<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------
FORM 10-Q
(MARK ONE)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
----------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---------------- ----------------
Commission file number 0-15705
Enstar Income Program IV-1, L.P.
--------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Georgia 58-1648322
--------------------------------------------------------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
10900 Wilshire Boulevard, 15th Floor, Los Angeles, CA 90024
--------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (310) 824-9990
-----------------------------
--------------------------------------------------------------------------------
FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT.
Indicate by check (X) whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
<PAGE> 2
PART I - FINANCIAL INFORMATION
ENSTAR INCOME PROGRAM IV-1, L.P.
CONDENSED BALANCE SHEETS
========================
<TABLE>
<CAPTION>
December 31, June 30,
1994* 1995
----------- -----------
ASSETS: (unaudited)
<S> <C> <C>
Equity in net assets of Joint Ventures:
Enstar IV/PBD Systems Venture $ 1,888,900 $ 1,964,600
Enstar Cable of Macoupin County 800,100 825,200
----------- -----------
2,689,000 2,789,800
Cash and cash equivalents 354,100 31,400
Deferred loan costs, net 67,200 59,000
----------- -----------
$ 3,110,300 $ 2,880,200
=========== ===========
LIABILITIES AND PARTNERSHIP CAPITAL
LIABILITIES:
Note payable $ 1,008,900 $ 1,008,900
Accounts payable 10,200 12,200
Due to affiliates 10,200 5,900
----------- -----------
TOTAL LIABILITIES 1,029,300 1,027,000
----------- -----------
PARTNERSHIP CAPITAL (DEFICIT):
General partners (62,600) (64,900)
Limited partners 2,143,600 1,918,100
----------- -----------
TOTAL PARTNERSHIP CAPITAL 2,081,000 1,853,200
----------- -----------
$ 3,110,300 $ 2,880,200
=========== ===========
</TABLE>
*As presented in the audited financial statements.
See accompanying notes to condensed financial statements.
-2-
<PAGE> 3
ENSTAR INCOME PROGRAM IV-1, L.P.
CONDENSED STATEMENTS OF OPERATIONS
==================================
<TABLE>
<CAPTION>
Unaudited
--------------------------
Three months ended
June 30,
--------------------------
1994 1995
-------- --------
<S> <C> <C>
OPERATING EXPENSES:
General and administrative expenses $ 6,400 $ 11,900
General Partner management fees
and reimbursed expenses 5,300 -
-------- --------
(11,700) (11,900)
-------- --------
OTHER INCOME (EXPENSE):
Interest expense (27,800) (31,900)
Interest income - 700
-------- --------
(27,800) (31,200)
-------- --------
LOSS BEFORE EQUITY IN NET INCOME
OF JOINT VENTURES (39,500) (43,100)
-------- --------
EQUITY IN NET INCOME
OF JOINT VENTURES:
Enstar IV/PBD Systems Venture 10,800 40,700
Enstar Cable of Macoupin County 5,400 15,400
-------- --------
16,200 56,100
-------- --------
NET INCOME (LOSS) $(23,300) $ 13,000
======== ========
NET INCOME (LOSS) PER UNIT OF LIMITED
PARTNERSHIP INTEREST $ (.58) $ .32
======== ========
AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD 39,982 39,982
======== ========
</TABLE>
See accompanying notes to condensed financial statements.
-3-
<PAGE> 4
ENSTAR INCOME PROGRAM IV-1, L.P.
CONDENSED STATEMENTS OF OPERATIONS
==================================
<TABLE>
<CAPTION>
Unaudited
---------------------------
Six months ended
June 30,
---------------------------
1994 1995
--------- ---------
<S> <C> <C>
OPERATING EXPENSES:
General and administrative expenses $ 13,700 $ 16,400
General Partner management fees
and reimbursed expenses 10,600 -
--------- ---------
(24,300) (16,400)
--------- ---------
OTHER INCOME (EXPENSE):
Interest expense (52,700) (63,500)
Interest income - 3,700
--------- ---------
(52,700) (59,800)
--------- ---------
LOSS BEFORE EQUITY IN NET INCOME
OF JOINT VENTURES (77,000) (76,200)
--------- ---------
EQUITY IN NET INCOME
OF JOINT VENTURES:
Enstar IV/PBD Systems Venture 37,700 75,700
Enstar Cable of Macoupin County 1,100 25,100
--------- ---------
38,800 100,800
--------- ---------
NET INCOME (LOSS) $ (38,200) $ 24,600
========= =========
NET INCOME (LOSS) PER UNIT OF LIMITED
PARTNERSHIP INTEREST $ (.95) $ .61
========= =========
AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD 39,982 39,982
========= =========
</TABLE>
See accompanying notes to condensed financial statements.
-4-
<PAGE> 5
ENSTAR INCOME PROGRAM IV-1, L.P.
STATEMENTS OF CASH FLOWS
========================
<TABLE>
<CAPTION>
Unaudited
-----------------------
Six months ended
June 30,
-----------------------
1994 1995
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (38,200) $ 24,600
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Equity in net income of Joint Ventures (38,800) (100,800)
Amortization of deferred loan costs 8,700 8,200
Increase (decrease) from changes in:
Deferred loan costs (11,400) --
Accounts payable and due to affiliates 15,300 (2,300)
---------- ----------
Net cash used in operating activities (64,400) (70,300)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions from Joint Ventures 268,500 --
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners (252,400) (252,400)
---------- ----------
DECREASE IN CASH AND CASH EQUIVALENTS (48,300) (322,700)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 49,300 354,100
---------- ----------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 1,000 $ 31,400
========= =========
</TABLE>
See accompanying notes to condensed financial statements.
-5-
<PAGE> 6
ENSTAR INCOME PROGRAM IV-1, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
=======================================
1. INTERIM FINANCIAL STATEMENTS
The accompanying condensed interim financial statements for the three
and six months ended June 30, 1995 and 1994 are unaudited. It is suggested that
these condensed interim financial statements be read in conjunction with the
audited financial statements and notes thereto included in the Partnership's
latest Annual Report on Form 10-K. In the opinion of management, such statements
reflect all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the results of such periods. The results of
operations for the three and six months ended June 30, 1995 are not necessarily
indicative of results for the entire year.
2. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
The Partnership has a management and service agreement (the
"Agreement") with a wholly-owned subsidiary of the Corporate General Partner
(the "Manager") pursuant to which it pays a monthly management fee of 5% of
gross revenues. The Agreement also provides that the Partnership will reimburse
the Manager for (i) direct expenses incurred on behalf of the Partnership and
(ii) for the Partnership's allocable share of the Manager's operational costs.
No such costs and expenses were incurred or charged to the Partnership for these
services during the three and six months ended June 30, 1995. The Manager has
entered into identical agreements with Enstar IV/PBD Systems Venture and Enstar
Cable of Macoupin County (both Georgia general partnerships, of which the
Partnership is a co-general partner - herein referred to as the "Joint
Ventures"), except that Enstar Cable of Macoupin County (the "Macoupin Joint
Venture") pays the Manager only a 4% management fee. However, the Macoupin Joint
Venture is required to distribute to Enstar Communications Corporation (which is
the Corporate General Partner of the Macoupin County Joint Venture as well as of
the Partnership) an amount equal to 1% of the Joint Venture's gross revenues in
respect of Enstar Communications Corporation's interest as the Corporate General
Partner of the Joint Venture. No management fee is payable by the Partnership in
respect of any amounts received by the Partnership from the Joint Ventures, and
there is no duplication of reimbursed expenses or costs of the Manager. The
Joint Ventures paid the Manager management fees of approximately $79,400 and
$157,200 and reimbursement of expenses of approximately $128,500 and $252,000
under the management agreements for the three and six months ended June 30,
1995. In addition, the Macoupin Joint Venture paid the Corporate General Partner
approximately $4,100 and $8,100 in respect of its 1% special interest during the
three and six months ended June 30, 1995. Management fees and reimbursed
expenses due the Corporate General Partner are non-interest bearing.
Certain programming services have been purchased through an affiliate
of the Joint Ventures. In turn, the affiliate charges the Joint Ventures for
these costs based on an estimate of what the Joint Ventures could negotiate for
such programming services on a stand-alone basis. The Joint Ventures paid the
affiliate $408,300 and $800,100 for these programming services for the three and
six months ended June 30, 1995. Programming fees are included in service costs
in the statements of operations for the three and six months ended June 30, 1995
and 1994.
-6-
<PAGE> 7
ENSTAR INCOME PROGRAM IV-1, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONT.)
===============================================
3. EARNINGS PER UNIT OF LIMITED PARTNERSHIP INTEREST
Earnings and losses per unit of limited partnership interest is based
on the average number of units outstanding during the periods presented. For
this purpose, earnings and losses are allocated 99% to the limited partners and
1% to the general partners.
4. RECLASSIFICATIONS
Certain 1994 amounts have been reclassified to conform to the 1995
presentation.
5. EQUITY IN NET ASSETS OF JOINT VENTURES
ENSTAR IV/PBD SYSTEMS VENTURE
Each of the Partnership and an affiliated partnership (Enstar Income
Program IV-2, L.P.) owns 50% of Enstar IV/PBD Systems Venture (the "PBD Joint
Venture"). Each partnership shares equally in the profits and losses of the PBD
Joint Venture. The investment in the PBD Joint Venture is accounted for on the
equity method. Summarized financial information for the PBD Joint Venture as of
June 30, 1995 and December 31, 1994, and the results of its operations for the
three and six months ended June 30, 1995 and 1994, have been included. The
results of operations for the three and six months ended June 30, 1995 are not
necessarily indicative of results for the entire year.
<TABLE>
<CAPTION>
December 31, June 30,
1994* 1995
------------ -----------
(unaudited)
<S> <C> <C>
Current assets $1,116,700 $1,713,500
Investment in cable television
properties, net 3,417,500 2,819,500
Other assets 59,300 77,600
---------- ----------
$4,593,500 $4,610,600
========== ==========
Current liabilities $ 815,900 $ 681,500
Venturers' capital 3,777,600 3,929,100
---------- ----------
$4,593,500 $4,610,600
========== ==========
</TABLE>
*As presented in the audited financial statements.
-7-
<PAGE> 8
ENSTAR INCOME PROGRAM IV-1, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONT.)
===============================================
ENSTAR IV/PBD SYSTEMS VENTURE (CONCLUDED)
<TABLE>
<CAPTION>
Unaudited
--------------------------
Three months ended
June 30,
--------------------------
1994 1995
--------------------------
<S> <C> <C>
REVENUES $ 1,221,900 $ 1,263,300
----------- -----------
OPERATING EXPENSES:
Service costs 433,100 450,700
General and administrative expenses 145,600 136,800
General Partner management fees and reimbursed expenses 169,700 156,100
Depreciation and amortization 451,900 447,800
----------- -----------
1,200,300 1,191,400
----------- -----------
OPERATING INCOME 21,600 71,900
OTHER INCOME (EXPENSE):
Interest income 3,100 13,500
Interest expense (4,000) (4,000)
Gain on sale of assets 800 --
----------- -----------
NET INCOME $ 21,500 $ 81,400
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
Unaudited
--------------------------
Six months ended
June 30,
--------------------------
1994 1995
--------------------------
<S> <C> <C>
REVENUES $ 2,422,900 $ 2,499,900
----------- -----------
OPERATING EXPENSES:
Service costs 830,300 883,200
General and administrative expenses 295,500 270,600
General Partner management fees and reimbursed expenses 331,800 306,100
Depreciation and amortization 890,200 905,400
----------- -----------
2,347,800 2,365,300
----------- -----------
OPERATING INCOME 75,100 134,600
OTHER INCOME (EXPENSE):
Interest income 5,200 23,100
Interest expense (5,800) (6,200)
Gain on sale of assets 800 --
----------- -----------
NET INCOME $ 75,300 $ 151,500
=========== ===========
</TABLE>
-8-
<PAGE> 9
ENSTAR INCOME PROGRAM IV-1, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONT.)
===============================================
ENSTAR CABLE OF MACOUPIN COUNTY
Each of the Partnership and two affiliated partnerships (Enstar Income
Program IV-2, L.P. and Enstar Income Program IV-3, L.P.) owns one third (1/3) of
Enstar Cable of Macoupin County (the "Macoupin Joint Venture"). Each of the
co-partners shares equally in the profits and losses of the Macoupin Joint
Venture. The investment in the Macoupin Joint Venture is accounted for on the
equity method. Summarized financial information for the Macoupin Joint Venture
as of June 30, 1995 and December 31, 1994 and the results of its operations for
the three and six months ended June 30, 1995 and 1994 have been included. The
results of operations for the three and six months ended June 30, 1995 are not
necessarily indicative of results for the entire year.
<TABLE>
<CAPTION>
December 31, June 30,
1994* 1995
------------ -----------
(unaudited)
<S> <C> <C>
Current assets $ 622,800 $1,005,100
Investment in cable television
properties, net 2,018,800 1,724,500
Other assets 6,000 7,700
---------- ----------
$2,647,600 $2,737,300
========== ==========
Current liabilities $ 247,200 $ 261,600
Venturers' capital 2,400,400 2,475,700
---------- ----------
$2,647,600 $2,737,300
========== ==========
</TABLE>
*As presented in the audited financial statements.
-9-
<PAGE> 10
ENSTAR INCOME PROGRAM IV-1, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONCLUDED)
===================================================
ENSTAR CABLE OF MACOUPIN COUNTY (CONCLUDED)
<TABLE>
<CAPTION>
Unaudited
----------------------
Three months ended
June 30,
----------------------
1994 1995
----------------------
<S> <C> <C>
REVENUES $ 401,300 $ 406,200
--------- ---------
OPERATING EXPENSES:
Service costs 128,500 113,700
General and administrative expenses 39,300 38,300
General Partner management fees and reimbursed expenses 60,300 55,900
Depreciation and amortization 163,900 159,400
--------- ---------
392,000 367,300
--------- ---------
OPERATING INCOME 9,300 38,900
OTHER INCOME (EXPENSE):
Interest income 8,500 9,000
Interest expense (1,700) (1,600)
--------- ---------
NET INCOME $ 16,100 $ 46,300
========= =========
</TABLE>
<TABLE>
<CAPTION>
Unaudited
----------------------
Six months ended
June 30,
----------------------
1994 1995
----------------------
<S> <C> <C>
REVENUES $ 792,900 $ 805,300
--------- ---------
OPERATING EXPENSES:
Service costs 250,100 239,600
General and administrative expenses 77,700 70,900
General Partner management fees and reimbursed expenses 115,400 111,200
Depreciation and amortization 358,600 321,700
--------- ---------
801,800 743,400
--------- ---------
OPERATING INCOME (LOSS) (8,900) 61,900
OTHER INCOME (EXPENSE):
Interest income 14,600 15,900
Interest expense (2,400) (2,500)
--------- ---------
NET INCOME $ 3,300 $ 75,300
========= =========
</TABLE>
-10-
<PAGE> 11
ENSTAR INCOME PROGRAM IV-1, L.P.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
INTRODUCTION
On February 22, 1994, the Federal Communications Commission (the "FCC")
announced significant amendments to its regulations implementing certain
provisions of the 1992 Cable Act, including those relating to rate regulation
which had previously become effective on September 1, 1993. The amended rate
regulations became effective during the quarter ended September 30, 1994.
Additional amendments were adopted November 10, 1994 and became effective
January 1, 1995. Compliance with these rules has had, and will most likely
continue to have, a significant negative impact on the Partnership's revenues
and cash flow. Based on certain recent FCC decisions that have been released,
however, the Partnership's management presently believes that revenues for the
first six months of 1995 fully reflect the impact of the 1992 Cable Act.
Nonetheless, management expects that certain costs, including programming costs,
will continue to rise at a rate in excess of that which the Partnership will be
permitted to pass on to its customers. Furthermore, given events since the
enactment of the 1992 Cable Act, there can be no assurance as to what, if any,
future action may be taken by Congress, the FCC or any other regulatory
authority or court, or the effect thereof on the Partnership's business.
Specifically, the FCC recently issued a proposal that may allow cable operators
to file abbreviated cost of service filings for system rebuilds and upgrades,
providing for additional rate increases related to significant capital
expenditures. There is also legislation currently being debated in Congress that
could significantly revise the 1992 Cable Act, although there can be no
certainty as to the final provisions of such legislation, or whether it will
become law.
In addition to the information set forth in this report, reference is
made to the Partnership's Annual Report on Form 10-K for the year ended December
31, 1994 for additional information regarding regulatory matters and the effect
thereof on the Partnership's business.
All of the Partnership's cable television business operations are
conducted through its participation as a general partner in both Enstar IV/PBD
Systems Venture and Enstar Cable of Macoupin County (collectively, the "Joint
Ventures"). The Partnership has a 50% interest in Enstar IV/PBD Systems Venture
(the "PBD Joint Venture") and a one-third (1/3) interest in Enstar Cable of
Macoupin County (the "Macoupin Joint Venture"). The PBD Joint Venture is owned
equally by the Partnership and an affiliated partnership (Enstar Income Program
IV-2, L.P). The Macoupin Joint Venture is owned equally by the Partnership and
two affiliated Partnerships (Enstar Income Program IV-2, L.P. and Enstar Income
Program IV-3, L.P.) The Partnership participates in the Joint Ventures equally
with its co-partners, based on its proportionate interest, with respect to
capital contributions, obligations and commitments, and results of operations.
Accordingly, in considering the financial condition and results of operations of
the Partnership, consideration must also be made of those matters as they relate
to the Joint Ventures. The following discussion reflects such consideration, and
with respect to Results of Operations, a separate discussion is provided for
each entity.
-11-
<PAGE> 12
ENSTAR INCOME PROGRAM IV-1, L.P.
RESULTS OF OPERATIONS
THE PARTNERSHIP
As discussed above, all of the Partnership's cable television business
operations are conducted through its participation as a partner in the Joint
Ventures. The Joint Ventures did not make distributions to the Partnership
during the three and six months ended June 30, 1995. The Partnership distributed
$126,200 and $252,400 to its partners during the three and six months ended June
30, 1995.
THE PBD JOINT VENTURE
The Joint Venture's revenues increased by $41,400, or by 3.4%, and by
$77,000, or by 3.2%, for the three and six months ended June 30, 1995 as
compared to the corresponding periods in 1994. Of the three months' increase,
$36,600 was due to an increase in the number of subscriptions for cable service,
$23,700 was due to increases in regulated service rates permitted under the 1992
Cable Act that were implemented by the Partnership in April 1995, $17,300 was
related to increases in other revenue producing items and $2,700 was due to
increases in unregulated rates charged for premium services. These increases
were partially offset by rate decreases implemented in September 1994 to comply
with the 1992 Cable Act, estimated by the Joint Venture to be approximately
$38,900. Of the six months' increase, $93,600 was due to an increase in the
number of subscriptions for cable service, $34,000 was related to increases in
other revenue producing items, $23,700 was due to increases in regulated service
rates permitted under the 1992 Cable Act that were implemented by the
Partnership in April 1995 and $3,500 was due to increases in unregulated rates
charged for premium services. These increases were partially offset by rate
decreases implemented in September 1994 to comply with the 1992 Cable Act,
estimated by the Joint Venture to be approximately $77,800.
Service costs increased by $17,600, or by 4.1%, and by $52,900, or by
6.4%, for the three and six months ended June 30, 1995 as compared to the
corresponding periods in 1994. Service costs represent costs directly
attributable to providing cable services to customers. Of the three months'
increase, $44,700 was due to increases in programming fees charged by program
suppliers (including primary satellite fees), partially offset by a $13,000
increase in capitalization of labor and overhead expense related to greater
construction activity, a $7,600 decrease in repair and maintenance expense and a
$5,100 decrease in property taxes. Of the six months' increase, $80,100 was due
to increases in programming fees charged by program suppliers, partially offset
by an $18,800 increase in capitalization of labor and overhead expense and a
$10,300 reduction in pole rent expense.
-12-
<PAGE> 13
ENSTAR INCOME PROGRAM IV-1, L.P.
RESULTS OF OPERATIONS (CONT.)
General and administrative expenses decreased by $8,800, or by 6.0%,
and by $24,900, or by 8.4%, for the three and six months ended June 30, 1995 as
compared to the corresponding periods in 1994. Of the three months' decrease,
$5,400 was due to lower costs related to compliance with the 1992 Cable Act and
$4,100 was due to a decrease in marketing expense. Of the six months' decrease,
$17,900 was due to a decrease in marketing expense, $5,000 was due to lower
costs related to compliance with the 1992 Cable Act and $3,900 was due to a
decrease in professional fees.
Management fees and reimbursed expenses decreased by $13,600, or by
8.0%, and by $25,700, or by 7.7%, for the three and six months ended June 30,
1995 as compared to the corresponding periods in 1994 due to decreased
reimbursable expenses allocated by the Corporate General Partner. Reimbursed
expenses decreased primarily due to lower personnel costs, computer service and
consulting fees, and postage, telephone and marketing expenses for the three and
six months ended June 30, 1995. Management fees increased by $2,100, or by 3.4%,
and by $3,800, or by 3.1%, for the three and six month periods in direct
relation to increased revenues.
Depreciation and amortization expense decreased by $4,100, or by 0.9%,
and by $15,200, or by 1.7%, for the three and six months ended June 30, 1995 as
compared to the corresponding periods in 1994, due to the effect of certain
intangible assets becoming fully amortized and due to the retirement of tangible
assets.
Operating income increased by $50,300 and $59,500 for the three and six
months ended June 30, 1995 as compared to the corresponding periods in 1994,
principally due to increases in revenues and capitalization of labor and
overhead expense, and decreases in marketing and reimbursed expenses as
described above.
Interest income, net of interest expense, increased by $10,400 and
$17,500 for the three and six months ended June 30, 1995 as compared to the
corresponding periods in 1994, due to higher average investment balances and
higher interest rates earned during the three and six months ended June 30,
1995.
Operating income before depreciation and amortization (EBITDA) as a
percentage of revenues increased from 38.8% to 41.1% during the three months
ended June 30, 1995 and from 39.8% to 41.6% during the six months ended June 30,
1995 as compared to the corresponding 1994 periods. These increases were
primarily caused by increases in revenues and capitalization of labor and
overhead expense, and decreases in marketing expenses and reimbursed expenses
allocated by the Corporate General Partner as described above. EBITDA increased
by $46,200, or by 9.8%, and by $74,700, or by 7.7%, for the three and six months
ended June 30, 1995 as compared to the corresponding periods in 1994.
-13-
<PAGE> 14
ENSTAR INCOME PROGRAM IV-1, L.P.
RESULTS OF OPERATIONS (CONT.)
THE MACOUPIN JOINT VENTURE
The Joint Venture's revenues increased by $4,900, or by 1.2%, and by
$12,400, or by 1.6%, for the three and six months ended June 30, 1995 as
compared to the corresponding periods in 1994. Of the three months' increase,
$6,200 was due to increases in the number of subscriptions for services, $5,400
was due to increases in regulated service rates permitted under the 1992 Cable
Act that were implemented by the Partnership in April 1995 and $3,200 was due to
other revenue producing items. These increases were partially offset by rate
decreases implemented in September 1994 to comply with the 1992 Cable Act,
estimated by the Joint Venture to be approximately $9,900. Of the six months'
increase, $21,600 was due to increases in the number of subscriptions for
services, $7,600 was due to other revenue producing items and $5,900 was due to
increases in regulated service rates permitted under the 1992 Cable Act that
were implemented by the Partnership in April 1995. These increases were
partially offset by rate decreases implemented in September 1994 to comply with
the 1992 Cable Act, estimated by the Joint Venture to be approximately $19,700.
Revenues decreased by $3,000 due to decreases in rates charged for premium
services.
Service costs decreased by $14,800, or by 11.5%, and by $10,500, or by
4.2%, for the three and six months ended June 30, 1995 as compared to the
corresponding periods in 1994. Service costs represents costs directly
attributable to providing cable services to customers. Of the three months'
decrease, $17,900 was due to a decrease in copyright fees resulting from a
change in copyright filing requirements, $4,000 was due to an increase in
capitalization of labor and overhead expense and $3,500 was due to a decrease in
repair and maintenance expense. These decreases were partially offset by an
increase of $7,400 in programming fees charged by program suppliers (including
primary satellite fees). Of the six months' decrease, $21,800 was due to a
decrease in copyright fees and $5,000 was due to an increase in capitalization
of labor and overhead expense related to greater construction activity. These
decreases were partially offset by an increase of $13,200 in programming fees
charged by program suppliers.
General and administrative expenses decreased by $1,000, or by 2.5%,
and by $6,800, or by 8.8%, for the three and six months ended June 30, 1995 as
compared to the corresponding periods in 1994. The three and six months'
decreases were principally due to decreases in bad debt expense of $2,400 and
$7,400, respectively.
Management fees and reimbursed expenses decreased by $4,400, or by
7.3%, and by $4,200, or by 3.6%, for the three and six months ended June 30,
1995 as compared to the corresponding periods in 1994, due to lower reimbursable
expenses payable to the Corporate General Partner. Reimbursed expenses decreased
due to lower allocated personnel costs, computer service and consulting fees,
and postage, telephone and marketing expenses.
-14-
<PAGE> 15
ENSTAR INCOME PROGRAM IV-1, L.P.
RESULTS OF OPERATIONS (CONCLUDED)
Depreciation and amortization expense decreased by $4,500, or by 2.8%,
and by $36,900, or by 10.3%, for the three and six months ended June 30, 1995 as
compared to the corresponding periods in 1994, primarily due to the retirement
of certain tangible and intangible assets.
Operating income increased by $29,600 and by $70,800 for the three and
six months ended June 30, 1995 as compared to the corresponding periods in 1994,
principally due to lower copyright fees and depreciation and amortization
expense as described above.
Interest income increased by $500, or by 5.9%, and by $1,300, or by
8.9%, for the three and six months ended June 30, 1995 as compared to the
corresponding periods in 1994, due to higher average interest rates earned on
invested cash balances during the three and six months ended June 30, 1995.
Operating income before depreciation and amortization (EBITDA) as a
percentage of revenues increased from 43.2% to 48.8% for the three months ended
June 30, 1995 and from 44.1% to 47.6% for the six months ended June 30, 1995 as
compared to the corresponding periods in 1994. These increases were primarily
caused by increased revenues and decreases in copyright fees as described above.
EBITDA increased by $25,100, or by 14.5%, and by $33,900, or by 9.7%, for the
three and six months ended June 30, 1995 as compared to the corresponding
periods in 1994.
LIQUIDITY AND CAPITAL RESOURCES
As previously stated, the FCC's amended rate regulation rules were
implemented during the quarter ended September 30, 1994. Compliance with these
rules has had, and most likely will continue to have, a significant negative
impact on the Joint Ventures' revenues and cash flow.
The Partnership's primary objective, having invested its net offering
proceeds in the Joint Ventures, is to distribute to its partners all available
cash flow from operations and proceeds from the sale of cable systems, after
providing for expenses, debt service and capital requirements relating to the
expansion, improvement and upgrade of the Joint Ventures' cable systems. The
Joint Ventures rely upon the availability of cash generated from operations and
possible borrowings to fund their ongoing capital requirements. In general,
these requirements involve expansion, improvement and upgrade of the Joint
Ventures' existing cable television systems. The Joint Ventures have budgeted
capital expenditures of approximately $1,100,000 in 1995 of which the
Partnership's pro-rata share will approximate $500,000 for line extensions and
upgrades of existing cable plant. Management believes that cash generated by the
Joint Ventures' operations in 1995, together with available borrowings, will be
adequate to fund capital expenditures and allow for continued distributions to
partners. Management also believes, however, that it is essential to preserve
liquidity by reserving cash for future rebuild requirements, including a planned
rebuild in the community of Auburn, Illinois which is expected to cost
approximately $1,500,000.
-15-
<PAGE> 16
ENSTAR INCOME PROGRAM IV-1, L.P.
LIQUIDITY AND CAPITAL RESOURCES (CONT.)
The Partnership paid distributions totaling $126,200 and $252,400
during the three and six months ended June 30, 1995, respectively. However,
there can be no assurance regarding the level, timing or continuation of future
distributions beyond 1995.
In December 1993, the Partnership obtained a $2,100,000 revolving bank
credit agreement (the "Facility") maturing on September 30, 1998. Loans under
the Facility are secured by substantially all of the Partnership's assets.
Interest is payable at the Base Rate plus 1.5%. "Base Rate" means the higher of
the lender's prime rate or the Federal Funds Effective Rate plus 1/2%. The
Facility provides for quarterly reductions of the maximum commitment beginning
September 30, 1995, payable at the end of each fiscal quarter. The Partnership
will be permitted to prepay amounts outstanding under the Facility at any time
without penalty, and is able to re-borrow throughout the term of the Facility up
to the maximum commitment then available so long as no event of default exists.
The Partnership is also required to pay a commitment fee of 1/2% per year on the
unused portion of the Facility. The Facility contains certain financial tests
and other covenants including, among others, restrictions on capital
expenditures, incurrence of indebtedness, distributions and investments, sale of
assets, acquisitions, and other covenants, defaults and conditions. The
Partnership was in compliance with the loan covenants at June 30, 1995. Its
commitment will decrease by $100,000 in 1995 to $2,000,000 and by $400,00 in
1996 to $1,600,000. Repayment of principal will be required to the extent the
loan balance then outstanding exceeds the reduced maximum commitment. The
outstanding loan balance at June 30, 1995 was $1,008,900.
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
Operating activities used $5,900 more cash during the six months ended
June 30, 1995 than in the comparable 1994 period. The increase was primarily due
to a $17,600 increase in the payment of liabilities owed to the General Partner
and third party creditors. The Partnership used $11,400 less cash during the
first six months of 1995 for the payment of deferred loan costs related to the
loan obtained in December 1993. Partnership expenses used $300 less cash after
adding back non-cash items consisting of amortization of deferred loan costs and
equity in net income of Joint Ventures.
Cash provided by investing activities decreased by $268,500 during the
six months ended June 30, 1995 as compared to the equivalent six months in 1994
due to a reduction in distributions from the Joint Ventures.
INFLATION
Certain of the Partnership's expenses, such as those for wages and
benefits, equipment repair and replacement and billing and marketing generally
increase with inflation. The Partnership does not believe that its financial
results have been, or will be, adversely affected by inflation, provided that it
is able to increase its service rates periodically, of which there can be no
assurance due to the re-regulation of rates charged for certain cable services.
-16-
<PAGE> 17
ENSTAR INCOME PROGRAM IV-1, L.P.
PART II. OTHER INFORMATION
ITEMS 1-5. Not applicable.
ITEM 6. Exhibits and Reports on Form 8-K
(a) None
(b) No Reports on Form 8-K were filed during the
quarter for which this report is filed.
-17-
<PAGE> 18
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 IV-1, L.P.
a GEORGIA LIMITED PARTNERSHIP
(Registrant)
By: ENSTAR COMMUNICATIONS CORPORATION
General Partner
Date: August 11, 1995 By: /s/ Michael K. Menerey
----------------------
Michael K. Menerey,
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT JUNE 30, 1995, AND THE STATEMENTS OF OPERATIONS FOR THE SIX MONTHS
ENDED JUNE 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 31,400
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
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<TOTAL-ASSETS> 2,880,200
<CURRENT-LIABILITIES> 18,100
<BONDS> 1,008,900
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<OTHER-SE> 0
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<OTHER-EXPENSES> (3,700)
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<INTEREST-EXPENSE> 63,500
<INCOME-PRETAX> 24,600
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<INCOME-CONTINUING> 24,600
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