<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-16789
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Enstar Income/Growth Program Five-B, L.P.
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(Exact name of Registrant as specified in its charter)
Georgia 58-1713008
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
10900 Wilshire Boulevard - 15th Floor
Los Angeles, California 90024
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including (310) 824-9990
area code: ----------------------
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Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
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PART I - FINANCIAL INFORMATION
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
CONDENSED BALANCE SHEETS
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<TABLE>
<CAPTION>
December 31, March 31,
1998* 1999
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<S> <C> <C>
(Unaudited)
ASSETS:
Cash $ 200 $ 800
Equity in net assets of Joint Venture 4,466,400 4,467,400
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$ 4,466,600 $ 4,468,200
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LIABILITIES AND PARTNERSHIP CAPITAL
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LIABILITIES:
Accounts payable $ 6,700 $ 3,400
Due to affiliates 2,200 6,700
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8,900 10,100
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PARTNERSHIP CAPITAL (DEFICIT):
General partners (79,400) (79,400)
Limited partners 4,537,100 4,537,500
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TOTAL PARTNERSHIP CAPITAL 4,457,700 4,458,100
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$ 4,466,600 $ 4,468,200
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</TABLE>
*As presented in the audited financial statements.
See accompanying notes to condensed financial statements.
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ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
CONDENSED STATEMENTS OF OPERATIONS
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<TABLE>
<CAPTION>
Unaudited
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Three months ended
March 31,
-------------------------------------
1998 1999
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<S> <C> <C>
OPERATING EXPENSES:
General and administrative expenses $ (5,000) $ (12,600)
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LOSS BEFORE EQUITY IN NET INCOME
OF JOINT VENTURE (5,000) (12,600)
EQUITY IN NET INCOME OF JOINT VENTURE 12,500 13,000
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NET INCOME $ 7,500 $ 400
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Net income allocated to General Partners $ 100 $ -
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Net income allocated to Limited Partners $ 7,400 $ 400
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NET INCOME PER UNIT OF LIMITED
PARTNERSHIP INTEREST $ 0.12 $ 0.01
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AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD 59,830 59,830
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</TABLE>
See accompanying notes to condensed financial statements.
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<PAGE>
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
STATEMENTS OF CASH FLOWS
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<TABLE>
<CAPTION>
Unaudited
-------------------------------------
Three months ended
March 31,
-------------------------------------
1998 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 7,500 $ 400
Adjustments to reconcile net income to net cash provided by operating
activities:
Equity in net income of Joint Venture (12,500) (13,000)
Increase (decrease) from changes in:
Accounts payable and due to affiliates (6,600) 1,200
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Net cash used in operating activities (11,600) (11,400)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions from Joint Venture 10,000 12,000
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INCREASE (DECREASE) IN CASH (1,600) 600
CASH AT BEGINNING OF PERIOD 3,400 200
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CASH AT END OF PERIOD $ 1,800 $ 800
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</TABLE>
See accompanying notes to condensed financial statements.
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<PAGE>
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
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1. INTERIM FINANCIAL STATEMENTS
The accompanying condensed interim financial statements for the three
months ended March 31, 1999 and 1998 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, 1999 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 Communications, L.P.
("FCLP"), successor to Falcon Holding Group, L.P. ("FHGLP"), an affiliated
partnership, to provide corporate management services for the Partnership and
Enstar Cable of Cumberland Valley, a Georgia general partnership, of which
the Partnership is co-general partner (the "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,
1999. The Manager has entered into an identical agreement with 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 $68,500 and
reimbursement of expenses of approximately $63,500 under its management
agreement for the three months ended March 31, 1999. In addition, the Joint
Venture paid the Corporate General Partner approximately $17,100 in respect
of its 1% special interest during the three months ended March 31, 1999.
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 $192,800 for
the three months ended March 31, 1999. No
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ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
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2. TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES (CONTINUED)
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.
Substantially all programming services have been purchased through FCLP.
FCLP, in the normal course of business, purchases cable programming services
from certain program suppliers owned in whole or in part by affiliates of an
entity that became a general partner of FCLP on September 30, 1998. Such
purchases of programming services are made on behalf of the Joint Venture and
the other partnerships managed by the Corporate General Partner as well as
for FCLP's own cable television operations. FCLP charges the Joint Venture
for these services 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 $341,300 for the three months ended March 31,
1999. Programming fees are included in service costs in the statements of
operations.
In the normal course of business, the Joint Venture pays interest and
principal to Enstar Finance Company, LLC ("EFC"), its primary lender and an
affiliate of the Corporate General Partner.
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 1998 amounts have been reclassified to conform to the 1999
presentation.
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ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
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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, 1999
and December 31, 1998 and the results of its operations for the three months
ended March 31, 1999 and 1998 have been included. The results of operations
for the three months ended March 31, 1999 are not necessarily indicative of
results for the entire year.
<TABLE>
<CAPTION>
December 31, March 31,
1998* 1999
------------------ -----------------
(Unaudited)
<S> <C> <C>
Current assets $ 878,500 $ 1,540,800
Investment in cable television properties, net 10,253,100 9,806,300
Other assets 98,200 82,900
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$ 11,229,800 $ 11,430,000
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Current liabilities $ 1,297,000 $ 1,471,200
Long-term debt 1,000,000 1,000,000
Venturers' capital 8,932,800 8,958,800
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$ 11,229,800 $ 11,430,000
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</TABLE>
*As presented in the audited financial statements.
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<PAGE>
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
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5. EQUITY IN NET ASSETS OF JOINT VENTURE (CONTINUED)
<TABLE>
<CAPTION>
Unaudited
---------------------------------------
Three months ended
March 31,
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1998 1999
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<S> <C> <C>
REVENUES $ 1,776,400 $ 1,711,100
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OPERATING EXPENSES:
Service costs 559,200 712,600
General and administrative expenses 227,700 284,100
General Partner management fees
and reimbursed expenses 158,100 149,100
Depreciation and amortization 530,200 490,700
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1,475,200 1,636,500
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OPERATING INCOME 301,200 74,600
OTHER INCOME (EXPENSE):
Interest income 13,200 6,700
Interest expense (73,900) (55,400)
Casualty loss (215,600) -
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NET INCOME $ 24,900 $ 25,900
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</TABLE>
-8-
<PAGE>
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 ended the regulation of cable programming service tier rates
on March 31, 1999. There can be no assurance as to what, if any, further
action may be taken by the FCC, Congress or any other regulatory authority or
court, or 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, 1998 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 $12,000
to the Partnership, representing the Partnership's pro rata share of the cash
flow distributed from the Joint Venture's operations during the three months
ended March 31, 1999. The Partnership did not pay distributions to its
partners during the three months ended March 31, 1999.
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<PAGE>
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
RESULTS OF OPERATIONS (CONTINUED)
THE JOINT VENTURE
The Joint Venture's revenues decreased from $1,776,400 to $1,711,100, or
by 3.7%, for the three months ended March 31, 1999 as compared to the
corresponding quarter in 1998. Of the $65,300 decrease, $56,300 was due to
decreases in the number of subscriptions for basic, premium, tier and
equipment rental services and $9,000 was due to decreases in other revenue
producing items. As of March 31, 1999, the Joint Venture had approximately
16,000 basic subscribers and 2,900 premium service units.
Service costs increased from $559,200 to $712,600, or by 27.4%, for the
three months ended March 31, 1999 as compared to the corresponding period in
1998. Service costs represent costs directly attributable to providing cable
services to customers. The increase was primarily due to decreases in
capitalization of labor and overhead costs in the first three months of 1999
as compared with the corresponding period in 1998 when the Joint Venture
replaced portions of its Kentucky system which sustained storm damage in
February 1998.
General and administrative expenses increased from $227,700 to $284,100,
or by 24.8%, for the three months ended March 31, 1999 as compared to the
corresponding period in 1998, primarily due to increases in insurance
premiums and allocated system operating management expenses from affiliates
of the Joint Venture. Such allocated expenses increased primarily due to
higher telephone expense and personnel costs resulting from staff additions.
Management fees and reimbursed expenses decreased from $158,100 to
$149,100, or by 5.7%, for the three months ended March 31, 1999 as compared
to the corresponding period in 1998. Management fees decreased in direct
relation to decreased revenues as described above. Reimbursed expenses
decreased as a result of lower allocated personnel costs.
Depreciation and amortization expense decreased from $530,200 to
$490,700, or by 7.5%, for the three months ended March 31, 1999 as compared
to the corresponding period in 1998, primarily due to the effect of certain
intangible assets becoming fully amortized.
Operating income decreased from $301,200 to $74,600, or by 75.2%, for
the three months ended March 31, 1999 as compared to the corresponding period
in 1998, primarily due to decreases in revenues and capitalization of labor
and overhead costs as described above.
Interest income decreased from $13,200 to $6,700, or by 49.2%, for the
three months ended March 31, 1999 as compared to the corresponding period in
1998, primarily due to lower average cash balances available for investment.
Interest expense decreased from $73,900 to $55,400, or by 25.0%, for the
three months ended March 31, 1999 as compared to the corresponding period in
1998, primarily due to decreases in average borrowings.
The Joint Venture recognized a $215,600 casualty loss during the first
quarter of 1998 related to storm damage sustained in its Kentucky system.
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<PAGE>
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
RESULTS OF OPERATIONS (CONTINUED)
Due to the factors described above, net income increased from $24,900 to
$25,900, or by 4.0%, for the three months ended March 31, 1999 as compared to
the corresponding period in 1998.
Based on its experience in the cable television industry, the
Partnership believes that operating income before depreciation and
amortization ("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 46.8% to 33.0% during the three months ended March 31, 1999 as
compared to the corresponding period in 1998. EBITDA decreased from $831,400
to $565,300, or by 32.0% during the three months ended March 31, 1999 as
compared to the corresponding period in 1998.
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.
Based on its belief that the market for cable systems has generally
improved, the Corporate General Partner is evaluating strategies for
liquidating the Joint Venture and the Partnership. These strategies include
the potential sale of substantially all of the Joint Venture's assets to
third parties and/or affiliates of the Corporate General Partner, and the
subsequent liquidation of the Partnership. The Corporate General Partner
expects to complete its evaluation within the next several months and intends
to advise unitholders promptly if it believes that commencing a liquidating
transaction would be in the best interests of unitholders.
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
$470,000. The upgrade began in 1998 and $82,800 had been incurred as of
December 31, 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
$500,000 beginning in 2000. The Joint Venture is budgeted to spend
approximately $1,257,000 in 1999 for plant extensions, new equipment and
system upgrades, including its upgrades in Tennessee. Capital expenditures
were approximately $43,100 during the first three months of 1999.
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
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ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
service and other liquidity requirements in 1999 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 EFC. The loan
agreement provides for a revolving loan facility of $9,181,000 (the
"Facility"). Total outstanding borrowings under the Facility were $1,000,000
at March 31, 1999. 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 (7.75% at March 31, 1999) plus 0.625%, or at an offshore
rate plus 1.875%. Under certain circumstances, the Joint Venture is required
to make mandatory prepayments, which 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, 1999.
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. 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 Corporate General Partner elected to
self-insure the Joint Venture's 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.
In October 1998, FCLP reinstated third party insurance coverage for all
of the cable television properties owned or managed by FCLP to cover damage
to cable distribution plant and subscriber connections and against business
interruptions resulting from such damage. This coverage is subject to a
significant annual deductible which applies to all of the cable television
properties owned or managed by FCLP.
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
sustained damage as a result of an ice storm. As of December 31, 1998, the
Joint Venture had spent $1,361,400 to replace and upgrade the damaged system.
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.
During the first quarter of 1999, FCLP, on behalf of the Corporate
General Partner, continued its identification and evaluation of the Joint
Venture's Year 2000 business risks and its exposure to
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<PAGE>
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
computer systems, to operating equipment which is date sensitive and to the
interface systems of its vendors and service providers. The evaluation has
focused on identification and assessment of systems and equipment that may
fail to distinguish between the year 1900 and the year 2000 and, as a result,
may cease to operate or may operate improperly when dates after December 31,
1999 are introduced.
Based on a study conducted in 1997, FCLP concluded that certain of the
Joint Venture's information systems were not Year 2000 compliant and elected
to replace such software and hardware with applications and equipment
certified by the vendors as Year 2000 compliant. FCLP installed the new
systems in the first quarter of 1999. The total anticipated cost, including
replacement software and hardware, will be borne by FCLP. FCLP is continuing
to utilize internal and external resources to extend the functionality of the
new systems. FCLP does not believe that any other significant information
technology projects affecting the Partnership or Joint Venture have been
delayed due to efforts to identify and address Year 2000 issues.
Additionally, FCLP has continued to inventory the Joint Venture's
operating and revenue generating equipment to identify items that need to be
upgraded or replaced and has surveyed cable equipment manufacturers to
determine which of their models require upgrade or replacement to become Year
2000 compliant. Identification and evaluation, while ongoing, are
substantially completed and a plan has been developed to remediate
non-compliant equipment prior to January 1, 2000. Upgrade or replacement,
testing and implementation will be performed over the remaining months of
1999. The cost of such replacement or remediation, currently estimated at
$36,700, is not expected to have a material effect on the Joint Venture's
financial position or results of operations. The Joint Venture had not
incurred any costs related to the Year 2000 project as of March 31, 1999.
FCLP plans to inventory, assess, replace and test equipment with embedded
computer chips in a separate segment of its project, presently scheduled for
the second half of 1999.
FCLP has continued to survey the Joint Venture's significant third party
vendors and service suppliers to determine the extent to which the Joint
Venture's interface systems are vulnerable should those third parties fail to
solve their own Year 2000 problems on a timely basis. Approximately 80% of
the Joint Venture's most critical equipment vendors have responded to the
surveys regarding the Year 2000 compliance of their products. Additional
compliance information has been obtained for specific products from vendor
Web sites. Among the most significant service providers upon which the Joint
Venture relies are programming suppliers, power and telephone companies,
various banking institutions and the Joint Venture's customer billing
service. A majority of these service suppliers either have not responded to
FCLP's inquiries regarding their Year 2000 compliance programs or have
responded that they are unsure if they will become compliant on a timely
basis. Consequently, there can be no assurance that the systems of other
companies on which the Joint Venture must rely will be Year 2000 compliant on
a timely basis.
FCLP is developing a contingency plan in 1999 to address possible
situations in which various systems of the Joint Venture, or of third parties
with which the Joint Venture does business, are not compliant prior to
January 1, 2000. Considerable effort has been directed toward distinguishing
between those contingencies with a greater probability of occurring from
those whose occurrence is considered remote. Moreover, such a plan has
focused on systems whose failure poses a material risk to the Joint Venture's
results of operations and financial condition.
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<PAGE>
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The Joint Venture's most significant Year 2000 risk is an interruption
of service to subscribers, resulting in a potentially material loss of
revenues. Other risks include impairment of the Joint Venture's ability to
bill and/or collect payment from its customers, which could negatively impact
its liquidity and cash flows. Such risks exist primarily due to technological
operations dependent upon third parties and to a much lesser extent to those
under the control of the Joint Venture. Failure to achieve Year 2000
readiness in either area could have a material adverse impact on the Joint
Venture and consequently on the Partnership. The Joint Venture is unable to
estimate the possible effect on its results of operations, liquidity and
financial condition should its significant service suppliers fail to complete
their readiness programs prior to the Year 2000. Depending on the supplier,
equipment malfunction or type of service provided, as well as the location
and duration of the problem, the effect could be material. For example, if a
cable programming supplier encounters an interruption of its signal due to a
Year 2000 satellite malfunction, the Joint Venture will be unable to provide
the signal to its cable subscribers, which could result in a loss of
revenues, although the Joint Venture would attempt to provide its customers
with alternative program services for the period during which it could not
provide the original signal. Due to the number of individually owned and
operated channels the Joint Venture carries for its subscribers, and the
packaging of those channels, the Joint Venture is unable to estimate any
reasonable dollar impact of such interruption.
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
Operating activities used $200 less cash during the three months ended
March 31, 1999 than in the corresponding period in 1998. The Partnership used
$7,800 less cash for accounts payable due to differences in the timing of
payments. Investing activities provided $2,000 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.
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<PAGE>
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.
-15-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ENSTAR INCOME/GROWTH PROGRAM FIVE-B, L.P.
a GEORGIA LIMITED PARTNERSHIP
(Registrant)
By: ENSTAR COMMUNICATIONS CORPORATION
General Partner
Date: May 14, 1999 By: /s/ Michael K. Menerey
-------------------------
Michael K. Menerey,
Executive Vice President,
Chief Financial Officer and
Secretary
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT MARCH 31, 1999, AND THE STATEMENTS OF OPERATIONS FOR THE THREE MONTHS
ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 800
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,468,200
<CURRENT-LIABILITIES> 10,100
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,468,200
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 12,600
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 400
<INCOME-TAX> 0
<INCOME-CONTINUING> 400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 400
<EPS-PRIMARY> .01
<EPS-DILUTED> 0
</TABLE>
