<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 IV-3, 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 IV-3, 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 IV-3, 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 IV-3, L.P. ("Enstar IV-3").
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 IV-3 are:
<TABLE>
<CAPTION>
NAME AND ADDRESS CAPACITY OF AMOUNT AND NATURE OF
OF PARTICIPANT PARTICIPANT BENEFICIAL OWNERSHIP
-------------- ----------- --------------------
<S> <C> <C>
1. Enstar Income Program IV-3, L.P. Registrant Not applicable
c/o Enstar Communications
Corporation
12444 Powerscourt Drive
Suite 100
St. Louis, Missouri 63131
2. Enstar Communications General Partner 0.5% partnership interest
Corporation
12444 Powerscourt Drive
Suite 100
St. Louis, Missouri 63131
</TABLE>
<PAGE> 3
ENSTAR INCOME PROGRAM IV-3, 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 IV-3, L.P., ("Enstar
IV-3" 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 the Partnership (together with
thirteen other Enstar-affiliated limited and general partnerships) has entered
into two separate and comprehensive Asset Purchase Agreements, one dated as of
June 21, 2000 and the other dated as of August 8, 2000 (the "Purchase
Agreements) with Multimedia Acquisition Corp. (an affiliate of Gans Multimedia
Partnership). Neither Multimedia nor Gans is affiliated with the Partnership or
any affiliate of the Partnership.
Pursuant to the Purchase Agreements, Multimedia would purchase
substantially all of the cable television systems and other operating assets of
each of those selling partnerships, including Enstar IV-3 and Enstar Cable of
Macoupin County (a general partnership in which Enstar IV-3 owns a one third
(1/3) interest), for a combined, aggregate purchase price of $122,850,900, of
which $13,775,394 would be paid to Enstar IV-3, subject to closing adjustments.
This amount includes Enstar IV-3's allocable portion of the sale proceeds that
would be received by Enstar Cable of Macoupin County.
The Multimedia agreements are 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
definitive purchase agreements covering all or substantially all of those
assets. Of the bids we received, Multimedia offered the most favorable price and
other terms.
In the case of each purchase agreement, Multimedia's obligation to
purchase the selling partnerships' cable system assets, including Enstar IV-3's
and Enstar Cable of Macoupin County's, is contingent on (i) each and every
selling partnership obtaining the approval of its respective limited or general
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 sales to Multimedia, we would repay the Partnership's
debts, fund required reserves, and terminate the Partnership by making
liquidating cash distributions to its
<PAGE> 4
partners in accordance with the liquidation provisions of the partnership
agreement. We presently expect that the liquidating distributions to the limited
partners would approximate $310 per Unit (subject to closing adjustments and
federal and state taxes).
We presently expect that both sales to Multimedia would close in the
first quarter of 2001 and anticipate making the initial liquidating distribution
approximately 60 days after the closings. We also expect that after required
closing adjustments are completed (which we expect to occur approximately 6
months after each 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 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 sales 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 sales, the reasons for them, 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 0-15686
-------
Enstar Income Program IV-3, L.P.
--------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Georgia 58-1648320
------------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
12444 Powerscourt Dr., Suite 100
St. Louis, Missouri 63131
----------------------------------------- ---------------------------
(Address of principal 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 IV-3, L.P.
CONDENSED BALANCE SHEETS
================================
<TABLE>
<CAPTION>
December 31, June 30,
1999* 2000
----------- -----------
(Unaudited)
ASSETS:
<S> <C> <C>
Cash $ 1,046,200 $ 1,607,200
Accounts receivable, net of allowance for doubtful accounts of $900 and
$5,900, respectively 38,700 78,300
Prepaid expenses and other assets 75,000 51,200
Equity in net assets of Joint Venture 1,105,400 1,153,800
Property, plant and equipment, net of accumulated
depreciation of $4,932,300 and $5,045,100, respectively 1,728,000 1,641,600
Franchise cost, net of accumulated
amortization of $2,416,900 and $2,480,600 157,400 100,500
----------- -----------
$ 4,150,700 $ 4,632,600
=========== ===========
LIABILITIES AND PARTNERSHIP CAPITAL
LIABILITIES:
Accounts payable $ 192,200 $ 177,700
Due to affiliates 148,400 438,600
----------- -----------
340,600 616,300
----------- -----------
PARTNERSHIP CAPITAL (DEFICIT):
General Partner (45,000) (42,500)
Limited Partners 3,855,100 4,058,800
----------- -----------
TOTAL PARTNERSHIP CAPITAL 3,810,100 4,016,300
----------- -----------
$ 4,150,700 $ 4,632,600
=========== ===========
</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 IV-3, L.P.
CONDENSED STATEMENTS OF OPERATIONS
==================================
<TABLE>
<CAPTION>
Unaudited
-----------------------
Three months ended
June 30,
-----------------------
1999 2000
----------- ----------
<S> <C> <C>
REVENUES $ 647,300 $ 625,300
--------- ---------
OPERATING EXPENSES:
Service costs 250,100 184,000
General and administrative expenses 125,800 91,200
General partner management fees
and reimbursed expenses 86,700 76,900
Depreciation and amortization 130,400 88,400
--------- ---------
593,000 440,500
--------- ---------
OPERATING INCOME 54,300 184,800
--------- ---------
OTHER INCOME (EXPENSE):
Interest income 7,300 17,800
Interest expense (3,300) (2,600)
--------- ---------
4,000 15,200
--------- ---------
INCOME BEFORE EQUITY IN NET INCOME
OF JOINT VENTURE 58,300 200,000
EQUITY IN NET INCOME OF JOINT VENTURE 65,100 65,300
--------- ---------
NET INCOME $ 123,400 $ 265,300
========= =========
Net income allocated to General Partner $ 1,200 $ 2,700
========= =========
Net income allocated to Limited Partners $ 122,200 $ 262,600
========= =========
NET INCOME PER UNIT OF LIMITED
PARTNERSHIP INTEREST $ 3.06 $ 6.58
========= =========
AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD 39,900 39,900
========= =========
</TABLE>
The accompanying notes are an integral part of these condensed
financial statements.
-3-
<PAGE> 8
ENSTAR INCOME PROGRAM IV-3, L.P.
CONDENSED STATEMENTS OF OPERATIONS
==================================
Unaudited
---------------------------
Six months ended
June 30,
---------------------------
1999 2000
----------- -----------
REVENUES $ 1,292,200 $ 1,259,400
----------- -----------
OPERATING EXPENSES:
Service costs 492,400 396,600
General and administrative expenses 226,800 183,700
General partner management fees
and reimbursed expenses 172,500 168,100
Depreciation and amortization 260,300 190,500
----------- -----------
1,152,000 938,900
----------- -----------
OPERATING INCOME 140,200 320,500
----------- -----------
OTHER INCOME (EXPENSE):
Interest income 15,700 30,000
Interest expense (6,500) (5,100)
----------- -----------
9,200 24,900
----------- -----------
INCOME BEFORE EQUITY IN NET INCOME
OF JOINT VENTURE 149,400 345,400
EQUITY IN NET INCOME OF JOINT VENTURE 118,100 111,500
----------- -----------
NET INCOME $ 267,500 456,900
=========== ===========
Net income allocated to General Partner $ 2,700 4,600
=========== ===========
Net income allocated to Limited Partners $ 264,800 452,300
=========== ===========
NET INCOME PER UNIT OF LIMITED
PARTNERSHIP INTEREST $ 6.64 11.34
=========== ===========
AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD 39,900 39,900
=========== ===========
The accompanying notes are an integral part of these condensed
financial statements.
-4-
<PAGE> 9
ENSTAR INCOME PROGRAM IV-3, 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 $ 267,500 $ 456,900
Adjustments to reconcile net income to net cash
from operating activities:
Equity in net income of Joint Venture (118,100) (111,500)
Depreciation and amortization 260,300 190,500
Changes in:
Accounts receivable, prepaid expenses and other assets (102,800) (15,800)
Accounts payable and due to affiliates 99,800 275,700
----------- -----------
Net cash from operating activities 406,700 795,800
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (34,200) (47,200)
Distributions from Joint Venture 25,000 63,100
----------- -----------
Net cash from investing activities (9,200) 15,900
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners (251,900) (250,700)
----------- -----------
INCREASE IN CASH 145,600 561,000
CASH AT BEGINNING OF PERIOD 812,200 1,046,200
----------- -----------
CASH AT END OF PERIOD $ 957,800 $ 1,607,200
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
-5-
<PAGE> 10
ENSTAR INCOME/GROWTH PROGRAM IV-3, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
=======================================
1. INTERIM FINANCIAL STATEMENTS
The accompanying condensed interim financial statements for
Enstar Income Program IV-3, 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. The Partnership's management fee expense
approximated $31,300 and $63,000 for the three and six months ended June 30,
2000, respectively. For the three and six months ended June 30, 1999, the
Partnership's management fee expense approximated $32,400 and $64,600,
respectively. The Manager has entered into an identical agreement with Enstar
Cable of Macoupin County (the "Joint Venture"), a Georgia general partnership of
which the Partnership is a co-general partner, except that that the Joint
Venture pays the Manager only a 4% management fee. The Joint Venture's
management fee expense approximated $19,900 and $39,800 for the three and six
months ended June 30, 2000, respectively. For the three and six months ended
June 30, 1999, the Joint Venture's management fee expense approximated $20,200
and $39,800, respectively. In addition, the Joint Venture is also required to
distribute to ECC (which is the corporate general partner of the Joint Venture
as well as of the Partnership) an amount equal to 1% of the Joint Venture's
gross revenues, representing ECC's interest as the corporate general partner of
the Joint Venture. The Joint Venture's management fee expense to ECC
approximated $5,000 and $10,000 during the three and six months ended June 30,
2000, respectively. For the three and six months ended June 30, 1999, the Joint
Venture's management fee expense to ECC approximated $5,100 and $10,000,
respectively. No management fee is payable to the Manager by the Partnership in
respect of any amounts received by the Partnership from the Joint Venture.
Management fees are non-interest bearing.
The Management Agreement provides that the Partnership
reimburse the Manager for direct expenses incurred on behalf of the Partnership
and the Partnership's allocable share of the Manager's operational costs.
Additionally, Charter Communications Holding Company, LLC and its affiliates
(collectively, "Charter") provide other management and operational services for
the
-6-
<PAGE> 11
ENSTAR INCOME/GROWTH PROGRAM IV-3, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS - (CONTINUED)
=====================================================
Partnership and the Joint Venture. Such services were provided by Falcon
Communications, L.P. and its affiliates (collectively, "Falcon") prior to
November 12, 1999. These expenses are charged to the properties served based
primarily on the Partnership's allocable share of operational cost associated
with the services provided. The Partnership and the Joint Venture reimburse the
affiliates for their allocable share of the affiliates' costs. The total amount
charged to the Partnership for these costs approximated $45,600 and $105,100 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 costs approximated $54,300 and $107,900, respectively. The total amount
charged to the Joint Venture for these costs approximated $47,200 and $107,600
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 Joint
Venture for these costs approximated $48,700 and $94,500, respectively. There is
no duplication of reimbursed expenses of the Manager.
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 and the Joint Venture for these costs based on an estimate of what
ECC could negotiate for such programming services for the 15 partnerships ECC
managed as a group. Charter charges the Partnership and the Joint Venture for
these costs based on its costs. The Partnership and Joint Venture recorded
programming fee expense of $204,800 and $450,500 for the three and six months
ended June 30, 2000, respectively. For the three and six months ended June 30,
1999, programming fee expense for the Partnership and Joint Venture was $287,100
and $569,700, respectively.
The cable system in one of the Partnership's franchise areas
does not have headend equipment to receive and retransmit its cable television
signal. The system relies on another partnership managed by ECC with systems
located in neighboring communities to provide its cable television signal. The
Partnership is not charged a fee for this service.
3. EARNINGS 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.
-7-
<PAGE> 12
ENSTAR INCOME/GROWTH PROGRAM IV-3, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS - (CONTINUED)
=====================================================
4. SALE OF CABLE SYSTEM
On June 21, 2000, the Partnership, together with certain
affiliates, (collectively, the "Sellers") entered into a purchase and sale
agreement (the "Gans I Agreement") with Multimedia Acquisition Corp., an
affiliate of Gans Multimedia Partnership, (the "Purchaser"). The Gans I
Agreement provides for the Purchaser to acquire the assets comprising the
Partnership's cable system serving Fulton, Kentucky, as well as certain assets
of other affiliates.
The aggregate purchase price payable to the Sellers pursuant
to the Gans I Agreement is $27,621,500 in cash (subject to normal closing
adjustments). Of that amount, $3,396,727 (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.
-8-
<PAGE> 13
ENSTAR INCOME/GROWTH PROGRAM IV-3, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS - (CONTINUED)
=====================================================
5. EQUITY IN NET ASSETS OF JOINT VENTURE
The Partnership and two affiliated partnerships (Enstar Income
Program IV-1, L.P. and Enstar Income Program IV-2, L.P.) each own one-third
(1/3) of the Joint Venture. Each of the co-partners share equally in the profits
and losses of the Joint Venture. The investment in the Joint Venture is
accounted for on the equity method. Summarized financial information for the
Joint Venture as of June 30, 2000 and December 31, 1999, and the results of its
operations for the three and six months ended June 30, 2000 and 1999, have been
included. The results of operations for the three and six months ended June 30,
2000 are not necessarily indicative of results for the entire year.
<TABLE>
<CAPTION>
December 31, June 30,
1999* 2000
-------------- -------------
(Unaudited)
<S> <C> <C>
Current assets $1,807,500 $2,323,000
Investment in cable television properties, net 1,730,200 1,640,300
Other assets 1,200 600
---------- ----------
$3,538,900 $3,963,900
========== ==========
Current liabilities $ 222,700 $ 502,600
Venturers' capital 3,316,200 3,461,300
---------- ----------
$3,538,900 $3,963,900
========== ==========
</TABLE>
---------
* Agrees with audited balance sheet included in the Partnership's Annual Report
on Form 10-K.
-9-
<PAGE> 14
ENSTAR INCOME/GROWTH PROGRAM IV-3, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS - (CONTINUED)
=====================================================
<TABLE>
<CAPTION>
Unaudited
-----------------------
Three months ended
June 30,
-----------------------
1999 2000
--------- ---------
<S> <C> <C>
REVENUES $ 505,400 $ 497,200
--------- ---------
OPERATING EXPENSES:
Service costs 158,200 159,000
General and administrative expenses 34,000 39,100
General partner management fees and reimbursed expenses 74,000 72,100
Depreciation and amortization 55,200 54,900
--------- ---------
321,400 325,100
--------- ---------
OPERATING INCOME 184,000 172,100
OTHER INCOME (EXPENSE):
Interest income 13,800 25,900
Interest expense (2,500) (2,000)
--------- ---------
NET INCOME $ 195,300 $ 196,000
========= =========
</TABLE>
-10-
<PAGE> 15
ENSTAR INCOME/GROWTH PROGRAM IV-3, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS - (CONTINUED)
=====================================================
<TABLE>
<CAPTION>
Unaudited
-----------------------
Six months ended
June 30,
-----------------------
1999 2000
--------- ---------
<S> <C> <C>
REVENUES $ 995,900 $ 995,700
--------- ---------
OPERATING EXPENSES:
Service costs 323,000 334,200
General and administrative expenses 87,300 101,400
General partner management fees and reimbursed expenses 144,300 157,400
Depreciation and amortization 109,600 109,500
--------- ---------
664,200 702,500
--------- ---------
OPERATING INCOME 331,700 293,200
OTHER INCOME (EXPENSE):
Interest income 27,800 45,800
Interest expense (5,100) (4,500)
--------- ---------
NET INCOME $ 354,400 $ 334,500
========= =========
</TABLE>
-11-
<PAGE> 16
ENSTAR INCOME/GROWTH PROGRAM IV-3, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS - (CONTINUED)
=====================================================
6. SUBSEQUENT EVENT
On August 8, 2000, the Partnership and Joint Venture, together
with certain affiliates, (collectively, the "Selling Affiliates") entered into a
purchase and sale agreement (the "Gans II Agreement") with Multimedia
Acquisition Corp., an affiliate of Gans Multimedia Partnership, (the "Buyer").
The Gans II Agreement provides for the Buyer to acquire the assets comprising
the Partnership's and Joint Venture's cable systems serving Macoupin and
Shelbyville, Illinois, as well as certain assets of other affiliates.
The aggregate purchase price payable to the Selling Affiliates
pursuant to the Gans II Agreement is $94,929,400 in cash (subject to normal
closing adjustments). Of that amount, $10,378,700 (subject to closing
adjustments) is payable to the Partnership. The allocation of the purchase price
among each of the Selling Affiliates was assigned by the Buyer for each of the
systems.
The Buyer'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 Selling Affiliates; (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 Selling
Affiliates; 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.
-12-
<PAGE> 17
ENSTAR INCOME PROGRAM IV-3, 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.
The Partnership conducts its cable television business
operations both (i) through the direct ownership and operation of certain cable
television systems and (ii) through its participation as a partner with a
one-third (1/3) interest in Enstar Cable of Macoupin County (the "Joint
Venture"). Our participation is equal to our affiliated partners (Enstar Income
Program IV-1, L.P. and Enstar Income Program IV-2, L.P.) under the joint venture
agreement with respect to capital contributions, obligations and commitments,
and results of operations. Accordingly, in considering the financial condition
and results of operations, consideration must also be made of those matters as
they relate to the Joint Venture. The following discussion reflects such
consideration and provides a separate discussion for each entity.
RESULTS OF OPERATIONS
THE PARTNERSHIP
The Partnership's revenues decreased from $647,300 to
$625,300, or by 3.4%, and from $1,292,200 to $1,259,400, or by 2.5%, for the
three and six months ended June 30, 2000, as compared to the first three months
of 1999. Of the $22,000 decrease for the three months ended June 30, 2000,
$53,800 was due to decreases in the number of subscribers for basic, premium and
tier services and $9,800 was due to decreases in other revenue producing items.
The decrease was partially offset by a $41,600 increase due to increases in
regulated service rates that we implemented in 1999. Of the $32,800 decrease for
the six months ended June 30, 2000, $84,800 was due to decreases in the number
of subscribers for basic, premium and tier services and $11,200 was due to
decreases in other revenue producing items. The decrease was partially offset by
a $63,200 increase due to increases in regulated service rates that we
implemented in 1999. As of June 30, 2000, the Partnership had approximately
5,500 basic subscribers and 1,200 premium service units.
Service costs decreased from $250,100 to $184,000, or by
26.4%, and from $492,400 to $396,600, or by 19.5%, for the three and six months
ended June 30, 2000, as compared to the corresponding periods of 1999. Service
costs represent costs directly attributable to providing cable services to
customers. The decrease was primarily due to lower programming fees resulting
from lower rates that Charter has extended to the Partnership.
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ENSTAR INCOME PROGRAM IV-3, L.P.
General and administrative expenses decreased from $125,800 to
$91,200, or by 27.5%, and from $226,800 to $183,700, or by 19.0% for the three
and six months ended June 30, 2000, as compared to the corresponding periods in
1999. The decrease was primarily due to decreases in marketing expenses.
Management fees and reimbursed expenses decreased from $86,700
to $76,900, or by 11.3%, and from $172,500 to $168,100, or by 2.6%, for the
three and six months ended June 30, 2000, as compared to the corresponding
periods in 1999. Management fees decreased in direct relation to decreased
revenues, as discussed above. In addition, the decrease was due to lower
accounting reimbursed expenses as a result of lower rates allocated by Charter.
Depreciation and amortization expense decreased from $130,400
to $88,400, or by 32.2%, and from $260,300 to $190,500, or by 26.8%, for the
three and six months ended June 30, 2000, as compared to the corresponding
periods in 1999. The decrease due to the impact of certain tangible assets
becoming fully depreciated and certain intangible assets becoming fully
amortized.
Operating income increased from $54,300 to $184,800, or by
240.3%, and from $140,200 to $320,500, or by 128.6%, for the three and six
months ended June 30, 2000, as compared to the corresponding periods in 1999,
due to the factors discussed above.
Interest income, net of interest expense, increased from
$4,000 to $15,200, or by 280.0%, and from $9,200 to $24,900, or by 170.6%, for
the three and six months ended June 30, 2000, as compared to the corresponding
periods in 1999. The increase was primarily due to higher average cash balances
available for investment and higher average interest rates earned on invested
funds in the current year period.
Due to the factors described above, our net income increased
from $123,400 to $265,300, or by 115.0%, and from $267,500 to $456,900, or by
70.8%, 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 28.5% to 43.7% and from 31.0% to 40.6% 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 and marketing
expenses as described above. EBITDA increased from $184,700 to $273,200, or by
47.9%, and from $400,500 to $511,000, or by 27.6%, for the three and six months
ended June 30, 2000, as compared to the corresponding periods in 1999.
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ENSTAR INCOME PROGRAM IV-3, L.P.
The Partnership distributed $250,700 to our partners during
the six months ended June 30, 2000. For the six months ended June 30, 1999, the
Partnership distributed to our partners $251,900.
THE JOINT VENTURE
The Joint Venture's revenues decreased from $505,400 to
$497,200, or by 1.6%, and decreased from $995,900 to $995,700, or by less than
1%, for the three and six months ended June 30, 2000, as compared to the
corresponding periods in 1999. Of the $8,200 decrease in revenues for the six
months ended June 30, 2000, $30,000 was due to decreases in the number of
subscribers for basic, premium, and equipment rental services and $5,600 was due
to a decrease in other revenue producing items. The decreases were partially
offset by a $27,400 increase in regulated service rates that we implemented in
2000. Of the $200 decrease in revenues for the six months ended June 30, 2000,
$38,600 was due to decreases in the number of subscribers for basic, premium,
and equipment rental services and $1,000 was due to a decrease in other revenue
producing items. The decrease was partially offset by a $39,400 increase in the
rates. As of June 30, 2000, we had approximately 4,300 basic subscribers and
1,100 premium service units.
Service costs increased from $158,200 to $159,000, or by less
than 1%, and from $323,000 to $334,200, or by 3.5%, for the three and six months
ended June 30, 2000, as compared to the corresponding periods in 1999. The
increase was primarily due to higher personnel costs resulting from staff
additions and a $40,000 programming rebate received in prior year. The increase
was partially offset due to the lower programming rates that Charter has
extended to us and a decrease in subscribers.
General and administrative expenses increased from $34,000 to
$39,100, or by 15.0%, and from $87,300 to $101,400, or by 16.2%, for the three
and six months ended June 30, 2000, as compared to the corresponding periods in
1999. The increase was primarily due to higher professional fees incurred in
2000.
General partner management fees and reimbursed expenses
decreased from $74,000 to $72,100, or by 2.6%, and increased from $144,300 to
$157,400, or by 9.1%, for the three and six months ended June 30, 2000, as
compared to the corresponding periods in 1999. The increase for the six months
ended June 30, 2000, represents certain costs incurred by Charter that were
previously incurred by the Macoupin County Joint Venture prior to the Charter
acquisition on November 12, 1999. The decrease for the three months ended June
30, 2000, represents certain costs Charter has been able to eliminate.
Depreciation and amortization expense decreased from $55,200
to $54,900, or less than 1%, and from $109,600 to $109,500, or by less than 1%,
for the three and six months ended June 30, 2000, as compared to the
corresponding periods in 1999.
Operating income decreased from $184,000 to $172,100, or by
6.5%, and from $331,700 to $293,200, or by 11.6%, for the three and six months
ended June 30, 2000, as compared to the corresponding periods in 1999. The
decrease was due to the factors discussed above.
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ENSTAR INCOME PROGRAM IV-3, L.P.
Interest income, net of interest expense, increased from
$11,300 to $23,900, or by 111.5%, and from $22,700 to $41,300, or by 81.9%, for
the three and six months ended June 30, 2000, as compared to the corresponding
periods in 1999. The increase was primarily due to higher average cash balances
available for investment and due to higher average interest rates earned on
invested funds during the current year period.
Due to the factors described above, the Joint Venture's net
income increased from $195,300 to $196,000, or by less than 1%, and decreased
from $354,400 to $334,500, or by 5.6%, for the three and six months ended June
30, 2000 as compared to the corresponding periods in 1999.
Based on its experience in the cable television industry, the
Joint Venture believes 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 decreased from 47.3% to 45.7% and
from 44.3% to 40.4% during the three and six months ended June 30, 2000, as
compared to the corresponding periods in 1999. The decrease was primarily due to
the factors described above. EBITDA decreased from $239,200 to $227,000, or by
5.1%, and from $441,300 to $402,700, or by 8.7%, for the three and six months
ended June 30, 2000, as compared to the corresponding periods in 1999.
The Joint Venture distributed $63,100 to the Partnership
during the six months ended June 30, 2000. For the six months ended June 30,
1999, the Joint Venture distributed $25,000 to the Partnership.
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ENSTAR INCOME PROGRAM IV-3, L.P.
LIQUIDITY AND CAPITAL RESOURCES
Our primary objective is to distribute to our partners all
available cash flow from the Partnership's and Joint Venture's operations and
proceeds from the sale of the Partnership's and Joint Venture's cable television
systems, if any, after providing for expenses, debt service and capital
requirements relating to the expansion, improvement and upgrade of such cable
television systems.
In accordance with the partnership agreement, Enstar
Communications Corporation (ECC) has implemented a plan for liquidating the
Partnership. On June 21, 2000, the Partnership, together with certain
affiliates, (collectively, the "Sellers") entered into a purchase and sale
agreement (the "Gans I Agreement") with Multimedia Acquisition Corp., an
affiliate of Gans Multimedia Partnership, (the "Purchaser"). The Gans I
Agreement provides for the Purchaser to acquire the assets compromising the
Partnership's cable system serving Fulton, Kentucky, as well as certain assets
of other affiliates. The aggregate purchase price payable to the Sellers
pursuant to the Gans I Agreement is $27,621,500 in cash (subject to normal
closing adjustments). Of that amount, $3,396,727 (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.
On August 8, 2000, the Joint Venture, together with certain
affiliates, (collectively, the "Selling Affiliate") entered into a purchase and
sale agreement (the "Gans II Agreement") with Multimedia Acquisition Corp., an
affiliate of Gans Multimedia Partnership, (the "Buyer"). The Agreement provides
for the Buyer to acquire the assets comprising the Partnership's and Joint
Venture's cable systems serving Macoupin and Shelbyville, Illinois, as well as
certain assets of other affiliates. The aggregate purchase price payable to the
Selling Affiliates pursuant to the Gans II Agreement is $94,929,400 in cash
(subject to normal closing adjustments). Of that amount, $10,378,700 (subject to
closing adjustments) is payable to the Partnership and Joint Venture. The
allocation of the purchase price among each of the Selling Affiliates was
assigned by the Buyer for each of the systems.
Both of these purchase and sale agreements are 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 to be sold; (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 selling affiliate; 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 Joint Venture's assets are
sold, Enstar Communications Corporation will proceed to liquidate the
Partnership and Joint Venture following the settlement of their final
liabilities.
The Partnership and the Joint Venture rely upon the
availability of cash generated from operations and possible borrowings to fund
their ongoing expenses and capital requirements. In
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ENSTAR INCOME PROGRAM IV-3, L.P.
general, these requirements involve expansion, improvement and upgrade of the
Partnership's and Joint Venture's existing cable television systems.
The Joint Venture is required by a provision of its franchise
agreement with the city of Carlinville, Illinois to upgrade its cable system in
that community by December 2001 at an estimated cost of $1.1 million, and plans
to upgrade its cable plant in Girard, Illinois at an estimated cost of
approximately $1.0 million provided the franchise agreement is renewed. The
franchise agreement under negotiation with Girard is expected to require
completion of a plant upgrade in the franchise area within two years. The
Partnership and the Joint Venture are budgeted to spend approximately $685,800
in 2000. The Partnership and the Joint Venture spent $34,400 during the six
months ended June 30, 2000 on their cable systems.
Falcon purchased insurance coverage for all of the cable
television properties owned or managed by it to cover damage to cable
distribution plant and subscriber connections and against business interruptions
resulting from such damage. This coverage is subject to a significant annual
deductible which applies to all of the cable television properties owned or
formerly managed by Falcon through November 12, 1999, and currently managed by
Charter, including those of the partnership and the Partnership and Joint
Venture.
Approximately 81% of the Partnership's and Joint Venture's
subscribers are served by their systems in Shelbyville and Carlinville, Illinois
and neighboring communities. Significant damage to these systems due to seasonal
weather conditions or other events could have a material adverse effect on the
Partnership's and Joint Venture's liquidity and cash flows. The Partnership and
Joint Venture continue to purchase insurance coverage in amounts their
management views as appropriate for all other property, liability, automobile,
workers' compensation and other types of insurable risks.
Operating activities for the Partnership provided $389,100
more cash during the six months ended June 30, 2000 than in the corresponding
period of 1999. The Partnership used $175,900 less cash to pay liabilities owed
to ECC and third party creditors due to differences in the timing of payments.
Changes in accounts receivable, prepaid expenses and other assets provided
$87,000 more cash for the six months ended June 30, 2000, than in the
corresponding period in 1999 due to differences in the timing of receivable
collections and the payment of prepaid expenses.
Investing activities provided $25,100 more cash in the six
months ended June 30, 2000 than in the corresponding period of 1999. The change
was primarily due to an increase in distributions from the Joint Venture and an
increase in capital expenditures.
INFLATION
Certain of the Joint Venture'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 the Joint Venture are able to
increase their service rates periodically, of which there can be no assurance.
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ENSTAR INCOME PROGRAM IV-3, 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 June 21, 2000, by
and among Multimedia Acquisition Corp., as Buyer,
and Enstar Income Program 1984-1, L.P., Enstar
Income Program IV-3, L.P., Enstar Income/Growth
Program Six-A, L.P., Enstar VII, Enstar VIII and
Enstar X, Ltd., as Sellers. (1)
10.2 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-1, L.P., Enstar Income Program IV-2,
L.P., Enstar Income Program IV-3, L.P., Enstar
Income/Growth Program Five-A, L.P., Enstar
Income/Growth Program Five-B, L.P., Enstar
Income/Growth Program Six-A, L.P., Enstar IX and
Enstar XI, Ltd., as Sellers. (2)
27.1 Financial Data Schedule.*
(b) Reports on Form 8-K
- On June 30, 2000, an 8-K dated June 21, 2000, was
filed to announce an Asset Purchase Agreement
dated June 21, 2000, by and among Multimedia
Acquisition Corp., as Buyer, and Enstar Income
Program 1984-1, L.P., Enstar Income Program IV-3,
L.P., Enstar Income/Growth Program Six-A, L.P.,
Enstar VII, Enstar VIII and Enstar X, Ltd., as
Sellers (Item 5).
- On July 18, 2000, an 8-K dated July 14, 2000, was
filed to announce a change in the Partnership's
principal independent accountants (Item 4).
-------
* Filed herewith.
(1) Incorporated by reference to the Current Report on Form 8-K of Enstar
Income Program 1984-1, L.P. filed on June 30, 2000 (File No. 000-13333).
(2) 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> 24
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-3, 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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