<PAGE> 1
SUBJECT TO COMPLETION
MARCH 10, 1995
PROSPECTUS SUPPLEMENT
(To Prospectus dated July 9, 1993)
$150,000,000 [JONES INTERCABLE LOGO]
JONES INTERCABLE, INC.
% SENIOR NOTES DUE 2002
The % Senior Notes due 2002 (the "Notes") of Jones Intercable, Inc. (the
"Company") will mature on March , 2002. Interest on the Notes is payable
semiannually on and , commencing ,
1995. The Notes will not be redeemable prior to maturity.
The Notes will be senior unsecured obligations of the Company, ranking pari
passu in right of payment with all existing and future senior indebtedness of
the Company.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT COMPANY(1)(2)
<S> <C> <C> <C>
Per Note.............................. % % %
Total................................. $ $ $
----------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from March , 1995 to the date of delivery.
(2) Before deduction of expenses payable by the Company, estimated to be
$10,000.
The Notes are offered subject to receipt and acceptance by the Underwriters, to
prior sale and to the Underwriters' right to reject any order, in whole or in
part, and to withdraw, cancel or modify the offer without notice. It is expected
that delivery of the Notes will be made at the office of Salomon Brothers Inc,
Seven World Trade Center, New York, New York or through the facilities of the
Depository Trust Company, on or about , 1995.
SALOMON BROTHERS INC
MORGAN STANLEY & CO.
INCORPORATED
PAINEWEBBER INCORPORATED
The date of this Prospectus Supplement is March , 1995
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE COMPANY
Jones Intercable, Inc. (the "Company") acquires, develops and operates
cable television systems for itself and for its managed limited partnerships.
Based on the number of basic subscribers served by the Company's owned and
managed cable television systems, the Company is one of the largest cable
television operators in the United States. As of January 31, 1995, the Company
owned or managed 48 cable television systems serving a total of 1,300,000 basic
subscribers in 24 states. Glenn R. Jones, the founder, Chairman, Chief Executive
Officer and controlling shareholder of the Company, is one of the pioneers in
the cable television industry and has owned and operated cable television
systems since 1970.
THE OFFERING
Securities Offered
Hereby..................... $150,000,000 of % Senior Notes.
Maturity Date.............. March , 2002.
Interest Payment Dates..... and of each year, commencing
, 1995.
Redemption................. The Notes will not be redeemable prior to maturity
and will not be subject to any mandatory redemption
or sinking fund.
Ranking.................... The Notes will be senior unsecured obligations of
the Company, ranking equally with all other senior
unsecured obligations of the Company.
Restrictive Covenants...... The Indenture contains certain covenants, which
restrict (among other things) the ability of the
Company and certain of its subsidiaries to incur
indebtedness, pay dividends or make stock
purchases, consummate mergers or make certain asset
dispositions. See "Description of the Notes."
Use of Proceeds............ For the acquisition of a cable television system in
Augusta, Georgia owned by a managed partnership and
cable television systems in the vicinity of
Manassas, Virginia or, if such acquisitions are not
completed, for the acquisition of other cable
television systems or for general corporate
purposes.
S-2
<PAGE> 3
RECENT DEVELOPMENTS
CERTAIN TRANSACTIONS
On March 22, 1994, Bell Canada International Inc. ("BCI"), a subsidiary of
BCE Inc., purchased 2,500,000 shares of Class A Common Stock from the Company.
On December 20, 1994, the Company sold an additional 7,414,300 shares of Class A
Common Stock to BCI, and closed on its acquisition of the operating assets of
Jones Spacelink, Ltd. ("Spacelink"). The two transactions represent a total
investment by BCI in the Company of $258,893,250, or 9,914,300 shares of Class A
Common Stock at an average price $26.10 per share. BCI's shares of Class A
Common Stock represent a 30% economic interest in the Company. BCI has also
committed to invest up to an additional $141,106,750 in the Company to maintain
its 30% economic interest in the event that the Company issues additional
equity. In a related transaction, BCI acquired an option to purchase 2,878,151
shares of Common Stock of the Company from Jones International, Ltd., Glenn R.
Jones and certain of their affiliates which, if and when exercised, will enable
BCI to elect 75% of the Board of Directors of the Company.
On February 22, 1995, the Company entered into a Purchase and Sale
Agreement with Cable TV Fund 12-B, Ltd., one of the Company's managed limited
partnerships, to acquire from such partnership the cable television system
serving areas in and around Augusta, Georgia (the "Augusta System"). The
purchase price is $141,718,000, which is the average of three separate
independent appraisals of the fair market value of the Augusta System. The
Augusta System passes approximately 102,000 homes and serves approximately
66,300 basic subscribers. The Company, as general partner of the partnership,
expects to receive a distribution from the partnership of approximately
$12,500,000 upon closing of such sale.
The Augusta System is contiguous with the cable television system owned by
the Company serving areas in and around North Augusta, South Carolina (the
"North Augusta System"). Together, the Augusta System and the North Augusta
System will, upon closing of the acquisition of the Augusta System, form an
operating cluster that serves approximately 81,700 basic subscribers and passes
approximately 125,700 homes.
The closing of the acquisition of the Augusta System, which is expected to
close in late summer 1995, is subject to a number of conditions, including the
approval of the holders of a majority of the limited partnership interests in
the selling partnership. The Company believes that the approval of the limited
partners will be received.
On March 1, 1995, the Company signed letters of intent with Cablevision of
Manassas Park, Inc. and Benchmark/Manassas Cable Fund, Ltd. to acquire cable
television systems serving Manassas, Manassas Park, Haymarket and portions of
unincorporated Prince William County, all in Virginia (the "Virginia Systems").
The purchase price for the Virginia Systems is $71,100,000, subject to normal
closing adjustments. The Virginia Systems serve approximately 26,000 basic
subscribers, and are located approximately 20 miles from the Company's
wholly-owned cable television system serving Alexandria, Virginia.
The Company believes that the acquisition of the Virginia Systems, if
completed, will add to its present presence in the Washington, D.C./Baltimore
metropolitan area where the Company owns or manages, on behalf of certain of its
limited partnerships, an aggregate of approximately 123,000 basic subscribers.
The acquisition of the Virginia Systems is subject to a number of
conditions, including the negotiation of a definitive purchase agreement, the
approval of the applicable governmental authorities to the transfer of the
franchises for the Virginia Systems, the approval of the Department of Justice
and the Federal Trade Commission pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, and the consent of various other third parties.
S-3
<PAGE> 4
RECENT REGULATORY AND LEGISLATIVE DEVELOPMENTS
Recent federal court decisions, that have held the Cable Communications
Policy Act of 1984 cable/telephone cross-ownership ban unconstitutional, will
enable a local exchange carrier ("LEC") upon obtaining a franchise to provide
cable television service to customers within its service area in direct
competition with cable television systems. If these decisions are appealed, it
is not known whether the United States Supreme Court will agree to review them.
The Federal Communications Commission ("FCC") is continuing to process and
grant applications of LECs to provide video dialtone service. Recent actions by
the FCC as part of its policy to foster competition with cable television
systems, and in connection with its ongoing video dialtone rulemaking
proceeding, will enable LECs to provide video dialtone service over their
facilities, including the ability to directly provide to customers their own
video dialtone programming. The FCC recently held that neither a LEC nor a video
programmer operating over LEC facilities is required to obtain a franchise to
provide video dialtone service if the LEC makes its facilities available on a
common carrier basis, and the FCC is considering whether a LEC offering video
dialtone service must secure a local cable television franchise if it also
engages in the provision of video programming carried on its video dialtone
platform. Legislation is likely to be considered by Congress during this
legislative session which would permit the provision of telecommunication
service by cable television systems and which would permit the provision of
cable television service by telephone companies in their own service areas,
conditioned on the establishment of safeguards to prevent cross-subsidization
between cable television and telephone operations. The outcome of these FCC,
legislative, or court proceedings and proposals or the effect of such outcome on
the cable television industry cannot be predicted.
USE OF PROCEEDS
The net proceeds to the Company from this offering are estimated to be
$ , after payment of estimated expenses. The Company anticipates
that, if all conditions to closing are met, the net proceeds will be used for
the acquisition of the Augusta System. If a definitive agreement is reached for
the acquisition of the Virginia Systems, and all conditions to closing are met,
the remaining net proceeds, together with cash on hand or funds available under
the Company's revolving credit facility, will be used to acquire the Virginia
Systems. If either acquisition is not completed, the unused net proceeds will be
used for the acquisition of other cable television systems either from among
those currently owned by the Company's managed partnerships or from unrelated
third parties or for general corporate purposes. Pending any use of the proceeds
for the foregoing acquisitions, the proceeds will be invested temporarily in
interest-bearing short-term securities.
S-4
<PAGE> 5
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
November 30, 1994; pro forma to reflect (i) the issuance of 3,900,000 shares
Class A Common Stock of the Company for substantially all of the assets of
Spacelink on December 20, 1994, (ii) the purchase by BCI of 7,414,300 shares of
the Company's Class A Common Stock on December 20, 1994 and (iii) the exercise
of an option to purchase 200,000 shares of the Company's Common Stock by Glenn
R. Jones in December 1994; and as adjusted to reflect the Augusta acquisition
and issuance of the Notes.
<TABLE>
<CAPTION>
AS OF NOVEMBER 30, 1994
-------------------------------------------
AS REPORTED PRO FORMA(1) AS ADJUSTED(2)
----------- ------------ --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and Cash Equivalents............................ $ 2,633 $ 94,078 $ 114,860
========== ========== ==========
Debt:
Revolving credit facility(1)....................... $ 38,000 $ -- $ --
% Senior Notes due 2002....................... -- -- 150,000
11.5% Subordinated Debentures due 2004............. 160,000 160,000 160,000
10.5% Subordinated Debentures due 2008............. 100,000 100,000 100,000
7.5% Convertible Debentures due 2007............... 19,368 19,368 19,368
Other.............................................. 1,550 2,389 2,389
---------- ---------- ----------
Total Debt................................. 318,918 281,757 431,757
---------- ---------- ----------
Shareholders' Investment:
Class A Common Stock, $.01 par value, 30,000,000
authorized, 14,817,088 issued, 26,131,388 issued
pro forma(1).................................... 148 261 261
Common Stock, $.01 par value, 5,550,000 shares
authorized, 4,913,021 issued, 5,113,021 issued
pro forma(1).................................... 49 51 51
Additional paid-in capital......................... 175,447 396,506 396,506
Accumulated deficit................................ (108,392) (121,792) (121,792)
---------- ---------- ----------
Total Shareholders' Investment............. 67,252 275,026 275,026
---------- ---------- ----------
Total Capitalization....................... $ 386,170 $ 556,783 $ 706,783
========== ========== ==========
</TABLE>
---------------
(1) Pro forma to reflect the issuance of 3,900,000 shares Class A Common Stock
of the Company for substantially all of the assets of Spacelink on December
20, 1994, the purchase by BCI of 7,414,300 shares of the Company's Class A
Common Stock on December 20, 1994 and the exercise of an option to purchase
200,000 shares of the Company's Common Stock by Glenn R. Jones in December
1994. The Spacelink transaction was a stock for net assets purchase whereby
the Company issued 3,900,000 shares of Class A Common Stock to acquire
substantially all of the assets and liabilities of Spacelink, excluding
Spacelink's holding of 2,878,151 shares of the Company's Common Stock. The
Spacelink transaction was accounted for as (i) the exchange of ownership
interests between entities under common control for the shares issued to
Glenn R. Jones and Jones International, Ltd., which is reflected at
predecessor cost, and (ii) the acquisition of the minority interest of
Spacelink, which is reflected at fair market value. The excess of the market
value of Spacelink's minority interest over the book value of approximately
$16,000,000 was assigned to goodwill. On December 20, 1994, BCI purchased
7,414,300 newly issued shares of the Company's Class A Common Stock at
$27.50 per share for $203,893,250. A portion of the $203,893,250 was used to
repay amounts then outstanding under the Company's and Spacelink's credit
facilities of $38,000,000 and $75,000,000, respectively, with the remainder
being used to pay certain fees and held for future needs.
(2) Reflects the issuance of the Notes and application of a portion of the
proceeds therefrom to the purchase of the Augusta System as if the purchase
was completed November 30, 1994. The purchase price of the Augusta System,
which was determined by the average of three separate independent appraisals
is $141,718,000. The total price paid, net of General Partner distributions
received of $12,500,000 is $129,218,000.
S-5
<PAGE> 6
SELECTED FINANCIAL DATA
The following table sets forth selected financial data regarding the
financial position and operating results of the Company and its subsidiaries.
This data should be read in conjunction with the Company's consolidated
financial statements and the notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" appearing in the
Annual Report on Form 10-K for the year ending May 31, 1994 and the Quarterly
Report on Form 10-Q for the quarter ended November 30, 1994, both of which are
incorporated by reference herein.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED MAY 31, -----------------------------
------------------------------------------------------------ NOVEMBER 30, NOVEMBER 30,
1990 1991 1992 1993 1994 1993 1994
-------- -------- -------- -------- -------- ------------ ------------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Subscriber service fees......... $ 68,434 $ 79,879 $ 87,979 $105,488 $115,076 $ 56,216 $ 59,623
Management fees................. 13,924 14,772 16,220 17,104 17,360 8,636 9,066
Fund fees and distributions..... 8,736 4,283 26,790 -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Total revenues.................... 91,094 98,934 130,989 122,592 132,436 64,852 68,689
Costs and expenses:
Operating, general and
administrative expenses......... 43,881 51,817 55,759 71,360 76,345 37,264 40,910
Depreciation and amortization..... 36,280 39,670 39,586 42,720 43,831 20,982 21,639
-------- -------- -------- -------- -------- -------- --------
Operating income (loss)........... 10,933 7,447 35,644 8,512 12,260 6,606 6,140
Other income (expense):
Interest expense.................. (54,122) (44,699) (38,129) (43,573) (36,189) (17,550) (18,329)
Interest charged to cable
television systems held for
resale.......................... 13,897 4,598 -- -- -- -- --
Equity in losses of affiliated
entities........................ (4,395) (11,233) (8,158) (2,900) (4,624) (2,079) (917)
Interest income................... 2,306 2,160 4,328 4,060 4,695 1,776 2,197
Litigation settlement............. -- (3,413) -- -- -- -- --
Gain (loss) on sale of assets..... -- -- 29,933 (5,466) -- -- 15,496
Other, net........................ 782 110 (235) (899) (1,419) (381) 491
-------- -------- -------- -------- -------- -------- --------
Income (loss) before income taxes,
extraordinary items and
accounting
change.......................... (30,599) (45,030) 23,383 (40,266) (25,277) (11,628) 5,078
Income tax benefit (provision).... 9,727 -- (7,389) -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Income (loss) before extraordinary
items
and accounting change........... (20,872) (45,030) 15,994 (40,266) (25,277) (11,628) 5,078
Extraordinary items:
Gain (loss) on early
extinguishment of debt.......... (1,996) 11,419 (2,504) (20,386) -- -- --
Tax benefit from loss carryforward
utilization..................... -- -- 6,089 -- -- -- --
Cumulative effect of change in
accounting method:
Change in method of accounting for
income taxes.................... -- -- -- 3,862 -- -- --
-------- -------- -------- -------- -------- -------- --------
Net income (loss)................. $(22,868) $(33,611) $ 19,579 $(56,790) $(25,277) $(11,628) $ 5,078
======== ======== ======== ======== ======== ======== ========
Primary earnings (loss) per
share........................... $ (1.83) $ (2.77) $ 1.59 $ (3.98) $ (1.43) $ (.68) $ .26
======== ======== ======== ======== ======== ======== ========
Fully diluted earnings (loss) per
share(4)........................ $ 1.53
========
Ratio of earnings to fixed
charges(1)...................... --(2) --(2) 1.83x --(2) --(2) --(2) 1.33x
OTHER FINANCIAL DATA:
Operating income (loss) before
depreciation and amortization
and excluding fund fees and
distributions................... $ 38,477 $ 42,834 $ 48,440 $ 51,232 $ 56,091 $ 27,588 $ 27,779
Net interest expense(3)........... 40,225 40,101 38,129 43,573 36,189 17,550 18,329
Capital expenditures.............. 28,958 27,278 17,068 18,238 23,818 8,589 15,383
BALANCE SHEET DATA (AT END OF
PERIOD):
Total assets...................... $487,752 $400,338 $357,252 $399,572 $448,485 $406,183 $432,619
Total debt........................ 412,695 345,678 299,300 327,214 343,907 343,951 318,918
Shareholders' investment
(deficit)....................... 40,358 (2,653) 26,875 31,649 62,043 20,326 67,252
</TABLE>
---------------
(1) The ratio of earnings to fixed charges has been computed by dividing the sum
of (a) pre-tax income, excluding equity in losses of limited partnerships
and (b) interest expense net of interest charged to cable television systems
held for resale, by net interest expense. Interest expense includes interest
expense on all indebtedness (including amortization of deferred debt
issuance costs and debt discount).
(2) Earnings were insufficient to cover fixed charges by $26,204,000,
$33,797,000, $37,366,000, $20,653,000 and $9,549,000 for the years ended May
31, 1990, 1991, 1993 and 1994, and for the six months ended November 30,
1993, respectively.
(3) Consists of interest expense net of interest charged to cable television
systems held for resale, but not net of interest income.
(4) Fully diluted earnings (loss) per share effect is not presented for periods
in which the calculation was either insignificant or anti-dilutive.
S-6
<PAGE> 7
SELECTED PRO FORMA FINANCIAL DATA
The following Unaudited Pro Forma Consolidated Statement of Operations data
for the six months ended November 30, 1994 gives effect to (i) the acquisition
of the assets of Spacelink (other than the approximately 2,900,000 shares of
Common Stock of the Company held by it) on December 20, 1994 for consideration
consisting of 3,900,000 shares of Class A Common Stock of the Company, (ii) the
purchase by BCI of 7,414,300 newly issued shares of Class A Common Stock of the
Company for aggregate consideration on $203,893,250, (iii) the repayment of an
aggregate of $113,000,000 of bank indebtedness of the Company and Spacelink,
(iv) the sale of the Company's Gaston County, North Carolina cable television
system on July 25, 1994 for aggregate consideration of $36,500,000, and (v) to
the proposed purchase of the Augusta System for aggregate consideration of
$141,718,000, subject to normal closing adjustments, and the receipt by the
Company of approximately $12,500,000 as a partnership distribution upon the
closing of such sale.
The Unaudited Pro Forma Statements of Operations data should be read in
conjunction with the note thereto, and the historical financial statements of
the Company, Spacelink and Cable TV Fund 12-B, Ltd., the partnership which owns
the Augusta System, which are incorporated by reference herein. The Unaudited
Pro Forma Statements of Operations are based on historical data and may not be
indicative of the actual results obtained upon the closing of the above
transactions.
<TABLE>
<CAPTION>
SIX MONTHS ENDED NOVEMBER 30, 1994
---------------------------------------------------------
PRO FORMA ADJUSTMENTS
---------------------------------------------------------
OTHER AUGUSTA
AS REPORTED ADJUSTMENTS PURCHASE(1) PRO FORMA
----------- ----------- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
REVENUES FROM OPERATIONS:
Subscriber service fees............... $ 59,623 $ 9,465 $13,550 $ 82,638
Management fees....................... 9,066 1,068 (678) 9,456
Other revenues........................ -- 7,369 -- 7,369
--------- --------- ------- ---------
TOTAL REVENUES................ 68,689 17,902 12,872 99,463
COSTS AND EXPENSES:
Operating expenses.................... 37,239 12,487 7,047 56,773
General and administrative expenses... 3,671 2,129 1,032 6,832
Depreciation and amortization......... 21,639 4,466 7,000 33,105
--------- --------- ------- ---------
OPERATING INCOME........................ 6,140 (1,180) (2,207) 2,753
OTHER INCOME (EXPENSE):
Interest expense...................... (18,329) 1,679 (1,600) (18,250)
Gain of sale of assets................ 15,496 (15,496) -- --
Equity in losses of affiliated
entities........................... (917) (635) -- (1,552)
Interest income....................... 2,197 25 -- 2,222
Other, net............................ 491 (98) -- 393
--------- --------- ------- ---------
INCOME (LOSS) BEFORE INCOME
TAXES................................. 5,078 (15,705) (3,807) (14,434)
Income tax benefit.................... -- -- -- --
--------- --------- ------- ---------
NET INCOME (LOSS)....................... $ 5,078 $ (15,705) $(3,807) $ (14,434)
========= ========= ======= =========
OTHER DATA
Capital expenditures.................. $ 15,383 $ 3,933 $ 2,406 $ 21,722
========= ========= ======= =========
</TABLE>
---------------
(1) The Unaudited Pro Forma Statement of Operations reflects the purchase of the
Augusta System, the acquisition of Spacelink, the BCI transaction and the
sale of the Gaston System as if the transactions occurred June 1, 1993. The
basis for the statement are the historical financials of the Company,
Spacelink and the Cable TV Fund 12-B, Ltd., which are incorporated by
reference herein. The depreciation and amortization of the Augusta System
has been adjusted to reflect the Company's basis in the assets. Additional
adjustments have been made for the amortization of the excess market value
of Spacelink's minority interest and for interest expense as a result of
changes in debt balances due to the above transactions.
S-7
<PAGE> 8
DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes supplements
and, to the extent inconsistent therewith, replaces the description of the
general terms of the Debt Securities set forth under the heading "Description of
Debt Securities" in the accompanying Prospectus, to which description reference
is made. The Notes will be issued pursuant to an Indenture dated as of March 15,
1995 between the Company and U.S. Trust Company of California, N.A., as trustee
(the "Trustee"), as supplemented by a First Supplemental Indenture dated March
15, 1995 (such Indenture and First Supplemental Indenture, collectively, the
"Indenture"). The Indenture is referred to in the Prospectus as the "Senior
Indenture." The Notes are "Senior Debt Securities" as that term is used in the
Prospectus and are also referred to in the Prospectus as the "Offered Debt
Securities."
GENERAL
The Notes are limited to $150,000,000 aggregate principal amount and will
be issued in fully registered form, without coupons, in denominations of $1,000
and integral multiples thereof. The Notes will mature on , 2002 (the
"Maturity Date").
The Notes will bear interest from the date of issuance at a rate of %
per annum, payable semiannually on and of each
year, commencing , 1995, to the person in whose name each Note was
registered at the close of business on the preceding and
, respectively, subject to certain exceptions.
OPTIONAL REDEMPTION
The Notes may not be redeemed prior to maturity on , 2002. The
Notes are subject to defeasance during the year prior to maturity as described
in the Prospectus.
SINKING FUND
The Notes will not be subject to any mandatory sinking fund or redemption.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms as well as any other capitalized terms used herein for which no
definition is provided.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlled by" and
"under common control with"), when used with respect to any person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities or by agreement or otherwise.
"Affiliated Partnership" means any general or limited partnership, joint
venture or other entity of a similar nature of which the Company or any
Subsidiary is general or managing partner or venturer and of which the Company
or any Subsidiary owns or controls at least a 0.5% interest.
"Annualized Pro Forma Operating Cash Flow" means Pro Forma Operating Cash
Flow for the latest fiscal quarter ended prior to the date as of which the
Annualized Pro Forma Operating Cash Flow is being determined multiplied by four.
"Asset Sale" means the sale, transfer, or other disposition (other than to
the Company or any of its Subsidiaries) in any single transaction or series of
related transactions of (a) any Capital Stock of any Subsidiary, (b) all or
substantially all of the assets of the Company or any Subsidiary or (c) all or
substantially all of the assets of a division, line of business, cable
television system, or comparable business segment of the Company or any
Subsidiary.
S-8
<PAGE> 9
"Capital Stock" means in respect of any Person, any and all shares,
interests, rights to purchase, warrants, options, participation or other
equivalents of or interests in (however designated) corporate stock.
"Capitalized Lease Obligation" means as applied to any Person, any lease of
any property (whether real, personal or mixed) by that Person as lessee which,
in conformity with GAAP, is required to be accounted for as a capital lease on
the balance sheet of that Person.
"Cash Flow Available for Interest Expense" means, for any Person, for any
period, (A) the sum of the amount for such period of (i) Net Income, (ii)
Interest Expense, (iii) provisions for taxes based on income (excluding taxes
related to gains and losses excluded from the definition of Net Income), (iv)
depreciation expense, (v) amortization expense, and (vi) any other non-cash
items reducing the Net Income of such Person for such period, minus (B) all
non-cash items increasing the Net Income of such Person, all as determined on a
consolidated basis in accordance with GAAP; provided that if, during such
period, such Person shall have made any Asset Sale, Cash Flow Available for
Interest Expense of such Person for such period shall be reduced by an amount
equal to the Cash Flow Available for Interest Expense (if positive) directly
attributable to the assets which are the subject of such Asset Sale for the
period or increased by an amount equal to the Cash Flow Available for Interest
Expense (if negative) directly attributable thereto for such period.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect against
fluctuations in currency values.
"Debt" of any Person means (without duplication) any indebtedness,
contingent or otherwise, in respect of borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof), or evidenced by bonds, notes, debentures or similar
instruments or representing the balance deferred and unpaid of the purchase
price of any property (except any such balance that constitutes a trade payable
or an accrued liability arising in the ordinary course of business that is not
overdue by more than 120 days or that is being contested in good faith), if and
to the extent any of the foregoing indebtedness would appear as a liability upon
a balance sheet of the Company in accordance with GAAP.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession as in effect on the date of the Indenture Supplement.
"Indebtedness" of any Person shall mean the Debt of such Person and shall
also include, to the extent not otherwise included, any Capitalized Lease
Obligation, the maximum fixed repurchase price of any Redeemable Stock, the
aggregate liquidation preference of the issued and outstanding shares of
preferred stock of any Subsidiary, indebtedness secured by a Lien to which the
property or assets owned or held by such Person are subject (whether or not the
obligations secured thereby shall have been assumed), guarantees of items that
would constitute Indebtedness under this definition (whether or not such items
would appear upon the balance sheet of such Person), letters of credit and
letter of credit reimbursement obligations (whether or not such items would
appear on such balance sheet), and obligations in respect of Currency Agreements
and Interest Swap Obligations, and any renewal, extension, refunding or
amendment of any of the foregoing. For purposes of the preceding sentence, the
maximum fixed repurchase price shall be calculated in accordance with the terms
of such Redeemable Stock as if such Redeemable Stock were repurchased on any
date on which Indebtedness shall be required to be determined pursuant to the
Indenture, and if such price is based upon or measured by the fair market value
of such Redeemable Stock (or any equity security for which it may be exchanged
or converted), such fair market value shall be determined in good faith by the
Board of Directors. The amount of Indebtedness of any Person at any date shall
be the outstanding balance at such date of all unconditional obligations as
described above and the maximum liability of any such contingent obligations at
such date.
S-9
<PAGE> 10
"Interest Expense" of any Person means, for any period, the aggregate
amount of (i) interest in respect of Indebtedness of such Person (excluding
interest attributable to cable television systems held for resale and including
amortization of original issue discount on any such Indebtedness and the
interest portion of any deferred payment obligation, calculated in accordance
with the effective interest method of accounting, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and the net costs associated with Interest Swap Obligations
and Currency Agreements), and (ii) all but the principal component of rentals in
respect of Capitalized Lease Obligations paid, accrued or scheduled to be paid
or accrued by such Person during such period.
"Interest Swap Obligations" shall mean the obligations of any Person
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payment made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount.
"Lien" means any lien, security interest, charge or encumbrance of any kind
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, and any agreement to give any security interest).
"Net Income" of any Person shall mean the net income (loss) of such Person,
determined in accordance with GAAP, excluding, however, (i) any gain or loss
realized upon an Asset Sale (including, without limitation, dispositions
pursuant to sale and leaseback transactions) of such Person not in the ordinary
course of business, and (ii) the amount of any non-recurring distribution from
any Affiliated Partnership and (iii) any extraordinary gain or loss.
"Pro Forma Operating Cash Flow" means, for any period, (A) the sum of the
amount for such period of (i) Net Income, (ii) Interest Expense, (iii)
provisions for taxes based on income (excluding taxes related to gains and
losses excluded from the definition of Consolidated Net Income or Net Income),
(iv) depreciation expense, (v) amortization expense, (vi) any other non-cash
items reducing the Net Income of such Person for such period, minus (B) all
non-cash items increasing the Net Income of such Person for such period; all as
determined on a consolidated basis for the Company and its Subsidiaries in
accordance with GAAP after giving effect to the following: (i) if, during such
period, the Company or any Subsidiary shall have any cable television systems
held for resale, to the extent not otherwise included, Pro Forma Operating Cash
Flow of the Company for such period shall be increased by an amount equal to Pro
Forma Operating Cash Flow (if positive) of such cable television system held for
resale for such period or decreased by an amount equal to the Pro Forma
Operating Cash Flow (if negative) directly attributable thereto for such period;
(ii) if, during such period, the Company or any of its Subsidiaries shall have
made any Asset Sale, Pro Forma Operating Cash Flow of the Company for such
period shall be reduced by an amount equal to the Pro Forma Operating Cash Flow
(if positive) directly attributable to the assets which are the subject of such
Asset Sale for the period or increased by an amount equal to the Pro Forma
Operating Cash Flow (if negative) directly attributable thereto for such period,
and (iii) if, during such period, Indebtedness is incurred by the Company or any
of its Subsidiaries for or in connection with the acquisition of any Person or
business which immediately after acquisition is a Subsidiary or whose assets are
held directly by the Company or a Subsidiary, Pro Forma Operating Cash Flow
shall be computed so as to give pro forma effect to the acquisition of such
Person or business as if such acquisition had occurred as of the first day of
such period.
"Redeemable Stock" means any Capital Stock which, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the
Maturity Date (as defined in the Indenture) of the Notes.
"Restricted Payment" shall mean, with respect to any Person, (i) the
declaration or payment of any dividend on, or the making of any distribution to
the holders (as such) of, any shares of its Capital Stock (other than (A)
dividends or distributions payable in Capital Stock (other than Redeemable
Stock) of
S-10
<PAGE> 11
the Company, or (B) dividends or distributions from a Subsidiary to any wholly
owned Subsidiary or to the Company); or (ii) the direct or indirect purchase,
redemption or other acquisition or retirement for value of any Capital Stock of
such Person; or (iii) any direct or indirect payment to redeem, repurchase,
defease or otherwise acquire or retire for value, prior to any scheduled
maturity, scheduled repayment or scheduled sinking fund payment, any
Indebtedness of the Company that (a) is subordinate in right of payment to the
Notes and (b) has a scheduled final maturity subsequent to the Maturity Date of
the Notes.
"Significant Subsidiary" shall have the meaning ascribed to it in Rule 1-02
of Regulation S-X of the Securities and Exchange Commission.
"Subsidiary" of any specified Person means a corporation whose Capital
Stock with voting power, under ordinary circumstances, to elect a majority of
directors is at any time, directly or indirectly, owned by such Person or by
such Person and a Subsidiary or Subsidiaries of such Person or by a Subsidiary
or Subsidiaries of such Person.
CERTAIN COVENANTS
Limitation on Restricted Payments. The Indenture provides that the Company
will not, and will not permit any Subsidiary to, make any Restricted Payment if
at the time of making such Restricted Payment (a) an Event of Default (as
defined in the Indenture) shall have occurred and be continuing, or shall occur
as a consequence thereof, or (b) if upon giving effect to such payment the
aggregate amount expended for all such Restricted Payments subsequent to
February 29, 1992 shall exceed the sum of (i) the excess of (X) the aggregate of
Cash Flow Available for Interest Expense of the Company and its Subsidiaries on
a consolidated basis, accrued during all fiscal quarters ended subsequent to
February 29, 1992 over (Y) the product of (1) 1.2 and (2) the aggregate of
Interest Expense of the Company and its Subsidiaries on a consolidated basis,
accrued during all fiscal quarters ended subsequent to February 29, 1992, (ii)
the net proceeds received by the Company from the issuance or sale, after
February 29, 1992, of Capital Stock of the Company (other than Redeemable Stock)
and of any convertible securities which have been converted into Capital Stock
(other than Redeemable Stock), and (iii) $15,000,000.
The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration when the payment would have
complied with the dividend restriction set forth above on the date of
declaration; (ii) the retirement of any shares of the Company's Capital Stock in
exchange for, or out of the net proceeds of the substantially concurrent sale
(other than to a Subsidiary of the Company) of, other shares of the Company's
Capital Stock (other than Redeemable Stock); and (iii) the redemption,
repurchase or retirement of any Indebtedness which is subordinated to the Notes
with the proceeds of, or in exchange for (a) any Indebtedness of the Company
which (x) is subordinate in right of payment to the Notes and (y) has a
scheduled final maturity subsequent to the Maturity Date of the Notes, or (b)
any shares of the Company's Capital Stock other than Redeemable Stock.
Limitation on Additional Indebtedness. The Indenture provides that the
Company will not, and will not permit any Subsidiary to, directly or indirectly,
create, incur, issue, assume or become liable for, contingently or otherwise
(collectively an "incurrence"), any Indebtedness (other than the Notes) unless,
after giving effect to such incurrence on a pro forma basis, Indebtedness of the
Company and its Subsidiaries, on a consolidated basis, shall not be more than
nine times Annualized Pro Forma Operating Cash Flow for the latest fiscal
quarter preceding such incurrence for which financial statements are available.
Notwithstanding the above, the Indenture does not limit (i) Indebtedness
incurred in connection with Currency Agreements or Interest Swap Obligations,
(ii) Indebtedness outstanding on the date of the Indenture, (iii) letters of
credit and letter of credit reimbursement obligations that support performance
obligations not to exceed $15,000,000 in the aggregate outstanding at any time,
and (iv) Indebtedness resulting from the extension, refunding or renewal of any
Indebtedness existing prior to such extension, renewal or refunding which does
not result in an increase in the principal amount of such existing Indebtedness
then outstanding or, in the case of existing Indebtedness which matures
S-11
<PAGE> 12
subsequent to the Maturity Date of the Notes, does not result in the maturity of
such Indebtedness prior to the Maturity Date of the Notes or, if the existing
Indebtedness is subordinated in right of payment to the Notes, the Indebtedness
resulting from such extension, renewal or refunding is also subordinated in
right of payment to the Notes.
Limitation on Transactions with Affiliates. The Indenture provides that the
Company will not, and will not permit any Subsidiary to, engage in any single
transaction or series of related transactions having a value in excess of
$10,000,000 with an Affiliate of the Company (other than a Subsidiary), or any
director, officer or employee of the Company or any Subsidiary, except for (i)
any payment for goods or services purchased in the ordinary course of business,
(ii) temporary loans or advances to any Affiliated Partnership on a basis
consistent with past practice, (iii) allocation of corporate overhead to
Affiliates of the Company and to the Company and its Subsidiaries on a basis
which is fair and reasonable, and (iv) the making of any payment pursuant to any
agreement or arrangement with any Affiliate entered into prior to the date of
the Indenture. Notwithstanding the foregoing, such provision shall not prohibit
any such transaction, the terms of which, taken as a whole, are determined by
the Board of Directors of the Company to be fair and in the best interests of
the Company or any Subsidiary.
EVENTS OF DEFAULT
An Event of Default is defined in the Indenture with respect to the Notes
as a default in payment of principal of, or premium, if any, on the Notes at
maturity or upon redemption; a default in payment of interest on the Notes, and
continuance of such default, for a period of 30 days; a failure by the Company
for 60 days after written notice to perform any other of the covenants or
agreements in the Indenture; certain events of bankruptcy, insolvency or
reorganization of the Company or any Significant Subsidiary; default in the
payment at final maturity of principal or premium, if any, aggregating
$5,000,000 or more with respect to other Indebtedness of the Company or any
Subsidiary or the acceleration of any such Indebtedness which default shall not
be cured or waived, or such acceleration shall not be rescinded or annulled or a
rendering of a final judgment in excess of $5,000,000 against the Company or any
Subsidiary that is not discharged for any period of 60 consecutive days during
which a stay of enforcement shall not be in effect. For purposes of the
foregoing, final maturity shall mean, in the case of Indebtedness which is
payable in installments, the date on which the last installment of such
Indebtedness is due or the date on which such Indebtedness is due as the result
of the acceleration thereof.
The Indenture provides that, if an Event of Default shall have occurred and
be continuing, either the Trustee or the holders of 25% in principal amount of
the Notes then outstanding, by notice in writing to the Company (and to the
Trustee if given by holders of the Notes), may declare the principal of all the
Notes to be due and payable immediately. Notwithstanding the foregoing, upon
certain conditions such declaration may be annulled and past defaults may be
waived by the holders of a majority in principal amount of the Notes then
outstanding. The holders of a majority in principal amount of the Notes then
outstanding may also waive any default (except a default in payment of principal
or interest on the Notes) prior to such declaration. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy, insolvency or reorganization, all outstanding Notes will become due
and payable without further action or notice.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Company may not consolidate or merge with or into, or sell, assign,
transfer, lease, convey or otherwise dispose of its assets as an entirety or
substantially as an entirety to, any Person unless (i) the Company is the
surviving Person or the successor or transferee is a corporation or organized
and existing under the laws of the United States, any state thereof or the
District of Columbia, (ii) the successor assumes all the obligations of the
Company under the Notes and the Indenture, (iii) after such transaction no Event
of Default exists, and (iv) immediately after giving effect to such transaction
on a pro forma basis, the consolidated Indebtedness of the Person formed by or
surviving any such consolidation or merger, or to which such sale, assignment,
transfer, lease or conveyance or disposition
S-12
<PAGE> 13
has been made would not be more than nine times Annualized Pro Forma Operating
Cash Flow for the latest fiscal quarter preceding such transaction for which
financial statements are available.
MODIFICATION OF THE INDENTURE
The Company and the Trustee, with the consent of the holders of not less
than a majority of the aggregate principal amount of the Notes at the time
outstanding, may execute supplemental indentures adding, changing or eliminating
stated provisions with respect to the Notes or the Indenture or of any
supplemental indenture or modifying in any manner the rights of the holders of
the Notes; however, no such supplemental indenture may (i) extend the stated
maturity of the Notes, reduce the rate or extend the time of payment of interest
thereon, reduce the principal amount thereof, or impair the right to institute
suit for the enforcement of any such payment on or after the stated maturity
thereof (or, in the case of redemption, on or after the redemption date) without
the consent of each holder of the Notes, (ii) reduce the aforesaid percentage of
any of the Notes, the consent of the holders of which is required for any such
supplemental indenture, without the consent of the holders of all the Notes then
outstanding, or (iii) modify any of the provisions concerning modification of
the Indenture except to increase any such percentage or to provide that certain
other provisions of the Indenture cannot be modified or waived without the
consent of each holder of the Notes.
REPORTS TO TRUSTEE AND HOLDERS OF NOTES
The Indenture provides that the Company must provide the Trustee with
copies of the quarterly and annual reports and other information, documents and
reports specified in Sections 13, 14 and 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), which the Company may be required to file
with the Commission; or if the Company is not required to file such information,
documents or reports, pursuant to any of such sections, then to file with the
Trustee and the Commission, such of the supplementary and periodic information,
documents and reports which may be required to be filed pursuant to Section 13
of the Exchange Act in respect of a security listed and registered on a national
securities exchange. The Indenture also provides that the Company must provide
holders of the Notes with summaries of any such information, documents and
reports.
UNDERWRITING
Subject to the terms and conditions set forth in an Underwriting Agreement
dated the date hereof (the "Underwriting Agreement") among the Company and
Salomon Brothers Inc, Morgan Stanley & Co. Incorporated and PaineWebber
Incorporated (collectively, the "Underwriters"), the Company has agreed to issue
and sell to the Underwriters, and each of the Underwriters has agreed to
purchase from the Company, the principal amount of Notes set forth opposite its
name below.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
---------------------------------------------------------------------- ----------------
<S> <C>
Salomon Brothers Inc ................................................. $
Morgan Stanley & Co. Incorporated.....................................
PaineWebber Incorporated..............................................
------------
Total....................................................... $150,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all of the Notes if any are
purchased.
The Underwriters propose initially to offer the Notes directly to the
public at the public offering price set forth on the cover page of this
Prospectus Supplement, and to certain dealers at such price less a concession
not in excess of % of the principal amount of the Notes. The Underwriters
may allow, and dealers may reallow, a concession not in excess of % of the
principal amount of the Notes to certain other dealers.
S-13
<PAGE> 14
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that the Underwriters intend to
make a market in the Notes as permitted by applicable laws and regulations, but
the Underwriters are not obligated to do so and may discontinue market making at
any time without notice. No assurance can be given as to the liquidity of the
trading market for the Notes.
The Underwriting Agreement provides that the Company will indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or contribute to payments the Underwriters
may be required to make in respect thereof. Certain of the Underwriters have
from time to time provided customary investment banking services to the Company
and expect in the future to provide such services, for which they have received
and will receive customary fees and commissions.
LEGAL MATTERS
The validity of the Notes will be passed upon for the Company by Elizabeth
M. Steele, Vice President/General Counsel of the Company. Certain legal matters
will be passed upon for the Underwriters by Cahill Gordon & Reindel (a
partnership including a professional corporation), New York, New York.
EXPERTS
The consolidated financial statements and related schedules (i) of the
Company and its subsidiaries included in the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1994, (ii) of Spacelink and its
subsidiaries in Spacelink's Annual Report on Form 10-K for the fiscal year ended
May 31, 1994, as amended by Form 10-K/A No. 1 dated September 7, 1994 and Form
10-K/A No. 2 dated September 19, 1994 and (iii) of the Partnership contained in
the Form 8-K of the Company dated March 10, 1995, which are incorporated herein
by reference, have been audited by Arthur Andersen LLP, independent certified
public accountants, as indicated in their reports with respect thereto, and are
incorporated herein by reference upon the authority of said firm as experts in
giving said reports.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which have been filed by Spacelink (File No.
0-8947) with the Commission pursuant to the requirements of the Exchange Act,
are hereby incorporated by reference into this Prospectus Supplement:
Spacelink's Annual Report on Form 10-K for the fiscal year ended May 31, 1994;
as amended by Form 10-K/A No. 1 dated September 7, 1994 and Form 10-K/A No. 2
dated September 19, 1994, and Quarterly Reports on Form 10-Q for the fiscal
quarters ended August 31 and November 30, 1994.
S-14
<PAGE> 15
PROSPECTUS
[JONES INTERCABLE LOGO]
SENIOR DEBT SECURITIES, SENIOR SUBORDINATED
DEBT SECURITIES AND SUBORDINATED DEBT SECURITIES
------------------
Jones Intercable, Inc. (the "Company") from time to time may offer up to
$500,000,000 aggregate principal amount of debentures, notes and/or other
unsecured evidences of indebtedness consisting of senior debt securities
("Senior Debt Securities"), senior subordinated debt securities ("Senior
Subordinated Debt Securities") and subordinated debt securities ("Subordinated
Debt Securities") (collectively, the "Debt Securities"). The Debt Securities may
be issued as convertible Debt Securities which, unless previously redeemed or
otherwise purchased, will be convertible at any time during the specified
conversion period into shares of the Company's Class A Common Stock, par value
$.01 per share (the "Class A Common Stock"). The Debt Securities may be offered
as separate series in amounts, at prices and on terms to be determined at the
time of sale and to be set forth in supplements to this Prospectus. The Company
may sell Debt Securities to or through underwriters or dealers and also may sell
Debt Securities directly to other purchasers or through agents. See "Plan of
Distribution."
Certain terms of the Debt Securities in respect of which this Prospectus is
being delivered (the "Offered Debt Securities"), including, where applicable,
the specific designation (including whether senior, senior subordinated or
subordinated and whether convertible), aggregate principal amount,
denominations, maturity or the method of determination thereof, interest rate
(which may be fixed or variable) and time of payment of interest, initial
conversion rate, if any, and terms relating to the adjustment thereof that are
in addition to or different from those described herein, the period during which
any convertible Debt Securities may be converted, terms for redemption at the
option of the Company or the holder, terms for sinking or purchase fund
payments, the initial public offering price, any listing or proposed listing on
a securities exchange, the names of any underwriters or agents and the
compensation of such underwriters or agents and the other terms in connection
with the offering and sale of the Offered Debt Securities are set forth in the
accompanying Prospectus Supplement ("Prospectus Supplement").
------------------
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAVE THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------
The date of this Prospectus is July 9, 1993.
<PAGE> 16
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus or the Prospectus Supplement in connection with the offer contained
herein or therein, and, if given or made, such information or representations
must not be relied upon as having been authorized by the Company or any other
person. This Prospectus and the Prospectus Supplement do not constitute an offer
to sell, or a solicitation of an offer to buy, any securities other than those
specifically offered hereby or thereby or any securities in any jurisdiction in
which, or to any person to whom, such offer or solicitation would be unlawful.
Neither the delivery of this Prospectus or the Prospectus Supplement nor any
sale made hereunder or thereunder shall, under any circumstances, create an
implication that there has been no change in the affairs of the Company since
the date hereof or thereof or that the information herein or therein is correct
as of any time subsequent to their respective dates.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (together with all amendments
and exhibits, referred to as the "Registration Statement") under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to the Debt
Securities. This Prospectus does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further information
pertaining to the Debt Securities, the Class A Common Stock and the Company,
reference is made to the Registration Statement.
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Judiciary Plaza, Washington,
D.C. 20549, and at the following Regional Offices: 500 West Madison Street,
Suite 2400, Chicago, Illinois 60661 and 7 World Trade Center, New York, New York
10048. Copies of any such material may be obtained at prescribed rates from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549.
The Company will furnish to holders of the Debt Securities annual reports
containing audited financial statements accompanied by a report thereon by the
Company's independent certified public accountants.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the requirements of the Exchange Act, are hereby
incorporated by reference into this Prospectus: the Company's Annual report on
Form 10-K for the fiscal year ended May 31, 1992, the Company's Quarterly
Reports on Form 10-Q for the fiscal quarters ended August 31 and November 30,
1992 and February 28, 1993, the Company's Proxy Statement dated December 18,
1992, the Company's Current Reports on Form 8-K filed on February 19, 1993,
March 1 and 15, 1993 and June 15, 1993 and the Company's Form 10-C filed on
March 1, 1993. The discussion of "Risks Associated with Government Regulation of
the Cable Television Industry" appearing on pages 6 and 7 of this Prospectus
should be read in conjunction with the financial statements incorporated herein
by reference.
All documents subsequently filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
termination of the offering of the Debt Securities shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
respective date of filing of each such document. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is, or is deemed to be, incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
2
<PAGE> 17
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of any and all of
the documents incorporated by reference herein, other than certain exhibits to
such documents. Requests for such documents should be directed to Elizabeth M.
Steele, Vice President/General Counsel and Secretary, Jones Intercable, Inc.,
9697 East Mineral Avenue, P.O. Box 3309, Englewood, Colorado 80155-3309, (303)
792-3111.
THE COMPANY
The Company acquires, develops and operates cable television systems for
itself and for its managed public limited partnerships (the "Partnerships").
Based on the number of basic subscribers served by the Company's owned and
managed cable television systems, the Company is one of the largest cable
television operators in the United States. As of May 31, 1993, the Company owned
or managed 42 cable television systems serving a total of approximately
1,067,000 basic subscribers in 20 states. Glenn R. Jones, the founder, Chairman,
Chief Executive Officer and controlling shareholder of the Company is one of the
pioneers in the cable television industry and has been involved in the ownership
and operation of cable television systems since 1970.
The Company has grown by acquiring and developing cable television systems
for both itself and its Partnerships, primarily in suburban areas with
attractive demographic characteristics. One of the primary factors utilized by
the Company in deciding to acquire a particular cable television system is the
potential of the system for operating cash flow growth and value appreciation.
Key elements of the Company's operating strategy include increasing basic
penetration levels and revenue per subscriber through targeted marketing,
superior customer service and maintenance of high technical standards. The
Company has deployed fiber optic cable wherever practical in its current rebuild
and upgrade projects, which improves system reliability and picture quality,
increases channel capacity and provides the potential for new business
opportunities. Additionally, the Company has focused on pay-per-view and
advertising as revenue growth opportunities, and expects to continue to do so in
the future.
Within the past several years, and at an increasing pace recently, the
cable television industry has seen much change. With recent announcements of
alliances between cable industry companies and telephone, computer and software
companies, the Company believes that the nature of the cable television business
is changing from the traditional coaxial network delivering video entertainment
to a more sophisticated, digital platform environment where cable systems could
be capable of delivering the traditional programming as well as other services,
including data, telephone and expanded educational and entertainment services on
an interactive basis. As this convergence of various technologies progresses, it
likely will require cable television companies to reevaluate their system
architecture and to upgrade their cable plants if they want to take advantage of
the new opportunities for revenue and growth that are expected to result. The
Company is, on an ongoing basis, evaluating its position in this changing
marketplace and intends, where possible, to pursue these opportunities as they
evolve. The ability of the Company to do so, however, will be dependent in large
part on the availability of debt and equity financing and/or its ability to
structure strategic alliances with companies engaged and experienced in
compatible businesses. As part of its efforts, the Company has had discussions
with possible strategic partners; however, no agreements have been made. There
can be no assurance that the Company will be successful in structuring any such
strategic alliance or in securing the necessary debt or equity financing needed
to take full advantage of any new revenue streams or opportunities that may
develop.
In 1972, the Company originated the use of public offerings of limited
partnership interests in order to finance the acquisition and development of
cable television systems. Pursuant to the terms of the various limited
partnership agreements of the Partnerships, the Company, as general partner, has
full operational control of the management and day-to-day business of the
Partnerships. The Company earns management fees for operating the cable
television systems owned by the Partnerships. The Company's management fee
generally is 5 percent of the gross revenues of each Partnership. The Company
makes advances to certain of its Partnerships and defers collection of
management fees and expense reimbursements owed by certain of its Partnerships,
primarily to accommodate expansion and other financing needs of such
Partnerships. At February 28, 1993, the Company had receivables from its
Partnerships totalling approximately $15,488,000,
3
<PAGE> 18
and had no outstanding deferred management fees and expense reimbursements. In
addition to receiving on-going management fees and expense reimbursements, upon
the dissolution of a Partnership or the sale or refinancing of a cable
television system owned by a Partnership, the Company is generally entitled to
receive 25% of the net remaining assets of such Partnership, after payment of
Partnership debts and after limited partners have received an amount equal to
their capital contributions plus, in most cases, a preferential return on their
investment.
From time to time, the Company has acquired cable television systems from
certain Partnerships. The most recent such acquisition was the cable television
system located in Alexandria, Virginia, purchased from the Company sponsored
master limited partnership, Jones Intercable Investors, L.P. (the "Alexandria
System"). The Company acquired the Alexandria System for $73,200,000 in November
1992. When acquired by the Company, the Alexandria System served approximately
34,300 basic subscribers and had approximately 27,900 premium subscriptions.
The Company is also engaged in the construction and development of cable
television/telephony systems in the United Kingdom. Through its wholly-owned
subsidiary, Jones U.K. Holdings, Inc., the Company owns a 15% interest in a
venture with BCE Telecom International to own and operate a cable
television/telephony system in an eastern section of London, England. There are
approximately 675,000 homes in the franchise areas and construction is ongoing.
As of May 31, 1993, the cable system passed approximately 62,100 marketed homes
and served 10,800 cable television subscribers and had 980 telephone service
customers. The Company is a shareholder in Jones Global Group, Ltd. which,
through a wholly-owned subsidiary, acts as the general partner of Jones United
Kingdom Fund, Ltd. (the "U.K. Fund"). The U.K. Fund owns the principal interest
in a United Kingdom corporation which has the licenses to construct, develop and
operate a cable television/telephony system in South Hertfordshire, located in
the northwestern suburbs of London, England (the "South Herts System"). There
are approximately 95,000 homes in the South Herts franchise areas, of which
approximately 85,000 will be passed by the South Herts System when construction
is completed. As of May 31, 1993, the South Herts System passed approximately
15,000 marketed homes and served approximately 3,400 cable television
subscribers and had approximately 1,400 telephone service customers. The Company
has committed to make a $5 million equity investment in South Hertfordshire and
has agreed to loan an additional $10 million to the project on an interim basis.
In addition, the Company, through affiliates, has interests in franchises
awarded for the areas of Leeds and Aylesbury-Chiltern. The Leeds franchise area
covers 286,000 homes. Construction has not yet begun and the Company expects it
will commence only after the debt and equity financing required to develop the
franchise area is secured. Such financing is currently being sought in the
United Kingdom.
The Company currently envisions growth principally through acquisitions of
certain of the cable television systems currently owned by its Partnerships,
subject to the Company's determination that an available system meets the
Company's investment objectives at the time the various Partnerships achieve
their investment objectives. The Company has the right under the terms of the
limited partnership agreements to acquire the cable television systems held by
such Partnerships at fair market value based upon independent appraisals. The
approval of the holders of a majority of the limited partnership interests in a
selling Partnership is generally required in the event that the proposed sale to
the Company would constitute the sale of all or substantially all of the assets
of that Partnership. The process of soliciting proxies in favor of a sale to the
Company can be time consuming and there can be no assurance that such approval
will be obtained. The Company may also acquire cable television systems from
unaffiliated parties if such systems because of their size, geographic location
and income and/or growth potential, would meet the Company's investment
objectives, including opportunities for consolidation. The Company intends to
finance future acquisitions through a combination of the proceeds of the public
or private sale of debt and/or equity securities of the Company, borrowings from
commercial banks, the proceeds received by the Company as the general partner of
Partnerships that have sold their assets and, in some circumstances, equity
contributions of joint venture partners.
Glenn R. Jones, the Chairman of the Board of Directors and Chief Executive
Officer, is deemed to be the beneficial owner of all shares of Class A Common
Stock and Common Stock owned by him, Jones Spacelink, Ltd., a public company
which he controls, and Jones International, Ltd., a private company owned 100%
by
4
<PAGE> 19
Mr. Jones. Mr. Jones' direct and indirect stock ownership in the Company enables
him to control the election of a majority of the Company's board of directors
and gives him voting power over approximately 50% of votes to be cast by all
shareholders of the Company on matters not requiring a class vote. See
"Description of Capital Stock."
At May 31, 1993, the Company had a total of approximately 2,780 employees.
The executive offices of the Company are located at 9697 East Mineral Avenue,
Englewood, Colorado 80112, and its telephone number is (303) 792-3111.
RISK FACTORS
Purchasers of the Debt Securities offered hereby should review the
following investment considerations before making an investment decision.
1. RISKS ASSOCIATED WITH GOVERNMENT REGULATION OF THE CABLE TELEVISION
INDUSTRY. The cable television industry is subject to regulation by Federal,
state and local governmental agencies. Governmental regulations, individually
and collectively, may impact the profitability and value of the cable television
systems owned or managed by the Company. These regulations are also subject to
amendment and judicial challenge.
On October 5, 1992, Congress enacted the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act"), which generally
became effective on December 4, 1992, although certain provisions became
effective at later dates and those dealing with rate regulation and
retransmission consent become effective on October 1 and October 6, 1993,
respectively. The FCC has also ordered an interim rate freeze which became
effective on April 5, 1993, and the freeze has been extended until November 15,
1993. On an industry-wide basis, the 1992 Cable Act will significantly expand
the scope of cable television regulation and increase the administrative costs
of complying with such regulations. The Commission has implemented regulations
pursuant to the requirements of the 1992 Cable Act with regard to, among other
things, rate regulation; rates for leased access channels; obscenity and
indecency; disposition of customer home wiring, access by multichannel video
providers to cable programming on nondiscriminatory conditions; equal employment
opportunity; anti-trafficking; customer service standards; and television
broadcast signal carriage and retransmission consent and has proposed limits on
horizontal and vertical ownership of cable television systems. On May 3, 1993,
the Federal Communications Commission (the "FCC") promulgated regulations that
will reduce rates currently charged by the Company and the Partnerships for
certain cable television services in most of the Company's owned or managed
systems and will limit the ability of the Company and the Partnerships to
increase rates in the future. The regulations require current rates charged for
cable television services (other than programming on a per-channel or
per-program basis) to be reduced to rates established by application of the
FCC's benchmarks and require rates for equipment to be cost-based. Operators may
justify rates above benchmark levels by filing cost-of-service showings with the
FCC. If the FCC's benchmarks were applied to all of the Company's owned or
managed systems (without giving effect to any cost-of-service showings or any
other mitigating factors), the resulting reduction in revenues, together with
other potential effects on the Company resulting from the implementation of the
1992 Cable Act, would significantly decrease the Company's cash flow from its
owned systems, as well as the management fees from the Partnership systems.
Because the FCC has not yet adopted the cost-of-service standards and the
Company is not able at this time to assess its ability to offset potential
revenue losses with other sources of revenues or to quantify the extent to which
it will be able to take any other mitigating actions, the Company is not able to
determine the actual impact of such regulations on its business. However, the
Company believes it will continue to be able to meet its obligations as they
become due, and does not currently expect to be in default under any of its
outstanding debt or credit instruments. The Company intends to continue to
assess the effect of the FCC rate regulations and to develop strategies to
mitigate the adverse impact of such regulations and other provisions of the 1992
Cable Act on the Company's business. No assurances can be given as to the
Company's ability to mitigate any such impact on any owned or managed systems.
For additional information about other regulation and legislation affecting
the cable television industry, prospective investors are advised to review the
discussion under the caption "Regulation and Legislation" in
5
<PAGE> 20
Item 1 of the Company's 1992 Form 10-K Annual Report and the Company's Form 10-Q
for the quarter ended February 28, 1993, which are incorporated by reference
herein.
2. RISKS ASSOCIATED WITH COMPETITION FROM MMDS AND DBS SYSTEMS. Cable
television systems currently experience competition from several sources, but
two technologies, Multichannel Multipoint Distribution Service ("MMDS") systems,
commonly called wireless cable systems, and Direct Broadcast Satellite ("DBS")
systems, which distribute programming to home satellite dishes, pose the
greatest potential threat to the cable television industry. Both DBS and MMDS
systems will likely focus on providing service to residents of rural areas that
are not served by cable television systems, but providers of programming via
these technologies will generally have the potential to compete directly with
cable television systems in urban areas as well, and in some areas of the
country, including the area served by the Company's Pima County, Arizona cable
television system (the "Pima County System"), MMDS systems are now in direct
competition with cable television systems. To date, the Company has not lost a
significant number of subscribers, nor a significant amount of revenue, to the
MMDS operator competing with the Company's Pima County System. However, given
the fact that these are emerging services, the effect of competition from these
technologies on the overall profitability of the cable television industry, and
the Pima County System specifically, is difficult to predict at this time. While
the MMDS industry is less capital intensive than the cable television industry,
and it is therefore more practical to construct MMDS systems in areas of lower
subscriber penetration, the previous unavailability of frequency spectrum,
programming services and the regulatory delays encountered by MMDS systems in
obtaining licenses have delayed the growth of the MMDS industry. It is
anticipated that these problems will be alleviated in the future as the FCC
processes applications for MMDS licenses and programming becomes more available
to the MMDS industry. Although the channel capacity of MMDS and DBS systems will
be limited, it is expected that developments in compression technology will
enable them to provide a sufficient number of channels that, while not
comparable to the number of channels that will be provided by cable television
systems using fiber-optic and compression technology, may nevertheless be
attractive to subscribers.
An emerging technology, Local Multipoint Distribution Service ("LMDS"),
could also pose a significant threat to the cable television industry, if and
when it becomes established. LMDS, sometimes referred to as cellular television,
could have the capability of delivering approximately 50 channels of video
programming to a subscriber's home, or if two systems were combined 100
channels, which capacity could be increased by using video compression
technology. The potential impact, however, of LMDS is difficult to assess due to
the newness of the technology and the absence of any current fully operational
LMDS systems.
For an in-depth discussion of the various forms of competition in the cable
television industry and with respect to the Company and its owned and managed
cable television systems, prospective investors are advised to review the
discussion under the caption "Competition" in Item 1 of the Company's 1992 Form
10-K Annual Report, which is incorporated herein by reference.
3. RISKS ASSOCIATED WITH SYSTEM OVERBUILDS. Cable television franchises
are not exclusive, so that more than one cable television system may be built in
the same area (known as an "overbuild"), with potential loss of revenues to the
operator of the original cable television system. The Company has experienced
overbuilds in connection with certain systems that it has owned or managed for
limited partnerships, and currently there are several overbuilds in the
Company's owned or managed systems. It is the Company's belief, however, that
not all overbuilds are economically successful and could result in the
overbuilder abandoning the overbuild or selling its system to the existing cable
operator. Constructing and developing a cable television system is a capital
intensive process and, because most cable television systems provide essentially
the same programming, it is often difficult for a new cable system operator to
create a marketing edge over the existing system. Generally, an overbuilder also
would be required to obtain franchises from the local governmental authorities,
although in some instances, the overbuilder could be the local government, such
as a city or town, and in some such cases, no franchise would be required. In
any case, an overbuilder would be required to obtain programming contracts from
entertainment programmers and, in most cases, would have to build a complete
cable system, including headends, trunk lines and drops to individual
subscribers homes, throughout the franchise areas.
6
<PAGE> 21
4. RISKS ASSOCIATED WITH TELEPHONE COMPANY COMPETITION. Although the
Company has not yet encountered competition from a telephone company entering
into the cable television business, the Company's cable television systems could
potentially face competition from telephone companies doing so.
The FCC conducted a comprehensive proceeding examining whether and under
what circumstances telephone companies should be allowed to provide cable
television services, including video programming, to their customers. The FCC
has concluded that neither the 1984 Cable Act nor its rules apply to prohibit
interexchange carriers (i.e., long distance telephone companies such as AT&T)
from providing such services to their customers. Additionally, the FCC has also
concluded that where a local exchange telephone company ("LEC") makes its
facilities available on a common carrier basis for the provision of video
programming to the public, the 1984 Cable Act does not require either the LEC or
its programmer customers to obtain a franchise to provide such service. This
decision has been appealed. Because cable operators are required to bear the
costs of complying with local franchise requirements, the FCC's decision could
place cable operators at a competitive disadvantage vis-a-vis local telephone
companies seeking to offer competing services on a common carrier basis.
As part of the same proceeding, the FCC recommended that Congress amend the
1984 Cable Act to allow LECs to provide their own video programming services
over their facilities. The FCC recently decided to loosen ownership and
affiliation restrictions currently applicable to telephone companies, and has
proposed to increase the numerical limit on the population of areas qualifying
as "rural" and in which LECs can provide cable service without an FCC waiver.
A provision of a Federal court antitrust consent decree also prohibited the
regional Bell Operating Companies ("RBOCs") from engaging in cable television
operations, but this prohibition was recently removed when the court retaining
jurisdiction over the consent decree ruled that the RBOCs could provide
information services over their facilities. This decision has been upheld by a
federal appellate court. Unless reversed by the Supreme Court, this decision
would enable the RBOCs to acquire or construct cable television systems outside
of their own service areas, and within their own service areas as well if
litigation challenging the cross-ownership regulations contained in the 1984
Cable Act is successful. (See discussion below.)
The 1984 Cable Act codified existing FCC cross-ownership regulations,
which, in part, prohibit LECs, including the regional RBOCs, from providing
video programming directly to subscribers within their local exchange telephone
service areas, except in rural areas or by specific waiver of FCC rules. In
December 1992, the Chesapeake and Potomac Telephone Company of Virginia and Bell
Atlantic Video Services Company (collectively, "Bell Atlantic"), both
wholly-owned subsidiaries of Bell Atlantic Corporation (one of the RBOCs), filed
suit in the United States District Court for the Eastern District of Virginia
(Alexandria Division) seeking to have declared unconstitutional the provision of
the 1984 Cable Act which prohibits a telephone company from owning a cable
television system in its own service area. This federal cross-ownership rule is
particularly important to the cable industry since these telephone companies
already own certain facilities needed for cable television operation, such as
poles, ducts and associated rights-of-way. In its complaint, Bell Atlantic
states that, if permitted, it will build and operate a cable television system
in the City of Alexandria, Virginia. This system, if built, would constitute
direct competition for the Company's Alexandria System. The court will hold
arguments on cross-motions for summary judgment filed by both sides on June 17,
1993, and a decision is expected shortly thereafter. The Company is not a party
to this litigation, although the National Cable Television Association ("NCTA"),
an industry group of which the Company is a member, has intervened in the case.
The Company currently expects that if the court declares the provision of the
1984 Cable Act unconstitutional, that the decision will be appealed, and that
Bell Atlantic will not be permitted to begin construction or operation of a
cable television system in Alexandria, Virginia until the appeal is resolved.
However, if Bell Atlantic prevails, or even if it does not, Congress could enact
legislation lifting the current prohibition in the 1984 Cable Act, at which
time, Bell Atlantic would be free to compete with the Company in Alexandria, and
other RBOCs could compete with the Company and other cable operators throughout
the country.
7
<PAGE> 22
There are currently bills pending in Congress that would permit the LECs to
provide cable television service over their own facilities conditioned on
establishing a video programming affiliate that will maintain separate records
to prevent cross-subsidization. These bills would, among other things, also
prohibit telephone companies from purchasing existing cable systems within their
telephone service areas.
In recent months, Southwestern Bell Telephone Company and US West, both
RBOCs, have separately evidenced an interest in the cable television industry.
According to public announcements, Southwestern Bell has entered into an
agreement to acquire certain cable television systems from Hauser
Communications, and US West has entered into an agreement to make a significant
investment in a subsidiary of Time Warner, one of the largest cable television
operators in the country. These announced transactions indicate to the Company a
strong intention on the part of telephone companies to enter the cable
television business.
5. RISKS ASSOCIATED WITH THE CHANGING CABLE TELEVISION SYSTEM
MARKETPLACE. The Company has observed, during the past several years, that
general market values of cable television systems have not appreciated as
quickly or as significantly as they did during the decade 1980 to 1990, and it
is expected that the 1992 Cable Act and the FCC's rate regulations, must-carry
rules and retransmission consent rules will create some additional uncertainty
in the system marketplace at least in the near term. The ultimate effect of the
new regulatory environment is not known. A decline in cable system values could
adversely affect the value of the Company's owned cable television systems, and
the value of the Company's residual interests in the systems owned by its
managed limited partnerships. At the same time, any decline would present an
opportunity to the Company as a buyer of cable television systems. The ability
and inclination of the Company to purchase cable systems if there is a decline
in values would be dependent upon many factors, including the availability of
financing (which might be adversely affected by a decline in value of the
Company's existing systems caused by rate regulation), and the Company's
assessment of the future of the industry, which is positive.
6. RISKS ASSOCIATED WITH FINANCING. The Company generally has good
relationships with commercial banks and has had available to it bank credit
arrangements which have allowed it to pursue its growth plans. The recent FCC
regulations with respect to rate regulation may impact the availability of
commercial bank debt financing in the future, although the Company currently
expects to be in compliance with the debt covenants of its present bank credit
facility even after giving effect to the new rate regulation requirements of the
FCC. However, the banking industry in general may react negatively to the new
regulatory environment and could impose stricter limits on the availability of
commercial bank debt.
7. RISKS ASSOCIATED WITH THE COMPANY'S CONTINUING LOSSES. The Company
reported net income for the fiscal year ended May 31, 1992, but it recognized
net losses in each of the three prior fiscal years. Although the Company
anticipates the continued recognition of operating income prior to depreciation
and amortization charges, net losses resulting from depreciation, amortization
and interest expenses may continue in the future. To the extent the Company
recognizes liquidation distributions from its Partnerships in the future, losses
may be eliminated; however, there is no assurance as to the amount, timing or
recognition of such distributions.
8. RISKS ASSOCIATED WITH CONFLICTS OF INTEREST. The Company faces both
potential competition and certain conflicts of interest with Jones Spacelink,
Ltd. and its other affiliates. Jones Spacelink, Ltd. also is engaged in the
ownership and operation of cable television systems for itself and for private
and public limited partnerships that it and its wholly owned subsidiaries have
sponsored. The Company also routinely engages in transactions with its
affiliates. For a detailed discussion of these matters, prospective investors
are advised to review the discussion under the caption "Potential Competition
with Jones Spacelink, Ltd." in Item 1, and the discussion about transactions
between the Company and its affiliates in Item 13, of the Company's 1992 Form
10-K Annual Report, which is incorporated herein by reference.
9. RISKS ASSOCIATED WITH A CONTROLLING SHAREHOLDER. As a result of the
direct and indirect stock ownership of the Company by Glenn R. Jones, Mr. Jones
has the power to elect 75% of the total membership of the Board of Directors of
the Company. This enables Mr. Jones to effectively direct and control certain
fundamental policy and management decisions of the Company.
10. RISKS ASSOCIATED WITH OPERATING IN THE UNITED KINGDOM. A portion of
the proceeds of this offering may be invested in cable television/telephony
systems in the United Kingdom. Cable television is not yet well-
8
<PAGE> 23
established in the United Kingdom, and there are risks that the business will
not develop as rapidly as it has in the United States. Because the Company has
limited experience constructing and operating cable television/telephony systems
in the United Kingdom, there is no assurance that the Company's investments in
the United Kingdom will be as successful as its investments in cable television
systems in the United States. Also, the Company will face competition from both
competing technologies, such as DBS and SMATV, as well as from more established
companies with greater financial resources than the Company which are currently
engaged in the provision of telephony services in the United Kingdom.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED MAY 31, ENDED
------------------------------------------------------ FEBRUARY 28,
1988 1989 1990 1991 1992 1993
------- -------- -------- -------- ------- ------------
DOLLARS IN THOUSANDS, EXCEPT RATIOS
<S> <C> <C> <C> <C> <C> <C>
Pre-tax Income (Loss).... $48,836 $(37,512) $(30,599) $(45,030) $23,383 $(25,318)
Adjustments:
Interest expense....... 22,031 41,399 54,122 44,699 38,129 30,672
Interest charged to
cable television
systems held for
resale.............. (2,766) (1,825) (13,897) (4,598) -- --
Equity in losses of
limited partnerships... 1,024 3,197 4,395 11,233 8,158 2,055
------- -------- -------- -------- ------- ------------
$69,125 $ 5,259 $ 14,021 $ 6,304 $69,670 $ 7,409
Interest Expense (net)... $19,265 $ 39,574 $ 40,225 $ 40,101 $38,129 $ 30,672
------- -------- -------- -------- ------- ------------
Ratio of Earnings to
Fixed Charges(1)....... 3.59x -- -- -- 1.83x --
Coverage deficiency...... -- $(34,315) $(26,204) $(33,797) -- $(23,263)
</TABLE>
---------------
(1) The ratio of earnings to fixed charges has been computed by dividing the sum
of (a) pre-tax income, excluding equity in losses of limited partnerships,
and (b) interest expense net of interest charged to cable television systems
held for resale, by net interest expense.
USE OF PROCEEDS
Except as otherwise described in the Prospectus Supplement relating to an
offering of Debt Securities, the net proceeds from the sale of the Debt
Securities will be added to the general funds of the Company, and may be used to
make acquisitions of domestic cable television systems or interests therein,
investments in cable television/telephony systems in the United Kingdom, or for
general corporate purposes.
The Company may borrow additional funds from time to time from public and
private sources on both a long-term and short-term basis to fund its future
capital and working capital requirements in excess of internally generated
funds. The Company is currently a party to a $300,000,000 secured revolving
credit facility, of which $15,000,000 was outstanding as of February 28, 1993,
all of which will constitute Senior Indebtedness with respect to the Senior
Subordinated and Subordinated Debt Securities. See "Description of Debt
Securities -- Subordination."
CONCURRENT OFFERINGS
The Company also has an effective registration statement under the Act
relating to the sale of 482,458 shares of its Class A Common Stock held by
various affiliates of the Company. The Company will receive none of the proceeds
of the concurrent offering. As of the date of this Prospectus, there remain only
30,000 shares which are the subject of the concurrent offering, which will
expire in November 1993.
9
<PAGE> 24
The Company also has an effective registration statement under the Act that
allows the Company, from time to time, to offer up to $400,000,000 of senior
debt securities, senior subordinated debt securities and subordinated debt
securities. In July 1992, the Company sold $160,000,000 of 11 1/2% Senior
Subordinated Debentures due 2004, and in March 1993, the Company sold
$100,000,000 of 10 1/2% Senior Subordinated Debentures due 2008 as part of such
offering. The net proceeds of these offerings were used to redeem all of the
remaining principal amount of the Company's 9.75% Subordinated Debentures and
13% Subordinated Debentures, to repay certain then outstanding indebtedness
under the Company's revolving credit facility and for general corporate
purposes. This registration statement will expire in June 1994.
In addition, the Company has filed a registration statement under the Act
for the offering, from time to time, of up to 6,000,000 shares of Class A Common
Stock of the Company. This registration statement has not yet been declared
effective.
The Company may file additional registration statements to offer equity
securities or additional debt securities during the effectiveness of the
offering made by this Prospectus.
DIVIDEND POLICY
The Company has never paid a cash dividend, and it has no present intention
to pay cash dividends in the foreseeable future. The current policy of the
Company is to retain earnings to provide working capital for the operation,
expansion and development of its business. Future dividends, if any, will be
determined by the board of directors in light of the circumstances then
existing, including the Company's earnings and financial requirements and
general business conditions. The Company's credit agreement restricts the right
of the Company to declare and pay cash dividends without the consent of the
lenders. If cash dividends are paid in the future, the holders of the Class A
Common Stock will be paid $.005 ( 1/2c) per share per quarter in addition to the
amount payable per share to the holders of the Company's Common Stock. Such
additional dividends on the Class A Common Stock are not cumulative but would be
adjusted appropriately if cash dividends are declared with respect to a period
other than a quarterly period.
The Company has paid stock dividends in Class A Common Stock to holders of
Common Stock and Class A Common Stock in prior years. The Company paid a 7%
stock dividend in Class A Common Stock to holders of Common Stock and Class A
Common Stock in fiscal year 1982, and the Company paid a 5% stock dividend in
Class A Common Stock to such shareholders in each of the fiscal years 1983, 1984
and 1985. The Company has not paid any dividends in Class A Common Stock since
that time, and it has no present intention to pay any such dividends in the
foreseeable future.
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<PAGE> 25
PRICE RANGE OF CLASS A COMMON STOCK
The Company's Class A Common Stock is traded in the over-the-counter market
and is quoted in the National Market System of the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") under the symbol
"JOINA." The following table sets forth for each quarterly period of fiscal
1993, 1992 and 1991 the high and low reported closing prices (rounded to the
nearest 1/8) of the Company's Class A Common Stock as reported by NASDAQ.
<TABLE>
<CAPTION>
PERIOD HIGH LOW
---------------------------------------------------------- ---- ---
<S> <C> <C> <C>
1993 First Quarter............................................. 13 1/2 10
Second Quarter............................................ 13 9 1/2
Third Quarter............................................. 16 12 1/4
Fourth Quarter............................................ 16 1/4 10
1992 First Quarter............................................. 11 1/4 8
Second Quarter............................................ 13 1/2 9
Third Quarter............................................. 14 11 1/4
Fourth Quarter............................................ 12 1/2 9 1/2
1991 First Quarter............................................. 11 3/4 5 3/4
Second Quarter............................................ 8 3/4 4 3/4
Third Quarter............................................. 11 5 1/4
Fourth Quarter............................................ 12 3/4 9 1/2
</TABLE>
On June 15, 1993, the closing price for a share of the Company's Class A
Common Stock as reported on NASDAQ was $14.00. At June 15, 1993, the Class A
Common Stock of the Company was held of record by approximately 1,500
shareholders.
The Company's Common Stock also is traded in the over-the-counter market
and is quoted in the National Market System of NASDAQ under the symbol "JOIN."
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Offered Debt Securities offered by any Prospectus
Supplement and any variations from such general terms and provisions applicable
to the Offered Debt Securities so offered will be described in the Prospectus
Supplement relating to such Offered Debt Securities.
The Debt Securities will be general unsecured obligations of the Company.
The Senior Debt Securities will be senior to all subordinated indebtedness of
the Company, including any outstanding Senior Subordinated Debt Securities and
Subordinated Debt Securities and pari passu with other senior unsecured
indebtedness of the Company. The Senior Subordinated Debt Securities will be
subordinate in right of payment to any Senior Debt Securities and to certain
other debt obligations of the Company that may be outstanding from time to time,
pari passu with certain other senior subordinated indebtedness of the Company
that may be outstanding from time to time and senior to certain subordinated
indebtedness of the Company that may be outstanding from time to time, including
any Subordinated Debt Securities. The Subordinated Debt Securities will be
subordinate in right of payment to any Senior Debt Securities and Senior
Subordinated Debt Securities and to certain other debt obligations of the
Company that may be outstanding from time to time and pari passu with certain
other subordinated indebtedness of the Company that may be outstanding from time
to time and senior to certain subordinated indebtedness of the Company that may
be outstanding from time to time.
The Senior Debt Securities are to be issued under an Indenture to be
executed by the Company and U.S. Trust Company of California, N.A., as trustee
(the "Senior Indenture"); the Senior Subordinated Debt Securities are to be
issued under an Indenture to be executed by the Company and First Trust National
11
<PAGE> 26
Association, as trustee (the "Senior Subordinated Indenture"); and the
Subordinated Debt Securities are to be issued under an Indenture to be executed
by the Company and Bank of America National Trust and Savings Association, as
trustee (the "Subordinated Indenture"). In this Prospectus, the Senior
Indenture, the Senior Subordinated Indenture and the Subordinated Indenture are
sometimes collectively referred to as the Indentures and the trustees thereunder
are sometimes collectively referred to as the Trustees and individually as a
Trustee.
The Debt Securities are subject to the terms stated in the Indentures, and
prospective purchasers of Debt Securities are referred to the Indentures for a
statement thereof. The statements under this caption relating to the Debt
Securities and the Indentures are summaries and do not purport to be complete.
Such summaries use certain terms which are defined in the Indentures and are
qualified in their entirety by express reference to the Indentures which have
been filed as exhibits to the Registration Statement of which this Prospectus is
a part.
GENERAL
The Indentures do not limit the aggregate principal amount of debentures,
notes or other evidences of indebtedness which may be issued thereunder and
provide that Debt Securities may be issued thereunder in one or more series, in
such form or forms, with such terms and up to the aggregate principal amount
authorized from time to time by the Company.
Reference is made to the Prospectus Supplement for the following terms of
the Offered Debt Securities: (1) the designation (including whether they are
Senior Debt Securities, Senior Subordinated Debt Securities or Subordinated Debt
Securities and whether such Debt Securities are convertible), aggregate
principal amount and authorized denominations of the Offered Debt Securities;
(2) the percentage of their principal amount at which such Offered Debt
Securities will be issued; (3) the date or dates on which the Offered Debt
Securities will mature or the method of determination thereof; (4) the rate or
rates (which may be fixed or variable) at which the Offered Debt Securities will
bear interest, if any, or the method by which such rate or rates shall be
determined, any reset features of the rates and the date or dates from which
such interest will accrue or the method by which such date or dates shall be
determined; (5) the dates on which any such interest will be payable and the
regular record dates for such interest payment dates; (6) any mandatory or
optional sinking fund or purchase fund or analogous provisions; (7) if
applicable, the date after which and the price or prices at which the Offered
Debt Securities may, pursuant to any optional or mandatory redemption
provisions, be redeemed at the option of the Company or of the holder thereof
and the other detailed terms and provisions of such optional or mandatory
redemption; (8) if applicable, the terms and conditions upon which the Offered
Debt Securities may be convertible into Class A Common Stock, including the
initial conversion rate, the conversion period and any other provision in
addition to or in lieu of those described herein; (9) whether such Offered Debt
Securities shall be subject to defeasance and, if so, the terms thereof; (10)
any Events of Default provided with respect to the Offered Debt Securities that
are in addition to or different from those described herein; and (11) any other
terms of the Offered Debt Securities.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the principal of (and premium, if any) and interest on the Offered Debt
Securities will be payable, and the Offered Debt Securities will be exchangeable
and transfers thereof will be registrable, at the Corporate Trust Office of the
Trustee, provided that at the option of the Company, payment of any interest may
be made by check mailed to the address of the person entitled thereto as it
appears in the Security Register.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Offered Debt Securities will be issued only in fully registered form,
without coupons, in denominations of $1,000 or any integral multiple thereof. No
service charge will be made for any registration of transfer or exchange of the
Offered Debt Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Debt Securities may be issued under the Indenture as original issue
discount securities to be offered and sold at a discount from the principal
amount thereof. Special federal income tax, accounting and other considerations
applicable to any such original issue discount securities will be described in
the Prospectus Supplement relating thereto.
12
<PAGE> 27
Unless otherwise indicated in the Prospectus Supplement relating to a
particular series of Debt Securities, the covenants applicable to the Debt
Securities would not necessarily afford holders protection in the event of a
highly leveraged or other transaction involving the Company or in the event of a
material adverse change in the Company's financial condition or results of
operation. Unless otherwise indicated in the Prospectus Supplement relating to a
particular series of Debt Securities, the Debt Securities do not contain any
other provisions that are designed to afford protection in the event of a highly
leveraged transaction involving the Company.
SUBORDINATION
The payment of the principal of (and premium, if any) and interest on the
Subordinated Debt Securities is expressly subordinated, to the extent and in the
manner set forth in any Prospectus Supplement and the Subordinated Indenture, in
right or payment to the prior payment in full of all present and future Senior
Indebtedness (including any Senior Debt Securities and Senior Subordinated Debt
Securities then outstanding) of the Company. Senior Indebtedness is defined in
the Subordinated Indenture as: (1) any indebtedness of the Company (i) for
borrowed money or (ii) evidenced by a note, debenture or similar instrument
(including obligations incurred under leases which are or may be capitalized
under generally accepted accounting principles and purchase money obligations)
given in connection with the acquisition of any property or assets, including
purchase of cable television systems and securities, (2) any indebtedness of
others described in the preceding clause (1) for which the Company is
responsible or liable as guarantor or otherwise, (3) any indebtedness now
outstanding or hereafter incurred by the Company in connection with an
acquisition by the Company or a subsidiary of the stock or substantially all of
the assets of another person or a merger or consolidation to which the Company
or a subsidiary is a party, for the payment of which the Company is responsible
or liable as obligor, guarantor or otherwise, and (4) all deferrals, renewals,
extensions and refundings of any such indebtedness or obligations, other than
(a) indebtedness issued pursuant to the Company's outstanding 7.5% convertible
subordinated debentures due 2007, (b) indebtedness as to which, in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such indebtedness is subordinate in right of
payment to all other indebtedness of the Company or is not superior in right of
payment to the Subordinated Debt Securities or to other indebtedness which is
pari passu with or subordinate to the Subordinated Debt Securities, and (c)
indebtedness of the Company to a subsidiary for money borrowed or advanced. It
is anticipated that the Subordinated Debt Securities will be senior to the 7.5%
convertible subordinated debentures due 2007. The Company is party to a
$300,000,000 secured revolving credit facility, borrowings under which
constitute Senior Indebtedness. At February 28, 1993, approximately $16,900,400
of Senior Indebtedness was outstanding, of which $15,000,000 was outstanding
under the secured revolving credit facility.
The payment of the principal of (and premium, if any) and interest on the
Senior Subordinated Debt Securities is expressly subordinated, to the extent and
in the manner set forth in any Prospectus Supplement and the Senior Subordinated
Indenture, in right of payment to the prior payment in full of all present and
future Senior Indebtedness (including any Senior Debt Securities then
outstanding) of the Company. Senior Indebtedness is defined in the Senior
Subordinated Indenture as set forth in clauses (1), (2), (3) and (4) above from
the Subordinated Indenture; provided, however, that it excludes only
indebtedness that is subordinate in right of payment to any other indebtedness
of the Company and indebtedness of the Company to a subsidiary for money
borrowed or advanced. The Senior Subordinated Debt Securities will rank senior
to the Company's outstanding issues of subordinated indebtedness.
The extent to which the Company may incur Senior Indebtedness and
limitations thereon, if any, are set forth in the accompanying Prospectus
Supplement. The aggregate principal amount of Senior Indebtedness outstanding as
of a recent date will be set forth in the accompanying Prospectus Supplement.
Upon any payment or distribution of assets of the Company to creditors upon
any dissolution, winding up, total or partial liquidation or reorganization,
whether voluntary or involuntary, or in bankruptcy, insolvency or receivership
or upon an assignment for the benefit of creditors or any other marshalling of
the assets and liabilities of the Company or otherwise, all principal of,
premium, if any, and interest due on all Senior Indebtedness (including any
outstanding Senior Debt Securities) must be paid in full before the holders of
the
13
<PAGE> 28
Senior Subordinated Debt Securities or the Subordinated Debt Securities are
entitled to receive or retain any payment thereon, and principal of, premium, if
any, and interest on the Senior Subordinated Securities must be paid in full
before the holders of the Subordinated Debt Securities are entitled to receive
or retain any payment thereon. Subject to the payment in full of all Senior
Indebtedness, the holders of the Senior Subordinated Debt Securities or the
Subordinated Debt Securities will be subrogated to the rights of the holders of
Senior Indebtedness (as respectively defined in the Senior Subordinated
Indenture and the Subordinated Indenture) to receive payments or distributions
of assets of the Company applicable to Senior Indebtedness until the Senior
Subordinated Debt Securities or Subordinated Debt Securities are paid in full.
CONVERSION RIGHTS
The Prospectus Supplement will provide whether the Offered Debt Securities
will be convertible and, if so, the initial conversion price or conversion rate
at which such convertible Debt Securities will be convertible into Class A
Common Stock. The holder of any convertible Debt Security will have the right
exercisable at any time during the time period specified in the Prospectus
Supplement, unless previously redeemed by the Company, to convert such Debt
Security at the principal amount thereof (or, if such Debt Security is an
original issue discount security, such portion of the principal amount thereof
as is specified in the terms of such Debt Security) into shares of Class A
Common Stock at the conversion price or conversion rate set forth in the
Prospectus Supplement, subject to adjustment as described below. In the case of
convertible Debt Securities called for redemption, conversion rights will expire
at the close of business on the second business day preceding the date fixed for
the redemption as may be specified in the Prospectus Supplement.
In certain events, the conversion rate will be subject to adjustment as set
forth in the Prospectus Supplement. Such events include the issuance of shares
of Class A Common Stock of the Company as a dividend or distribution on the
Class A Common Stock; subdivisions and combinations of the Class A Common Stock;
the issuance to all holders of Class A Common Stock of certain rights or
warrants entitling the holders to subscribe for or purchase Class A Common Stock
at a price per share less than the current market price per share of Class A
Common Stock (as defined in the Indentures); and the distribution to all holders
of Class A Common Stock of assets (excluding cash dividends or distributions
paid from retained earnings), capital stock (other than Class A Common Stock) or
evidences of indebtedness of the Company. No adjustment of the conversion price
or conversion rate will be required unless an adjustment would require a change
of at least 1% in such price or rate then in effect; provided, that any
adjustment that otherwise would be required to be made shall be carried forward
and taken into account in any subsequent adjustment, and provided further that
any such adjustment carried forward shall be made no later than three years
after the date of the event triggering such adjustment. Except as stated above,
the conversion price or rate will not be adjusted for the issuance of Class A
Common Stock or any securities convertible into or exchangeable for Class A
Common Stock, or carrying the right to purchase any of the foregoing. Fractional
shares of Class A Common Stock will not be issued upon conversion, but, in lieu
thereof, the Company will pay a cash adjustment. Convertible Debt Securities
surrendered for conversion between the record date for an interest payment, if
any, and the interest payment date (except convertible Debt Securities called
for redemption on a redemption date during such period) must be accompanied by
payment of an amount equal to the interest thereon which the registered holder
is entitled to receive.
In the case of a reclassification of the Class A Common Stock,
consolidation or merger involving the Company as a result of which holders of
Class A Common Stock shall be entitled to receive stock, securities or other
property or assets (including cash) with respect to or in exchange for such
Class A Common Stock, or in the case of a sale or conveyance to another
corporation of the properties and assets of the Company as an entirety or
substantially as an entirety, the holders of convertible Debt Securities then
outstanding will be entitled thereafter to convert such Debt Securities into the
kind and amount of shares of stock, other securities or other property or assets
which they would have owned or been entitled to receive upon reclassification,
consolidation, merger, sale or conveyance had such convertible Debt Securities
been converted immediately prior to such reclassification, consolidation,
merger, sale or conveyance.
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<PAGE> 29
EVENTS OF DEFAULT, NOTICE AND WAIVER
An Event of Default is defined in the Indentures with respect to Debt
Securities of any series issued thereunder as a default in payment of principal
or premium, if any, at maturity or upon redemption; a default in payment of
interest subject to applicable grace periods; a failure by the Company for 60
days after notice to perform any other of the covenants or agreements in the
Indentures; certain events of bankruptcy, insolvency or reorganization of the
Company or any significant subsidiary; or any other event of default provided
with respect to Debt Securities of that series.
Each Indenture provides that, if an Event of Default shall have occurred
and be continuing, either the Trustee or the holders of 25% in principal amount
of the Debt Securities of such series then outstanding may declare the principal
of all the Debt Securities of such series to be due and payable immediately, but
upon certain conditions such declaration may be annulled and past defaults may
be waived by the holders of a majority in principal amount of the Debt
Securities of such series then outstanding. The holders of a majority in
principal amount of the Debt Securities of such series then outstanding may also
waive any default (except a default in payment of principal or interest on the
Debt Securities of such series) prior to such declaration.
Each Indenture requires the Company to file a certificate specifying a
default immediately upon becoming aware of such default, and to file annually
with the Trustee a certificate either stating the absence of any default or
specifying any default that exists. Each Indenture provides that the Trustee
shall, within 90 days after the occurrence of a default, give the holders of
Debt Securities of any series notice of all uncured and unwaived defaults known
to it; provided that, except in the case of default in the payment of principal
or interest on any of the Debt Securities of such series or the making of any
sinking fund payment, the Trustee will be protected in withholding such notice
if the Trustee in good faith determines that the withholding of such notice is
in the interest of such holders. The term "default" for the purpose of this
provision means the occurrence of any of the Events of Default specified above,
excluding any grace periods and irrespective of the giving of notice.
Each Indenture contains provisions entitling the Trustee, subject to the
duty of the Trustee during default to act with the required standard of care, to
be indemnified by the holders of Debt Securities of any series before proceeding
to exercise any right or power under the Indenture at the request of such
holders. Each Indenture provides that the holders of a majority in principal
amount of the Debt Securities of such series then outstanding may direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee, provided
that the Trustee may decline to act if such direction is contrary to law or if
the Trustee determines in good faith that the proceeding so directed would be
illegal, would involve it in personal liability or would be unduly prejudicial
to other holders of Debt Securities of such series. Each Indenture also
restricts the right of holders of Debt Securities of such series to initiate any
suit or proceeding by requiring prior written request to the Trustee of holders
of at least 25% in principal amount of the Debt Securities of such series.
Reference is made to the Prospectus Supplement relating to any series of
offered debt securities which are original issue discount securities for the
particular provision relating to acceleration of the maturity of a portion of
the principal amount of such original issue discount securities upon the
occurrence of an Event of Default and the continuation thereof.
MERGER OR SALES OF ASSETS
Each Indenture provides that the Company may merge with another corporation
if the Company is the surviving corporation, or may consolidate with or merge
into another corporation or sell or lease all or substantially all of its assets
to another corporation if (i) immediately after such transaction no default or
event of default under the Indenture shall have occurred or be continuing, (ii)
the resulting, surviving or transferee corporation is organized and existing
under the laws of a state of the United States or the District of Columbia and
(iii) such corporation agrees to pay promptly when due the principal of and
interest on the Debt Securities and agrees to assume, perform and observe all
the covenants and conditions of the Indenture.
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<PAGE> 30
MODIFICATION OF THE INDENTURES
The Company and the Trustee, with the consent of the holders of not less
than a majority of the aggregate principal amount of the Debt Securities of any
series affected at the time outstanding, may execute supplemental indentures
adding, changing or eliminating stated provisions of the Indentures or of any
supplemental indenture or modifying in any manner the rights of the holders of
the Debt Securities; however, no such supplemental indenture may (i) extend the
stated maturity of any Debt Securities, reduce the rate or extend the time of
payment of interest thereon, reduce the principal amount thereof, or impair the
right to institute suit for the enforcement of any such payment on or after the
stated maturity thereof (or, in the case of redemption, on or after the
redemption date) without the consent of each holder of the Debt Securities of
such series so affected, (ii) reduce the aforesaid percentage of any of the Debt
Securities, the consent of the holders of which is required for any such
supplemental indenture, without the consent of the holders of all the Debt
Securities of such series then outstanding, or (iii) modify any of the
provisions concerning modification of the Indentures except to increase any such
percentage or to provide that certain other provisions of the Indentures cannot
be modified or waived without the consent of each holder of the Debt Securities
of such series so affected.
SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE
Each Indenture may be discharged upon payment of the principal of (and
premium, if any) and interest, if any, on all the Debt Securities and all other
sums due thereunder. In addition, the Indentures provide that if, within one
year of the date the Debt Securities of any series becomes due and payable, or
are to be called for redemption, the Company, if so permitted with respect to
Debt Securities of a particular series, deposits with the Trustee, in trust for
the benefit of the holders thereof, funds sufficient to pay all sums due for the
principal of (and premium, if any) and interest, if any, on the Debt Securities
of such series, as they shall become due or redeemable and, if certain other
conditions are met, the Trustee shall cancel and satisfy such Indenture with
respect to such series to the extent provided therein. The Prospectus Supplement
describing the Debt Securities of such series will more fully describe the
provisions, if any, relating to such cancellation and satisfaction of the
Indenture with respect to such series.
TRUSTEES
U.S. Trust Company of California, N.A. will be Trustee under the Senior
Debt Securities. First Trust National Association will be Trustee under the
Senior Subordinated Debt Securities. Bank of America National Trust and Savings
Association will be Trustee under the Subordinated Debt Securities. The Trustees
may perform certain services for and transact other banking business with the
Company from time to time in the ordinary course of business.
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 5,550,000 shares of
Common Stock, $.01 par value per share, of which 4,913,021 shares were
outstanding at May 31, 1993, and 30,000,000 shares of Class A Common Stock, $.01
par value per share, of which 12,235,866 shares were outstanding at such date.
The outstanding shares of both classes of common stock are not subject to
redemption or to any liability for further calls or assessments, and the holders
of such shares do not have pre-emptive or other rights to subscribe for
additional shares of the Company. All issued and outstanding shares of Common
Stock and Class A Common Stock are validly issued, fully paid and nonassessable.
Dividends in cash, property or shares of the Company may be paid upon the Common
Stock and Class A Common Stock, if declared by the board of directors out of any
funds legally available therefor, and holders of Class A Common Stock have a
cash dividend preference over holders of Common Stock, as described below.
Holders of Common Stock and Class A Common Stock are entitled to share ratably
in assets available for distribution upon any liquidation of the Company,
subject to the prior rights of creditors, although holders of Class A Common
Stock have a preference on liquidation over holders of Common Stock, as
described below.
16
<PAGE> 31
The Class A Common Stock has certain preferential rights with respect to
cash dividends and upon liquidation of the Company. In the event that cash
dividends are paid, the holders of the Class A Common Stock will be paid $.005
( 1/2c) per share per quarter in addition to the amount payable per share for
each share of Common Stock. In the case of liquidation, holders of Class A
Common Stock will be entitled to a preference of $1 per share. After such amount
is paid, holders of the Common Stock will then be entitled to receive $1 per
share for each share of Common Stock outstanding. Any remaining amount will be
distributed to the holders of Class A Common Stock and Common Stock on a pro
rata basis.
The Class A Common Stock has voting rights that are generally 1/10th of
those held by the Common Stock. In the election of directors, the holders of
Class A Common Stock, voting as a separate class, are entitled to elect that
number of directors that constitute 25% of the total membership of the board of
directors. Holders of the Common Stock, also voting as a separate class, are
entitled to elect the remaining directors.
As of May 31, 1993, the outstanding shares of Class A Common Stock
constituted approximately 71% of the total outstanding shares of capital stock
of the Company but cast only 20% of the votes to be cast in matters to be acted
upon by shareholders of the Company not requiring a class vote, and the
outstanding shares of the Company's Common Stock constituted approximately 29%
of the outstanding capital stock of the Company, but cast approximately 80% of
the votes to be cast by shareholders of the Company in connection with such
matters.
The Company is a Colorado corporation organized in 1970. Jones Spacelink,
Ltd. ("Spacelink"), a Colorado corporation organized in 1980 that also is
engaged in, among other things, the business of owning and operating cable
television systems, as of May 31, 1993, owned approximately 58% of the Company's
outstanding Common Stock (or approximately 17% of all outstanding shares of the
Company taking into account both classes of the Company's capital stock).
Spacelink is publicly held and is controlled by Glenn R. Jones, the Chairman of
the Board of Directors and Chief Executive Officer of both the Company and
Spacelink. Approximately 82% of Spacelink's Class A Common Stock and 100% of its
Class B Common Stock are owned by Jones International, Ltd. ("International"),
also a Colorado corporation. Mr. Jones is the sole owner of all of the
outstanding stock of International. Mr. Jones also directly owns approximately
4% of Spacelink's Class A Common Stock. Mr. Jones' direct and indirect stock
ownership enables him to control the election of a majority of the board of
directors of Spacelink and gives him voting power over approximately 87% of
votes to be cast by all of Spacelink's shareholders on matters not requiring a
class vote. International also directly owns approximately 4% of the Company's
Common Stock; International owns none of the Class A Common Stock of the
Company. Mr. Jones is deemed to be the beneficial owner of all shares of both
the Company and Spacelink owned by International and his direct and indirect
stock ownership enables him to control the election of a majority of the
Company's board of directors and gives him voting power of approximately 50% of
votes to be cast by all shareholders of the Company on matters not requiring a
class vote.
PLAN OF DISTRIBUTION
GENERAL
The Company may sell Offered Debt Securities on a negotiated or competitive
bid basis to or through underwriters or dealers, and also may sell Offered Debt
Securities directly to other purchasers or through agents. The Prospectus
Supplement will describe the method of distribution of the Offered Debt
Securities.
The distribution of the Offered Debt Securities may be effected from time
to time in one or more transactions at a fixed price or prices, which may be
changed, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices.
If underwriters are used in the offering of Offered Debt Securities, the
names of the managing underwriter or underwriters and any other underwriters,
and the terms of the transaction, including compensation of the underwriters and
dealers, if any, will be set forth in the Prospectus Supplement relating to such
offering. Only underwriters named in a Prospectus Supplement will be deemed to
be underwriters in
17
<PAGE> 32
connection with the Offered Debt Securities described therein. Firms not so
named will have no direct or indirect participation in the underwriting of such
Offered Debt Securities, although such a firm may participate in the
distribution of such Offered Debt Securities under circumstances entitling it to
a dealer's commission. It is anticipated that any underwriting agreement
pertaining to any Offered Debt Securities will (1) entitle the underwriters to
indemnification by the Company against certain civil liabilities, including
liabilities under the Securities Act, or to contribution for payment which the
underwriters may be required to make in respect thereof, (2) provide that the
obligations of the underwriters will be subject to certain conditions precedent,
and (3) provide that the underwriters generally will be obligated to purchase
all Offered Debt Securities if any are purchased.
The Company also may sell Offered Debt Securities to a dealer as principal.
In such event, the dealer may then resell such Offered Debt Securities to the
public at varying prices to be determined by such dealer at the time of resale.
The name of the dealer and the terms of the transaction will be set forth in the
Prospectus Supplement relating thereto.
Offered Debt Securities also may be offered through agents designated by
the Company from time to time. Any such agent will be named, and the terms of
any such agency will be set forth, in the Prospectus Supplement relating
thereto. Unless otherwise indicated in such Prospectus Supplement, any such
agent will act on a best efforts basis for the period of its appointment.
Dealers and agents named in the Prospectus Supplement may be deemed to be
underwriters (within the meaning of the Securities Act) of the Offered Debt
Securities described therein and, under agreements which may be entered into
with the Company, may be entitled to indemnification by the Company against
certain civil liabilities, including liabilities under the Securities Act, or to
contribution for payments which they may be required to make in respect thereof.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, the Company in the ordinary course of business.
If so indicated in the Prospectus Supplement, the Company will authorize
agents and underwriters to solicit offers by certain institutional investors to
purchase Offered Debt Securities from the Company at the public offering price
set forth in the Prospectus Supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future.
Institutional investors with whom such contracts, when authorized, may be made
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and other
institutions but shall in all cases be subject to the approval of the Company.
Such contracts will be subject only to those conditions set forth in the
Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts. Agents and underwriters
will not have any responsibility in respect of the validity of such contracts or
the performance of the Company or such institutional investors thereunder.
The anticipated place and time of delivery for the Offered Debt Securities
will be set forth in the Prospectus Supplement.
LEGAL MATTERS
The legality of the Debt Securities offered will be passed upon for the
Company by Elizabeth M. Steele, Vice President/General Counsel of the Company.
EXPERTS
The consolidated financial statements and related schedules of the Company
and its subsidiaries included in the Company's Annual Report on Form 10-K for
the fiscal year ended May 31, 1992, which are incorporated herein by reference,
have been audited by Arthur Andersen & Co., independent certified public
accountants, as indicated in their reports with respect thereto, and are
incorporated herein by reference upon the authority of said firm as experts in
giving said reports.
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<PAGE> 33
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION, OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT AND PROSPECTUS, IN CONNECTION WITH THE OFFER MADE BY THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR BY THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT NOR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE OF THIS PROSPECTUS SUPPLEMENT. THE
PROSPECTUS SUPPLEMENT AND PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION
BY ANYONE IN ANY STATE IN WHICH SUCH AN OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
The Company................................. S-2
The Offering................................ S-2
Recent Developments......................... S-3
Use of Proceeds............................. S-4
Capitalization.............................. S-5
Selected Financial Data..................... S-6
Selected Pro Forma Financial Data........... S-7
Description of the Notes.................... S-8
Underwriting................................ S-13
Legal Matters............................... S-14
Experts..................................... S-14
Incorporation of Certain Information by
Reference................................. S-14
PROSPECTUS
Available Information....................... 2
Incorporation of Certain Information by
Reference................................. 2
The Company................................. 3
Risk Factors................................ 5
Ratio of Earnings to Fixed Charges.......... 9
Use of Proceeds............................. 9
Concurrent Offerings........................ 9
Dividend Policy............................. 10
Price Range of Class A Common Stock......... 11
Description of Debt Securities.............. 11
Description of Capital Stock................ 16
Plan of Distribution........................ 17
Legal Matters............................... 18
Experts..................................... 18
</TABLE>
$150,000,000
JONES INTERCABLE, INC.
% SENIOR NOTES DUE 2002
[JONES INTERCABLE LOGO]
SALOMON BROTHERS INC
MORGAN STANLEY & CO.
INCORPORATED
PAINEWEBBER INCORPORATED
PROSPECTUS SUPPLEMENT
DATED MARCH , 1995
