<PAGE>
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, 1999
----------------------------------
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 0-17687
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Enstar Income/Growth Program Six-A, L.P.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Georgia 58-1755230
- -------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
10900 Wilshire Boulevard - 15th Floor
Los Angeles, California 90024
- ------------------------------------------ -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including (310) 824-9990
area code:
---------------------
- --------------------------------------------------------------------------------
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>
PART I - FINANCIAL INFORMATION
ENSTAR INCOME/GROWTH PROGRAM SIX-A, L.P.
CONDENSED BALANCE SHEETS
===============================================================================
<TABLE>
<CAPTION>
December 31, September 30,
1998* 1999
----------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 542,000 $ 391,800
Accounts receivable, less allowance of $6,000 and
$4,000 for possible losses 34,400 30,900
Prepaid expenses and other assets 33,700 130,100
Property, plant and equipment, less accumulated
depreciation and amortization of $5,396,200 and $5,937,200 3,048,800 2,750,400
Franchise cost, net of accumulated
amortization of $2,622,600 and $2,809,000 927,400 780,000
Deferred loan costs and other deferred charges, net 52,500 37,400
----------------- -----------------
$ 4,638,800 $ 4,120,600
================= =================
LIABILITIES AND PARTNERSHIP CAPITAL
LIABILITIES:
Accounts payable $ 292,700 $ 249,000
Due to affiliates 576,600 305,800
Note payable - affiliate 1,350,000 1,050,000
----------------- -----------------
TOTAL LIABILITIES 2,219,300 1,604,800
----------------- -----------------
COMMITMENTS AND CONTINGENCIES
PARTNERSHIP CAPITAL (DEFICIT):
General partners (138,400) (137,400)
Limited partners 2,557,900 2,653,200
----------------- -----------------
TOTAL PARTNERSHIP CAPITAL 2,419,500 2,515,800
----------------- -----------------
$ 4,638,800 $ 4,120,600
================= =================
</TABLE>
*As presented in the audited financial statements.
See accompanying notes to condensed financial statements.
-2-
<PAGE>
ENSTAR INCOME/GROWTH PROGRAM SIX-A, L.P.
CONDENSED STATEMENTS OF OPERATIONS
========================================
<TABLE>
<CAPTION>
Unaudited
-------------------------------------
Three months ended
September 30,
-------------------------------------
1998 1999
---------------- -----------------
<S> <C> <C>
REVENUES $ 896,000 $ 866,100
---------------- -----------------
OPERATING EXPENSES:
Service costs 262,800 285,200
General and administrative expenses 105,000 92,600
General Partner management fees
and reimbursed expenses 131,300 132,100
Depreciation and amortization 208,000 255,100
---------------- -----------------
707,100 765,000
---------------- -----------------
OPERATING INCOME 188,900 101,100
---------------- -----------------
OTHER INCOME (EXPENSE):
Interest income 7,100 7,700
Interest expense (49,700) (37,300)
---------------- -----------------
(42,600) (29,600)
---------------- -----------------
NET INCOME $ 146,300 $ 71,500
================ =================
Net income allocated to General Partners $ 1,500 $ 700
================ =================
Net income allocated to Limited Partners $ 144,800 $ 70,800
================ =================
NET INCOME PER UNIT OF LIMITED
PARTNERSHIP INTEREST $ 1.81 $ 0.88
================ =================
AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD 79,818 79,818
================ =================
</TABLE>
See accompanying notes to condensed financial statements.
-3-
<PAGE>
ENSTAR INCOME/GROWTH PROGRAM SIX-A, L.P.
CONDENSED STATEMENTS OF OPERATIONS
========================================
<TABLE>
<CAPTION>
Unaudited
-------------------------------------
Nine months ended
September 30,
-------------------------------------
1998 1999
---------------- -----------------
<S> <C> <C>
REVENUES $ 2,736,400 $ 2,602,700
---------------- -----------------
OPERATING EXPENSES:
Service costs 861,500 877,700
General and administrative expenses 321,400 370,100
General Partner management fees
and reimbursed expenses 393,900 394,100
Depreciation and amortization 626,200 770,900
---------------- -----------------
2,203,000 2,412,800
---------------- -----------------
OPERATING INCOME 533,400 189,900
---------------- -----------------
OTHER INCOME (EXPENSE):
Interest income 25,500 19,000
Interest expense (170,500) (112,600)
Gain on sale of cable assets 200 -
---------------- -----------------
(144,800) (93,600)
---------------- -----------------
NET INCOME $ 388,600 $ 96,300
================ =================
Net income allocated to General Partners $ 3,900 $ 1,000
================ =================
Net income allocated to Limited Partners $ 384,700 $ 95,300
================ =================
NET INCOME PER UNIT OF LIMITED
PARTNERSHIP INTEREST $ 4.82 $ 1.19
================ =================
AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD 79,818 79,818
================ =================
</TABLE>
See accompanying notes to condensed financial statements.
-4-
<PAGE>
ENSTAR INCOME/GROWTH PROGRAM SIX-A, L.P.
STATEMENTS OF CASH FLOWS
========================================
<TABLE>
<CAPTION>
Unaudited
-------------------------------------
Nine months ended
September 30,
-------------------------------------
1998 1999
---------------- -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 388,600 $ 96,300
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 626,200 770,900
Amortization of deferred loan costs 12,700 12,800
Gain on sale of cable assets (200) -
Decrease from changes in:
Accounts receivable, prepaid expenses and other assets (9,000) (92,900)
Accounts payable (146,600) (43,700)
---------------- -----------------
Net cash provided by operating activities 871,700 743,400
---------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (128,000) (283,800)
Increase in intangible assets (16,900) (39,000)
Proceeds from sale of property, plant and equipment 200 -
---------------- -----------------
Net cash used in investing activities (144,700) (322,800)
---------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Due to affiliates (75,900) (270,800)
Deferred loan costs (2,400) -
Repayment of debt (750,000) (300,000)
---------------- -----------------
Net cash used in financing activities (828,300) (570,800)
---------------- -----------------
DECREASE IN CASH AND CASH EQUIVALENTS (101,300) (150,200)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 659,400 542,000
---------------- -----------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 558,100 $ 391,800
================ =================
</TABLE>
See accompanying notes to condensed financial statements.
-5-
<PAGE>
ENSTAR INCOME/GROWTH PROGRAM SIX-A, 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, 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 and nine months ended September 30, 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 with a wholly
owned subsidiary of the Corporate General Partner (the "Manager") for a monthly
management fee of 5% of revenues, excluding revenues from the sale of cable
television systems or franchises. Management fee expense approximated $43,300
and $130,100 for the three and nine months ended September 30, 1999.
In addition to the monthly management fee described above, the
Partnership reimburses the Manager for direct expenses incurred on behalf of the
Partnership and for the Partnership's allocable share of operational costs
associated with services provided by the Manager. All cable television
properties managed by the Corporate General Partner and its subsidiary are
charged a proportionate share of these expenses. 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. Corporate office allocations and
district office expenses are charged to the properties served based primarily on
the respective percentage of basic subscribers or homes passed (dwelling units
within a system) within the designated service areas. The total amount charged
to the Partnership for these services approximated $88,800 and $264,000 for the
three and nine months ended September 30, 1999. Management fees and reimbursed
expenses due the Corporate General Partner are non-interest bearing.
On September 30, 1997, the Corporate General Partner contributed a
$269,300 receivable balance from the Partnership for past due management fees
and reimbursed expenses as an equity contribution to its subsidiary, Enstar
Finance Company, LLC ("EFC"). This balance remains an outstanding obligation of
the Partnership. In the normal course of business, the Partnership pays interest
and principal to EFC, its primary lender.
The Partnership also receives certain system operating management
services from an affiliate of the Corporate General Partner in addition to the
Manager due to the fact that there are no such employees directly employed by
the Partnership. The Partnership reimburses the affiliate for its allocable
share of the affiliate's operational costs. The total amount charged to the
Partnership for these costs approximated $5,500 and $15,000 for the three and
nine months ended September 30, 1999. No management fee is payable to the
affiliate by the Partnership and there is no duplication of reimbursed expenses
and costs paid to the Manager.
6
<PAGE>
ENSTAR INCOME/GROWTH PROGRAM SIX-A, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
========================================
2. TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES (CONTINUED)
Substantially all programming services have been purchased through
FCLP. FCLP, in the normal course of business, purchases cable programming
services from certain affiliated program suppliers. Such purchases of
programming services are made on behalf of the Partnership and the other
partnerships managed by the Corporate General Partner as well as for FCLP's own
cable television operations. FCLP charges the Partnership 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 Partnership recorded programming fee expense of
$208,000 and $615,800 for the three and nine months ended September 30, 1999.
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.
7
<PAGE>
ENSTAR INCOME/GROWTH PROGRAM SIX-A, 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 Partnership'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 Partnership's business. Accordingly, the
Partnership'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.
RESULTS OF OPERATIONS
The Partnership's revenues decreased from $896,000 to $866,100, or
by 3.3%, and from $2,736,400 to $2,602,700, or by 4.9%, for the three and
nine months ended September 30, 1999 as compared to the corresponding periods
in 1998. Of the $29,900 decrease in revenues for the three months ended
September 30, 1999, $36,700 was due to decreases in the number of
subscriptions for basic, premium, tier and equipment rental services, and
$8,000 was due to decreases in other revenue producing items. The decrease
was partially offset by a $14,800 increase due to increases in regulated
service rates that were implemented by the Partnership in June 1999. Of the
$133,700 decrease in revenues for the nine months ended September 30, 1999,
$129,100 was due to decreases in the number of subscriptions for basic,
premium, tier and equipment rental services, and $24,400 was due to decreases
in other revenue producing items, including installation revenue. The
decrease was partially offset by a $19,800 increase due to increases in
regulated service rates that were implemented by the Partnership in June
1999. As of September 30, 1999, the Partnership had approximately 8,600 basic
subscribers and 1,800 premium service units.
Service costs increased from $262,800 to $285,200, or by 8.5%, and
from $861,500 to $877,700, or by 1.9%, for the three and nine months ended
September 30, 1999 as compared to the corresponding periods in 1998. Service
costs represent costs directly attributable to providing cable services to
customers. The increases were primarily due to increases in copyright fees
and personnel
-8-
<PAGE>
ENSTAR INCOME/GROWTH PROGRAM SIX-A, L.P.
RESULTS OF OPERATIONS (CONTINUED)
costs. The nine months' increase was also due to higher programming fees
resulting from rate increases by program suppliers.
General and administrative expenses decreased from $105,000 to
$92,600, or by 11.8%, and increased from $321,400 to $370,100, or by 15.2%,
respectively, for the three and nine months ended September 30, 1999 as
compared to the corresponding periods in 1998. The quarterly decrease was
primarily due to decreases in telephone costs. The nine months' increase was
primarily due to increases in insurance premiums and professional fees,
including audit and legal fees.
Management fees and reimbursed expenses increased from $131,300 to
$132,100, or by less than 1.0%, and from $393,900 to $394,100, or by less
than 1.0%, for the three and nine months ended September 30, 1999 as compared
to the corresponding periods in 1998. Management fees decreased in direct
relation to decreases in revenues as described above. Reimbursed expenses
increased primarily due to higher personnel costs resulting from staff
additions and wage increases.
Depreciation and amortization expense increased from $208,000 to
$255,100, or by 22.6%, and from $626,200 to $770,900, or by 23.1%, for the
three and nine months ended September 30, 1999 as compared to the
corresponding periods in 1998, primarily due to the depreciation of plant
asset additions.
The Partnership's operating income decreased from $188,900 to
$101,100, or by 46.5%, and from $533,400 to $189,900, or by 64.4%, for the
three and nine months ended September 30, 1999 as compared to the
corresponding periods in 1998, primarily due to decreases in revenues and
increases in depreciation and amortization as described above.
Interest income increased from $7,100 to $7,700, or by 8.5%, and
decreased from $25,500 to $19,000, or by 25.5%, for the three and nine months
ended September 30, 1999, respectively, as compared to the corresponding
periods in 1998. The quarterly increase was primarily due to higher average
cash balances available for investment. The nine months' decrease was
primarily due to lower average cash balances available for investment and
lower average interest rates earned on invested cash.
Interest expense decreased from $49,700 to $37,300, or by 24.9%, and
from $170,500 to $112,600, or by 34.0%, for the three and nine months ended
September 30, 1999 as compared to the corresponding periods in 1998,
primarily due to lower average borrowings in the 1999 periods.
Due to the factors described above, the Partnership's net income
decreased from $146,300 to $71,500, or by 51.1%, and from $388,600 to
$96,300, or by 75.2%, for the three and nine months ended September 30, 1999
as compared to the corresponding periods 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
-9-
<PAGE>
ENSTAR INCOME/GROWTH PROGRAM SIX-A, L.P.
RESULTS OF OPERATIONS (CONTINUED)
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 44.3% to 41.1% and from 42.4% to 36.9% during the three and
nine months ended September 30, 1999 as compared to the corresponding periods
in 1998. The decrease was primarily due to lower revenues and higher
copyright fees. The nine months' decrease was also due to higher insurance
premiums, professional fees and programming expenses as described above.
EBITDA decreased from $396,900 to $356,200, or by 10.3%, and from $1,159,600
to $960,800, or by 17.1%, for the three and nine months ended September 30,
1999 as compared to the corresponding periods in 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's primary objective, having invested its net
offering proceeds in cable systems, is to distribute to its partners all
available cash flow from operations and proceeds from the sale of cable
systems, if any, after providing for expenses, debt service and capital
requirements relating to the expansion, improvement and upgrade of its cable
systems. The Partnership's capital expenditures were $283,800 for the nine
months ended September 30, 1999.
Based on its belief that the market for cable systems has generally
improved, the Corporate General Partner had been evaluating strategies for
liquidating the Partnership. These strategies included the potential sale of
substantially all of the Partnership's assets to third parties and/or
affiliates of the Corporate General Partner, and the subsequent liquidation
of the Partnership. On May 26, 1999, Charter Communications ("Charter")
signed an agreement to acquire all of the cable television assets of FCLP and
to acquire Enstar Communications Corporation, the Partnership's Corporate
General Partner. The Corporate General Partner and Charter have decided to
implement a strategy for liquidating the Partnership that involves selling
its systems to third parties. Accordingly, the Corporate General Partner has
entered into agreements with two cable brokers regarding the sale of the
systems, although no assurance can be given regarding the likelihood, if any,
of receiving appropriate offers to purchase the systems. Any such sale and
corresponding liquidation will not close before the sale of the Corporate
General Partner to Charter.
Following the close of all pending transactions, Charter will serve
approximately 6.2 million customers and will be the nation's fourth largest
cable operator. Headquartered in St. Louis, Missouri, Charter was acquired by
Paul G. Allen in 1998. More information about Charter can be accessed on the
Internet at www.chartercom.com.
The Partnership plans to upgrade its cable system to increase
channel capacity in two franchise areas, which together serve 63% of the
Partnership's total customer base. One of the upgrades is required in an
existing franchise agreement. The estimated cost to upgrade the cable system
in this franchise area is approximately $2.4 million and must be completed by
June 2000. Another of the Partnership's franchise agreements is under
negotiation for renewal and the Partnership believes that the renewed
franchise agreement may require the Partnership to upgrade its cable plant at
an estimated cost of $1.5 million within 24 months. The full upgrade program
is estimated to require aggregate capital expenditures of approximately $3.9
million. Capital expenditures budgeted for 1999 include $2.4 million for the
required rebuild and approximately $346,400 for the upgrade of other assets.
As of September 30, 1999, rebuild expenditures totaled approximately $175,600
and other capital
-10-
<PAGE>
ENSTAR INCOME/GROWTH PROGRAM SIX-A, L.P.
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
expenditures approximated $108,200. It is unlikely that budgeted amounts will
be spent in 1999 due to construction delays.
The Partnership is party to a loan agreement with EFC. The loan
agreement provides for a revolving loan facility of $4,563,000 (the
"Facility"). Total outstanding borrowings were $1,050,000 at September 30,
1999. The Partnership's management expects to increase borrowings under the
Facility in the future to fund the upgrade of the Partnership's systems.
However, the Partnership's borrowing capacity and its present cash reserves
may be insufficient to fund its entire upgrade program. Consequently, the
Partnership may need to rely on increased cash flow from operations or new
sources of borrowing in order to meet its future liquidity requirements.
There can be no assurance that such cash flow increases can be attained, or
that additional future borrowings will be available to the Partnership on
acceptable terms. If the Partnership is not able to attain such cash flow
increases, or obtain new sources of borrowings, the Partnership may not be
able to complete its full upgrade program. As a result, the value of the
Partnership's systems would be lower than that of systems rebuilt to a higher
technical standard.
The Partnership'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 (8.25% at September 30, 1999) plus 0.625%, or at an
offshore rate plus 1.875%. Under certain circumstances, the Partnership 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 it was in compliance with
the covenants at September 30, 1999.
The Corporate General Partner contributed its $269,300 receivable
balance from the Partnership for past due management fees and reimbursed
expenses as an equity contribution to EFC. This balance remains an
outstanding obligation of the Partnership.
The Facility does not restrict the payment of distributions to
partners unless an event of default exists thereunder or the Partnership's
ratio of debt to cash flow is greater than 4 to 1. However, as a result of
the pending upgrade program discussed above, the Corporate General Partner
has concluded that it is not prudent for the Partnership to resume paying
distributions at this time.
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 73% of the Partnership's subscribers are served by its
system in Flora, Illinois and neighboring communities. Significant damage to
the system due to seasonal weather conditions or other events could have a
material adverse effect on the Partnership's liquidity and cash flows. The
Partnership 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.
-11-
<PAGE>
ENSTAR INCOME/GROWTH PROGRAM SIX-A, L.P.
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
YEAR 2000
During the third quarter of 1999, FCLP, on behalf of the Corporate
General Partner, continued its identification, evaluation and remediation of
the Partnership's Year 2000 business risks associated with operations
directly under the control of the Partnership and those risks that are
dependent on third parties related to its exposure to 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, assessment and remediation 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. Most of the Partnership's exposure to Year 2000 issues
is dependent in large part on third parties. Failure to identify and
remediate a critical Year 2000 issue could result in an interruption of
services to customers or in the interruption of critical business functions,
either of which could result in a material adverse impact on the
Partnership's financial results.
FCLP concluded that certain of the Partnership's internal
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 cost of the implementation, including replacement
software and hardware, has been borne by FCLP. FCLP is continuing to utilize
internal and external resources to extend the functionality of the new
systems. The Partnership does not believe that any other significant
information technology projects affecting the Partnership have been delayed
due to efforts to identify or address Year 2000 issues.
Additionally, FCLP has continued to inventory the Partnership's
internal 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 or replace non-compliant equipment. Of the total number of
potentially non-compliant items identified in the inventory, all were
evaluated during the assessment stage, approximately 8.5% are in the
remediation planning phase and 91.5% are in the implementation stage. FCLP
conducted limited testing of systems, software and equipment in the third
quarter of 1999 and placed significant reliance on test results provided by
AT&T Broadband & Internet Services, an affiliate of FCLP. The cost of such
replacement or remediation to the Partnership is currently estimated to be
$38,800, all of which had been incurred as of September 30, 1999. FCLP has
also substantially completed the assessment and replacement or remediation of
the majority of the Partnership's internal equipment containing embedded
computer chips.
FCLP has continued to survey the Partnership's significant third
party vendors and service suppliers to determine the extent to which the
Partnership's interface systems are vulnerable should those third parties
fail to solve their own Year 2000 problems on a timely basis. The Partnership
is heavily dependent on third parties and these parties are themselves
heavily dependent on technology. For example, if a television broadcaster or
cable programmer encounters Year 2000 problems that impede its ability to
deliver its programming, the Partnership will be unable to provide that
programming to its cable customers, which would result in a loss of revenues,
although the Partnership would attempt to provide its customers with
alternative program services. Virtually all of the
-12-
<PAGE>
ENSTAR INCOME/GROWTH PROGRAM SIX-A, L.P.
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
Partnership's most critical equipment vendors have responded to the surveys
regarding the Year 2000 compliance of their products and indicated that they
are already compliant or have indicated their intent to be compliant.
Additional compliance information has been obtained for specific products
from vendor Web sites, interviews, on-site visits, system interface testing
and industry group participation. Among the most significant third party
service providers upon which the Partnership relies are programming
suppliers, power and telephone companies, various banking institutions and
the Partnership's customer billing service. The Partnership has taken steps
to attempt to satisfy itself that the third parties on which it is heavily
reliant are Year 2000 compliant and have developed satisfactory contingency
plans, or that alternative means of meeting the Partnership's business
requirements are available. However, the Partnership can predict neither the
likelihood of successful compliance nor the direct or indirect costs to the
Partnership of non-compliance by those third parties or of securing such
services from alternate compliant third parties.
FCLP believes that it has established an effective program to
resolve all significant Year 2000 issues in its control in a timely manner.
As noted above, however, while FCLP has substantially completed all phases of
the Partnership's remediation program, it is dependent on third parties whose
progress is not within its control. Disruptions experienced by third parties
with which the Partnership does business as well as by the economy generally
could also materially adversely affect the Partnership. The amount of
potential liability and lost revenue cannot be reasonably estimated at this
time.
FCLP has focused its efforts on identification and remediation of
the Partnership's Year 2000 exposures and has developed specific contingency
plans in the event it does not successfully complete its remaining
remediation as anticipated or experiences unforeseen problems. Considerable
effort has been directed toward distinguishing between those contingencies
with a greater probability of occurring from those whose occurrence is
considered remote, and on those systems whose failure poses a material risk
to the Partnership's results of operations and financial condition. FCLP has
also examined the Partnership's business interruption strategies to evaluate
whether they would satisfactorily meet the demands of failures arising from
Year 2000 related problems. FCLP intends to examine the Partnership's status
periodically to determine the necessity of establishing and implementing such
contingency plans or additional strategies, which could involve, among other
things, manual workarounds, adjusting staffing strategies and sharing
resources.
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
Cash provided by operating activities decreased by $128,300 for the
nine months ended September 30, 1999 from the corresponding period in 1998.
Changes in receivables and prepaid expenses used $83,900 more cash in the
first nine months of 1999 than in the corresponding period in 1998 due to
differences in the timing of receivable collections and in the payment of
prepaid expenses. The Partnership used $102,900 less cash to pay liabilities
owed to third-party creditors due to differences in the timing of payments.
The Partnership used $178,100 more cash in investing activities
during the nine months ended September 30, 1999 than in the comparable nine
months of 1998, primarily due to an increase of $155,800 in expenditures for
tangible assets and an increase of $22,100 in expenditures for intangible
-13-
<PAGE>
ENSTAR INCOME/GROWTH PROGRAM SIX-A, L.P.
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
assets. Financing activities used $288,500 less cash in the first nine months
of 1999 than in the corresponding period of 1998. The Partnership used
$450,000 less cash for the repayment of debt but used $194,900 more cash to
pay liabilities owed to the Corporate General Partner in the first nine
months of 1999 than in the corresponding period of 1998 due to differences in
the timing of payments.
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.
-14-
<PAGE>
ENSTAR INCOME/GROWTH PROGRAM SIX-A, L.P.
PART II. OTHER INFORMATION
ITEMS 1-5. Not applicable.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27.1 - Financial Data Schedule
(b) No reports on Form 8-K were filed during the
quarter for which this report is filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ENSTAR INCOME/GROWTH PROGRAM SIX-A, L.P.
A GEORGIA LIMITED PARTNERSHIP
-----------------------------
(Registrant)
By: ENSTAR COMMUNICATIONS CORPORATION
General Partner
Date: November 11, 1999 By: /s/ MICHAEL K. MENEREY
-------------------------
Michael K. Menerey,
Executive Vice President,
Chief Financial Officer and
Secretary
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT SEPTEMBER 30, 1999, AND THE STATEMENTS OF OPERATIONS FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 391,800
<SECURITIES> 0
<RECEIVABLES> 34,900
<ALLOWANCES> 4,000
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 8,687,600
<DEPRECIATION> 5,937,200
<TOTAL-ASSETS> 4,120,600
<CURRENT-LIABILITIES> 554,800
<BONDS> 1,050,000
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,120,600
<SALES> 0
<TOTAL-REVENUES> 2,602,700
<CGS> 0
<TOTAL-COSTS> 2,412,800
<OTHER-EXPENSES> (19,000)
<LOSS-PROVISION> 21,800
<INTEREST-EXPENSE> 112,600
<INCOME-PRETAX> 96,300
<INCOME-TAX> 0
<INCOME-CONTINUING> 96,300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 96,300
<EPS-BASIC> 1.19
<EPS-DILUTED> 0
</TABLE>
