SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2000
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-15686
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Enstar Income Program IV-3, L.P.
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(Exact name of Registrant as specified in its charter)
Georgia 58-1648320
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(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
12444 Powerscourt Dr., Suite 100
St. Louis, Missouri 63131
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area (314) 965-0555
code: --------------
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Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
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PART I - FINANCIAL INFORMATION
ENSTAR INCOME PROGRAM IV-3, L.P.
CONDENSED BALANCE SHEETS
======================================
December 31, March 31,
1999* 2000
----------------- -----------------
(Unaudited)
ASSETS:
<S> <C> <C>
Cash $ 1,046,200 $ 1,212,500
Accounts receivable, less allowance of $900 and
$2,700 for possible losses 38,700 14,700
Prepaid expenses and other assets 75,000 74,200
Equity in net assets of Joint Venture 1,105,400 1,088,600
Property, plant and equipment, less accumulated
depreciation and amortization of $4,932,300 and $4,978,100 1,728,000 1,667,700
Franchise cost, net of accumulated
amortization of $2,416,900 and $2,452,400 157,400 121,900
----------------- -----------------
$ 4,150,700 $ 4,179,600
================= =================
LIABILITIES AND PARTNERSHIP CAPITAL
-----------------------------------
LIABILITIES:
Accounts payable $ 192,200 $ 141,500
Due to affiliates 148,400 162,400
----------------- -----------------
TOTAL LIABILITIES 340,600 303,900
----------------- -----------------
COMMITMENTS AND CONTINGENCIES
PARTNERSHIP CAPITAL (DEFICIT):
General partners (45,000) (44,400)
Limited partners 3,855,100 3,920,100
----------------- -----------------
TOTAL PARTNERSHIP CAPITAL 3,810,100 3,875,700
----------------- -----------------
$ 4,150,700 $ 4,179,600
================= =================
</TABLE>
*As presented in the audited financial statements.
See accompanying notes to condensed financial statements.
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<CAPTION>
ENSTAR INCOME PROGRAM IV-3, L.P.
CONDENSED STATEMENTS OF OPERATIONS
======================================
Unaudited
-------------------------------------
Three months ended
March 31,
-------------------------------------
1999 2000
---------------- -----------------
<S> <C> <C>
REVENUES $ 644,900 $ 634,100
---------------- -----------------
OPERATING EXPENSES:
Service costs 242,300 215,300
General and administrative expenses 101,000 102,000
General Partner management fees
and reimbursed expenses 85,800 78,900
Depreciation and amortization 129,900 102,200
---------------- -----------------
559,000 498,400
---------------- -----------------
OPERATING INCOME 85,900 135,700
---------------- -----------------
OTHER INCOME (EXPENSE):
Interest income 8,400 12,200
Interest expense (3,200) (2,600)
---------------- -----------------
5,200 9,600
---------------- -----------------
INCOME BEFORE EQUITY IN NET INCOME
OF JOINT VENTURE 91,100 145,300
EQUITY IN NET INCOME OF JOINT VENTURE 53,000 46,200
---------------- -----------------
NET INCOME $ 144,100 $ 191,500
================ =================
Net income allocated to General Partners $ 1,400 $ 1,900
================ =================
Net income allocated to Limited Partners $ 142,700 $ 189,600
================ =================
NET INCOME PER UNIT OF LIMITED
PARTNERSHIP INTEREST $ 3.58 $ 4.75
================ =================
AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD 39,900 39,900
================ =================
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See accompanying notes to condensed financial statements.
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<CAPTION>
ENSTAR INCOME PROGRAM IV-3, L.P.
STATEMENTS OF CASH FLOWS
======================================
Unaudited
-------------------------------------
Three months ended
March 31,
-------------------------------------
1999 2000
---------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 144,100 $ 191,500
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in net income of Joint Venture (53,000) (46,200)
Depreciation and amortization 129,900 102,200
Increase (decrease) from changes in:
Accounts receivable, prepaid expenses and other assets (101,500) 24,800
Accounts payable and due to affiliates 85,800 (36,700)
---------------- -----------------
Net cash provided by operating activities 205,300 235,600
---------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (12,300) (6,400)
Distributions from Joint Venture - 63,000
---------------- -----------------
Net cash provided by (used in) investing activities (12,300) 56,600
---------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners (125,900) (125,900)
---------------- -----------------
INCREASE IN CASH 67,100 166,300
CASH AT BEGINNING OF PERIOD 812,200 1,046,200
---------------- -----------------
CASH AT END OF PERIOD $ 879,300 $ 1,212,500
================ =================
</TABLE>
See accompanying notes to condensed financial statements.
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ENSTAR INCOME PROGRAM IV-3, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
======================================
1. INTERIM FINANCIAL STATEMENTS
The accompanying condensed interim financial statements for the three
months ended March 31, 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, 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 months ended March 31, 2000 are not necessarily indicative of results for
the entire year.
2. TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES
The partnership has a management and service agreement with a
wholly-owned subsidiary of our corporate general partner for a monthly
management fee of 5% of revenues, excluding revenues from the sale of cable
television systems or franchises. Management fee expense approximated $31,700
for the three months ended March 31, 2000.
In addition to the monthly management fees described above, we
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. All cable television properties managed by the
corporate general partner and its subsidiary are charged a proportionate share
of these expenses. Charter Communications Holding Company, LLC and its
affiliates provide other management services for the partnership that were
provided by Falcon Communications, L.P. and its affiliates prior to November 12,
1999. Corporate office allocations and district office expenses are charged to
the properties served based primarily on the respective percentage of basic
subscribers or homes passed (dwelling units within a system) within the
designated service areas. The total amount charged to the partnership for these
services approximated $47,200 for the three months ended March 31, 2000.
Management fees and reimbursed expenses due the corporate general partner are
non-interest bearing.
The manager has entered into an identical agreement with Enstar Cable
of Macoupin County, or the Joint Venture, a Georgia general partnership of which
the partnership is a co-partner, except that the Joint Venture pays the manager
only a 4% management fee. However, the Joint Venture is required to distribute
to Enstar Communications Corporation (which is the corporate general partner of
the Joint Venture as well as of the partnership) an amount equal to 1% of its
gross revenues in respect of Enstar Communications Corporation's interest as
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 Venture, and there is no duplication of reimbursed expenses or costs of
the manager. The Joint Venture paid the manager management fees of approximately
$19,900 and reimbursement of expenses of approximately $41,000 under its
management agreement for the three months ended March 31, 2000. In addition, the
Joint Venture paid the corporate general partner approximately $5,000 in respect
of its 1% special interest during the three months ended March 31, 2000.
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ENSTAR INCOME PROGRAM IV-3, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
======================================
2. TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES (Continued)
The partnership and the Joint Venture also receive certain system
operating management services from Charter and other affiliates of the corporate
general partner in addition to the manager, due to the fact that there are no
such employees directly employed by the partnership's and Joint Venture's cable
systems. The partnership and the Joint Venture reimburse the affiliates for
their allocable share of the affiliates' operational costs. The total amount
charged to the partnership and the Joint Venture approximated $31,800 for the
three months ended March 31, 2000. No management fee is payable to the
affiliates by the partnership and the Joint Venture and there is no duplication
of reimbursed expenses and costs paid to 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 Communications. Falcon Communications
charged the partnership and the Joint Venture for these costs based on an
estimate of what the corporate general partner could negotiate for such
programming services for the 15 partnerships managed by the corporate general
partner as a group. Charter charges the partnership and the Joint Venture for
these costs based on its costs. The partnership and the Joint Venture recorded
programming fee expense of $245,600 during the three months ended March 31,
2000. Programming fees are included in service costs in the statements of
operations.
The cable system in one of the partnership's franchise areas does not
have head-end equipment to receive and retransmit its cable television signal.
The system relies on another partnership managed by the corporate general
partner 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
Earnings and losses per unit of limited partnership interest is based
on the average number of units outstanding during the periods presented. For
this purpose, earnings and losses have been allocated 99% to the limited
partners and 1% to the general partners. The general partners do not own units
of partnership interest in the partnership, but rather hold a participation
interest in the income, losses and distributions of the partnership.
4. SUBSEQUENT EVENTS
In April 2000, the corporate general partner signed two non-binding
letters of intent, which, together, cover the sale of all of the partnership's
and Joint Venture's cable television systems. The sale of all or substantially
all of the partnership's and Joint Venture's assets is subject to approval by a
majority of the limited partners, and any sale agreement will provide for
standard closing conditions, such as obtaining regulatory approvals. Each of the
prospective buyers seeks to purchase a large group of cable television systems,
which includes certain of the partnership's and Joint Venture's systems as well
as certain systems owned by other partnerships under the common control of the
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ENSTAR INCOME PROGRAM IV-3, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
======================================
4. SUBSEQUENT EVENTS (Continued)
partnership's corporate general partner. There is no assurance that both
definitive sale agreements will be executed, and if so, whether the proposed
sales will be consummated. Even if the limited partners do approve the sales,
consummation of the sales is subject to certain factors beyond the partnership's
control, including receipt of regulatory approvals and approval of the sales by
other selling partnerships.
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<PAGE>
ENSTAR INCOME PROGRAM IV-3, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
======================================
5. EQUITY IN NET ASSETS OF JOINT VENTURE
Each of the partnership and two affiliated partnerships (Enstar Income
Program IV-1, L.P. and Enstar Income Program IV-2, L.P.) owns one-third (1/3) of
the Joint Venture. Each of the co-partners shares 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 March 31, 2000 and December 31, 1999, and the results of its operations
for the three months ended March 31, 2000 and 1999, have been included. The
results of operations for the three months ended March 31, 2000 are not
necessarily indicative of results for the entire year.
<TABLE>
<CAPTION>
December 31, March 31,
1999* 2000
------------------ -----------------
(Unaudited)
<S> <C> <C>
Current assets $ 1,807,500 $ 1,792,500
Investment in cable television properties, net 1,730,200 1,680,400
Other assets 1,200 900
------------------ -----------------
$ 3,538,900 $ 3,473,800
================== =================
Current liabilities $ 222,700 $ 208,100
Venturers' capital 3,316,200 3,265,700
------------------ -----------------
$ 3,538,900 $ 3,473,800
================== =================
</TABLE>
*As presented in the audited financial statements.
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<CAPTION>
ENSTAR INCOME PROGRAM IV-3, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
======================================
5. EQUITY IN NET ASSETS OF JOINT VENTURE (Continued)
Unaudited
---------------------------------------
Three months ended
March 31,
---------------------------------------
1999 2000
------------------ -----------------
<S> <C> <C>
REVENUES $ 490,500 $ 498,500
------------------ -----------------
OPERATING EXPENSES:
Service costs 164,800 179,900
General and administrative expenses 53,300 75,400
General Partner management fees and reimbursed expenses 70,300 65,900
Depreciation and amortization 54,400 56,200
------------------ -----------------
342,800 377,400
------------------ -----------------
OPERATING INCOME 147,700 121,100
OTHER INCOME (EXPENSE):
Interest income 14,000 19,900
Interest expense (2,600) (2,500)
------------------ -----------------
NET INCOME $ 159,100 $ 138,500
================== =================
</TABLE>
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<PAGE>
ENSTAR INCOME PROGRAM IV-3, L.P.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
The 1992 Cable Act required the Federal Communications Commission to,
among other things, implement extensive regulation of the rates charged by cable
television systems for basic and programming service tiers, installation, and
customer premises equipment leasing. Compliance with those rate regulations has
had a negative impact on our revenues and cash flow. The 1996 Telecommunications
Act substantially changed the competitive and regulatory environment for cable
television and telecommunications service providers. Among other changes, the
1996 Telecommunications Act ended the regulation of cable programming service
tier rates on March 31, 1999. There can be no assurance as to what, if any,
further action may be taken by the FCC, Congress or any other regulatory
authority or court, or their effect on our business. Accordingly, our historical
financial results as described below are not necessarily indicative of future
performance.
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 is owned equally
by the partnership and two affiliated partnerships (Enstar Income Program IV-1,
L.P. and Enstar Income Program IV-2, L.P.). The partnership participates equally
with its co-partners under the Joint Venture's partnership agreement with
respect to capital contributions, obligations and commitments, and results of
operations. Accordingly, in considering the financial condition and results of
operations for the partnership, consideration must also be made of those matters
as they relate to the Joint Venture. The following discussion reflects such
consideration, and with respect to results of operations, a separate discussion
is provided for each entity.
RESULTS OF OPERATIONS
The Partnership
---------------
Our revenues decreased from $644,900 to $634,100, or by 1.7%, for the
three months ended March 31, 2000 as compared to the first three months of 1999.
Of the $10,800 decrease, $31,000 was due to decreases in the number of
subscriptions for basic, premium and tier services and $1,400 was due to
decreases in other revenue producing items. The decrease was partially offset by
a $21,600 increase due to increases in regulated service rates that we
implemented in 1999. As of March 31, 2000, the partnership had approximately
5,700 basic subscribers and 1,300 premium service units.
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<PAGE>
ENSTAR INCOME PROGRAM IV-3, L.P.
RESULTS OF OPERATIONS (Continued)
Our service costs decreased from $242,300 to $215,300, or by 11.1%,
for the three months ended March 31, 2000 as compared to the first quarter of
1999. Service costs represent costs directly attributable to providing cable
services to customers. The decrease was primarily due to decreases in
programming fees, system power costs and pole rent expense. Programming fees
decreased as a result of lower rates that Charter has extended to the
partnership.
Our general and administrative expenses increased from $101,000 to
$102,000, or by less than 1.0%, for the three months ended March 31, 2000 as
compared to the corresponding period in 1999, primarily due to decreases in
marketing expenses.
Management fees and reimbursed expenses decreased from $85,800 to
$78,900, or by 8.0%, for the three months ended March 31, 2000 as compared to
the three months ended March 31, 1999. Management fees decreased in direct
relation to decreased revenues as discussed above. Reimbursed expenses decreased
due to lower allocated personnel costs, telephone expense and corporate office
expenses.
Our depreciation and amortization expense decreased from $129,900 to
$102,200, or by 21.3%, for the three months ended March 31, 2000 as compared to
the corresponding period in 1999, due to the impact of certain tangible assets
becoming fully depreciated and certain intangible assets becoming fully
amortized.
Our operating income increased from $85,900 to $135,700, or by 58.0%,
for the three months ended March 31, 2000 as compared to the equivalent period
in 1999, primarily due to decreases in programming fees, marketing expenses and
depreciation and amortization as discussed above.
Our interest income, net of interest expense, increased from $5,200 to
$9,600, or by 84.6%, for the three months ended March 31, 2000 as compared to
the corresponding period 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
$144,100 to $191,500, or by 32.9%, for the three months ended March 31, 2000 as
compared to the first three months of 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, or 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 33.5% to 37.5% during the three months ended March 31,
2000 as compared to the corresponding
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ENSTAR INCOME PROGRAM IV-3, L.P.
RESULTS OF OPERATIONS (Continued)
period in 1999. The increase was primarily due to lower programming fees and
marketing expenses as described above. EBITDA increased from $215,800 to
$237,900, or by 10.2%, for the three months ended March 31, 2000 as compared to
the corresponding period in 1999.
Distributions to Partners
-------------------------
The partnership distributed $125,900 to our partners during the three
months ended March 31, 2000. The Joint Venture distributed $63,000 to the
partnership during the three months ended March 31, 2000.
The Joint Venture
-----------------
The Joint Venture's revenues increased from $490,500 to $498,500, or
by 1.6%, for the three months ended March 31, 2000 as compared to the first
three months of 1999. Of the $8,000 increase, $12,000 was due to increases in
regulated service rates that the Joint Venture implemented in 1999 and $4,600
was due to other revenue producing items. These increases were partially offset
by an $8,600 decrease due to decreases in the number of subscriptions for basic,
premium, tier and equipment rental services. As of March 31, 2000, the Joint
Venture had approximately 4,500 basic subscribers and 1,100 premium service
units.
Service costs increased from $164,800 to $179,900, or by 9.2%, for the
three months ended March 31, 2000 as compared to the equivalent period in 1999.
Service costs represent costs directly attributable to providing cable services
to customers. The increase was primarily due to higher personnel costs resulting
from staff additions and due to increases in allocated wages from affiliates of
the corporate general partner.
General and administrative expenses increased from $53,300 to $75,400,
or by 41.5%, for the three months ended March 31, 2000 as compared to the first
quarter of 1999. The increase was primarily due to higher professional fees,
primarily audit fees, and greater allocated personnel costs from affiliates of
the corporate general partner.
Management fees and reimbursed expenses decreased from $70,300 to
$65,900, or by 6.3%, for the three months ended March 31, 2000 as compared to
1999. Management fees increased in direct relation to increased revenues as
discussed above. Reimbursed expenses decreased due to lower allocated personnel
costs, telephone expenses and corporate office expenses.
Depreciation and amortization expense increased from $54,400 to
$56,200, or by 3.3%, for the three months ended March 31, 2000 as compared to
the corresponding quarter of 1999, due to the depreciation of plant asset
additions.
Operating income decreased from $147,700 to $121,100, or by 18.0%, for
the three months ended March 31, 2000 as compared to the three months ended
March 31, 1999. The decrease was primarily due to increases in personnel costs
as discussed above.
Interest income, net of interest expense, increased from $11,400 to
$17,400, or by 52.6%, for the three months ended March 31, 2000 as compared to
the first three months of 1999. The
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<PAGE>
ENSTAR INCOME PROGRAM IV-3, L.P.
RESULTS OF OPERATIONS (Continued)
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
decreased from $159,100 to $138,500, or by 12.9%, for the three months ended
March 31, 2000 as compared to the first three months of 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, or 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 41.2% to 35.6% during the three months
ended March 31, 2000, as compared to the corresponding period in 1999. The
decrease was primarily due to higher personnel costs as described above. EBITDA
decreased from $202,100 to $177,300, or by 12.3%, for the three months ended
March 31, 2000 as compared to the corresponding period in 1999.
LIQUIDITY AND CAPITAL RESOURCES
The partnership's primary objective, having invested its net offering
proceeds in cable systems and the Joint Venture, is to distribute to its
partners all available cash flow from operations and proceeds from the sale of
cable systems, if any, after providing for expenses, debt service and capital
requirements relating to the expansion, improvement and upgrade of its cable
systems.
In accordance with the partnership agreement, the corporate general
partner has implemented a plan for liquidating the partnership. In connection
with that strategy, the corporate general partner has entered into an agreement
with a cable broker to market the partnership's and Joint Venture's cable
systems to third parties. Should the partnership and Joint Venture receive
offers from third parties for such assets and should the corporate general
partner enter into one or more agreements to sell such assets, the corporate
general partner will prepare a proxy or written consent solicitation for
submission to the limited partners for the purpose of approving or disapproving
such sale. If all of the partnership's assets are sold, the corporate general
partner will proceed to liquidate the partnership and Joint Venture following
the settlement of their final liabilities. We can give no assurance, however,
that we will be able to generate a sale of the partnership's or Joint Venture's
cable assets.
In April 2000, the corporate general partner signed two non-binding
letters of intent, which, together, cover the sale of all of the partnership's
and Joint Venture's cable television systems. The sale of all or substantially
all of the partnership's and Joint Venture's assets is subject to approval by a
majority of the limited partners, and any sale agreement will provide for
standard closing conditions, such as obtaining regulatory approvals. Each of the
prospective buyers seeks to purchase a large group of cable television systems,
which includes certain of the partnership's and Joint Venture's
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<PAGE>
ENSTAR INCOME PROGRAM IV-3, L.P.
LIQUIDITY AND CAPITAL RESOURCES (Continued)
systems as well as certain systems owned by other partnerships under the common
control of the partnership's corporate general partner. There is no assurance
that both definitive sale agreements will be executed, and if so, whether the
proposed sales will be consummated. Even if the limited partners do approve the
sales, consummation of the sales is subject to certain factors beyond the
partnership's control, including receipt of regulatory approvals and approval of
the sales by other selling partnerships.
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 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 $6,400 and $4,600,
respectively, during the three months ended March 31, 2000 on their cable
systems.
The partnership paid distributions totaling $125,900 during the three
months ended March 31, 2000. However, there can be no assurances regarding the
level, timing or continuation of future distributions.
Falcon Communications 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 Communications through November 12, 1999 and
currently managed by Charter, including those of the partnership and the 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.
We have not experienced any system failures or other disruptions
caused by Year 2000 problems since January 1, 2000 through the date of this
report, and do not anticipate that we will encounter any Year 2000 problems
going forward. We did not incur expense in the first three months of 2000
related to the Year 2000 date change.
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<PAGE>
ENSTAR INCOME PROGRAM IV-3, L.P.
LIQUIDITY AND CAPITAL RESOURCES (Continued)
Three months ended March 31, 2000 and 1999
------------------------------------------
Operating activities provided $30,300 more cash during the three
months ended March 31, 2000 than in the corresponding period of 1999. The
partnership used $122,500 more cash to pay liabilities owed to the corporate
general partner and third party creditors due to differences in the timing of
payments. Changes in accounts receivable, prepaid expenses and other assets
provided $126,300 more cash in the first three months of 2000 than in the
comparable 1999 period due to differences in the timing of receivable
collections and the payment of prepaid expenses.
Investing activities provided $68,900 more cash in the three months
ended March 31, 2000 than in the corresponding quarter of 1999. The change was
primarily due to a $63,000 increase in distributions from the Joint Venture and
a $5,900 decrease in capital expenditures.
INFLATION
Certain of the Joint Ventures' 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 Ventures are able to increase their
service rates periodically, of which there can be no assurance.
-15-
<PAGE>
ENSTAR INCOME PROGRAM IV-3, L.P.
PART II. OTHER INFORMATION
ITEMS 1-4. Not applicable.
ITEM 5. Other Information.
In April 2000, the corporate general partner signed two
non-binding letters of intent, which, together, cover the sale
of all of the partnership's and Joint Venture's cable
television systems. The sale of all or substantially all of
the partnership's and Joint Venture's assets is subject to
approval by a majority of the limited partners, and any sale
agreement will provide for standard closing conditions, such
as obtaining regulatory approvals. Each of the prospective
buyers seeks to purchase a large group of cable television
systems, which includes certain of the partnership's and Joint
Venture's systems as well as certain systems owned by other
partnerships under the common control of the partnership's
corporate general partner. There is no assurance that both
definitive sale agreements will be executed, and if so,
whether the proposed sales will be consummated. Even if the
limited partners do approve the sales, consummation of the
sales is subject to certain factors beyond the partnership's
control, including receipt of regulatory approvals and
approval of the sales by other selling partnerships.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27.1 - Financial Data Schedule.
(b) No reports on Form 8-K were filed during the quarter for
which this report is filed
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ENSTAR INCOME PROGRAM IV-3, L.P.
a GEORGIA LIMITED PARTNERSHIP
-----------------------------
(Registrant)
By: ENSTAR COMMUNICATIONS CORPORATION
General Partner
Date: May 12, 2000 By: /s/ Kent D. Kalkwarf
---------------------
Kent D. Kalkwarf
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer
and Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT MARCH 31, 2000 AND THE STATEMENTS OF OPERATIONS FOR THE THREE MONTHS
ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000783765
<NAME> Enstar IV-3
<MULTIPLIER> 1
<CURRENCY> US$
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 1,212,500
<SECURITIES> 0
<RECEIVABLES> 17,400
<ALLOWANCES> 2,700
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 6,645,800
<DEPRECIATION> 4,978,100
<TOTAL-ASSETS> 4,179,600
<CURRENT-LIABILITIES> 303,900
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,179,600
<SALES> 0
<TOTAL-REVENUES> 634,100
<CGS> 0
<TOTAL-COSTS> 498,400
<OTHER-EXPENSES> (12,200)
<LOSS-PROVISION> 7,200
<INTEREST-EXPENSE> 2,600
<INCOME-PRETAX> 191,500
<INCOME-TAX> 0
<INCOME-CONTINUING> 191,500
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 191,500
<EPS-BASIC> 4.75
<EPS-DILUTED> 0
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