.1% and 42.0% to 45.8% during the three and
six months ended June 30, 2000, as compared to the corresponding periods in
1999. The increase was primarily due to lower programming fees, marketing
expenses and insurance premiums as described above. EBITDA increased from
$432,200 to $448,700, or by 3.8%, and from $823,800 to $897,300, or by 8.9%,
-9-
<PAGE> 14
ENSTAR INCOME PROGRAM II-2, L.P.
during the three and six months ended June 30, 2000, as compared to the
corresponding periods 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 and capital requirements relating to the
expansion, improvement and upgrade of such cable television systems.
In accordance with the partnership agreement, Enstar
Communications Corporation, our corporate general partner, has implemented a
plan for liquidating the Partnership. On August 8, 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 system serving Hillsboro, Illinois and Malden, Missouri, as well as
certain assets of other affiliates.
The aggregate purchase price payable to the Sellers pursuant
to the Agreement is $94,929,400 in cash (subject to normal closing adjustments).
Of that amount, $15,530,400 (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
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.
Enstar Communications Corporation is currently preparing a
proxy for submission to the Partnership's Limited Partners for the purpose of
approving or disapproving the sale. If all of the Partnership's assets are sold,
Enstar Communications Corporation will proceed to liquidate the Partnership
following the settlement of their final liabilities.
At June 30, 2000, the Partnership had no debt outstanding. The
Partnership relies upon cash flow from operations to meet operating requirements
and fund necessary capital expenditures. Although the Partnership currently has
a significant cash balance, there can be no assurance that the Partnership's
cash flow will be adequate to meet its future liquidity requirements.
Approximately 73% of our subscribers are served by our 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 our liquidity and cash flows. We continue to
-10-
<PAGE> 15
ENSTAR INCOME PROGRAM II-2, L.P.
purchase insurance coverage in amounts our management views as appropriate for
all other property, liability, automobile, workers' compensation and other type
a of insurable risks.
Our operating activities provided $578,300 more cash in the
six months ended June 30, 2000 than in the corresponding period of 1999. Changes
in receivables, prepaid expenses and other assets used $61,900 less cash during
the six months ended June 30, 2000 due to differences in the timing of
receivable collections and the payment of prepaid expenses. We used $373,400
more cash to pay liabilities owed to affiliates and third party creditors during
the six months ended June 30, 2000 due to differences in the timing of payments.
We used $15,100 less cash in investing activities during the
six months ended June 30, 2000 than in the corresponding six months of 1999 due
to an decrease in expenditures for tangible assets.
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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<PAGE> 16
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) Exhibits
10.1 Asset Purchase Agreement, dated August 8, 2000, by and
among Multimedia Acquisition Corp., as Buyer, and
Enstar Income Program II-1, L.P., Enstar Income
Program II-2, L.P., Enstar Income Program IV-3, L.P.,
Enstar Income/Growth Program Six-A, L.P., Enstar IX,
Ltd., Enstar XI, Ltd., Enstar IV/PBD Systems Venture,
Enstar Cable of Cumberland Valley and Enstar Cable of
Macoupin County, as Sellers. (1)
27.1 Financial Data Schedule.*
(b) Reports on Form 8-K
- On July 18, 2000, an 8-K dated July 14, 2000, was
filed to announce a change in the Partnership's
principal independent accountants
-------
* Filed herewith.
(1) Incorporated by reference to the Current Report on Form 10-Q of Enstar
Income Program II-1, L.P., filed with the Commission on or about August
14, 2000.
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<PAGE> 17
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: August 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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