1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
FORM 10-Q
(MARK ONE)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
-----------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------------- ---------------------
Commission File Number 0-13333
-------
Enstar Income Program 1984-1, L.P.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Georgia 58-1581136
- --------------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
12405 Powerscourt Drive
St. Louis, Missouri 63131
- -------------------------------------- -----------------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number,
including area code: (314) 965-0555
--------------------------
- --------------------------------------------------------------------------------
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
---- ----
2
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
ENSTAR INCOME PROGRAM 1984-1, L.P.
CONDENSED BALANCE SHEETS
================================================================================
JUNE 30, DECEMBER 31,
2001 2000 *
-------------- --------------
(UNAUDITED)
ASSETS
ASSETS:
Cash $ 2,454,300 $ 2,366,800
Accounts receivable, net of allowance for doubtful
accounts of $20,300 and $10,600, respectively 499,000 495,900
Prepaid expenses and other assets 58,900 67,500
Property, plant and equipment, net of accumulated
depreciation of $10,570,500 and $10,198,900, respectively 3,366,500 3,425,500
Franchise cost, net of accumulated amortization of
$30,500 and $26,500, respectively 50,200 48,100
Deferred loan costs and other deferred charges, net 10,500 26,400
------------- -------------
$ 6,439,400 $ 6,430,200
============= =============
LIABILITIES AND PARTNERSHIP CAPITAL
LIABILITIES:
Accounts payable $ 602,300 $ 571,200
Accrued liabilities 446,600 716,100
Due to affiliates 756,000 196,300
------------- -------------
1,804,900 1,483,600
------------- -------------
PARTNERSHIP CAPITAL (DEFICIT)
General Partner (26,400) (23,300)
Limited Partners 4,660,900 4,969,900
------------- -------------
TOTAL PARTNERSHIP CAPITAL 4,634,500 4,946,600
------------- -------------
$ 6,439,400 $ 6,430,200
============= =============
* Agrees with audited balance sheet included in the Partnership's Annual Report
on Form 10-K.
The accompanying notes are an integral part of these condensed financial
statements.
2
3
ENSTAR INCOME PROGRAM 1984-1, L.P.
CONDENSED STATEMENTS OF OPERATIONS
================================================================================
UNAUDITED
THREE MONTHS ENDED
JUNE 30,
-------------------------------
2001 2000
-------------- --------------
REVENUES $ 950,600 $ 1,265,300
OPERATING EXPENSES:
Service costs 410,300 368,600
General and administrative expenses 282,800 165,500
General partner management fees and reimbursed expenses 111,300 142,200
Depreciation and amortization 199,400 215,500
------------- -------------
1,003,800 891,800
------------- -------------
OPERATING INCOME (LOSS) (53,200) 373,500
OTHER INCOME (EXPENSE):
Interest income 25,700 29,200
Interest expense (6,600) (18,300)
Other expense (340,200) (21,300)
------------- -------------
(321,100) (10,400)
------------- -------------
NET INCOME (LOSS) $ (374,300) $ 363,100
============= =============
Net income (loss) allocated to General Partner $ (3,700) $ 3,600
============= =============
Net income (loss) allocated to Limited Partners $ (370,600) $ 359,500
============= =============
NET INCOME (LOSS) PER UNIT OF LIMITED
PARTNERSHIP INTEREST $ (12.38) $ 12.01
============= =============
AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD 29,940 29,940
============= =============
The accompanying notes are an integral part of these condensed financial
statements.
3
4
ENSTAR INCOME PROGRAM 1984-1, L.P.
CONDENSED STATEMENTS OF OPERATIONS
================================================================================
UNAUDITED
SIX MONTHS ENDED
JUNE 30,
----------------------------------
2001 2000
-------------- --------------
REVENUES $ 1,899,500 $ 2,539,100
OPERATING EXPENSES:
Service costs 797,300 791,100
General and administrative expenses 488,600 362,700
General partner management fees and reimbursed expenses 215,200 309,500
Depreciation and amortization 394,200 425,800
------------- -------------
1,895,300 1,889,100
------------- -------------
OPERATING INCOME 4,200 650,000
OTHER INCOME (EXPENSE):
Interest income 42,200 51,700
Interest expense (12,600) (35,400)
Other expense (345,900) (24,400)
Casualty gain - 79,800
------------- -------------
(316,300) 71,700
------------- -------------
NET INCOME (LOSS) $ (312,100) $ 721,700
============= =============
Net income (loss) allocated to General Partner $ (3,100) $ 7,200
============= =============
Net income (loss) allocated to Limited Partners $ (309,000) $ 714,500
============= =============
NET INCOME (LOSS) PER UNIT OF LIMITED
PARTNERSHIP INTEREST $ (10.32) $ 23.86
============= =============
AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD 29,940 29,940
============= =============
The accompanying notes are an integral part of these condensed financial
statements.
4
5
ENSTAR INCOME PROGRAM 1984-1, L.P.
CONDENSED STATEMENTS OF CASH FLOWS
================================================================================
UNAUDITED
SIX MONTHS ENDED
JUNE 30,
--------------------------------
2001 2000
------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (312,100) $ 721,700
Adjustments to reconcile net income (loss) to net cash
from operating activities:
Depreciation and amortization 377,200 425,800
Amortization of deferred loan costs 17,000 14,900
Changes in:
Receivables, prepaid expenses and other assets 5,500 (195,300)
Accounts payable, accrued liabilities and due to affiliates 321,300 (78,300)
------------- -------------
Net cash from operating activities 408,900 888,800
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (312,100) (277,400)
Other investing activities (6,000) -
------------- -------------
Net cash from investing activities (318,100) (277,400)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred loan costs - (9,100)
Other financing activities (3,300) -
------------- -------------
Net cash from financing activities (3,300) (9,100)
------------- -------------
INCREASE IN CASH 87,500 602,300
CASH AT BEGINNING OF PERIOD 2,366,800 1,963,500
------------- -------------
CASH AT END OF PERIOD $ 2,454,300 $ 2,565,800
============= =============
The accompanying notes are an integral part of these condensed financial
statements.
5
6
ENSTAR INCOME PROGRAM 1984-1, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
=============================
1. INTERIM FINANCIAL STATEMENTS
The accompanying condensed interim financial statements for Enstar Income
Program 1984-1, L.P. (the "Partnership") as of June 30, 2001, and for the three
and six months ended June 30, 2001 and 2000, 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, 2000. 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 six months ended June 30, 2001, are not necessarily indicative of
results for the entire year.
2. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
The Partnership has a management and service agreement (the "Management
Agreement") with Enstar Cable Corporation (the "Manager"), a wholly owned
subsidiary of Enstar Communications Corporation (ECC), the corporate general
partner, for a monthly management fee of 5% of gross revenues paid to the
Manager, excluding revenues from the sale of cable television systems or
franchises. Management fee expense approximated $47,500 and $63,300 for the
three months ended June 30, 2001 and 2000, respectively, and $95,000 and
$127,000 for the six months ended June 30, 2001 and 2000, respectively.
Management fees are non-interest bearing.
The Management Agreement provides that the Partnership reimburse 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. Additionally, Charter Communications Holding Company,
LLC and its affiliates (collectively, "Charter") provide other management and
operational services for the Partnership. These expenses are charged to the
properties served based primarily on the Partnership's allocable share of
operational costs associated with services provided. The total amount charged to
the Partnership for these services approximated $63,800 and $78,900 for the
three months ended June 30, 2001 and 2000, respectively, and $120,200 and
$182,500 for the six months ended June 30, 2001 and 2000, respectively. These
fees are non-interest bearing.
Substantially all programming services are purchased through Charter.
Charter charges the Partnership for these costs based on its actual costs. The
Partnership recorded programming fees of $211,900 and $232,800 for the three
months ended June 30, 2001 and 2000, respectively, and $427,100 and $492,100 for
the six months ended June 30, 2001 and 2000, respectively. Programming fees are
included in service costs in the accompanying condensed statements of
operations.
3. NET INCOME (LOSS) PER UNIT OF LIMITED PARTNERSHIP INTEREST
Net income (loss) per unit of limited partnership interest is based on the
average number of units outstanding during the periods presented. For this
purpose, net income (loss) has been allocated 99% to the Limited Partners and 1%
to the General Partner. The General Partner does not own units of partnership
interest in the Partnership, but rather holds a participation interest in the
income, losses and distributions of the Partnership.
4. SALE OF CABLE SYSTEM
During 2000, the Partnership sold cable systems serving Kershaw, South
Carolina for an aggregate sale price of $5.2 million. Summarized unaudited pro
forma operating results of the Partnership as though such disposition had
occurred on January 1, 2000, with adjustments to give effect to amortization of
franchise, interest expense, and certain other adjustments, follows.
6
7
UNAUDITED
SIX MONTHS ENDED
JUNE 30, 2000
-----------------
Revenues $ 2,290,900
Operating Income 558,100
Net Income 651,500
Net Income Per Unit 21.52
The unaudited pro forma financial information has been presented for comparative
purposes and does not purport to be indicative of the consolidated results of
operations had these transactions been completed as of the assumed date or which
may be obtained in the future.
5. COMMITMENTS
The Partnership, together with certain affiliates (collectively, the
"Selling Partnerships"), entered into a purchase and sale agreement, dated as of
June 21, 2000, as amended as of September 29, 2000 (the "Agreement"), with
Multimedia Acquisition Corp., an affiliate of Gans Multimedia Partnership
("Gans"). The Agreement provided for Gans to acquire the assets comprising the
Partnership's Snow Hill, North Carolina and Brownsville, Tennessee cable
systems, as well as certain assets of the other Selling Partnerships.
Following a series of discussions and meetings, the Partnership and Gans
determined that they will not be able to agree on certain further amendments to
the Agreement that are required in order to satisfy conditions precedent to
close the transaction. In light of this, present economic and financial market
conditions, and their impact on Gans' inability to arrange financing in order to
close the acquisition, on April 18, 2001, the parties agreed to terminate the
Agreement.
The Partnership's corporate general partner will continue to operate the
Partnership's cable television systems and will continue to investigate
potential divestiture transactions for the benefit of its unitholders.
6. NEW ACCOUNTING STANDARDS
In July 2001, the Financial Accounting Standards Board adopted Statements
of Financial Accounting Standards (SFAS) No. 141 "Business Combinations" and No.
142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires all business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method of accounting. SFAS No. 141 is required to be implemented for
all acquisitions initiated after June 30, 2001 and all business combinations
accounted for using the purchase method for which the date of acquisition is
July 1, 2001 or later. Adoption of SFAS No. 141 will not impact the condensed
financial statements of the Partnership.
Under SFAS No. 142, goodwill is no longer subject to amortization over its
useful life, rather, it is subject to at least annual assessments of impairment.
Also, under SFAS No. 142, an intangible asset should be recognized if the
benefit of the intangible is obtained through contractual or other legal rights
or if the intangible asset can be sold, transferred, licensed, rented or
exchanged. Such intangibles will be amortized over their useful lives. Certain
intangibles have indefinite useful lives and will not be amortized. SFAS No. 142
will be implemented by the Partnership on January 1, 2002. All goodwill and
intangible assets acquired after June 30, 2001 will be immediately subject to
the provisions of SFAS No. 142. The Partnership is currently in process of
assessing the future impact of adoption of SFAS No. 142.
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 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 our Annual Report on Form 10-K for the
year ended December 31, 2000, for additional information regarding such matters
and the effect thereof on the Partnership's business.
7
8
RESULTS OF OPERATIONS
Revenues decreased from $1,265,300 to $950,600, or 24.9%, and from
$2,539,100 to $1,899,500, or 25.2%, for the three and six months ended June 30,
2001, respectively, as compared to the corresponding periods in 2000. The
decreases were primarily due to a decline in the number of customers as a result
of the sale of our Kershaw cable system. The remaining decrease was due to a
decline in basic service customers partially offset by an increase in premium
service customers. As of June 30, 2001 and 2000, the partnership had
approximately 8,100 and 10,600 basic service customers, respectively, and 5,000
and 4,100 premium service customers, respectively.
Service costs increased from $368,600 to $410,300, or 11.3%, and from
$791,100 to $797,300, or 0.8%, for the three and six months ended June 30, 2001,
respectively, as compared to the corresponding periods in 2000. Service costs
represent programming costs and other costs directly attributable to providing
cable services to customers. The increases were primarily due to an increase in
the number of system employees.
Gross margin decreased from $896,700 to $540,300, or 39.7%, and from
$1,748,000 to $1,102,200, or 36.9%, for the three and six months ended June 30,
2001, respectively, as compared to the corresponding periods in 2000. As a
percentage of revenues, gross margin decreased from 70.9% to 56.8%, and from
68.8% to 58.0%, for the three and six months ended June 30, 2001, respectively,
as compared to the corresponding periods in 2000. The decreases in gross margin
dollars and gross margin as a percentage of revenues were due to the sale of our
Kershaw cable system and a decline in the number of customers coupled with
rising service costs, as described above, during the three and six months ended
June 30, 2001, as compared to the corresponding periods in 2000.
General and administrative expenses increased from $165,500 to $282,800, or
70.9%, and from $362,700 to $488,600, or 34.7%, for the three and six months
ended June 30, 2001, respectively, as compared to the corresponding periods in
2000. The increases were due primarily to a new excise tax enforced by the state
of Tennessee.
General partner management fees and reimbursed expenses represent
administrative costs reimbursed to Charter by the Partnership based on Charter's
actual cost incurred. These costs decreased from $142,200 to $111,300, or 21.7%,
and from $309,500 to $215,200, or 30.5%, for the three and six months ended June
30, 2001, respectively, as compared to the corresponding periods in 2000. The
decreases were due primarily to reduced administrative costs as a result of the
sale of the Kershaw cable system.
Depreciation and amortization expense decreased from $215,500 to $199,400,
or 7.5%, and from $425,800 to $394,200, or 7.4%, for the three and six months
ended June 30, 2001, respectively, as compared to the corresponding periods in
2000. The decreases were due primarily to the sale of our Kershaw cable system
offset partially by capital expenditures during the six months ended June 30,
2001 relating to cable systems upgrades.
Due to the factors described above, operating income decreased from
$373,500 to an operating loss of $53,200, or 114.2%, and from $650,000 to
$4,200, or 99.4%, for the three and six months ended June 30, 2001,
respectively, as compared to the corresponding periods in 2000.
Interest income decreased from $29,200 to $25,700, or 12.0%, and from
$51,700 to $42,200, or 18.4%, for the three and six months ended June 30, 2001,
respectively, as compared to the corresponding periods in 2000, primarily due to
lower average cash balances available for investment during the three and six
months ended June 30, 2001, as compared to the corresponding period in 2000.
Interest expense decreased from $18,300 to $6,600, or 63.9%, and from
$35,400 to $12,600, or 64.4%, for the three and six months ended June 30, 2001,
respectively, as compared to the corresponding periods in 2000, due to lower
average outstanding borrowings under our loan facility during the three and six
months ended June 30, 2001.
Other expense of $340,200 and $345,900 for the three and six months ended
June 30, 2001, respectively, represents expenses associated with the termination
of the Agreements with Gans.
Due to the factors described above, our net income decreased from $363,100
to a net loss of $374,300, or 203.1%, and from $721,700 to a net loss of
$312,100, or 143.2%, for the three and six months ended June 30, 2001,
respectively, as compared to the corresponding periods in 2000.
8
9
Based on our experience in the cable television industry, we believe that
income before interest, income taxes, depreciation and amortization, or 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 decreased from
$1,131,200 to $52,500, or 95.4%, for the six months ended June 30, 2001, as
compared to the corresponding period in 2000. As a percentage of revenues,
EBITDA decreased from 44.6% to 2.8%, during the six months ended June 30, 2001,
as compared to the corresponding period in 2000.
Our operating activities provided $408,900 in cash during the six months
ended June 30, 2001. Changes in accounts receivable and prepaid expenses
provided $5,500 in cash in the first six months of 2001 due primarily to
receivable collections. Changes in liabilities owed to affiliates and third
party creditors provided $321,300 in cash during the six months ended June 30,
2001, due to differences in the timing of payments. Investing activities used
$318,100 in cash during the first six months of 2001 due to capital
expenditures.
LIQUIDITY AND CAPITAL RESOURCES
Our primary objective is to distribute to our 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. In general, these
capital requirements involve expansion, improvement and upgrade of our existing
cable systems.
During 2000, the Partnership sold cable systems serving Kershaw, South
Carolina for an aggregate sale price of $5.2 million. Summarized unaudited pro
forma operating results of the Partnership as though such disposition had
occurred on January 1, 2000, with adjustments to give effect to amortization of
franchise, interest expense, and certain other adjustments, follows.
UNAUDITED
SIX MONTHS ENDED
JUNE 30, 2000
----------------
Revenues $ 2,290,900
Operating Income 558,100
Net Income 651,500
Net Income Per Unit 21.52
The unaudited pro forma financial information has been presented for
comparative purposes and does not purport to be indicative of the consolidated
results of operations had these transactions been completed as of the assumed
date or which may be obtained in the future.
The Partnership, together with certain affiliates (collectively, the
"Selling Partnerships"), entered into a purchase and sale agreement, dated as of
June 21, 2000, as amended as of September 29, 2000 (the "Agreement"), with
Multimedia Acquisition Corp., an affiliate of Gans Multimedia Partnership
("Gans"). The Agreement provided for Gans to acquire the assets comprising the
Partnership's Snow Hill, North Carolina and Brownsville, Tennessee cable
systems, as well as certain assets of the other Selling Partnerships.
Following a series of discussions and meetings, the Partnership and Gans
determined that they will not be able to agree on certain further amendments to
the Agreement that are required in order to satisfy conditions precedent to
close the transaction. In light of this, present economic and financial market
conditions, and their impact on Gans' inability to arrange financing in order to
close the acquisition, on April 18, 2001 the parties agreed to terminate the
Agreement.
The Partnership's corporate general partner will continue to operate the
Partnership's cable television systems and will continue to investigate
potential divestiture transactions for the benefit of its unitholders.
Each of our systems needs to be upgraded, as substantially all of the
available channel capacity in our cable television systems is being utilized. We
presently estimate that the entire upgrade program will cover twelve franchise
areas and require aggregate capital expenditures of approximately $8,300,000. Of
the twelve franchise areas to be upgraded, existing franchise agreements
currently require upgrading with respect to eight franchise areas and were
requested to be completed by June 2000, December 2001 and February 2002. These
required upgrades are estimated to cost approximately $4,400,000. The
Partnership did not complete the first required upgrade by June 30, 2000, due to
the sale of the system located in Kershaw, South Carolina.
9
10
The Partnership relies upon the availability of cash generated from
operations and possible borrowings to fund its ongoing liquidity requirements
and capital requirements. Our capital expenditures were $312,100 for the six
months ended June 30, 2001.
The loan facility with Enstar Finance Company, LLC, has a maximum loan
commitment of $4,800,000. The Partnership pays a commitment fee of 0.5% to
Enstar Finance Company, LLC, on the unborrowed portion of the facility. The
Partnership had no outstanding borrowings under the facility as of June 30,
2001. The loan facility matures on August 31, 2001, at which time any amounts
then outstanding would be due in full. It is anticipated that the loan facility
will not be extended or replaced. However, our present cash reserves will be
insufficient to fund our entire upgrade program. If our systems are not sold,
we will need to rely on increased cash flow from operations or new sources of
financing in order to meet our future liquidity requirements and complete our
planned upgrade program. 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 us. If we are not able to attain such cash
flow increases, or obtain new sources of borrowings, we will not be able to
fully complete our cable systems upgrades. As a result, the value of our
systems would be lower than that of systems rebuilt to a higher technical
standard.
The General Partner continues to conserve cash and, consequently, has
concluded that it would not be prudent for the Partnership to resume paying
distributions at this time.
The city of Covington, Tennessee rejected our franchise renewal proposal in
June 1999. The franchise agreement with the city expired in 1994 and we have
continued to operate our cable system in Covington and pay franchise fees to the
city. In March 2000, Charter submitted another proposal to the city on behalf of
the Partnership. The city suspended the hearing to consider Charter's renewal
proposal, and in May 2000 issued a resolution denying its consent to transfer
controlling interest in Enstar from an affiliate of Charter. In November 2000,
the city sold $5,300,000 in municipal bonds to finance construction of a
municipally owned cable system. Should the determination not to renew the
franchise be upheld, or if the Partnership did not have the authority to
transfer the affiliate's interest to Charter, then the Partnership would have no
right to continue operations within the city unless the city issued a new
franchise. The loss of the Partnership's franchise and the related loss of
customers would have significant adverse impact on the Partnership's financial
condition and results of operations.
In January 2000, the franchise authority in Bolivar, Tennessee authorized
its municipal utility to construct and operate a competing cable system in that
franchise area. As we have in Covington, the Partnership has continued to
operate our cable system in Bolivar and pay franchise fees to the franchise
authority. Although the municipal utility has not obtained funds to build a
cable system, we believe that if a competing system were built, the loss of
customers would have an adverse impact on the Partnership's financial condition
and results of operations. Additionally, the loss of either of the above
franchises would constitute an event of default under our loan agreement and
would preclude us from borrowing under our loan facility to finance our
franchise-required rebuilds. As of June 30, 2001, there were approximately 2,000
and 1,500 basic customers in the cities of Covington and Bolivar, respectively.
Insurance coverage is maintained for all of the cable television properties
owned or managed by Charter to cover damage to cable distribution plant and
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 Partnership. We have recorded a receivable of
approximately $19,000 for insurance recovery due to us under this policy as of
June 30, 2001.
Approximately 83% of our customers are served by our system in Brownsville,
Tennessee and neighboring communities. Significant damage to the system due to
seasonal weather conditions or other events could have a material adverse effect
on our liquidity and cash flows. We continue to purchase insurance coverage in
amounts our management views as appropriate for all other property, liability,
automobile, workers' compensation and other types of insurable risks.
Our operating activities provided $408,900 in cash during the six months
ended June 30, 2001. Changes in accounts receivable and prepaid expenses
provided $5,500 in cash in the first six months of 2001 due primarily to
receivable collections. Changes in liabilities owed to affiliates and third
party creditors provided $321,300 in cash during the six months ended June 30,
2001, due to differences in the timing of payments. Investing activities used
$318,100 in cash during the first six months of 2001 due to capital
expenditures.
NEW ACCOUNTING STANDARDS
In July 2001, the Financial Accounting Standards Board adopted Statements
of Financial Accounting Standards (SFAS) No. 141 "Business Combinations" and No.
142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires all business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method of accounting. SFAS No. 141 is required to be implemented for
all acquisitions initiated after June 30, 2001 and all business combinations
accounted for using the purchase method
10
11
for which the date of acquisition is July 1, 2001 or later. Adoption of SFAS No.
141 will not impact the condensed financial statements of the Partnership.
Under SFAS No. 142, goodwill is no longer subject to amortization over its
useful life, rather, it is subject to at least annual assessments of impairment.
Also, under SFAS No. 142, an intangible asset should be recognized if the
benefit of the intangible is obtained through contractual or other legal rights
or if the intangible asset can be sold, transferred, licensed, rented or
exchanged. Such intangibles will be amortized over their useful lives. Certain
intangibles have indefinite useful lives and will not be amortized. SFAS No. 142
will be implemented by the Partnership on January 1, 2002. All goodwill and
intangible assets acquired after June 30, 2001 will be immediately subject to
the provisions of SFAS No. 142. The Partnership is currently in process of
assessing the future impact of adoption of SFAS No. 142.
INFLATION
Certain of our 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 way, provided that we are
able to increase our service rates periodically, of which there can be no
assurance.
11
12
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
None.
(B) REPORTS ON FORM 8-K
On May 1, 2001, the Registrant filed a current report on Form 8-K to
announce the termination of its sale agreement with Multimedia
Acquisition Corp.
12
13
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 PROGRAM 1984-1, L.P.
a GEORGIA LIMITED PARTNERSHIP
-----------------------------
(Registrant)
By: ENSTAR COMMUNICATIONS CORPORATION
General Partner
Date: August 14, 2001 By: /s/ Paul E. Martin
--------------------
Paul E. Martin, Vice President and
Corporate Controller (Principal Financial
Officer and Principal Accounting Officer)
13