<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 September 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 0-16779
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Enstar Income/Growth Program Five-A, L.P.
--------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
Georgia 58-1712898
------------------------------------------------------------------ ------------------------------------------
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
12444 Powerscourt Dr., Suite 100
St. Louis, Missouri 63131
-------------------------------------------------------------- ------------------------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
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> 2
PART I - FINANCIAL INFORMATION
ENSTAR INCOME/GROWTH PROGRAM FIVE-A, L.P.
CONDENSED BALANCE SHEETS
========================================
<TABLE>
<CAPTION>
December 31, September 30,
1999* 2000
--------------- ---------------
(Unaudited)
<S> <C> <C>
ASSETS:
Cash $ 39,500 $ 18,700
Equity in net assets of Joint Venture 4,601,600 4,880,000
--------------- ---------------
$ 4,641,100 $ 4,898,700
=============== ===============
LIABILITIES AND PARTNERSHIP CAPITAL
-----------------------------------
LIABILITIES:
Accounts payable $ 1,600 $ 3,700
Due to affiliates 2,000 39,300
--------------- ---------------
3,600 43,000
--------------- ---------------
PARTNERSHIP CAPITAL (DEFICIT):
General Partner (77,800) (75,600)
Limited Partners 4,715,300 4,931,300
--------------- ---------------
TOTAL PARTNERSHIP CAPITAL 4,637,500 4,855,700
--------------- ---------------
$ 4,641,100 $ 4,898,700
=============== ===============
</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.
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<PAGE> 3
ENSTAR INCOME/GROWTH PROGRAM FIVE-A, L.P.
CONDENSED STATEMENTS OF OPERATIONS
================================
<TABLE>
<CAPTION>
Unaudited
-----------------------------------
Three months ended
September 30,
-----------------------------------
1999 2000
---------------- -----------------
<S> <C> <C>
OPERATING EXPENSES:
General and administrative expenses $ (12,800) $ (16,000)
---------------- ----------------
LOSS BEFORE EQUITY IN NET INCOME
OF JOINT VENTURE (12,800) (16,000)
EQUITY IN NET INCOME OF JOINT VENTURE 70,500 30,900
---------------- ----------------
NET INCOME $ 57,700 $ 14,900
================ ================
Net income allocated to General Partner $ 600 $ 100
================ ================
Net income allocated to Limited Partners $ 57,100 $ 14,800
================ ================
NET INCOME PER UNIT OF LIMITED
PARTNERSHIP INTEREST $ 0.96 $ 0.25
================ ================
AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD 59,766 59,766
================ ================
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
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<PAGE> 4
ENSTAR INCOME/GROWTH PROGRAM FIVE-A, L.P.
CONDENSED STATEMENTS OF OPERATIONS
================================
<TABLE>
<CAPTION>
Unaudited
----------------------------------
Nine months ended
September 30,
----------------------------------
1999 2000
---------------- ----------------
<S> <C> <C>
OPERATING EXPENSES:
General and administrative expenses $ (35,800) $ (60,200)
---------------- ----------------
LOSS BEFORE EQUITY IN NET INCOME
OF JOINT VENTURE (35,800) (60,200)
EQUITY IN NET INCOME OF JOINT VENTURE 128,900 278,400
---------------- ----------------
NET INCOME $ 93,100 $ 218,200
================ ================
Net income allocated to General Partner $ 900 $ 2,200
================ ================
Net income allocated to Limited Partners $ 92,200 $ 216,000
================ ================
NET INCOME PER UNIT OF LIMITED
PARTNERSHIP INTEREST $ 1.54 $ 3.61
================ ================
AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD 59,766 59,766
================ ================
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
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<PAGE> 5
ENSTAR INCOME/GROWTH PROGRAM FIVE-A, L.P.
CONDENSED STATEMENTS OF CASH FLOWS
================================
<TABLE>
<CAPTION>
Unaudited
-----------------------------------
Nine months ended
September 30,
-----------------------------------
1999 2000
---------------- -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 93,100 $ 218,200
Adjustments to reconcile net income to net cash
from operating activities:
Equity in net income of Joint Venture (128,900) (278,400)
Changes in:
Accounts payable and due to affiliates (5,200) 39,400
---------------- ----------------
Net cash from operating activities (41,000) (20,800)
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions from Joint Venture 45,000 -
---------------- ----------------
INCREASE (DECREASE) IN CASH 4,000 (20,800)
CASH AT BEGINNING OF PERIOD 20,500 39,500
---------------- ----------------
CASH AT END OF PERIOD $ 24,500 $ 18,700
================ ================
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
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<PAGE> 6
ENSTAR INCOME/GROWTH PROGRAM FIVE-A, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
==============================
1. INTERIM FINANCIAL STATEMENTS
The accompanying condensed interim financial statements for
Enstar Income/Growth Program Five-A, L.P. (the "Partnership") as of September
30, 2000, and for the three and nine months ended September 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 nine months
ended September 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 Manager has entered into an
identical agreement with Enstar Cable of Cumberland Valley (the "Joint
Venture"), a Georgia general partnership of which the Partnership is a
co-general partner, except that the Joint Venture pays the Manager only a 4%
management fee. The Joint Venture's management fee expense approximated $65,500
and $196,000 for the three and nine months ended September 30, 2000,
respectively. For the three and nine months ended September 30, 1999, the Joint
Venture's management fee expense approximated $67,800 and $203,700,
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 $16,400
and $49,000 during the three and nine months ended September 30, 2000,
respectively. For the three and nine months ended September 30, 1999, the Joint
Venture's management fee expense to ECC approximated $16,900 and $50,900,
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 also 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 Partnership and the Joint Venture. Such services were provided by Falcon
Communications, L.P. and its affiliates (collectively, "Falcon") prior to
November 12, 1999. This results from the fact that there are no employees
directly employed by the Partnership and the Joint Venture. These expenses are
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<PAGE> 7
ENSTAR INCOME/GROWTH PROGRAM FIVE-A, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS - (CONTINUED)
==============================
charged to the properties served based primarily on the Partnership's allocable
share of operational costs associated with the services provided. The Joint
Venture reimburses the affiliates for the Partnership's allocable share of the
affiliates' costs. The total amount charged to the Joint Venture for these costs
approximated $291,200 and $821,100, for the three and nine months ended
September 30, 2000, respectively. For the three and nine months ended September
30, 1999, the total amount charged to the Joint Venture for these costs
approximated $66,800 and $195,300, respectively. There is no duplication of
reimbursed expenses 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. Falcon charged the Joint
Venture for these costs based on an estimate of what ECC could negotiate for
such programming services for the 14 partnerships ECC managed as a group.
Charter charges the Joint Venture for these costs based on its costs. The Joint
Venture recorded programming fee expense of $280,200 and $783,200 for the three
and nine months ended September 30, 2000, respectively. For the three and nine
months ended September 30, 1999, programming fee expense was $360,600 and
$1,054,900, respectively.
In the normal course of business, the Joint Venture paid
interest and principal to Enstar Finance Company, LLC, its primary lender and a
subsidiary of ECC, when there were amounts outstanding under the facility and
pays a commitment fee to Enstar Finance Company, LLC, on the unborrowed portion
of its facility.
3. NET INCOME PER UNIT OF LIMITED PARTNERSHIP INTEREST
Net income per unit of limited partnership interest is based
on the average number of units outstanding during the periods presented. For
this purpose, net income has been allocated 99% to the Limited Partners and 1%
to the General Partner. The General Partner does not own units of partnership
interest in the Partnership, but rather holds a participation interest in the
income, losses and distributions of the Partnership.
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<PAGE> 8
ENSTAR INCOME/GROWTH PROGRAM FIVE-A, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS - (CONTINUED)
==============================
4. EQUITY IN NET ASSETS OF JOINT VENTURE
The Partnership and an affiliated partnership (Enstar
Income/Growth Program Five-B, L.P.) each own 50% 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 September 30, 2000,
and December 31, 1999, and the results of its operations for the three and nine
months ended September 30, 2000 and 1999, have been included. The results of
operations for the three and nine months ended September 30, 2000, are not
necessarily indicative of results for the entire year.
<TABLE>
<CAPTION>
December 31, September 30,
1999* 2000
------------------ -----------------
(Unaudited)
<S> <C> <C>
Current assets $ 1,361,700 $ 2,278,000
Investment in cable television properties, net 9,104,800 8,052,700
Other assets 55,300 31,800
---------------- ----------------
$ 10,521,800 $ 10,362,500
================ ================
Current liabilities $ 1,318,600 $ 602,400
Venturers' capital 9,203,200 9,760,100
---------------- ----------------
$ 10,521,800 $ 10,362,500
================ ================
</TABLE>
---------
* Agrees with audited balance sheet included in the Partnership's Annual
Report on Form 10-K.
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<PAGE> 9
ENSTAR INCOME/GROWTH PROGRAM FIVE-A, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS - (CONTINUED)
==============================
<TABLE>
<CAPTION>
Unaudited
------------------------------------
Three months ended
September 30,
------------------------------------
1999 2000
----------------- -----------------
<S> <C> <C>
REVENUES $ 1,693,700 $ 1,638,400
----------------- -----------------
OPERATING EXPENSES:
Service costs 698,000 578,400
General and administrative expenses 231,900 160,000
General partner management fees
and reimbursed expenses 151,500 373,100
Depreciation and amortization 439,700 450,400
----------------- -----------------
1,521,100 1,561,900
----------------- -----------------
OPERATING INCOME 172,600 76,500
OTHER INCOME (EXPENSE):
Interest income 13,700 3,900
Interest expense (45,200) (18,500)
----------------- -----------------
NET INCOME $ 141,100 $ 61,900
================= =================
</TABLE>
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<PAGE> 10
ENSTAR INCOME/GROWTH PROGRAM FIVE-A, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS - (CONTINUED)
==============================
<TABLE>
<CAPTION>
Unaudited
------------------------------------
Nine months ended
September 30,
------------------------------------
1999 2000
----------------- -----------------
<S> <C> <C>
REVENUES $ 5,092,600 $ 4,900,700
--------------- ----------------
OPERATING EXPENSES:
Service costs 2,118,900 1,382,800
General and administrative expenses 773,700 522,900
General partner management fees
and reimbursed expenses 449,900 1,066,100
Depreciation and amortization 1,377,600 1,354,400
--------------- ----------------
4,720,100 4,326,200
--------------- ----------------
OPERATING INCOME 372,500 574,500
OTHER INCOME (EXPENSE):
Interest income 30,400 35,400
Interest expense (145,000) (53,100)
--------------- ----------------
NET INCOME $ 257,900 $ 556,800
=============== ================
</TABLE>
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<PAGE> 11
ENSTAR INCOME/GROWTH PROGRAM FIVE-A, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS - (CONTINUED)
==============================
5. SALE OF CABLE SYSTEMS
On August 8, 2000, (as amended on September 29, 2000) the
Joint Venture, together with certain affiliates, (collectively, the "Sellers")
entered into a purchase and sale agreement (the "Agreement") with Multimedia
Acquisition Corp., an affiliate of Gans Multimedia Partnership, (the
"Purchaser"). The Agreement provides for the Purchaser to acquire the assets
comprising the Joint Venture, as well as certain assets of other affiliates.
The aggregate purchase price payable to the Sellers pursuant
to the Agreement is $95,574,600 in cash (subject to normal closing adjustments).
Of that amount, $12,739,500 (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.
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<PAGE> 12
ENSTAR INCOME/GROWTH PROGRAM FIVE-A, 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.
All of our cable television business operations are conducted
through our participation as a partner with a 50% interest in Enstar Cable of
Cumberland Valley (the "Joint Venture"). Our participation is equal to our
affiliated partner (Enstar Income/Growth Program Five-B, L.P.) under the joint
venture agreement with respect to capital contributions, obligations and
commitments, and results of operations. Accordingly, in considering our
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
All of our cable television business operations are conducted
through our participation as a partner in the Joint Venture. The Joint Venture
did not distribute cash flow from its operations to the Partnership and the
Partnership did not pay distributions to its partners during the three and the
nine months ended September 30, 2000.
THE JOINT VENTURE
The Joint Venture's revenues decreased from $1,693,700 to
$1,638,400, or by 3.3%, and from $5,092,600 to $4,900,700, or by 3.8%, for the
three and nine months ended September 30, 2000, as compared to the corresponding
periods in 1999. Of the $55,300 decrease for the three months ended September
30, 2000, $66,400 was due to decreases in the number of subscriptions for basic,
premium, tier and equipment rental services and $9,300 was due to decreases in
other revenue producing items. The decreases were partially offset by a $20,400
increase in regulated service rates that were implemented in 2000. Of the
$191,900 decrease for the nine months ended September 30, 2000, $190,800 was due
to a decrease in the number of subscribers for basic, premium and tier equipment
rental services and $21,500 was due to decreases in other revenue producing
items. The decreases were partially offset by a $20,400 increase in regulated
service rates that were implemented in 2000. As of September 30, 2000, the Joint
Venture had approximately 14,700 basic subscribers and 4,200 premium service
units.
Effective with the acquisition of Falcon Communications, L.P.
(Falcon) by Charter Communications Holdings Company, LLC (Charter) on November
12, 1999, certain activities
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<PAGE> 13
ENSTAR INCOME/GROWTH PROGRAM FIVE-A, L.P.
previously incurred at the Joint Venture and expensed through service cost and
general and administrative expense have been either eliminated by Charter or
have been reimbursed by the Joint Venture based on Charter's costs incurred.
These reimbursed costs are included in general partner management fees and
reimbursed expenses on the Joint Venture's statements of operations. The total
of service costs, general and administrative expenses and general partner
management fees and reimbursed expenses increased from $1,081,400 to $1,111,500,
or by 2.8%, and decreased from $3,342,500 to $2,971,800, or by 11.1%, for the
three and nine months ended September 30, 2000, as compared to the corresponding
periods in 1999.
Service costs decreased from $698,000 to $578,400, or by
17.1%, and from $2,118,900 to $1,382,800, or by 34.7%, for the three and nine
months ended September 30, 2000, as compared to the corresponding periods in
1999. Service costs represent costs directly attributable to providing cable
services to customers. The decrease was primarily due to lower programming fees
resulting from lower rates that Charter has extended to the Joint Venture and
certain costs incurred by the Joint Venture prior to the Charter acquisition
that are now incurred by Charter and reimbursed by the Joint Venture, as
discussed above.
General and administrative expenses decreased from $231,900 to
$160,000, or by 31.0%, and from $773,700 to $522,900, or by 32.4%, for the three
and nine months ended September 30, 2000, as compared to the corresponding
periods in 1999. The decrease was primarily due to decreases in marketing, bad
debt expenses and certain costs incurred by the Joint Venture prior to the
Charter acquisition that are now incurred by Charter and reimbursed by the Joint
Venture, as discussed above.
General partner management fees and reimbursed expenses
increased from $151,500 to $373,100, or by 146.3%, and from $449,900 to
$1,066,100, or by 137.0%, for the three and nine months ended September 30,
2000, as compared to the corresponding periods in 1999. As discussed above,
Charter now performs certain management and operational functions formerly
performed by the Joint Venture. This has resulted in more reimbursable costs to
the Joint Venture and lower service costs and general and administrative
expenses for the Joint Venture. In addition, for the three months ended
September 30, 2000, the General Partner incurred additional bank fees, which are
included in reimbursed expenses.
Depreciation and amortization expense increased from $439,700
to $450,400, or by 2.4%, and decreased from $1,377,600 to $1,354,400, or by
1.7%, for the three and nine months ended September 30, 2000, as compared to the
corresponding periods in 1999. The increase for the three months is due to
additional depreciation related to plant asset additions in the third quarter.
The decrease for the nine months is due to the effect of certain intangible
assets becoming fully amortized in the fourth quarter of 1999.
Due to the factors described above, operating income decreased
from $172,600 to $76,500, or by 55.7%, and increased from $372,500 to $574,500,
or by 54.2%, for the three and nine months ended September 30, 2000, as compared
to the corresponding periods in 1999.
Interest income decreased from $13,700 to $3,900, or by 71.5%,
and increased from $30,400 to $35,400, or by 16.4%, for the three and nine
months ended September 30, 2000, as compared to the corresponding periods in
1999. For the three months ended September 30, 2000,
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<PAGE> 14
ENSTAR INCOME/GROWTH PROGRAM FIVE-A, L.P.
lower cash balances available for investment were maintained, as compared to
higher average cash balances available for investment that were maintained
during the first six months of 2000.
Interest expense decreased from $45,200 to $18,500, or by
59.1%, and from $145,000 to $53,100, or by 63.4%, for the three and nine months
ended September 30, 2000, as compared to the corresponding periods in 1999. The
decrease is due to the repayment of outstanding borrowings during 1999. Interest
expense for the periods ended September 30, 2000 and 1999, includes commitment
fees on the unborrowed portion of the Joint Venture's loan facility.
Due to the factors described above, net income decreased from
$141,100 to $61,900, or by 56.1%, and increased from $257,900 to $556,800, or by
115.9%, for the three and nine months ended September 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 36.2% to 32.2% and
increased from 34.4% to 39.4% during the three and nine months ended September
30, 2000, as compared to the corresponding periods in 1999. The decrease for the
three months ended September 30, 2000, was primarily due to the additional bank
fees included in reimbursed expenses. The increase for the nine months ended
September 30, 2000, was primarily due to decreases in programming fees as
described above. EBITDA decreased from $612,300 to $526,900, or by 13.9% and
increased from $1,750,100 to $1,928,900, or by 10.2%, during the three and nine
months ended September 30, 2000, as compared to the corresponding periods in
1999.
LIQUIDITY AND CAPITAL RESOURCES
Our primary objective is to distribute to our partners all
available cash flow received from the Joint Venture's operations and proceeds
from the sale of the 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, our corporate general partner, has implemented a
plan for liquidating the Partnership. On August 8, 2000, (as amended on
September 29, 2000) the Joint Venture, together with certain affiliates,
(collectively, the "Sellers") entered into a purchase and sale agreement (the
"Agreement") with Multimedia Acquisition Corp., an affiliate of Gans Multimedia
Partnership, (the "Purchaser"). The Agreement provides for the Purchaser to
acquire the assets comprising the Joint Venture, as well as certain assets of
other affiliates.
The aggregate purchase price payable to the Sellers pursuant
to the Agreement is $95,574,600 in cash (subject to normal closing adjustments).
Of that amount, $12,739,500 (subject
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<PAGE> 15
ENSTAR INCOME/GROWTH PROGRAM FIVE-A, L.P.
to closing adjustments) is payable to the Partnership. The allocation of the
purchase price among each of the Sellers was assigned by the Purchaser for each
of the systems.
The Purchaser's obligation to acquire the cable systems is
subject to numerous closing conditions, including without limitation: (a)
receipt of the necessary governmental consents to transfer franchises covering
an aggregate of 90% of the subscribers of all of the Sellers; (b) receipt of
certain other material consents and approvals required for the consummation of
the sale; (c) receipt of the necessary approvals of the Limited Partners of each
Seller; and (d) other standard closing conditions. With respect to clause (c)
above, completion of the transaction is contingent on the Limited Partners of
the Partnership and the other selling affiliates voting to approve the sale.
Enstar Communications Corporation is currently preparing a
proxy for submission to the Partnership's Limited Partners for the purpose of
approving or disapproving the sale. If all of the 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 Joint Venture relies upon the availability of cash
generated from operations and possible borrowings to fund its ongoing expenses,
debt service and capital requirements. The Joint Venture was required to upgrade
its system in Campbell County, Tennessee under a provision of its franchise
agreement. Upgrade expenditures are budgeted at a total estimated cost of
approximately $1,061,000. The upgrade began in 1998 and $126,500 had been
incurred as of September 30, 2000. The franchise agreement required the project
to be completed by January 2000. The Joint Venture did not meet this
requirement, although it has commenced the upgrade. The franchising authority
has not given any indication that it intends to take action adverse to the Joint
Venture as the result of the Joint Venture's noncompliance with the upgrade
requirements in the franchise agreement. No assurances can be given that the
franchising authority will not take action that is adverse to the Joint Venture.
The Joint Venture is budgeted to spend approximately $697,300 in 2000 for plant
extensions, new equipment and system upgrades, including its upgrade in
Tennessee, of which $288,800 had been incurred as of September 30, 2000.
We believe that cash generated by operations of the Joint
Venture, together with available cash and proceeds from borrowings, will be
adequate to fund capital expenditures, debt service and other liquidity
requirements in 2000 and beyond. As a result, the Joint Venture intends to use
its cash for such purposes.
The Joint Venture is party to a loan agreement with Enstar
Finance Company, LLC, its primary lender and a subsidiary of Enstar
Communications Corporation. The loan agreement provides for a revolving loan
facility of $1,000,000. The Joint Venture paid its outstanding borrowings under
the facility during 1999 and presently has no borrowings outstanding under the
loan facility. The Joint Venture pays a commitment fee of 0.5% to Enstar Finance
Company, LLC, on the unborrowed portion of its facility. The Joint Venture's
management expects to increase borrowings under the facility in the future for
system upgrades and other liquidity requirements.
The Joint Venture's facility matures on August 31, 2001, at
which time all amounts then outstanding are due in full. Borrowings bear
interest at the lender's base rate (9.5% at September 30, 2000) plus 0.625%, or
at an offshore rate (6.74% at September 30, 2000) plus 1.875%. Under certain
circumstances, the Joint Venture is required to make mandatory prepayments,
which
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ENSTAR INCOME/GROWTH PROGRAM FIVE-A, L.P.
permanently reduce the maximum commitment under the facility. The facility
contains certain financial tests and other covenants including, among others,
restrictions on incurrence of indebtedness, investments, sales of assets,
acquisitions and other covenants, defaults and conditions.
The facility does not restrict the payment of distributions to
partners by the Partnership unless an event of default exists thereunder or the
Joint Venture's ratio of debt to cash flow is greater than 4 to 1. We believe it
is critical for the Joint Venture to conserve cash and borrowing capacity to
fund its anticipated capital expenditures. Accordingly, the Joint Venture does
not anticipate an increase in distributions to the Partnership in order to fund
distributions to partners at this time.
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 formerly
owned or managed by Falcon through November 12, 1999, and currently managed by
Charter, including those of the Joint Venture.
Approximately 94% of the Joint Venture's subscribers are
served by its system in Monticello, Kentucky and neighboring communities.
Significant damage to the system due to seasonal weather conditions or other
events could have a material adverse effect on the Joint Venture's liquidity and
cash flows. The Joint Venture continues to purchase insurance coverage in
amounts its management views as appropriate for all other property, liability,
automobile, workers' compensation and other types of insurable risks.
Operating activities of the Partnership used $20,200 less cash
during the nine months ended September 30, 2000, than in the corresponding
period in 1999. Cash provided by investing activities for the Partnership
decreased by $45,000 for the nine months ended September 30, 2000, as compared
to the corresponding period in 1999, due to decreased distributions from the
Joint Venture.
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, we do not believe that our financial
results have been, or will be, adversely affected by inflation in a material
way, provided that the Joint Venture is able to increase our service rates
periodically, of which there can be no assurance.
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ENSTAR INCOME/GROWTH PROGRAM FIVE-A, L.P.
PART II. OTHER INFORMATION
ITEMS 1-5. Not applicable.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Amendment dated September 29, 2000, of the Asset
Purchase Agreement dated August 8, 2000, by and
among Multimedia Acquisition Corp., as Buyer, and
Enstar Income Program II-1, L.P., Enstar Income
Program II-2, L.P., Enstar Income Program IV-3,
L.P., Enstar Income/Growth Program Six-A, L.P.,
Enstar IX, Ltd., Enstar XI, Ltd., Enstar IV/PBD
Systems Venture, Enstar Cable of Cumberland
Valley and Enstar Cable of Macoupin County, as
Sellers. (1)
27.1 Financial Data Schedule.*
(b) Reports on Form 8-K
None
-------
* Filed herewith
(1) Incorporated by reference to the report on Form 10-Q of Enstar Income
Program IV-1, L.P. filed on November 13, 2000 (File No. 00015705).
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<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/GROWTH PROGRAM FIVE-A, L.P.
a GEORGIA LIMITED PARTNERSHIP
-----------------------------
(Registrant)
By: ENSTAR COMMUNICATIONS CORPORATION
General Partner
<TABLE>
<S> <C>
Date: November 13, 2000 By: /s/ Kent D. Kalkwarf
-------------------------------------
Kent D. Kalkwarf
Executive Vice President and Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
</TABLE>
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EXHIBIT INDEX
Exhibit
Number Description
10.1 Amendment dated September 29, 2000, of the Asset Purchase
Agreement dated August 8, 2000, by and among Multimedia
Acquisition Corp., as Buyer, and Enstar Income Program II-1,
L.P., Enstar Income Program II-2, L.P., Enstar Income Program
IV-3, L.P., Enstar Income/Growth Program Six-A, L.P., Enstar
IX, Ltd., Enstar XI, Ltd., Enstar IV/PBD Systems Venture,
Enstar Cable of Cumberland Valley and Enstar Cable of Macoupin
County, as Sellers (incorporated by reference to the Current
Report on Form 10-Q of Enstar Income Program IV-1, L.P. filed
on November 13, 2000, File No. 00015705).
27.1 Financial Data Schedule.
E-1
