<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, 1996
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 0-16789
Enstar Income/Growth Program Five-B, L.P
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Georgia 58-1713008
- ------------------------------- ------------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
10900 Wilshire Boulevard, 15th Floor, Los Angeles, CA 90024
----------------------------------------------------- ----------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (310) 824-9990
--------------
FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE
LAST REPORT.
Indicate by check X whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
<PAGE> 2
PART I - FINANCIAL INFORMATION
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, September 30,
1995* 1996
------------ -------------
(unaudited)
<S> <C> <C>
ASSETS:
Cash $ 700 $ 12,500
Due from affiliates 4,300 --
Equity in net assets of joint venture 4,636,500 4,330,600
---------- ----------
$4,641,500 $4,343,100
========== ==========
LIABILITIES AND PARTNERSHIP CAPITAL
LIABILITIES:
Accounts payable $ 14,800 $ 19,100
Due to affiliate -- 400
---------- ----------
TOTAL LIABILITIES 14,800 19,500
---------- ----------
PARTNERSHIP CAPITAL (DEFICIT):
General partners (77,800) (80,800)
Limited partners 4,704,500 4,404,400
---------- ----------
TOTAL PARTNERSHIP CAPITAL 4,626,700 4,323,600
---------- ----------
$4,641,500 $4,343,100
========== ==========
</TABLE>
*As presented in the audited financial statements.
See accompanying notes to condensed financial statements.
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<PAGE> 3
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Unaudited
----------------------------------
Three months ended
September 30,
----------------------------------
1995 1996
--------- --------
<S> <C> <C>
OPERATING EXPENSES:
General and administrative expenses $ (6,100) $ (7,200)
--------- --------
OTHER EXPENSE:
Interest expense - (500)
--------- --------
LOSS BEFORE EQUITY IN NET LOSS
OF JOINT VENTURE (6,100) (7,700)
EQUITY IN NET LOSS OF JOINT VENTURE (163,100) (70,700)
--------- --------
NET LOSS $(169,200) $(78,400)
========= ========
NET LOSS PER UNIT OF LIMITED
PARTNERSHIP INTEREST $ (2.80) $ (1.30)
========= ========
AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD $ 59,830 $ 59,830
========= ========
</TABLE>
See accompanying notes to condensed financial statements.
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<PAGE> 4
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Unaudited
-----------------------------------
Nine months ended
September 30,
-----------------------------------
1995 1996
--------- ---------
<S> <C> <C>
OPERATING EXPENSES:
General and administrative expenses $ (21,100) $ (27,800)
--------- ---------
OTHER EXPENSE:
Interest expense (600) (900)
--------- ---------
LOSS BEFORE EQUITY IN NET LOSS
OF JOINT VENTURE (21,700) (28,700)
EQUITY IN NET LOSS OF JOINT VENTURE (414,600) (274,400)
--------- ---------
NET LOSS $(436,300) $(303,100)
========= =========
NET LOSS PER UNIT OF LIMITED
PARTNERSHIP INTEREST $ (7.22) $ (5.02)
========= =========
AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD 59,830 59,830
========= =========
</TABLE>
See accompanying notes to condensed financial statements.
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<PAGE> 5
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Unaudited
----------------------------------
Nine months ended
September 30,
----------------------------------
1995 1996
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(436,300) $(303,100)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Equity in net loss of Joint Venture 414,600 274,400
Increase (decrease) from changes in:
Due from affiliates (1,500) 4,300
Accounts payable and due to affiliate (25,100) 4,700
--------- ---------
Net cash used in operating activities (48,300) (19,700)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions from Joint Venture - 31,500
--------- ---------
INCREASE (DECREASE) IN CASH (48,300) 11,800
CASH AT BEGINNING OF PERIOD 49,300 700
--------- ---------
CASH AT END OF PERIOD $ 1,000 $ 12,500
========= =========
</TABLE>
See accompanying notes to condensed financial statements.
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<PAGE> 6
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL STATEMENTS
The accompanying condensed interim financial statements for
the three and nine months ended September 30, 1996 and 1995 are unaudited.
These condensed interim financial statements should be read in conjunction with
the audited financial statements and notes thereto included in the
Partnership's latest Annual Report on Form 10-K. In the opinion of management,
such statements reflect all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the results of such periods.
The results of operations for the three and nine months ended September 30,
1996 are not necessarily indicative of results for the entire year.
2. TRANSACTIONS WITH THE CORPORATE GENERAL PARTNER AND AFFILIATES
The Partnership has a management and service agreement (the
"Agreement") with a wholly-owned subsidiary of the Corporate General Partner
(the "Manager") pursuant to which it pays a monthly management fee of 5% of
gross revenues. The Agreement also provides that the Partnership will
reimburse the Manager for (i) direct expenses incurred on behalf of the
Partnership and (ii) the Partnership's allocable share of the Manager's
operational costs. No such costs and expenses were incurred or charged to the
Partnership for these services during the three and nine months ended September
30, 1996. The Manager has entered into an identical agreement with Enstar
Cable of Cumberland Valley, a Georgia general partnership, of which the
Partnership is co-general partner (the "Joint Venture"), 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 the Joint Venture's gross revenues in respect of
Enstar Communications Corporation's interest as the Corporate General Partner
of the Joint Venture. No management fee is payable to the Manager by the
Partnership in respect of any amounts received by the Partnership from the
Joint Venture, and there is no duplication of reimbursed expenses and costs of
the Manager. The Joint Venture paid the Manager management fees of
approximately $67,400 and $197,400 and reimbursement of expenses of
approximately $68,100 and $205,900 under its management agreement for the three
and nine months ended September 30, 1996. In addition, the Joint Venture paid
the Corporate General Partner approximately $16,900 and $49,400 in respect of
its 1% special interest during the three and nine months ended September 30,
1996. Management fees and reimbursed expenses due the General Partner are non-
interest bearing.
The Joint Venture also receives certain system operating
management services from 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 Joint Venture. The Joint Venture reimburses the
affiliates for the Joint Venture's allocable share of the affiliates'
operational costs. The total amount charged to the Joint Venture for these
costs approximated $139,000 and $434,200 for the three and nine months ended
September 30, 1996. No management fee is payable to the affiliates by the
Joint Venture and there is no duplication of reimbursed expenses and costs paid
to the Manager.
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<PAGE> 7
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(CONTINUED)
2. TRANSACTIONS WITH THE CORPORATE GENERAL PARTNER AND AFFILIATES
(CONCLUDED)
Certain programming services have been purchased through an
affiliate of the Joint Venture. In turn, the affiliate charges the Joint
Venture for these costs based on an estimate of what the Joint Venture could
negotiate for such programming services on a stand-alone basis. The Joint
Venture paid the affiliate $332,300 and $933,800 for programming services for
the three and nine months ended September 30, 1996. Programming fees are
included in service costs in the statements of operations for the three and
nine months ended September 30, 1996 and 1995.
3. EARNINGS PER UNIT OF LIMITED PARTNERSHIP INTEREST
Earnings and losses per unit of limited partnership interest
is based on the average number of units outstanding during the periods
presented. For this purpose, earnings and losses are allocated 99% to the
limited partners and 1% to the general partners.
4. RECLASSIFICATION
Certain 1995 amounts have been reclassified to conform to the
1996 presentation.
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<PAGE> 8
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(CONTINUED)
5. EQUITY IN NET ASSETS OF JOINT VENTURE
The Partnership and an affiliated partnership (Enstar
Income/Growth Program Five-A, 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, 1996
and December 31, 1995 and the results of its operations for the three and nine
months ended September 30, 1996 and 1995 have been included. The results of
operations for the three and nine months ended September 30, 1996 are not
necessarily indicative of results for the entire year.
<TABLE>
<CAPTION>
December 31, September 30,
1995* 1996
------------ -------------
(unaudited)
<S> <C> <C>
Current assets $ 1,868,400 $ 2,535,200
Investment in cable television
properties, net 14,975,900 13,328,000
Other assets 205,400 167,500
----------- -----------
$17,049,700 $16,030,700
=========== ===========
Current liabilities $ 1,009,500 $ 1,302,300
Long-term debt 6,767,200 6,067,200
Venturers' capital 9,273,000 8,661,200
----------- -----------
$17,049,700 $16,030,700
=========== ===========
</TABLE>
*As presented in the audited financial statements.
-8-
<PAGE> 9
ENSTAR INCOME/GROWTH PROGRAM FIVE-B L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(CONTINUED)
5. EQUITY IN NET ASSETS OF JOINT VENTURE (Continued)
<TABLE>
<CAPTION>
Unaudited
-----------------------
Three months ended
September 30,
-----------------------
1995 1996
---- ----
<S> <C> <C>
REVENUES $1,543,500 $1,685,200
---------- ----------
OPERATING EXPENSES:
Service costs 573,400 609,400
General and administrative expenses 190,800 201,900
General Partner management fees and
reimbursed expenses 142,800 152,400
Depreciation and amortization 781,400 712,400
---------- ----------
1,688,400 1,676,100
---------- ----------
OPERATING INCOME (LOSS) (144,900) 9,100
OTHER INCOME (EXPENSE):
Interest income 14,000 16,300
Interest expense (195,300) (166,800)
---------- ----------
NET LOSS $ (326,200) $ (141,400)
========== ==========
</TABLE>
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<PAGE> 10
ENSTAR INCOME/GROWTH PROGRAM FIVE-B L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(CONCLUDED)
----------------------------------------
5. EQUITY IN NET ASSETS OF JOINT VENTURE (Concluded)
<TABLE>
<CAPTION>
Unaudited
--------------------------------
Nine months ended
September 30,
--------------------------------
1995 1996
------------ ------------
<S> <C> <C>
REVENUES $ 4,655,500 $ 4,935,100
------------ ------------
OPERATING EXPENSES:
Service costs 1,657,500 1,778,800
General and administrative expenses 576,500 646,900
General Partner management fees and
reimbursed expenses 414,000 452,700
Depreciation and amortization 2,297,300 2,125,200
------------ ------------
4,945,300 5,003,600
------------ ------------
OPERATING LOSS (289,800) (68,500)
OTHER INCOME (EXPENSE):
Interest income 44,100 49,100
Interest expense (583,600) (529,400)
------------ ------------
NET LOSS $ (829,300) $ (548,800)
============ ============
</TABLE>
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<PAGE> 11
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
INTRODUCTION
On February 8, 1996, President Clinton signed into law the
Telecommunications Act of 1996 (the "1996 Telecom Act"). This statute
substantially changed the competitive and regulatory environment for
telecommunications providers by significantly amending the Communications Act
of 1934, including certain of the rate regulation provisions previously imposed
by the Cable Television Consumer Protection and Competition Act of 1992 (the
"1992 Cable Act"). Compliance with those rate regulations has had a negative
impact on the Partnership's revenues and cash flow. However, in accordance
with policy decisions by the Federal Communications Commission (the "FCC"), the
Partnership will increase regulated service rates in the future in response to
specified historical and anticipated future cost increases, although certain
costs may continue to rise at a rate in excess of that which the Partnership
will be permitted to pass on to its customers. The 1996 Telecom Act provides
that certain of the rate regulations will be phased-out altogether in 1999.
Further, the regulatory environment will continue to change pending, among
other things, the outcome of legal challenges and FCC rulemaking and
enforcement activity in respect of the 1992 Cable Act and the completion of a
significant number of FCC rulemakings under the 1996 Telecom Act. There can be
no assurance as to what, if any, future action may be taken by the FCC,
Congress or any other regulatory authority or court, or the effect thereof on
the Partnership's business. Accordingly, the Partnership's historic interim
financial results as described below are not necessarily indicative of future
performance.
This Report includes certain forward looking statements regarding,
among other things, 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 the Partnership's Annual Report on Form
10-K for the year ended December 31, 1995 for additional information regarding
such matters and the effect thereof on the Partnership's business.
All of the Partnership's cable television business operations are
conducted through its participation as a partner with a 50% interest in Enstar
Cable of Cumberland Valley. The Partnership participates equally with its
affiliated partner (Enstar Income/Growth Program Five-A, 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 of the Partnership, 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.
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<PAGE> 12
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
RESULTS OF OPERATIONS
THE PARTNERSHIP
All of the Partnership's cable television business operations, which
began in January 1988, are conducted through its participation as a partner in
the Joint Venture. The Joint Venture distributed an aggregate of $17,000 and
$31,600 to the Partnership, representing the Partnership's pro rata share of
the cash flow distributed from the Joint Venture's operations during the three
and nine months ended September 30, 1996. The Partnership did not pay
distributions to its partners during the three and nine months ended September
30, 1996.
THE JOINT VENTURE
The Joint Venture's revenues increased from $1,543,500 to $1,685,200,
or by 9.2%, and from $4,655,500 to $4,935,100, or by 6.0%, for the three and
nine months ended September 30, 1996 as compared to the corresponding periods
in 1995. Of the $141,700 increase in revenues for the three months ended
September 30, 1996 as compared to the corresponding period in 1995, $95,200 was
due to increases in regulated service rates that were implemented by the Joint
Venture in the second and third quarters of 1996, $55,400 due to the
restructuring of The Disney Channel from a premium channel to a tier channel
effective July 1, 1996 and $21,000 was due to increases in other revenue
producing items. These increases were partially offset by a $29,900 decrease
in the number of subscriptions for basic service. Of the $279,600 increase in
revenues for the nine months ended September 30, 1996 as compared to the
corresponding period in 1995, $202,000 was due to increases in regulated
service rates that were implemented by the Joint Venture in the second quarter
of 1995 and in the second and third quarters of 1996, $55,400 due to the
restructuring of The Disney Channel discussed above and $22,200 was due to
increases in other revenue producing items. As of September 30, 1996, the
Joint Venture had approximately 17,100 homes subscribing to cable service and
3,500 premium service units. The decrease of 500 premium units from June 30,
1996 was primarily due to approximately 400 Disney premium units that became
tier subscriptions under the restructuring discussed above.
Service costs for the Joint Venture increased from $573,400 to
$609,400, or by 6.3%, and from $1,657,500 to $1,778,800, or by 7.3%, for the
three and nine months ended September 30, 1996 as compared to the corresponding
periods in 1995. Service costs represent costs directly attributable to
providing cable services to customers. Of the $36,000 increase in service
costs for the three months ended September 30, 1996 as compared to the
corresponding period in 1995, $45,800 related to increased programming fees
charged by program suppliers (including primary satellite fees), $19,100 was
due to an increase in copyright fees, $8,200 was due to a decrease in
capitalization of labor and overhead costs due to fewer capital projects in the
1996 period, $7,400 was due to an increase in personnel costs and $6,200 was
due to an increase in franchise fees. These increases were partially offset by
a $54,300 decrease in property taxes that resulted from non-recurring charges
to expense in the third quarter of 1995 to adjust estimated property taxes to
reflect actual tax assessments in Kentucky. Of the $121,300 increase in
service costs for the nine months ended September 30, 1996 as compared to the
corresponding period in 1995, $82,900 related to increased programming fees
charged by program suppliers (including primary satellite fees), $50,200 was
due to an increase in personnel costs and $18,200 was due to an increase in
copyright fees. These increases were partially offset by a $35,300 decrease in
property taxes and a $10,500 increase in capitalization of labor and overhead
costs due to more capital projects in the 1996 period. The increases in
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<PAGE> 13
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
RESULTS OF OPERATIONS (CONTINUED)
programming fees during the three and nine months ended September 30, 1996
included a $17,800 increase related to the restructuring of The Disney Channel
discussed above.
General and administrative expenses increased from $190,800 to
$201,900, or by 5.8%, and from $576,500 to $646,900, or by 12.2%, for the three
and nine months ended September 30, 1996 as compared to the corresponding
periods in 1995. Of the $11,100 increase for the three months ended September
30, 1996 as compared to the corresponding period in 1995, $20,100 was due to
higher insurance premiums, $15,300 was due to a decrease in capitalization of
labor and overhead expense and $6,200 was due to an increase in expense related
to re-regulation of the cable industry. These increases were partially offset
by a $13,600 decrease in bad debt expense, by a $7,600 decrease in expenses
allocated by affiliates of the General Partner that provide system operating
management services to the Partnership and by a $5,500 decrease in customer
billing expense. Of the $70,400 increase for the nine months ended September
30, 1996 as compared to the corresponding period in 1995, $48,100 was due to
higher insurance premiums, $23,000 was due to a decrease in capitalization of
labor and overhead expense, $14,300 was due to an increase in personnel costs
and $9,400 was due to an increase in expense related to re-regulation of the
cable industry. These increases were partially offset by a $17,500 decrease in
expenses allocated by affiliates of the General Partner that provide system
operating management services to the Partnership and a by $6,000 decrease in
customer billing expense.
Management fees and reimbursed expenses increased from $142,800 to
$152,400, or by 6.7%, and from $414,000 to $452,700, or by 9.3%, for the three
and nine months ended September 30, 1996 as compared to the corresponding
periods in 1995. Reimbursable expenses increased by $2,500 and $24,700 for the
three and nine months ended September 30, 1996 from the comparable periods in
1995, primarily due to higher allocated personnel costs and professional fees.
The nine months' increase was also due to higher allocated computer service
expense. Management fees increased by $7,100 and $14,000 for the three and nine
months ended September 30, 1996 from the corresponding 1995 periods in direct
relation to increased revenues as described above.
Depreciation and amortization expense decreased from $781,400 to
$712,400, or by 8.8%, and from $2,297,300 to $2,125,200, or by 7.5%, for the
three and nine months ended September 30, 1996 as compared to the corresponding
periods in 1995 primarily due to the effect of certain intangible assets
becoming fully amortized.
The Joint Venture generated operating income of $9,100 for the three
months ended September 30, 1996 compared to an operating loss of $144,900 for
the corresponding 1995 period. For the nine months ended September 30, 1996,
the Joint Venture's operating loss decreased from $289,800 to $68,500 as
compared to the first nine months of 1995. The changes for the three and nine
months ended September 30, 1996 as compared to the corresponding periods for
1995 were primarily due to increases in revenues and decreases in depreciation
and amortization expense as described above.
Interest income increased from $14,000 to $16,300, or by 16.4%, and
from $44,100 to $49,100, or by 11.3%, for the three and nine months ended
September 30, 1996 as compared to the corresponding periods in 1995 due to
higher cash balances available for investment.
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<PAGE> 14
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
RESULTS OF OPERATIONS (CONCLUDED)
Interest expense decreased from $195,300 to $166,800, or by 14.6%, and
from $583,600 to $529,400, or by 9.3%, for the three and nine months ended
September 30, 1996 as compared to the corresponding periods in 1995 due to
lower average borrowings and a decrease in the average interest rate paid by
the Joint Venture on long-term borrowings (9.8% during the three and nine
months ended September 30, 1996 versus 10.3% and 10.4% for the corresponding
periods in 1995).
Due to the factors described above, the Joint Venture's net loss
decreased from $326,200 to $141,400, or by 56.7%, and from $829,300 to
$548,800, or by 33.8%, for the three and nine months ended September 30, 1996
as compared to the corresponding periods in 1995.
Operating income before depreciation and amortization (EBITDA) as a
percentage of revenues increased from 41.2% to 42.8% for the quarter ended
September 30, 1996 and decreased from 43.1% to 41.7% for the nine months ended
September 30, 1996 as compared to the corresponding periods in 1995. The three
months' increase was primarily due to increases in revenues while the nine
months' decrease was primarily due to increases in programming expense,
personnel costs and insurance premiums. EBITDA increased from $636,500 to
$721,500, or by 13.4%, and from $2,007,500 to $2,056,700, or by 2.5%, for the
three and nine months ended September 30, 1996 as compared to the corresponding
periods in 1995.
LIQUIDITY AND CAPITAL RESOURCES
The FCC's amended rate regulation rules were implemented during the
quarter ended September 30, 1994. Compliance with these rules has had a
negative impact on the Partnership's revenues and cash flow. The Partnership's
primary objective, having invested its net offering proceeds in the Joint
Venture, is to distribute to its partners distributions of cash flow received
from the Joint Venture's operations and proceeds from the sale of the Joint
Venture's cable systems, if any, after providing for expenses, debt service and
capital requirements relating to the expansion, improvement and upgrade of such
cable systems. 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. In general, these requirements involve
expansion, improvement and upgrade of the Joint Venture's existing cable
television systems. The Joint Venture's capital expenditures are projected to
be approximately $525,000 in 1996, primarily to upgrade certain equipment. The
Joint Venture also anticipates that it may need to rebuild certain of its
systems in 1997 and 1998 at a total cost of approximately $2,200,000, pending
franchise renewals that are currently in process.
Management believes 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 1996. As a result, the Corporate General Partner intends to
use its cash for such purposes. Accordingly, management does not anticipate a
resumption of distributions to unitholders during 1996.
In December 1993, the Joint Venture obtained a $9,000,000 reducing
revolving credit facility (the "Facility") maturing on September 30, 1999. The
Facility is secured by substantially all of the Joint Venture's assets.
Interest is payable at the Base Rate plus 1.50%. "Base Rate" means the higher
of the Lender's prime rate or the Federal Funds Effective Rate plus 1/2%. The
Facility provides for quarterly reductions of the maximum commitment beginning
on September 30, 1994 which are payable at the end of
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<PAGE> 15
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
LIQUIDITY AND CAPITAL RESOURCES (CONCLUDED)
each fiscal quarter. The Joint Venture is permitted to prepay amounts
outstanding under the Facility at any time without penalty, and is able to
re-borrow throughout the term of the Facility up to the maximum commitment then
available so long as no event of default exists. The Joint Venture is also
required to pay a commitment fee of 1/2% per annum on the unused portion of the
Facility. The Facility contains certain financial tests and other covenants
including, among others, restrictions on capital expenditures, incurrence of
indebtedness, distributions and investments, sale of assets, acquisitions, and
other covenants, defaults and conditions. The Joint Venture believes that it
was in compliance with its loan covenants as of September 30, 1996. The Joint
Venture's maximum commitment will decrease by $1,350,000 in 1996 to $6,850,000.
The Joint Venture repaid $700,000 of its outstanding loan balance on June 21,
1996 in order to remain in compliance with a certain financial test contained
in the Facility that stepped down on July 1, 1996. The outstanding loan
balance after the repayment was $6,067,200.
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Operating activities used $28,600 less cash during the nine months
ended September 30, 1996 than in the first nine months of 1995. The change was
primarily due to a $29,800 decrease in the payment of liabilities owed to the
Corporate General Partner and third party creditors and a $5,800 decrease in
receivables from affiliates. Partnership expenses used $7,000 more cash during
the nine months ended September 30, 1996 than in the corresponding nine months
in 1995 after adding back non-cash equity in net loss of joint venture.
Financing activities provided $31,500 more cash in the 1996 period due
to distributions of cash flow from the Joint Venture.
INFLATION
Certain of the Partnership's expenses, such as those for wages
and benefits, equipment repair and replacement, and billing and marketing
generally increase with inflation. 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 it is able to increase its service
rates periodically, of which there can be no assurance.
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<PAGE> 16
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
PART II. OTHER INFORMATION
ITEMS 1-5. Not applicable.
ITEM 6. Exhibits and Reports on Form 8-K
(a) None
(b) No reports on Form 8-K were filed during the quarter
for which this report is filed.
-16-
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
A GEORGIA LIMITED PARTNERSHIP
(Registrant)
By: ENSTAR COMMUNICATIONS CORPORATION
General Partner
Date: November 12, 1996 By: /s/ Michael K. Menerey
-----------------------------
Michael K. Menerey,
Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AT SEPTEMBER 30 1996, AND THE STATEMENTS OF OPERATIONS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 12,500
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,343,100
<CURRENT-LIABILITIES> 19,500
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,343,100
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 27,800
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 900
<INCOME-PRETAX> (303,100)
<INCOME-TAX> 0
<INCOME-CONTINUING> (303,100)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (303,100)
<EPS-PRIMARY> (5.02)
<EPS-DILUTED> 0
</TABLE>
