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, 2002
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: 000-16779
ENSTAR INCOME/GROWTH PROGRAM FIVE-A, L.P.
(Exact name of registrant as specified in its charter)
12405 Powerscourt Drive
St. Louis, Missouri 63131
(Address of principal executive offices including zip code)
(314) 965-0555
(Registrant's telephone number, including area code)
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 reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ]
ENSTAR INCOME/GROWTH PROGRAM FIVE-A, L.P.
Quarterly Report on Form 10-Q for the Period ended September 30, 2002
Table of Contents
| PART I. FINANCIAL INFORMATION | Page No. |
| Item 1. Financial Statements - Enstar Income Program Five-A, L.P. | |
| Condensed Balance Sheets as of September 30, 2002 and December 31, 2001 | |
| Condensed Statements of Operations for the three and nine months ended September 30, 2002 and 2001 | |
| Condensed Statements of Cash Flows for the nine months ended September 30, 2002 and 2001 | |
| Notes to Condensed Financial Statements | |
| Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | |
| Item 4. Controls and Procedures | |
| PART II. OTHER INFORMATION | |
| Item 6. Exhibits and Reports on Form 8-K | |
| Signatures | |
| Certifications |
PART I. FINANCIAL INFORMATION.
ITEM 1. FINANCIAL STATEMENTS.
ENSTAR INCOME/GROWTH PROGRAM FIVE-A, L.P.
CONDENSED BALANCE SHEETS
September 30, December 31,
2002 2001
------------ ------------
(unaudited)
ASSETS
ASSETS:
Cash............................................................. $ 3,000 $ 1,300
Equity in net assets of joint venture............................ 5,027,600 4,949,400
------------ ------------
Total assets............................................... $ 5,030,600 $ 4,950,700
============ ============
LIABILITIES AND PARTNERSHIP CAPITAL
LIABILITIES:
Accounts payable and accrued liabilities......................... $ 2,800 $ 3,600
Due to affiliates................................................ 110,600 134,300
------------ ------------
Total liabilities......................................... 113,400 137,900
------------ ------------
PARTNERSHIP CAPITAL (DEFICIT):
General Partners................................................. (75,000) (76,000)
Limited Partners................................................. 4,992,200 4,888,800
------------ ------------
Total partnership capital................................. 4,917,200 4,812,800
------------ ------------
Total liabilities and partnership capital................. $ 5,030,600 $ 4,950,700
============ ============
See accompanying notes to condensed financial statements.
ENSTAR INCOME/GROWTH PROGRAM FIVE-A, L.P.
CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
2002 2001 2002 2001
------------ ------------ ------------ ------------
(unaudited) (unaudited)
EQUITY IN NET INCOME OF JOINT VENTURE........................... $ 48,400 $ 75,100 $ 153,200 $ 75,400
GENERAL AND ADMINISTRATIVE EXPENSES............................. 11,900 19,100 48,800 50,700
OTHER EXPENSE................................................... -- 3,800 -- 3,800
------------ ------------ ------------ ------------
NET INCOME...................................................... $ 36,500 $ 52,200 $ 104,400 $ 20,900
============ ============ ============ ============
Net income allocated to General Partners........................ $ 400 $ 500 $ 1,000 $ 200
============ ============ ============ ============
Net income allocated to Limited Partners........................ $ 36,100 $ 51,700 $ 103,400 $ 20,700
============ ============ ============ ============
NET INCOME PER UNIT OF LIMITED PARTNERSHIP INTEREST............. $ 0.60 $ 0.87 $ 1.73 $ 0.35
============ ============ ============ ============
AVERAGE LIMITED PARTNERSHIP UNITS OUTSTANDING DURING PERIOD..... 59,766 59,766 59,766 59,766
============ ============ ============ ============
See accompanying notes to condensed financial statements.
ENSTAR INCOME/GROWTH PROGRAM FIVE-A, L.P.
CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
------------------------
2002 2001
----------- -----------
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................................. $ 104,400 $ 20,900
Adjustments to reconcile net income to net cash flows from operating activities:
Equity in net income of joint venture.................................... (153,200) (75,400)
Changes in:
Accounts payable, accrued liabilities and due to affiliates.............. (24,500) 49,700
----------- -----------
Net cash flows from operating activities............................. (73,300) (4,800)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions from joint venture............................................ 75,000 --
----------- -----------
Net cash flows from investing activities............................. 75,000 --
----------- -----------
NET INCREASE (DECREASE) IN CASH ............................................... 1,700 (4,800)
CASH, beginning of period...................................................... 1,300 5,000
----------- -----------
CASH, end of period............................................................ $ 3,000 $ 200
=========== ===========
See accompanying notes to condensed financial statements.
ENSTAR INCOME/GROWTH PROGRAM FIVE-A, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. INTERIM FINANCIAL STATEMENTS
The accompanying condensed interim financial statements for Enstar Income/Growth Program Five-A, L.P. (the Partnership) as of September 30, 2002, and for the three and nine months ended September 30, 2002 and 2001, 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 Annual Report on Form 10-K for the year ended December 31, 2001. In the opinion of management, the condensed interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results of such periods. The results of operations for the three and nine months ended September 30, 2002 are not necessarily indicative of results for the entire year.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates include useful lives of property, plant and equipment, valuation of long-lived assets and allocated operating costs. Actual results could differ from those estimates.
2. TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES
The Partnership did not own or operate any cable television operations in 2002 and 2001 other than through its investment in the joint venture, as defined below. The Partnership has a management and service agreement (the Management Agreement) with Enstar Cable Corporation (Enstar Cable), a wholly owned subsidiary of Enstar Communications Corporation (ECC), the Corporate General Partner, for a monthly management fee of 5% of gross revenues, as defined, from the operations of the Partnership. No management fees were paid by the Partnership during 2002 and 2001.
Enstar Cable has entered into an identical agreement with Enstar Cable of Cumberland Valley (the Joint Venture), a Georgia general partnership, of which the Partnership is a joint venturer and co-general partner, except that the Joint Venture pays Enstar Cable a 4% management fee. The Joint Venture's management fee expense approximated $63,100 and $66,700 for the three months ended September 30, 2002 and 2001, respectively, and $191,200 and a $198,100 for the nine months ended September 30, 2002 and 2001, respectively. In addition, the Joint Venture is also required to distribute to ECC an amount equal to 1% of the Joint Venture's gross revenues. The Joint Venture's management fee expense to ECC approximated $15,800 and $16,700 during the three months ended September 30, 2002 and 2001, respectively, and $47,800 and $49,500 during the nine months ended September 30, 2002 and 2001, respectively. No management fee is payable to Enstar Cable by the Partnership with respect to any amounts received by the Partnership from the Joint Venture.
In addition to the monthly management fee, the Partnership reimburses Enstar Cable for direct expenses incurred on behalf of the Partnership, and for the Partnership's allocable share of operational costs associated with services provided by Enstar Cable. Additionally, Charter Communications Holding Company, LLC, a direct parent of ECC, and its affiliates (collectively, Charter) provide other management and operational services for the Partnership and the Joint Venture. These expenses are charged to the properties served based primarily on the Partnership's or Joint Venture's allocable share of operational costs associated with the services provided. The Partnership and the Joint Venture reimburse the affiliates for the Partnership's and the Joint Venture's allocable share of the affiliates' costs. The total amount charged to the Joint Venture for these costs approximated $169,200 and $176,300 for the three months ended September 30, 2002 and 2001, respectively, and $528,400 and $689,000 for the nine months ended September 30, 2002 and 2001, respectively.
All programming services are purchased through Charter. Charter charges the Joint Venture for these costs based on an allocation of its costs. The Joint Venture recorded programming fee expense of $313,300 and $327,000 for the three months ended September 30, 2002 and 2001, respectively, and $943,900 and $972,500 for the nine months ended September 30, 2002 and 2001, respectively. Programming fees are included in service costs in the accompanying condensed statements of operations.
All amounts owed to the General Partner and affiliates are non-interest bearing.
3. NET INCOME PER UNIT OF LIMITED PARTNERSHIP INTEREST
Net income per unit of limited partnership interest is based on the average number of units outstanding during the periods presented. For this purpose, net income has been allocated 99% to the Limited Partners and 1% to the General 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. EQUITY IN NET ASSETS OF ENSTAR CABLE OF CUMBERLAND VALLEY (JOINT VENTURE)
The Partnership and an affiliated partnership, Enstar Income/Growth Program Five-B, L.P. (collectively, the Venturers), each own 50% of the Joint Venture. Each of the Venturers share equally in the profits and losses of the Joint Venture. The investment in the Joint Venture is accounted for on the equity method. Condensed financial information for the Joint Venture as of September 30, 2002 and December 31, 2001, and the condensed results of its operations for the three and nine months ended September 30, 2002 and 2001 follow. The condensed results of operations for the three and nine months ended September 30, 2002 are not necessarily indicative of results for the entire year.
ENSTAR CABLE OF CUMBERLAND VALLEY
CONDENSED BALANCE SHEETS
September 30, December 31,
2002 2001
----------- ------------
(unaudited)
ASSETS
Current assets.......................................... $ 6,244,300 $ 4,471,500
Investment in cable television properties, net.......... 6,351,500 6,845,300
Other assets............................................ 300 600
----------- ------------
$12,596,100 $ 11,317,400
=========== ============
LIABILITIES AND VENTURERS' CAPITAL
Current liabilities..................................... $ 606,700 $ 655,700
Due to affiliates....................................... 1,934,100 762,900
Venturers' capital...................................... 10,055,300 9,898,800
----------- ------------
$12,596,100 $ 11,317,400
=========== ============
ENSTAR CABLE OF CUMBERLAND VALLEY
CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
2002 2001 2002 2001
------------ ------------ ------------ ------------
(unaudited) (unaudited)
REVENUES $ 1,576,400 $ 1,666,700 $ 4,779,700 $ 4,952,400
------------ ------------ ------------ ------------
OPERATING EXPENSES:
Service costs............................................. 599,500 536,900 1,752,400 1,618,600
General and administrative expenses....................... 233,900 289,100 693,400 804,800
General partner management fees and reimbursed expenses... 248,100 259,700 767,400 936,600
Depreciation and amortization............................. 418,300 470,300 1,307,800 1,444,000
------------ ------------ ------------ ------------
1,499,800 1,556,000 4,521,000 4,804,000
------------ ------------ ------------ ------------
OPERATING INCOME 76,600 110,700 258,700 148,400
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE):
Interest income........................................... 20,100 28,300 47,800 78,500
Interest expense.......................................... -- -- -- (7,600)
Other income (expense).................................... -- 11,100 -- (68,600)
------------ ------------ ------------ ------------
20,100 39,400 47,800 2,300
------------ ------------ ------------ ------------
NET INCOME................................................... $ 96,700 $ 150,100 $ 306,500 $ 150,700
============ ============ ============ ============
5. PROPOSED SALES TRANSACTIONS
The Joint Venture has entered into two asset purchase agreements providing for the sale of certain assets and liabilities of its Kentucky systems. The first asset purchase agreement, executed September 30, 2002, provides for the sale of cable systems in and around Monticello, Kentucky to Access Cable Television, Inc. The second asset purchase agreement, executed October 8, 2002, provides for the sale of cable systems in and around Russell Springs, Kentucky to Cumberland Cellular, Inc. The total sale price of the two transactions is approximately $10,645,600. The sale is subject to approval by a majority of the holders of the Partnership's outstanding units and certain closing conditions, including regulatory approvals. The results of operations and assets associated with these systems will be classified as discontinued operations in the Joint Venture's financials statements once the sales are deemed probable.
On November 8, 2002 the Joint Venture entered into an asset purchase agreement providing for the sale of the Pomme de Terre, Missouri headend to Telecommunications Management, LLC (Telecommunications Management) for a total sale price of approximately $502,800 (approximately $599 per customer acquired). This sale is a part of a larger transaction in which the Joint Venture and nine other affiliated partnerships (which, together with the Joint Venture are collectively referred to as the "Selling Partnerships") would sell all of their remaining assets used in the operation of their respective cable systems to Telecommunications Management for a total cash sale price of approximately $15,341,600 (the Telecommunications Management Sale). The Telecommunications Management Sale is subject to the approval of a majority of the holders of the Partnership's units and approval of the holders of the other Selling Partnerships. In addition, the transaction is subject to certain closing conditions, including regulatory and franchise approvals. If approved, it is expected that this sale will close in the first half of 2003, although no assurance can be given regarding this matter.
Upon sale of the Pomme de Terre, Missouri cable system, the Joint Venture and the Partnership will be liquidated and all remaining assets distributed to the joint venturers and ultimately to the Limited Partners and the General Partners.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
This report includes certain forward-looking statements regarding, among other things, our future results of operations, regulatory requirements, competition, capital needs and general business conditions applicable to us. 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 us. In addition to the information provided herein, reference is made to our Annual Report on Form 10-K for the year ended December 31, 2001, for additional information regarding such matters and the effect thereof on our business.
All of our cable television business operations are conducted through our participation as a partner with a 50% interest in Enstar Cable of Cumberland Valley (the Joint Venture). Our participation is equal to our affiliated partner (Enstar Income/Growth Program Five-B, L.P.) under the joint venture agreement with respect to capital contributions, obligations and commitments, and results of operations. We have a management and service agreement with Enstar Cable Corporation (Enstar Cable), a wholly owned subsidiary of Enstar Communications Corporation, the Corporate General Partner. Enstar Cable has entered into a similar agreement with the Joint Venture. In considering the financial condition and results of operations for us, consideration must also be made of those matters as they relate to the Joint Venture. The following discussion reflects such consideration, and with respect to results of operations, a separate discussion is provided for each entity.
RESULTS OF OPERATIONS
THE PARTNERSHIP
General and administrative expenses decreased $7,200 from $19,100 to $11,900, or 37.7%, and $1,900 from $50,700 to $48,800, or 3.7%, for the three and nine months ended September 30, 2002, respectively, compared to the corresponding periods in 2001. The decrease for the three month period was due to a decline in professional fees.
Other expense of $3,800 for the three and nine months ended September 30, 2001, represent costs associated with the termination of a potential sales agreement.
THE JOINT VENTURE
The Joint Venture's revenues decreased $90,300 from $1,666,700 to $1,576,400, or 5.4%, and $172,700 from $4,952,400 to $4,779,700, or 3.5%, for the three and nine months ended September 30, 2002, respectively, compared to the corresponding periods in 2001. The decrease was primarily due to a decline in the number of basic and premium service customers. As of September 30, 2002 and 2001, the Joint Venture had approximately 13,300 and 14,500 basic service customers, respectively, and 2,000 and 3,700 premium service customers, respectively. The decline in customers is primarily due to competition from satellite providers and customer reaction to increased prices.
Service costs increased $62,600 from $536,900 to $599,500, or 11.7%, and $133,800 from $1,618,600 to $1,752,400, or 8.3%, for the three and nine months ended September 30, 2002, respectively, compared to the corresponding periods in 2001. Service costs represent programming costs and other costs directly attributable to providing cable services to customers. The increase was primarily due to an increase in personnel costs which had previously been paid by Charter and reimbursed by the Joint Venture but is now directly paid by the Joint Venture.
General and administrative expenses decreased $55,200 from $289,100 to $233,900, or 19.1%, and $111,400 from $804,800 to $693,400, or 13.8%, for the three and nine months ended September 30, 2002, respectively, compared to the corresponding periods in 2001. The decrease was due to a decline in billing and insurance costs.
General partners management fees and reimbursed expenses decreased $11,600 from $259,700 to $248,100, or 4.5%, and $169,200 from $936,600 to $767,400, or 18.1%, for the three and nine months ended September 30, 2002, respectively, compared to the corresponding periods in 2001. The decrease was primarily due to the fact that personnel costs were previously paid by Charter and reimbursed by the Joint Venture.
Depreciation and amortization expense decreased $52,000 from $470,300 to $418,300, or 11.1%, and $136,200 from $1,444,000 to $1,307,800, or 9.4%, for the three and nine months ended September 30, 2002, respectively, compared to the corresponding periods in 2001. The decrease was primarily due to certain franchise costs becoming fully amortized during the last half of 2001 and the nine months ended September 30, 2002 partially offset by capital expenditures.
Due to the factors described above, operating income decreased $34,100 from $110,700 to $76,600 and increased $110,300 from $148,400 to $258,700 for the three and nine months ended September 30, 2002, respectively, compared to the corresponding periods in 2001.
Interest income decreased $8,200 from $28,300 to $20,100, or 29.0%, and $30,700 from $78,500 to $47,800, or 39.1%, for the three and nine months ended September 30, 2002, respectively, compared to the corresponding periods in 2001. The decrease was primarily due to a decrease in interest rates on cash balances available for investment during the three and nine months ended September 30, 2002 compared to the corresponding periods in 2001.
Interest expense decreased from $7,600 to $0 for the nine months ended September 30, 2002. The decrease was due to the expiration of our loan facility on August 31, 2001.
Other income of $11,100 and other expense of $68,600 for the three and nine months ended September 30, 2001, respectively, represent other income and costs associated with the termination of a potential sales agreement.
Due to the factors described above, net income decreased $53,400 from $150,100 to $96,700 and increased $155,800 from $150,700 to $306,500 for the three and nine months ended September 30, 2002, respectively, compared to the corresponding periods in 2001.
LIQUIDITY AND CAPITAL RESOURCES
THE PARTNERSHIP
All of our cable television business operations, which began in January 1988, are conducted through our participation as a partner in the Joint Venture. We did not pay distributions to our partners during the three and nine months ended September 30, 2002 and 2001. The Joint Venture paid $75,000 from its operations to us during the nine months ended September 30, 2002.
Operating activities used cash of $73,300 and $4,800 during the nine months ended September 30, 2002 and 2001, respectively. Changes in liabilities owed to affiliates and third party creditors used cash of $24,500 and provided cash of $49,700 during the nine months ended September 30, 2002 and 2001, respectively.
Our primary objective, having invested net offering proceeds in the Joint Venture, is to distribute to our partners all available cash from the sale of the Joint Venture's cable systems and all cash flow, if any, from operations after providing for expenses and any planned capital requirements relating to the expansion, improvement and upgrade of such cable television systems.
INVESTING ACTIVITIES
Significant capital would be required for a comprehensive plant and headend upgrade particularly in light of the high cost of electronics to enable two-way service, to offer high speed cable modem Internet service and other interactive services, as well as to increase channel capacity and allow a greater variety of video services.
The estimated cost of a comprehensive upgrade would be approximately $20.6 million (for an upgrade to 550 megahertz capacity) and $24.8 million (for an upgrade to 870 megahertz capacity). Given the high cost of this comprehensive upgrade plan, the limited funds available, and the belief that such a plan is not economically prudent, the Corporate General Partner does not presently anticipate that it will proceed with a comprehensive upgrade plan. In light of the pending transactions, the Corporate General Partner will continue to maintain compliance with franchise agreements and be economically prudent.
FINANCING ACTIVITIES
The Joint Venture was a party to a loan agreement with Enstar Finance Company, LLC, a subsidiary of the Corporate General Partner that matured on August 31, 2001. The loan facility was not extended or replaced and any amounts outstanding under the facility were paid in full. Cash generated by operations of the Joint Venture, together with available cash balances will be used to fund any capital expenditures as required by franchise authorities. However, the Joint Venture's cash reserves will be insufficient to fund a comprehensive upgrade program. If the Joint Venture's systems are not sold, it will need to rely on increased cash flow from operations or new sources of financing 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 financing will be available on terms acceptable to the Joint Venture. If the Joint Venture is not able to attain such cash flow increases, or obtain new sources of borrowings, it will not be able to fully complete any cable systems upgrades as required by franchise authorities. As a result, the value of the Joint Venture's systems would likely be lower than that of systems built to a higher technical standard.
The Joint Venture believes it is critical to conserve cash to fund its future liquidity requirements and any anticipated capital expenditures as required by franchise authorities. Accordingly, we do not anticipate any distributions to partners at this time.
PROPOSED SALES TRANSACTIONS
The Joint Venture has entered into two asset purchase agreements providing for the sale of certain assets and liabilities of its Kentucky systems. The first asset purchase agreement, executed September 30, 2002, provides for the sale of cable systems in and around Monticello, Kentucky to Access Cable Television, Inc. The second asset purchase agreement, executed October 8, 2002, provides for the sale of cable systems in and around Russell Springs, Kentucky to Cumberland Cellular, Inc. The total sale price of the two transactions is approximately $10,645,600. The sale is subject to approval by a majority of the holders of the Partnership's and Enstar Income/Growth Program Five-B, L.P.'s outstanding units and certain closing conditions, including regulatory approvals. The results of operations and assets associated with these systems will be classified as discontinued operations once the sales are deemed probable.
On November 8, 2002 the Joint Venture entered into an asset purchase agreement providing for the sale of the Pomme de Terre, Missouri headend to Telecommunications Management, LLC (Telecommunications Management) for a total sale price of approximately $502,800 (approximately $599 per customer acquired). This sale is a part of a larger transaction in which the Joint Venture and nine other affiliated partnerships (which, together with the Joint Venture are collectively referred to as the "Selling Partnerships") would sell all of their remaining assets used in the operation of their respective cable systems to Telecommunications Management for a total cash sale price of approximately $15,341,600 (the Telecommunications Management Sale). The Telecommunications Management Sale is subject to the approval of a majority of the holders of the Partnership's units and approval of the holders of the other Selling Partnerships. In addition, the transaction is subject to certain closing conditions, including regulatory and franchise approvals. If approved, it is expected that this sale will close in the first half of 2003, although no assurance can be given regarding this matter.
Upon sale of all of the Pomme de Terre, Missouri cable system, the Joint Venture and the Partnership will be liquidated and all remaining assets distributed to the Limited Partners and the General Partners.
CERTAIN TRENDS AND UNCERTAINTIES
The Joint Venture relies upon the availability of cash generated from operations and possible borrowings to fund its ongoing expenses and capital requirements. The Joint Venture was required to upgrade its system in Campbell County, Tennessee, under a provision of its franchise agreement. The upgrade began in 1998 and the franchise agreement required the project to be completed by January 2000. The Joint Venture did not meet this requirement. The franchising authority notified the Joint Venture on March 18, 2002, that it had violated the franchise agreement for failing to comply with the upgrade requirement. As a result of the alleged violation, the franchising authority could assess monetary damages or revoke the franchise. The franchising authority has notified the Joint Venture that it may take action to remedy the alleged violation but has not done so to date. The loss of our franchise and the related loss of customers would have a significant impact on our financial condition and results of operation. As of September 30, 2002, there were approximately 800 basic customers in Campbell County representing 6.0% of the subscribers in the Joint Venture.
Insurance coverage is maintained for all of the cable television properties owned or managed by Charter to cover damage to cable distribution systems, customer 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 Charter, including those of the Joint Venture.
Approximately 93.7% of the Joint Venture's customers are served by its system in Monticello, Kentucky and neighboring communities. Significant damage to the system due to seasonal weather conditions or other events could have a material adverse effect on the Joint Venture's liquidity and cash flows. The Joint Venture continues to purchase insurance coverage in amounts its management views as appropriate for all other property, liability, automobile, workers' compensation and other insurable risks.
Charter and our Corporate General Partner have had communications and correspondence with representatives of certain limited partners, and others, concerning certain Enstar partnerships of which our Corporate General Partner is also the Corporate General Partner. While we are not aware of any formal litigation which has been filed relating to the communications and correspondence, or the subject matter referred to therein, it is impossible to predict what actions may be taken in the future or what loss contingencies may result therefrom.
It is difficult to assess the impact that the general economic slowdown will have on future operations. This could result in reduced spending by customers and advertisers, which could reduce revenues and operating cash flow, as well as the collectibility of accounts receivable.
INFLATION
Certain of the Joint Venture's expenses, such as those for wages and benefits, equipment repair and replacement, and billing and marketing generally increase with inflation. However, we do not believe that our financial results have been, or will be, adversely affected by inflation in a material manner, provided that the Joint Venture is able to increase its prices periodically, of which there can be no assurance.
ITEM 4. CONTROLS AND PROCEDURES.(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. Within the 90 days prior to the date of this report, our Corporate General Partner carried out an evaluation, under the supervision and with the participation of our management, including our Chief Administrative Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our Chief Administrative Officer and Principal Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information that is required to be disclosed by the Partnership in reports that it files in its periodic SEC reports is recorded, processed, summarized and reported within the terms specified in the SEC rules and forms.
(b) CHANGES IN INTERNAL CONTROLS. There were no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date that our Corporate General Partner carried out this evaluation.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8- K.
- EXHIBITS
- REPORTS ON FORM 8-K
ExhibitNumber | Description of Document |
2.1 | Asset Purchase Agreement, dated September 30, 2002, by and between Access Cable Television, Inc. and Enstar Cable of Cumberland Valley. * |
2.2 | Asset Purchase Agreement, dated October 8, 2002, by and between Cumberland Cellular, Inc. and Enstar Cable of Cumberland Valley. * |
2.3 | Asset Purchase Agreement, dated November 8, 2002, by and among Telecommunications Management, LLC and Enstar Income Program II-2, L.P., Enstar Income Program IV-3, L.P., Enstar Income Program 1984-1, L.P., Enstar Income/Growth Program Six-A, L.P., Enstar VII, L.P., Enstar VIII, L.P., Enstar X, L.P., Enstar XI, L.P., Enstar IV/PBD Systems Venture and Enstar Cable of Cumberland Valley (Incorporated by reference to Exhibit 2.1 to the quarterly report of Form 10-Q of Enstar Income Program II-2, L.P. filed on November 12, 2002 (File No. 000-14505)). |
99.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Administrative Officer).* |
99.2 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Principal Financial Officer).* |
* filed herewith
On October 8, 2002, the registrant filed a current report on Form 8-K dated September 30, 2002 to announce it had entered into two asset purchase agreements.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ENSTAR INCOME/GROWTH PROGRAM FIVE-A, L.P.
By:ENSTAR COMMUNICATIONS CORPORATION
Corporate General Partner
Date: November 13, 2002
By: /s/ Paul E. Martin
Name: Paul E. Martin
Title: Senior Vice President and Corporate
Controller (Principal Financial Officer
and Principal Accounting Officer)
Certification of Chief Administrative Officer
I, Steven A. Schumm, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Enstar Income/Growth Program Five-A, L.P.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: November 13, 2002
/s/ Steven A. Schumm
Steven A. Schumm
Executive Vice President and
Chief Administrative Officer
Certification of Principal Financial Officer
I, Paul E. Martin, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Enstar Income/Growth Program Five-A, L.P.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: November 13, 2002
/s/ Paul E. Martin
Paul E. Martin
Senior Vice President and
Corporate Controller (Principal Financial
Officer and Principal Accounting Officer)
EXHIBIT INDEX
ExhibitNumber | Description of Document |
2.1 | Asset Purchase Agreement, dated September 30, 2002, by and between Access Cable Television, Inc. and Enstar Cable of Cumberland Valley. * |
2.2 | Asset Purchase Agreement, dated October 8, 2002, by and between Cumberland Cellular, Inc. and Enstar Cable of Cumberland Valley. * |
2.3 | Asset Purchase Agreement, dated November 8, 2002, by and among Telecommunications Management, LLC and Enstar Income Program II-2, L.P., Enstar Income Program IV-3, L.P., Enstar Income Program 1984-1, L.P., Enstar Income/Growth Program Six-A, L.P., Enstar VII, L.P., Enstar VIII, L.P., Enstar X, L.P., Enstar XI, L.P., Enstar IV/PBD Systems Venture and Enstar Cable of Cumberland Valley (Incorporated by reference to Exhibit 2.1 to the quarterly report of Form 10-Q of Enstar Income Program II-2, L.P. filed on November 12, 2002 (File No. 000-14505)). |
99.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Administrative Officer).* |
99.2 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Principal Financial Officer).* |
* filed herewith