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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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(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, 2003
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: 000-17687
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)
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 [ ]
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ENSTAR INCOME/GROWTH PROGRAM SIX-A, L.P.
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 2003
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements - Enstar Income/Growth Program Six-A, L.P.
Condensed Statements of Net Assets in Liquidation as of September 30, 2003 3
and December 31, 2002
Condensed Statements of Changes in Net Assets in Liquidation for the three and nine 4
months ended September 30, 2003
Condensed Statements of Operations for the three and nine months ended September 30, 2002 5
Condensed Statement of Cash Flows for the nine months ended September 30, 2002 6
Notes to Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11
Item 4. Controls and Procedures 12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
EXHIBIT INDEX 16
PART I. FINANCIAL INFORMATION.
ITEM 1. FINANCIAL STATEMENTS.
ENSTAR INCOME/GROWTH PROGRAM SIX-A, L.P.
CONDENSED STATEMENTS OF NET ASSETS IN LIQUIDATION
(SEE NOTE 2)
SEPTEMBER 30, DECEMBER 31,
2003 2002
------------- ------------
(UNAUDITED)
ASSETS:
Cash and cash equivalents ................................................. $1,953,500 $3,178,500
Accounts receivable, net .................................................. -- 6,600
Prepaid expenses .......................................................... -- 7,600
Property, plant and equipment ............................................. -- 837,600
Franchise cost ............................................................ -- 166,000
Escrow deposits ........................................................... 51,000 --
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Total assets ........................................................... 2,004,500 4,196,300
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LIABILITIES:
Accounts payable and accrued liabilities .................................. 36,500 349,300
Due to purchaser .......................................................... 51,000 --
Due to affiliates ......................................................... 82,200 2,353,100
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Total liabilities ...................................................... 169,700 2,702,400
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NET ASSETS IN LIQUIDATION:
General Partners .......................................................... 18,000 14,600
Limited Partners .......................................................... 1,816,800 1,479,300
---------- ----------
$1,834,800 $1,493,900
========== ==========
See accompanying notes to condensed financial statements.
3
ENSTAR INCOME/GROWTH PROGRAM SIX-A, L.P.
CONDENSED STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
(UNAUDITED)
(SEE NOTE 2)
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER ENDED SEPTEMBER
30, 2003 30, 2003
--------------- ---------------
Additions:
Revenues ................................................................ $ 121,500 $ 500,600
Interest income ......................................................... 700 9,900
Excess of net proceeds over net book value of cable systems ............. 289,000 266,100
---------- ----------
Total additions ...................................................... 411,200 776,600
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Deductions:
Service costs ........................................................... 51,000 197,200
General and administrative expenses ..................................... 52,700 149,100
General partner management fees and reimbursed expenses ................. 16,900 72,200
Capital expenditures .................................................... 7,700 17,200
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Total deductions ..................................................... 128,300 435,700
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Net increase in net assets in liquidation .................................. 282,900 340,900
NET ASSETS IN LIQUIDATION, beginning of period ............................. 1,551,900 1,493,900
---------- ----------
NET ASSETS IN LIQUIDATION, end of period ................................... $1,834,800 $1,834,800
========== ==========
See accompanying notes to condensed financial statements.
4
ENSTAR INCOME/GROWTH PROGRAM SIX-A, L.P.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER ENDED SEPTEMBER
30, 2002 30, 2002
--------------- ---------------
REVENUES ....................................................................... $ 203,400 $ 1,240,500
----------- -----------
OPERATING EXPENSES:
Service costs ............................................................... 67,800 407,100
General and administrative expenses ......................................... 23,400 204,600
General partner management fees and reimbursed expenses ..................... 40,200 216,200
Depreciation and amortization ............................................... 68,100 389,500
----------- -----------
199,500 1,217,400
----------- -----------
Operating (loss) income .................................................. 3,900 23,100
----------- -----------
OTHER INCOME:
Interest income, net ........................................................ 21,000 45,600
Gain (loss) on sale of cable systems ........................................ (7,900) 7,454,300
----------- -----------
13,100 7,499,900
----------- -----------
NET INCOME ..................................................................... $ 17,000 $ 7,523,000
=========== ===========
NET INCOME ALLOCATED TO GENERAL PARTNERS ....................................... $ 200 $ 237,600
=========== ===========
NET INCOME ALLOCATED TO LIMITED PARTNERS ....................................... $ 16,800 $ 7,285,400
=========== ===========
NET INCOME PER UNIT OF LIMITED PARTNERSHIP INTEREST ............................ $ 0.21 $ 91.28
=========== ===========
LIMITED PARTNERSHIP UNITS OUTSTANDING
DURING PERIOD .................................................................. 79,818 79,818
=========== ===========
See accompanying notes to condensed financial statements.
5
ENSTAR INCOME/GROWTH PROGRAM SIX-A, L.P.
CONDENSED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2002
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .......................................................................................... $ 7,523,000
Adjustments to reconcile net income to net cash from operating
activities:
Depreciation and amortization ................................................................. 389,500
Gain on sale of cable systems ................................................................. (7,454,300)
Changes in:
Accounts receivable, prepaid expenses and other assets ........................................ 96,800
Accounts payable, accrued liabilities and due to affiliates ................................... (21,500)
------------
Net cash from operating activities ......................................................... 533,500
------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ................................................................................ (496,900)
Proceeds from sale of cable systems ................................................................. 12,035,000
------------
Net cash from investing activities ......................................................... 11,538,100
------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments on note payable to affiliate ............................................................. (250,000)
Distributions to General Partners ................................................................... (87,900)
Distributions to Limited Partners ................................................................... (8,700,100)
------------
Net cash from financing activities ......................................................... (9,038,000)
------------
Net increase in cash ....................................................................... 3,033,600
CASH, beginning of period .............................................................................. 465,800
------------
CASH, end of period .................................................................................... $ 3,499,400
============
See accompanying notes to condensed financial statements.
6
ENSTAR INCOME/GROWTH PROGRAM SIX-A, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. INTERIM FINANCIAL STATEMENTS
The accompanying condensed interim financial statements for Enstar Income/Growth
Program Six-A, L.P. (the Partnership), as of September 30, 2003, and for the
three and nine months ended September 30, 2003 and 2002, 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, 2002. 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 changes in net assets in
liquidation for the three and nine months ended September 30, 2003 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.
As discussed in Note 2, the financial statements as of September 30, 2003 and
December 31, 2002 are presented on a liquidation basis of accounting.
Accordingly, the financial information in the condensed statement of changes in
net assets in liquidation for the three and nine months ended September 30, 2003
is presented on a different basis of accounting than the financial statements
for the three and nine months ended September 30, 2002, which were prepared on
the historical cost basis of accounting. As a result, depreciation and
amortization ceased upon conversion to liquidation accounting and capital
expenditures are expensed as incurred.
Certain reclassifications have been made to conform to current period
presentation.
2. LIQUIDATION BASIS ACCOUNTING AND SALES OF CABLE ASSETS
Effective August 31, 2003, pursuant to an asset purchase agreement dated
November 8, 2002 as amended, the Partnership completed the sale of its only
remaining cable system to Telecommunications Management, LLC (Telecommunications
Management) for a total adjusted sales price of approximately $1,286,400
(approximately $800 per customer acquired), subject to post closing adjustments
(the Telecommunications Management Sale). The Telecommunications Management Sale
was part of a larger transaction in which the Partnership and eight other
affiliated partnerships sold all of their remaining assets used in the
operations of their respective cable systems to Telecommunications Management
for a total cash sales price of $12,354,600 after closing adjustments. Excess of
net proceeds over net book value of cable systems represents the cash proceeds
net of transaction costs received from the Telecommunications Management Sale in
excess of the net book value of the cable system assets sold.
The Partnership finalized its proposed plan of liquidation in December 2002 in
connection with the filing of a proxy to obtain partner approval for the
Telecommunications Management Sale and the subsequent liquidation and
dissolution of the Partnership. In April 2003, the required number of votes
necessary to implement the plan of liquidation were obtained. As a result, the
Partnership changed its basis of accounting to the liquidation basis as of
December 31, 2002. Upon changing to liquidation basis accounting, the
Partnership recorded $30,800 of accrued costs of liquidation in accounts payable
and accrued liabilities on the accompanying statement of net assets in
liquidation representing an estimate of the costs to be incurred after the sale
of the final cable system but prior to dissolution of the Partnership. Because
reliable estimates of future operating results or the ultimate realizable value
of property, plant and equipment could not be developed due to uncertainties
surrounding the final dissolution of the Partnership, no adjustments were
recorded, prior to the sale of the assets, to reflect assets at estimated
realizable values or to reflect estimates of future operating results.
Accordingly, the assets in the accompanying statement of net assets in
liquidation as of December 31, 2002 have been stated at historical book values.
Net assets in liquidation as of September 30, 2003 represent the estimated
distributions to the Limited Partners and the General Partners. Distributions
ultimately made to the partners upon liquidation will differ from the net assets
in liquidation recorded in the accompanying statements of net assets in
liquidation as of September 30, 2003 as a result of post closing purchase price
adjustments and adjustments to estimated costs of liquidation. No adjustments
were made to accrued costs of liquidation during the three and nine months ended
September 30, 2003.
7
ENSTAR INCOME/GROWTH PROGRAM SIX-A, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
The Corporate General Partner's intention is to terminate the Partnership as
expeditiously as possible. After paying or providing for the payment of the
expenses of the sale, the Corporate General Partner will make one or more
distributions of the Partnership's allocable share of the remaining net sale
proceeds, in accordance with its partnership agreement. In November 2003 the
Partnership intends to make an initial distribution payment of $1.4 million to
the Limited Partners. A final liquidating distribution will occur on or after
approximately 13 months following the close of the transaction upon the release
of the indemnity escrow and the receipt of the remaining proceeds of such escrow
if any.
On April 10, 2002, pursuant to an asset purchase agreement dated August 29,
2001, the Partnership completed the sale of all of the Partnership's Illinois
cable television systems in and around Cisne, Farmersville, Flora, Noble,
Raymond, Salem and Xenia, Illinois to Rifkin Acquisition Partners, LLC ("RAP")
and Charter Communications Entertainment I, LLC ("CCE-I"), each an affiliate of
the Corporate General Partner and an indirect subsidiary of Charter
Communications, Inc. ("Charter"), for a total sale price of approximately $12.0
million (the "Charter Sale"). The Charter Sale was part of a larger transaction
in which the Partnership and five other affiliated partnerships (which, together
with the Partnership are collectively referred to as the "Selling Partnerships")
sold all of their assets used in the operation of their respective Illinois
cable television systems to RAP, CCE-I and another affiliate of the Corporate
General Partner (also referred to as the "Purchasers") for a total cash sale
price of $63.0 million. Each Selling Partnership received the same value per
customer. In addition, the Limited Partners of each of the Selling Partnerships
approved an amendment to their respective partnership agreement to allow the
sale of assets to an affiliate of such partnership's General Partner. The
Purchasers are each indirect subsidiaries of the Corporate General Partner's
ultimate parent company, Charter, and therefore, are affiliates of the
Partnership and each of the other Selling Partnerships.
After setting aside $1.0 million to fund the Dyer, Tennessee system's working
capital needs and paying or providing for the payment of the expenses of the
Charter Sale, the Corporate General Partner made distributions of the allocable
share of the remaining net sale proceeds, in accordance with the Partnership
Agreement. The Partnership made an initial distribution payment of approximately
$7.2 million on or about May 15, 2002, with a second distribution of
approximately $1.6 million made on or about September 24, 2002.
The Telecommunications Management Sale and the Charter Sale resulted from a sale
process actively pursued since 1999, when the Corporate General Partner sought
purchasers for all of the cable television systems of the Selling Partnerships,
as well as eight other, affiliated limited partnership cable operators of which
the Corporate General Partner is also the general partner. This effort was
undertaken primarily because, based on the Corporate General Partner's
experience in the cable television industry, it was concluded that generally
applicable market conditions and competitive factors were making (and would
increasingly make) it extremely difficult for smaller operators of rural cable
systems (such as the Partnership and the other affiliated Enstar partnerships)
to effectively compete and be financially successful. This determination was
based on the anticipated cost of electronics and additional equipment to enable
the Partnership's systems to operate on a two-way basis with improved technical
capacity, insufficiency of Partnership cash reserves and cash flows from
operations to finance such expenditures, limited customer growth potential due
to the Partnership's systems' rural location, and a general inability of a small
cable system operator such as the Partnership to benefit from economies of scale
and the ability to combine and integrate systems that large cable operators
have. Although limited plant upgrades have been made, the Corporate General
Partner projected that if the Partnership made the comprehensive additional
upgrades deemed necessary to enable enhanced and competitive services,
particularly two-way capability, the Partnership would not recoup the costs or
regain its ability to operate profitably within the remaining term of its
franchises, and as a result, making these upgrades would not be economically
prudent.
3. TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES
The Partnership has a management and service agreement (the Management
Agreement) with Enstar Cable Corporation ("Enstar Cable"), a wholly owned
subsidiary of the Corporate General Partner, for a monthly management fee of 5%
of gross revenues. Management fee expense approximated $6,100 and $10,200 for
the three months ended September 30, 2003 and 2002, respectively, and $25,000
and $62,000 for the nine months ended
8
ENSTAR INCOME/GROWTH PROGRAM SIX-A, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
September 30, 2003 and 2002, respectively. Management fees are non-interest
bearing.
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 and its affiliates 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 the services provided. The total
amount charged to the Partnership for these services approximated $10,800 and
$30,000 for the three months ended September 30, 2003 and 2002, respectively,
and $47,200 and $154,200 for the nine months ended September 30, 2003 and 2002,
respectively.
Substantially all programming services are purchased through Charter. Charter
charges the Partnership for these costs based on its costs. The Partnership
recorded programming fee expense of $26,900 and $43,000 for the three months
ended September 30, 2003 and 2002, respectively, and $112,900 and $284,600 for
the nine months ended September 30, 2003 and 2002, respectively. Programming
fees are included in service costs in the accompanying condensed statement of
changes in net assets in liquidation and statement of operations.
As disclosed in Charter's Quarterly Report on Form 10-Q, the parent of the
Corporate General Partner and the Manager is the defendant in twenty-two class
action and shareholder lawsuits and is the subject of a grand jury investigation
being conducted by the United States Attorney's Office for the Eastern District
of Missouri into certain of its accounting and reporting practices, focusing on
how Charter reported customer numbers and its reporting of amounts received from
digital set-top terminal suppliers for advertising. The United States Attorney's
Office has publicly stated that Charter is not currently a target of the
investigation. Charter has also been advised by the United States Attorney's
Office that no member of its board of directors, including its Chief Executive
Officer, is a target of the investigation. On July 24, 2003, a federal grand
jury charged four former officers of Charter with conspiracy and mail and wire
fraud, alleging improper accounting and reporting practices focusing on revenue
from digital set-top terminal suppliers and inflated subscriber account numbers.
On July 25, 2003, one of the former officers who was indicted entered a guilty
plea. Charter has informed the Corporate General Partner that they are fully
cooperating with the investigation.
Charter is unable to predict the outcome of the class action lawsuits and
government investigations at this time. An unfavorable outcome of these matters
could have a material adverse effect on Charter's results of operations and
financial condition, which could in turn have a material adverse effect on the
Partnership.
4. NET INCOME PER UNIT OF LIMITED PARTNERSHIP INTEREST
The amended Partnership Agreement generally provides that all cash flows be
distributed 1% to the General Partners and 99% to the Limited Partners until the
Limited Partners have received aggregate cash distributions equal to their
original capital contributions. The amended Partnership Agreement also provides
that all partnership operating profits be allocated to the partners in the same
proportion as cash flow distributions are made. After the Limited Partners have
received cash flow equal to their initial investment, the General Partners will
only receive a 1% distribution of proceeds from a disposition or refinancing of
a system until the Limited Partners have received an annual simple interest
return of at least 8% of their initial investment less any distributions from
previous dispositions or refinancing of systems. Thereafter, proceeds from a
disposition or refinancing of a system shall be distributed 80% to the Limited
Partners and 20% to the General Partners. Gains from dispositions of systems are
first allocated in the same manner as the proceeds from such dispositions. This
occurs until the dispositions result in the aggregate fair market value of the
Partnership's remaining system(s) being less than or equal to 50% of the
aggregate contributions to the capital of the Partnership by the partners.
Any losses, whether resulting from operations or the sale or disposition of a
system, are allocated 99% to the Limited Partners and 1% to the General Partners
until the Limited Partners' capital account balances are equal to zero.
Thereafter, all losses are allocated to the Corporate General Partner.
Upon dissolution of the Partnership, distributions are to be made to the
partners in accordance with their capital
9
ENSTAR INCOME/GROWTH PROGRAM SIX-A, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
account balances. No partners other than General Partners shall be obligated to
restore any negative capital account balance existing upon dissolution of the
Partnership. All allocations to individual Limited Partners will be based on
their respective limited partnership ownership interests. The Partnership
Agreement limits the amount of debt the Partnership may incur.
5. LONG-TERM DEBT
The Partnership was party to a loan agreement in the amount of $250,000 with
Falcon Cable Communications, LLC, an affiliate of the Partnership, for general
working capital purposes. The loan matured on May 31, 2002 and was repaid rather
than extended or replaced.
10
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 costs of liquidation, legal requirements, and our estimated
future distributions. Such forward-looking statements involve risks and
uncertainties including, without limitation, the uncertainty of legislative and
regulatory changes and the costs required to liquidate 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, 2002 for additional
information regarding such matters and the effect thereof on our business.
Effective August 31, 2003, pursuant to an asset purchase agreement dated
November 8, 2002 as amended, the Partnership completed the sale of its only
remaining cable system to Telecommunications Management, LLC (Telecommunications
Management) for a total adjusted sales price of approximately $1,286,400
(approximately $800 per customer acquired), subject to post closing adjustments
(the Telecommunications Management Sale). The Telecommunications Management
Sale was part of a larger transaction in which the Partnership and eight other
affiliated partnerships sold all of their remaining assets used in the
operations of their respective cable systems to Telecommunications Management
for a total cash sales price of $12,354,600 after closing adjustments. Excess of
net proceeds over net book value of cable systems represents the cash proceeds
net of transaction costs received from the Telecommunications Management Sale in
excess of the net book value of the cable system assets sold.
The Partnership finalized its proposed plan of liquidation in December 2002 in
connection with the filing of a proxy to obtain partner approval for the
Telecommunications Management Sale and the subsequent liquidation and
dissolution of the Partnership. In April 2003, the required number of votes
necessary to implement the plan of liquidation were obtained. As a result, the
Partnership changed its basis of accounting to the liquidation basis as of
December 31, 2002. Upon changing to liquidation basis accounting, the
Partnership recorded $30,800 of accrued costs of liquidation in accounts payable
and accrued liabilities on the accompanying statement of net assets in
liquidation representing an estimate of the costs to be incurred after the sale
of the final cable system but prior to dissolution of the Partnership. Because
reliable estimates of future operating results or the ultimate realizable value
of property, plant and equipment could not be developed due to uncertainties
surrounding the final dissolution of the Partnership, no adjustments were
recorded, prior to the sale of the assets, to reflect assets at estimated
realizable values or to reflect estimates of future operating results.
Accordingly, the assets in the accompanying statement of net assets in
liquidation as of December 31, 2002 have been stated at historical book values.
Net assets in liquidation as of September 30, 2003 represent the estimated
distributions to the Limited Partners and the General Partners. Distributions
ultimately made to the partners upon liquidation will differ from the net assets
in liquidation recorded in the accompanying statements of net assets in
liquidation as of September 30, 2003 as a result of post closing purchase price
adjustments and adjustments to estimated costs of liquidation. No adjustments
were made to accrued costs of liquidation during the three and nine months ended
September 30, 2003.
RESULTS OF OPERATIONS
The Partnership operated its properties through August 31, 2003 but had no
operations for the period subsequent to that date as a result of the
Telecommunications Management Sale discussed above. Accordingly, no discussion
of operating results for the period from July 1, 2003 to September 30, 2003 and
the three months ended September 30, 2002, as well as the period from January 1,
2003 to September 30, 2003 and the nine months ended September 30, 2002, has
been provided as such analysis is not relevant.
Net assets in liquidation at September 30, 2003 were $1,834,800, consisting of
current assets of $2,004,500, offset by current liabilities of $169,700. The net
change in net assets in liquidation for the three and nine months ended
September 30, 2003, was an increase of $282,900 and $340,900, respectively,
which was primarily due to the excess of net proceeds over the net book value of
cable systems.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased $1,225,000 from $3,178,500 at December 31,
2002 to $1,953,500 at September 30, 2003 primarily due to repayments of
$2,428,000 on the amounts due to affiliates and remittance of $205,000 in
withholding taxes related to the April 2002 sale of the Partnership's Illinois
cable systems which had been recorded
11
in accounts payable and accrued expenses offset by $1,286,400 of proceeds from
the Telecommunications Management Sale. Amounts due to affiliates at December
31, 2002 primarily represent accrued and unpaid management fees and other
allocated expenses accrued since the fourth quarter of 2000. Cash and cash
equivalents increased $3,033,600 from $465,800 at December 31, 2001 to
$3,499,400 at September 30, 2002 primarily as a result of proceeds from sale of
cable systems of $12,035,000 offset by distributions to partners of $8,788,000.
Capital expenditures, which are expensed as incurred in the nine months ended
September 30, 2003, were $17,200. Capital expenditures for the nine months ended
September 30, 2002 were $496,900.
We were party to a loan agreement in the amount of $250,000 with Falcon Cable
Communications, LLC, our affiliate, for general working capital purposes. The
loan matured on May 31, 2002 and was repaid rather than extended or replaced.
The Corporate General Partner's intention is to terminate the Partnership as
expeditiously as possible. After paying or providing for the payment of the
expenses of the sale, the Corporate General Partner will make one or more
distributions of the Partnership's allocable share of the remaining net sale
proceeds, in accordance with its partnership agreement. In November 2003 we
intend to make an initial distribution payment of $1.4 million to the Limited
Partners. A final liquidating distribution will occur on or after approximately
13 months following the close of the transaction upon the release of the
indemnity escrow and the receipt of the remaining proceeds of such escrow if
any.
CERTAIN TRENDS AND UNCERTAINTIES
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.
As disclosed in Charter's Quarterly Report on Form 10-Q, the parent of the
Corporate General Partner and the Manager is the defendant in twenty-two class
action and shareholder lawsuits and is the subject of a grand jury investigation
being conducted by the United States Attorney's Office for the Eastern District
of Missouri into certain of its accounting and reporting practices, focusing on
how Charter reported customer numbers and its reporting of amounts received from
digital set-top terminal suppliers for advertising. The United States Attorney's
Office has publicly stated that Charter is not currently a target of the
investigation. Charter has also been advised by the United States Attorney's
Office that no member of its board of directors, including its Chief Executive
Officer, is a target of the investigation. On July 24, 2003, a federal grand
jury charged four former officers of Charter with conspiracy and mail and wire
fraud, alleging improper accounting and reporting practices focusing on revenue
from digital set-top terminal suppliers and inflated subscriber account numbers.
On July 25, 2003, one of the former officers who was indicted entered a guilty
plea. Charter has informed the Corporate General Partner that they are fully
cooperating with the investigation.
Charter is unable to predict the outcome of the class action lawsuits and
government investigations at this time. An unfavorable outcome of these matters
could have a material adverse effect on Charter's results of operations and
financial condition, which could in turn have a material adverse effect on us.
ITEM 4. CONTROLS AND PROCEDURES.
As of the end of the period covered by this report, our Corporate General
Partner, including our Chief Administrative Officer and Principal Financial
Officer, evaluated the effectiveness of the design and operation of our
disclosure controls and procedures with respect to the information generated for
use in this Quarterly Report. The evaluation was based in part upon reports and
affidavits provided by a number of executives. Based upon, and as of the date of
that evaluation, our Chief Administrative Officer and Principal Financial
Officer concluded that the disclosure controls and procedures were effective to
provide reasonable assurances that information required to be disclosed in the
reports we file or submit under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
Commission's rules and forms.
12
There was no change in our internal control over financial reporting during the
quarter ended September 30, 2003 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.
In designing and evaluating the disclosure controls and procedures, our
management recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable, not absolute, assurance of
achieving the desired control objectives and management necessarily was required
to apply its judgment in evaluating the cost-benefit relationship of possible
controls and procedures. Based upon the above evaluation, we believe that our
controls do provide such reasonable assurances.
13
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
Exhibit
Number Description of Document
2.1a 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)).
2.1b Letter of Amendment, dated as of February 6, 2003, between
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 and Telecommunications
Management, LLC (Incorporated by reference to Exhibit 2.1 to the
current report on Form 8-K of Enstar Income/Growth Program
Five-A, L.P. filed on February 14, 2003 (File No. 000-16779)).
2.1c Letter of Amendment, dated as of April 24, 2003, between 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 and Telecommunications Management,
LLC (Incorporated by reference to Exhibit 2.1 to the current
report on Form 8-K of Enstar Income/Growth Program Five-A, L.P.
filed on April 25, 2003 (File No. 000-16779)).
2.1d Letter of Amendment, dated as of November 8, 2002, between
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 and Telecommunications
Management, LLC (Incorporated by reference to Exhibit 2.1 to the
current report on Form 8-K of Enstar Income/Growth Program
Five-A, L.P. filed on June 9, 2003 (File No. 000-16779)).
2.1e Close of Asset Purchase Agreement, dated as of September 11,
2003, between 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 and
Telecommunications Management, LLC (Incorporated by reference to
Exhibit 2.1 to the current report on Form 8-K of Enstar
Income/Growth Program Five-A, L.P. filed on September 16, 2003
(File No. 000-16779)).
31.1 Certificate of Chief Administrative Officer pursuant to Rule
13a-14(a)/Rule 15d-14(a) under the Securities Exchange Act of
1934. *
31.2 Certificate of Chief Financial Officer pursuant to Rule
13a-14(a)/Rule 15d-14(a) under the Securities Exchange Act of
1934. *
32.1 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). *
32.2 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
(b) REPORTS ON FORM 8-K
On September 16, 2003 the registrant filed a current report on Form 8-K
dated September 11, 2003 to announce the close of the asset purchase
agreement dated November 8, 2002.
14
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.
By: ENSTAR COMMUNICATIONS CORPORATION
------------------------------------
Corporate General Partner
Date: November 14, 2003 By: /s/ Paul E. Martin
---------------------------------------
Name: Paul E. Martin
Title: Senior Vice President and Corporate
Controller (Principal Financial Officer
and Principal Accounting Officer)
15
EXHIBIT INDEX
Exhibit
Number Description of Document
2.1a 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)).
2.1b Letter of Amendment, dated as of February 6, 2003, between
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 and Telecommunications
Management, LLC (Incorporated by reference to Exhibit 2.1 to the
current report on Form 8-K of Enstar Income/Growth Program
Five-A, L.P. filed on February 14, 2003 (File No. 000-16779)).
2.1c Letter of Amendment, dated as of April 24, 2003, between 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 and Telecommunications Management,
LLC (Incorporated by reference to Exhibit 2.1 to the current
report on Form 8-K of Enstar Income/Growth Program Five-A, L.P.
filed on April 25, 2003 (File No. 000-16779)).
2.1d Letter of Amendment, dated as of November 8, 2002, between
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 and Telecommunications
Management, LLC (Incorporated by reference to Exhibit 2.1 to the
current report on Form 8-K of Enstar Income/Growth Program
Five-A, L.P. filed on June 9, 2003 (File No. 000-16779)).
2.1e Close of Asset Purchase Agreement, dated as of September 11,
2003, between 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 and
Telecommunications Management, LLC (Incorporated by reference to
Exhibit 2.1 to the current report on Form 8-K of Enstar
Income/Growth Program Five-A, L.P. filed on September 16, 2003
(File No. 000-16779)).
31.1 Certificate of Chief Administrative Officer pursuant to Rule
13a-14(a)/Rule 15d-14(a) under the Securities Exchange Act of
1934. *
31.2 Certificate of Chief Financial Officer pursuant to Rule
13a-14(a)/Rule 15d-14(a) under the Securities Exchange Act of
1934. *
32.1 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). *
32.2 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
16