<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 March 31, 1998
-------------------------------
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
incorporation or organization) Identification Number)
10900 Wilshire Boulevard - 15th Floor
Los Angeles, California 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 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
----- -----
<PAGE> 2
PART I - FINANCIAL INFORMATION
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
CONDENSED BALANCE SHEETS
=========================================
<TABLE>
<CAPTION>
December 31, March 31,
1997* 1998
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS:
Cash $ 3,400 $ 1,800
Equity in net assets of Joint Venture 4,222,900 4,225,400
----------- -----------
$ 4,226,300 $ 4,227,200
=========== ===========
LIABILITIES AND PARTNERSHIP CAPITAL
-----------------------------------
LIABILITIES:
Accounts payable $ 14,800 $ 8,200
----------- -----------
PARTNERSHIP CAPITAL (DEFICIT):
General partners (81,900) (81,800)
Limited partners 4,293,400 4,300,800
----------- -----------
TOTAL PARTNERSHIP CAPITAL 4,211,500 4,219,000
----------- -----------
$ 4,226,300 $ 4,227,200
=========== ===========
</TABLE>
*As presented in the audited financial statements.
See accompanying notes to condensed financial statements.
-2-
<PAGE> 3
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
CONDENSED STATEMENTS OF OPERATIONS
=========================================
<TABLE>
<CAPTION>
Unaudited
--------------------------
Three months ended
March 31,
--------------------------
1997 1998
-------- --------
<S> <C> <C>
OPERATING EXPENSES:
General and administrative expenses $ (7,100) $ (4,200)
-------- --------
OTHER EXPENSE:
Interest expense (800) (800)
-------- --------
LOSS BEFORE EQUITY IN NET INCOME (LOSS)
OF JOINT VENTURE (7,900) (5,000)
EQUITY IN NET INCOME (LOSS) OF JOINT VENTURE (1,800) 12,500
-------- --------
NET INCOME (LOSS) $ (9,700) $ 7,500
======== ========
Net income (loss) allocated to General Partners $ (100) $ 100
======== ========
Net income (loss) allocated to Limited Partners $ (9,600) $ 7,400
======== ========
NET INCOME (LOSS) PER UNIT OF LIMITED
PARTNERSHIP INTEREST $ (0.16) $ 0.12
======== ========
AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD 59,830 59,830
======== ========
</TABLE>
See accompanying notes to condensed financial statements.
-3-
<PAGE> 4
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
STATEMENTS OF CASH FLOWS
=========================================
<TABLE>
<CAPTION>
Unaudited
--------------------------
Three months ended
March 31,
--------------------------
1997 1998
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (9,700) $ 7,500
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Equity in net income (loss) of Joint Venture 1,800 (12,500)
Increase (decrease) from changes in:
Due from affiliates 600 --
Accounts payable (100) (6,600)
-------- --------
Net cash used in operating activities (7,400) (11,600)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions from Joint Venture 5,000 10,000
-------- --------
DECREASE IN CASH (2,400) (1,600)
CASH AT BEGINNING OF PERIOD 4,500 3,400
-------- --------
CASH AT END OF PERIOD $ 2,100 $ 1,800
======== ========
</TABLE>
See accompanying notes to condensed financial statements.
-4-
<PAGE> 5
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 months ended March 31, 1998 and 1997 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 months ended March 31, 1998 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 (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. The
Corporate General Partner has contracted with Falcon Holding Group, L.P.
("FHGLP"), an affiliated partnership, to provide corporate management services
for the Partnership and Joint Venture. Corporate office allocations and district
office expenses are charged to the properties served based primarily on the
respective percentage of basic subscribers within the designated service areas.
No such costs and expenses were incurred or charged to the Partnership for these
services during the three months ended March 31, 1998. 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 $71,000 and reimbursement of expenses
of approximately $69,300 under its management agreement for the three months
ended March 31, 1998. In addition, the Joint Venture paid the Corporate General
Partner approximately $17,800 in respect of its 1% special interest during the
three months ended March 31, 1998. Management fees and reimbursed expenses due
the Corporate 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 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 $165,500 for the three
months ended March 31, 1998. No management fee is payable to the
-5-
<PAGE> 6
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
=========================================
2. TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES (CONTINUED)
affiliates by the Joint Venture and there is no duplication of reimbursed
expenses and costs paid to the Manager.
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 Corporate General Partner could
negotiate for such programming services for the 15 partnerships managed by the
Corporate General Partner as a group. The Joint Venture recorded programming fee
expense of $345,000 for the three months ended March 31, 1998. Programming fees
are included in service costs in the statements of operations.
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. RECLASSIFICATIONS
Certain 1997 amounts have been reclassified to conform to the 1998
presentation.
-6-
<PAGE> 7
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
=========================================
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 March 31, 1998 and December 31, 1997 and
the results of its operations for the three months ended March 31, 1998 and 1997
have been included. The results of operations for the three months ended March
31, 1998 are not necessarily indicative of results for the entire year.
<TABLE>
<CAPTION>
December 31, March 31,
1997* 1998
----------- -----------
(Unaudited)
<S> <C> <C>
Current assets $ 1,504,500 $ 1,679,700
Investment in cable television properties, net 10,759,800 10,362,000
Other assets 127,800 120,700
----------- -----------
$12,392,100 $12,162,400
=========== ===========
Current liabilities $ 1,346,300 $ 1,111,700
Long-term debt 2,600,000 2,600,000
Venturers' capital 8,445,800 8,450,700
----------- -----------
$12,392,100 $12,162,400
=========== ===========
</TABLE>
*As presented in the audited financial statements.
-7-
<PAGE> 8
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
=========================================
5. EQUITY IN NET ASSETS OF JOINT VENTURE (CONTINUED)
<TABLE>
<CAPTION>
Unaudited
--------------------------------
Three months ended
March 31,
--------------------------------
1997 1998
----------- -----------
<S> <C> <C>
REVENUES $ 1,802,400 $ 1,776,400
----------- -----------
OPERATING EXPENSES:
Service costs 624,200 559,200
General and administrative expenses 237,300 227,700
General Partner management fees
and reimbursed expenses 161,400 158,100
Depreciation and amortization 663,700 530,200
----------- -----------
1,686,600 1,475,200
----------- -----------
OPERATING INCOME 115,800 301,200
OTHER INCOME (EXPENSE):
Interest income 27,100 13,200
Interest expense (146,400) (73,900)
Loss from involuntary conversion
of cable system assets -- (215,600)
----------- -----------
NET INCOME (LOSS) $ (3,500) $ 24,900
=========== ===========
</TABLE>
-8-
<PAGE> 9
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
The Cable Television Consumer Protection and Competition Act of 1992
(the "1992 Cable Act") required the Federal Communications Commission ("FCC")
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 the Joint Venture's revenues and cash flow. The
Telecommunications Act of 1996 (the "1996 Telecom Act") substantially changed
the competitive and regulatory environment for cable television and
telecommunications service providers. Among other changes, the 1996 Telecom Act
provides that the regulation of cable programming service tier ("CPST") rates
will be terminated on March 31, 1999. Because cable service rate increases have
continued to outpace inflation under the FCC's existing regulations, the
Partnership and Joint Venture expect Congress and the FCC to explore additional
methods of regulating cable service rate increases, including deferral or repeal
of the March 31, 1999 termination of CPST rate regulation. 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 the effect thereof on the Joint
Venture's business. Accordingly, the Joint Venture's historical 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, 1997 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 the
Joint Venture. 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.
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 $10,000 to the
Partnership, representing the Partnership's pro rata share of the cash flow
-9-
<PAGE> 10
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
RESULTS OF OPERATIONS (CONTINUED)
distributed from the Joint Venture's operations during the three months ended
March 31, 1998. The Partnership did not pay distributions to its partners during
the three months ended March 31, 1998.
THE JOINT VENTURE
The Joint Venture's revenues decreased from $1,802,400 to
$1,776,400, or by 1.4%, for the three months ended March 31, 1998 as compared to
the corresponding period in 1997. Of the $26,000 decrease, $22,500 was due to
decreases in the number of subscriptions for basic, tier and equipment rental
services and $12,400 was due to decreases in other revenue producing items
including incentive fees from programmers and installation revenue. These
decreases were partially offset by an increase of $8,900 due to increases in
regulated service rates that were implemented by the Joint Venture in 1997. As
of March 31, 1998, the Joint Venture had approximately 16,700 basic subscribers
and 2,600 premium service units.
Service costs decreased from $624,200 to $559,200, or by 10.4%, for
the three months ended March 31, 1998 as compared to the corresponding period in
1997. Service costs represent costs directly attributable to providing cable
services to customers. The decrease was principally due to an increase in the
capitalization of labor and overhead costs resulting from replacement of
portions of the Joint Venture's Monticello system which sustained storm damage
in February 1998.
General and administrative expenses decreased from $237,300 to
$227,700, or by 4.0%, for the three months ended March 31, 1998 as compared to
the corresponding period in 1997, primarily due to a decrease in insurance
expense resulting from the Corporate General Partner's election in August 1997
to self-insure the Joint Venture's cable distribution plant and subscriber
connections against property damage.
Management fees and reimbursed expenses decreased from $161,400 to
$158,100, or by 2.0%, for the three months ended March 31, 1998 as compared to
the corresponding period in 1997. Management fees decreased in direct relation
to decreased revenues as described above. Reimbursable expenses decreased
primarily as a result of lower allocated personnel costs resulting from staff
reductions.
Operating income before income taxes, depreciation and amortization
(EBITDA) is a commonly used financial analysis tool for measuring and comparing
cable television companies in several areas, such as liquidity, operating
performance and leverage. EBITDA as a percentage of revenues increased from
43.2% during the quarter ended March 31, 1997 to 46.8% for the corresponding
quarter in 1998. The increase was primarily due to an increase in capitalization
and overhead costs as discussed above. EBITDA increased from $779,500 to
$831,400, or by 6.7%, for the three months ended March 31, 1998 as compared with
the corresponding period in 1997. EBITDA should be considered in addition to and
not as a substitute for net income and cash flows determined in accordance with
generally accepted accounting principles as an indicator of financial
performance and liquidity.
Depreciation and amortization expense decreased from $663,700 to
$530,200, or by 20.1%, for the three months ended March 31, 1998 as compared to
the corresponding period in 1997, due to the effect of certain tangible assets
becoming fully depreciated and certain intangible assets becoming fully
amortized.
-10-
<PAGE> 11
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
RESULTS OF OPERATIONS (CONTINUED)
Operating income increased from $115,800 to $301,200 for the three
months ended March 31, 1998 as compared to the corresponding period in 1997,
primarily due to decreases in depreciation and amortization expense and
increased capitalization of labor and overhead costs as described above.
Interest income decreased from $27,100 to $13,200, or by 51.3%, for
the three months ended March 31, 1998 as compared to the corresponding period in
1997, as a result of lower average cash balances available for investment in the
1998 period.
Interest expense decreased from $146,400 to $73,900, or by 49.5%,
for the three months ended March 31, 1998 as compared to the corresponding
period in 1997, due to a decrease in average borrowings.
The Joint Venture recognized a $215,600 loss on involuntary
conversion of cable system assets during the first quarter of 1998 related to
storm damage sustained in its Monticello system.
Due to the factors described above, the Joint Venture generated net
income of $24,900 in the first three months of 1998 as compared to a net loss of
$3,500 for the corresponding period in 1997.
LIQUIDITY AND CAPITAL RESOURCES
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.
The Joint Venture is 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 $400,000 beginning in 1998.
The franchise agreement requires the project be completed by October 2000.
Additionally, the Joint Venture expects to upgrade its systems in surrounding
communities at a total estimated cost of approximately $570,000 beginning in
1999. Capital expenditures of $2.7 million are budgeted for the 1998 upgrade of
other assets and extension of the Joint Venture's cable systems to pass new
serviceable homes in their franchise areas. The Joint Venture has also budgeted
for expenditures of approximately $900,000 to replace and upgrade cable plant in
Kentucky that sustained storm damage in February 1998. As discussed below, such
losses are not covered by insurance. The Joint Venture spent $341,300 in the
first quarter of 1998, primarily for equipment and plant upgrades including
expenditures related to the storm.
The Partnership 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 1998. As a result, the Joint Venture intends to use its cash for
such purposes.
-11-
<PAGE> 12
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
On September 30, 1997, the Joint Venture entered into a loan
agreement with Enstar Finance Company, LLC ("EFC"), a subsidiary of the
Corporate General Partner, for a revolving loan facility of $9,181,000 (the
"Facility") of which $2,600,000 was advanced to the Joint Venture at closing.
Such funds together with available cash were used to repay the Joint Venture's
previous note payable balance of $4,067,200 and related interest expense. The
Joint Venture's management expects to increase borrowings under the Facility for
system upgrades and other liquidity requirements.
The Joint Venture's Facility will mature on August 31, 2001, at
which time all funds previously advanced will be due in full. Borrowings bear
interest at the lender's base rate (8.5% at March 31, 1998) plus 0.625%, or at
an offshore rate plus 1.875%. The Joint Venture is permitted to prepay amounts
outstanding under the Facility at any time without penalty, and is able to
reborrow throughout the term of the Facility up to the maximum commitment then
available so long as no event of default exists. If the Joint Venture has excess
cash flow and its ratio of debt to cash flow exceeds 4.25 to 1, or it receives
proceeds from sales of its assets in excess of a specified amount, the Joint
Venture is required to make mandatory prepayments under the Facility. Such
prepayments 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 Partnership believes the Joint Venture was in compliance with
the covenants at March 31, 1998.
The Facility does not restrict the payment of distributions to
partners unless an event of default exists thereunder or the ratio of debt to
cash flow is greater than 4 to 1. The Partnership believes 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 unitholders at this time.
Beginning in August 1997, the Joint Venture elected to self-insure
its cable distribution plant and subscriber connections against property damage
as well as possible business interruptions caused by such damage. The decision
to self-insure was made due to significant increases in the cost of insurance
coverage and decreases in the amount of insurance coverage available.
While the Joint Venture has made the election to self-insure for
these risks based upon a comparison of historical damage sustained over the past
five years with the cost and amount of insurance currently available, there can
be no assurance that future self-insured losses will not exceed prior costs of
maintaining insurance for these risks. 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. In February 1998, the Joint Venture's Monticello,
Kentucky system incurred damage as a result of an ice storm. The Joint Venture
estimates costs to replace and upgrade the damaged system will be approximately
$900,000. The Joint Venture continues to purchase insurance coverage in amounts
its
-12-
<PAGE> 13
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
management views as appropriate for all other property, liability, automobile,
workers' compensation and other types of insurable risks.
The "Year 2000" issue refers to certain contingencies that could
result from computer programs being written using two digits rather than four to
define the year. Many existing computer systems, including certain computer
systems of the Partnership and Joint Venture, process transactions based on two
digits for the year of the transaction (for example, "98" for 1998). These
computer systems may not operate effectively when the last two digits become
"00," as will occur on January 1, 2000.
The Corporate General Partner has commenced an assessment of the
Partnership's and Joint Venture's Year 2000 business risks and their exposure to
computer systems, to operating equipment which is date sensitive and to the
interface systems of their vendors and service providers. Based on a preliminary
study, the Corporate General Partner has concluded that certain of the
Partnership's and Joint Venture's information systems were not Year 2000
compliant and has elected to replace such software and hardware with Year 2000
compliant applications and equipment, although the decision to replace major
portions of such software and hardware had previously been made without regard
to the Year 2000 issue. The Corporate General Partner expects to install
substantially all of the new systems in 1998, with the remaining systems to be
installed in the first half of 1999. The total anticipated cost, including
replacement software and hardware, will be borne by FHGLP.
In addition to evaluating internal systems, the Corporate General
Partner has also initiated communications with third party vendors and service
suppliers to determine the extent to which the Partnership's and Joint Venture's
interface systems are vulnerable should those third parties fail to solve their
own Year 2000 problems on a timely basis. There can be no assurance that the
systems of other companies on which the Partnership's and Joint Venture's
systems rely will be timely converted and that the failure to do so would not
have an adverse impact on the Partnership's and Joint Venture's systems. The
Corporate General Partner continues to closely monitor Year 2000 developments
with vendors and service suppliers.
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
Operating activities used $4,200 more cash during the three months
ended March 31, 1998 than in the corresponding period in 1997. The Partnership
used $6,500 more cash for accounts payable resulting from differences in the
timing of payments. Investing activities provided $5,000 more cash due to
increased distributions from the Joint Venture.
INFLATION
Certain of the Joint Venture's expenses, such as those for equipment
repair and replacement, billing and marketing, generally increase with
inflation. However, the Partnership does not believe that its financial results
have been, or will be, adversely affected by inflation in a material way,
provided that the Joint Venture is able to increase its service rates
periodically, of which there can be no assurance.
-13-
<PAGE> 14
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.
<PAGE> 15
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: May 14, 1998 By: /s/ Michael K. Menerey
--------------------------------
Michael K. Menerey,
Executive Vice President,
Chief Financial Officer and
Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT MARCH 31, 1998, AND THE STATEMENTS OF OPERATIONS FOR THE THREE MONTHS
ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,800
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,227,200
<CURRENT-LIABILITIES> 8,200
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,227,200
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 4,200
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 800
<INCOME-PRETAX> 7,500
<INCOME-TAX> 0
<INCOME-CONTINUING> 7,500
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,500
<EPS-PRIMARY> 0.12
<EPS-DILUTED> 0
</TABLE>
