<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by Registrant [X]
Filed by a Party other than Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
JONES INTERCABLE, INC.
----------------------
(Name of Registrant as Specified in Its Charter)
JONES INTERCABLE, INC.
----------------------
(Name of Person Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:*
4) Proposed maximum aggregate value of transaction:
*Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:____________________________________
2) Form Schedule or Registration Statement No.:_______________
3) Filing Party:______________________________________________
4) Date Filed:________________________________________________
<PAGE> 2
JONES INTERCABLE, INC.
9697 EAST MINERAL AVENUE
P.O. BOX 3309
ENGLEWOOD, COLORADO 80155-3309
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ___________, 1995
The Annual Meeting of the Shareholders of Jones Intercable, Inc. (the
"Company") will be held at the Company's corporate offices, 9697 East Mineral
Avenue, Englewood, Colorado, on ________, __________, 1995, at ___:00 __.m.,
Mountain Time, for the following purposes:
1. To elect Directors to serve until the next annual
meeting and until their successors are duly elected and qualified.
2. To vote upon a proposal to amend the Company's
Articles of Incorporation to increase the number of authorized shares
of Class A Common Stock from 30,000,000 shares to 60,000,000 shares.
3. To ratify the appointment of Arthur Andersen & Co.,
Certified Public Accountants, as independent auditors for the Company
for the fiscal year ending May 31, 1995.
4. To transact such other business as may properly come
before the meeting.
Only shareholders of record at the close of business on _______ __,
1995 are entitled to notice of, and to vote at, the meeting.
It is very important that all shareholders be represented at the
meeting. We urge you to sign and return the enclosed proxy as promptly as
possible - whether or not you plan to attend the meeting. The proxy should be
returned in the enclosed envelope. You may revoke the proxy at any time prior
to its use by filing with the Company a duly executed proxy bearing a later
date, by voting in person at the Annual Meeting or by giving written or oral
notice of revocation to the Secretary of the Company.
By Order of the Board of Directors
Elizabeth M. Steele
Secretary
Dated: ___________, 1995
<PAGE> 3
JONES INTERCABLE, INC.
9697 EAST MINERAL AVENUE
P.O. BOX 3309
ENGLEWOOD, COLORADO 80155-3309
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD _________, 1995
Proxies in the form accompanying this statement are being solicited by
the Board of Directors of Jones Intercable, Inc. (the "Company") for use at the
Annual Meeting of Shareholders to be held on _________, _______ __, 1995, at
__:__ __.m., Mountain Time, at the Company's corporate offices, 9697 East
Mineral Avenue, Englewood, Colorado, and at any adjournments thereof. A proxy
may be revoked by a shareholder at any time prior to its use by filing with the
Company a duly executed proxy bearing a later date, by voting in person at the
Annual Meeting, or by giving written or oral notice of revocation to the
Secretary of the Company.
Officers and other employees of the Company may solicit proxies by
telephone, fax, telegraph or personal interview, as well as by mail. The cost
of any such solicitation will be paid by the Company. To assist in the
solicitation of proxies, the Company may employ a paid solicitor at a cost of
approximately $________ plus out-of-pocket expenses.
As of March 1, 1995, the Company's classes of capital stock entitled
to vote were its Common Stock, $.01 par value, of which 5,113,021 shares were
outstanding, and its Class A Common Stock, $.01 par value, of which 26,131,388
were outstanding. Only shareholders of record at the close of business on
_______ __, 1995 (the "Record Date") will be entitled to notice of, and to vote
at, the meeting.
The approximate date on which this Proxy Statement is being sent to
shareholders is _______ __, 1995.
SHAREHOLDER PROPOSALS
The date by which shareholder proposals must be received by the
Company in order to be presented at the next Annual Meeting of Shareholders is
__________, 1995.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT
The following table sets forth certain information as of _______ __,
1995, regarding ownership of the Company's Common Stock or Class A Common Stock
by persons (including
<PAGE> 4
any group) known to the Company to be beneficial owners of more than 5% of
either class of stock, the individual Directors of the Company, nominees to
become Directors of the Company, each of the executive officers named in the
Summary Compensation Table and the executive officers and Directors of the
Company as a group. Under the rules of the Securities and Exchange Commission,
a person (or group of persons) is deemed to be a "beneficial owner" of a
security if he or she, directly or indirectly, has or shares the power to vote
or to direct the voting of such security, or the power to dispose of or to
direct the disposition of such security. Accordingly, more than one person may
be deemed to be a beneficial owner of the same security. A person is also
deemed to be a beneficial owner of any security which that person has the right
to acquire within 60 days.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF OF BENEFICIAL
BENEFICIAL OWNER (1) TITLE OF CLASS OWNERSHIP (2) PERCENT OF CLASS
-------------------- -------------- ------------- ----------------
<S> <C> <C> <C>
Jones International, Ltd. Common Stock 2,403,751 (3)(4) 47.01
9697 East Mineral Avenue
Englewood, CO 80112 Class A 2,372,568 (3)(5) 9.08
Common Stock
Glenn R. Jones Common Stock 2,878,151 (3)(6) 56.29
9697 East Mineral Avenue
Englewood, CO 80112 Class A 2,769,678 (3)(7) 10.54
Common Stock
Derek H. Burney Class A 350 less than .01
1000 rue de la Common Stock
Gauchetiere Quest
Montreal, Quebec,
Canada H3B 4Y8
Christopher J. Bowick Common Stock 2,678 .05
9697 East Mineral Avenue
Englewood, CO 80112 Class A Common 8,601 (8) .03
Stock
Kevin P. Coyle Common Stock 1,843 (9) .04
9697 East Mineral Avenue
Englewood, CO 80112 Class A 4,303 (10) .02
Common Stock
James J. Krejci Class A 5,000 .02
1133 Race St., 16N Common Stock
Denver, CO 80206
Christine Jones Marocco Common Stock 2,749,679 (11) 53.78
25 East End Avenue, #14F
New York, NY 10288 Class A 107,376 (12) .41
Common Stock
</TABLE>
2
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<TABLE>
<S> <C> <C> <C>
James B. O'Brien Common 3,588 .07
9697 East Mineral Avenue
Englewood, CO 80112 Class A 29,121 (13) .11
Common Stock
Daniel E. Somers Class A 100 less than .01
1000 rue de la Common Stock
Gauchetiere Quest
Montreal, Quebec,
Canada H3B 4Y8
Raymond L. Vigil Common 180 less than .01
9697 East Mineral Avenue
Englewood, CO 80112 Class A 2,207 (14) .01
Common Stock
Robert S. Zinn Common Stock 2,771,944 (15) 54.21
9697 East Mineral Avenue
Englewood, CO 80112 Class A 157,290 (16) .60
Common Stock
David K. Zonker Common Stock 9,824 (17) .19
9697 East Mineral Avenue
Englewood, CO 80112 Class A 29,174 (18) .11
Common Stock
All executive officers and Common Stock 2,990,659 58.49
directors as a group
(16 persons) Class A 3,122,422 (19) 11.88
Common Stock
Mutuelles AXA group Class A 1,962,178 (20)(25) 7.51
Vie Mutuelle Common Stock
101-100 Terrasse Boieldieu
92042 Paris La Defense
France
AXA
23, Avenue Matignon
75008 Paris France
The Equitable Companies
Incorporated
787 Seventh Avenue
New York, New York 10019
</TABLE>
3
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<TABLE>
<S> <C> <C> <C>
Bell Canada International Common Stock 2,878,151 (21) 56.29
BVI III Limited
Arawak Chamber Class A 9,914,300 (22)(25) 37.94
Road Town Common Stock
Tortola, BVI
The Capital Group Class A 1,576,700 (23)(25) 6.03
Companies, Inc. and Common Stock
Capital Research
333 South Hope Street
Los Angeles, CA 90071
Neuberger & Berman Class A 2,000,200 (24)(25) 7.65
605 Third Avenue Common Stock
New York, NY 10158
</TABLE>
(1) Directors and executive officers named in the Summary Compensation
Table who are not listed in the table do not beneficially own any of
the Company's shares. Shares shown as subject to options means that
such options are exercisable immediately.
(2) Unless otherwise noted, all persons indicated in the table have full
voting and investment power with respect to the share ownership
described.
(3) Glenn R. Jones, Chairman of the Board of Directors and Chief Executive
Officer of the Company, owns all of the outstanding shares of Jones
International, Ltd. ("International") and is deemed to be the
beneficial owner of all shares of the Company owned by International.
By virtue of this ownership, Mr. Jones controls approximately 41% of
the total votes to be cast by all shareholders of the Company's shares
on matters not requiring a class vote, because, with regard to such
matters, a share of Common Stock has one vote and a share of Class A
Common Stock has 1/10th of a vote. The holders of Class A Common
Stock, as a class, are able to elect the greater of 25% or the next
highest whole number of the Company's Board of Directors. Thus,
holders of the Class A Common Stock, as a class, are presently
entitled to elect four Directors.
(4) Includes 2,239,416 shares held by the Jones International Grantor
Business Trust; 100,400 shares held by Jones Entertainment Group,
Ltd.; 35,707 shares held by Jones Space Segment, Inc.; 27,585 shares
held by Jones Global Group, Inc.; and 643 shares held by Jones
Interdigital, Inc. International may be deemed to be the beneficial
owner of all shares of Common Stock owned by Jones Entertainment
Group, Ltd., Jones Space Segment, Inc., Jones Global Group, Inc. and
Jones Interdigital, Inc.
(5) Includes 2,148,414 shares held by International; 136,946 shares held
by Jones Entertainment Group, Ltd., 48,705 shares held by Jones Space
Segment, Inc., 37,626 shares held by Jones Global Group, Inc.; and 877
shares held by Jones Interdigital, Inc. International may be deemed
to be the beneficial owner of all shares of Class A Common Stock owned
by Jones Entertainment Group, Ltd., Jones Space Segment, Inc., Jones
Global Group, Inc. and Jones Interdigital, Inc.
(6) Includes 474,400 shares held by the Glenn Jones Grantor Business
Trust; 2,239,416 shares held by the Jones International Grantor
Business Trust; 100,400 shares held by Jones Entertainment Group,
Ltd.; 35,707 shares held by Jones Space Segment, Inc.; 27,585 shares
held by Jones Global Group, Inc.; and 643 shares held by Jones
Interdigital, Inc.
(7) Includes 262,433 shares owned by Mr. Jones; 134,677 shares held by Mr.
Jones pursuant to stock options; 2,148,414 shares held by
International; 136,946 shares held by Jones Entertainment Group,
4
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Ltd.; 48,705 shares held by Jones Space Segment, Inc.; 37,626 shares
held by Jones Global Group, Inc.; and 877 shares held by Jones
Interdigital, Inc.
(8) Includes 1,329 shares held by Mr. Bowick pursuant to a stock option.
(9) Includes 320 shares held by Mr. Coyle's wife.
(10) Includes 1,252 shares held by Mr. Coyle pursuant to a stock option.
(11) Includes 8,799 shares held by Mrs. Marocco; 357 shares held by the
Joseph Michael Marocco Irrevocable Trust; 26,707 held by the Christine
Jones Marocco Irrevocable Trust; 2,239,416 shares held by the Jones
International Grantor Business Trust in which Mrs. Marocco has shared
voting power; and 474,400 shares held by the Glenn Jones Grantor
Business Trust in which Mrs. Marocco has shared voting power.
(12) Includes 23,891 held by Mrs. Marocco; 970 shares held by the Joseph
Michael Marocco Irrevocable Trust; 72,515 shares held by the Christine
Jones Marocco Irrevocable Trust; and 10,000 shares held by Mrs.
Marocco's husband. Mrs. Marocco disclaims beneficial ownership of the
shares held by her husband. Mrs. Marocco's husband is a principal in
a firm that may from time to time invest in the Company's securities.
Mrs. Marocco disclaims beneficial ownership of any securities of the
Company that said firm purchases or in which Mr. Marocco may therefor
have an interest.
(13) Includes 9,377 shares held by Mr. O'Brien pursuant to a stock option.
(14) Includes 1,719 shares held by Mr. Vigil pursuant to a stock option.
(15) Mr. Zinn is a trustee of (i) the Glenn R. Jones Children's Trust which
holds 57,893 shares, (ii) the Glenn Jones Grantor Business Trust which
holds 474,400 shares and (iii) the Jones International Grantor
Business Trust which holds 2,239,416 shares. Mr. Zinn shares voting
power of these trusts. Also includes 235 shares held by Mr. Zinn's
wife; Mr. Zinn disclaims beneficial ownership of these shares.
(16) Mr. Zinn is a trustee of the Glenn R. Jones Children's Trust which
holds 157,194 shares, and Mr. Zinn shares voting power of the shares
held by this trust. Includes 96 shares held by Mr. Zinn's wife; Mr.
Zinn disclaims beneficial ownership of these shares.
(17) These shares are held by Mr. Zonker's wife; Mr. Zonker disclaims
beneficial ownership of these shares.
(18) Includes 26,674 shares held by Mr. Zonker's wife and 2,500 shares held
by Mr. Zonker pursuant to a stock option; Mr. Zonker disclaims
beneficial ownership of the shares held by his wife.
(19) Includes 154,479 shares held by various executive officers and
directors pursuant to stock options.
(20) The Mutuelles AXA group includes AXA Assurances I.A.R.D. Mutuelle, AXA
Assurances Vie Mutuelle, Alpha Assurances I.A.R.D. Mutuelle, Alpha
Assurances Vie Mutuelle and Uni Europe Assurance Mutuelle. The
Mutuelles AXA group, AXA and The Equitable Companies Incorporated have
sole voting power over 1,734,753 shares and shared voting power over
425 shares, sole dispositive power over 1,964,678 shares and shared
dispositive power over 500 shares.
(21) Bell Canada International Inc. ("BCI"), the sole shareholder of Bell
Canada International BVI III Limited, may be deemed to have beneficial
ownership of the 2,878,151 shares of Common Stock covered by Option
Agreements dated December 20, 1994 among Morgan Guaranty Trust Company
of New York, acting as agent for BCI, and the Glenn Jones Grantor
Business Trust, the Jones International Grantor Business Trust, Jones
Entertainment Group, Ltd., Jones Space Segment, Inc., Jones Global
Group, Inc. and Jones Interdigital, Inc.
5
<PAGE> 8
(22) Bell Canada International BVI III Limited is a wholly-owned subsidiary
of Bell Canada International Inc., 1000 de la Gauchetiere Street West,
Suite 1100, Montreal, Quebec, Canada H3B 4Y8.
(23) Capital Guardian Trust Company and Capital Research and Management
Company, operating subsidiaries of The Capital Group Companies, Inc.,
exercised as of December 31, 1994, investment discretion with respect
to 596,700 and 980,000 shares, respectively, which was owned by
various institutional investors.
(24) Neuberger & Berman has sole voting power over 616,700 shares, shared
voting power over 928,400 shares and shared dispositive power over
2,000,200 shares.
(25) This information is based upon filings made by the shareholders with
the Securities and Exchange Commission, copies of which were provided
to the Company.
PROPOSAL 1. ELECTION OF DIRECTORS
Directors are elected to hold office until the next Annual Meeting of
Shareholders and until their successors shall be elected and shall qualify. In
the absence of instructions to the contrary, the proxies designated by the
Board of Directors on the form of proxy enclosed will vote the shares
represented by them in favor of the nominees listed below. Each of the persons
nominated is currently a member of the Board of Directors. Although management
does not anticipate that such an event will occur, if a nominee named in this
Proxy Statement is unable to serve as a Director at the time of the Annual
Meeting, the proxy will be voted for a nominee to be designated by the present
Board of Directors.
The Company's Articles of Incorporation provide that, with respect to
the election of Directors, the holders of Class A Common Stock, voting as a
separate class, are entitled to elect that number of Directors constituting 25%
of the total membership of the Board of Directors. If such 25% is not a whole
number, holders of Class A Common Stock are entitled to elect the nearest
higher whole number of directors constituting 25% of the membership of the
Board of Directors. Holders of Common Stock, voting as a separate class, are
entitled to elect the remaining Directors.
Four members of the Board of Directors are to be elected by holders of
Class A Common Stock, and nine members of the Board of Directors are to be
elected by holders of Common Stock. Of the thirteen persons set forth below as
nominees for the position of Director of the Company, William E. Frenzel,
Donald R. Jacobs, Philip R. Ladouceur, and Robert B. Zoellick have been
designated by the Board of Directors as nominees to be elected by holders of
Class A Common Stock, and Glenn R. Jones, Derek H. Burney, James J. Krejci,
Christine Jones Marocco, James B. O'Brien, Daniel E. Somers, Raymond L. Vigil,
Robert S. Zinn and David K. Zonker have been designated as the nominees to be
elected by holders of Common Stock.
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<PAGE> 9
Each share of Common Stock and Class A Common Stock has one vote in
the election of the Directors to be elected by that class. The Company's
Articles of Incorporation provide that cumulative voting shall not be allowed
in the election of directors.
DIRECTORS TO BE ELECTED BY HOLDERS OF CLASS A COMMON STOCK
Mr. William E. Frenzel has been a Guest Scholar since 1991 with the
Brookings Institution, a research organization located in Washington D. C.
Until his retirement in January 1991, Mr. Frenzel served for twenty years in
the United States House of Representatives, representing the State of
Minnesota, where he was a member of the House Ways and Means Committee and its
Trade Subcommittee, he was the Congressional Representative to the General
Agreement on Tariffs and Trade (GATT), was the Ranking Minority Member on the
House Budget Committee and a member of the National Economic Commission. Mr.
Frenzel also served in the Minnesota Legislature for eights years. He is a
Distinguished Fellow of the Tax Foundation, Vice Chairman of the Eurasia
Foundation, a Board Member of the U.S.-Japan Foundation, the Close-Up
Foundation, Sit Mutual Funds and Chairman of the Japan-America Society of
Washington. He is 66 years old.
Mr. Donald L. Jacobs is a retired executive officer of TRW. Prior to
his retirement, he was Vice President and Deputy Manager of the Space and
Defense Sector; prior to that appointment, he was the Vice President and
General Manager of the Defense Systems Group and prior to his appointment as
Group General Manager, he was President of ESL, Inc., a wholly owned subsidiary
of TRW. During his career, Mr. Jacobs served on several corporate,
professional and civic boards. He is 56 years old.
Mr. Philip R. Ladouceur joined Bell Canada International Inc. as
Executive Vice President of Operations on March 1, 1995. From 1993 to March
1995, Mr. Ladouceur was President, Chief Executive Officer and a Director of
ISM Information Systems Management (Alberta) Corporation, a major information
management company based in Alberta, Canada. From 1990 to 1992, Mr. Ladouceur
was Executive Vice President and a Director of Sharwood and Company, a Toronto
merchant bank and President and Senior Partner of HDL Capital Corporation in
Toronto. From 1986-1989, he was Senior Vice President of Finance, Chief
Financial Officer and a Director of Rogers Communications Inc. Mr. Ladouceur
is a past director of the Financial Executives Institute of Canada. He is 54
years old.
Mr. Robert B. Zoellick is Executive Vice President, General Counsel
and Corporate Secretary of Fannie Mae, a federally chartered and
stockholder-owned corporation that is the largest housing finance investor in
the United States. From August 1992 to January 1993, Mr. Zoellick served as
Deputy Chief of Staff of the White House and Assistant to the President. From
May 1991 to August 1992, Mr. Zoellick served concurrently as the Under
Secretary of State for Economic and Agricultural Affairs and as Counselor of
the Department of State, a post he assumed in March 1989. From 1985 to 1988,
Mr. Zoellick served at the Department of Treasury in a number of capacities,
including Counselor to the Secretary. Mr. Zoellick received the Alexander
Hamilton and Distinguished Service Awards, highest honors of the Departments of
Treasury and State, respectively. The German Government awarded him the
7
<PAGE> 10
Knight Commanders Cross for his work on Germany unification. Mr. Zoellick
currently serves on the boards of the Council on Foreign Relations, the
Congressional Institute, the German Marshall Fund of the U.S., the European
Institute, the National Bureau of Asian Research, the American Council on
Germany and the Overseas Development Council. He is 41 years old.
DIRECTORS TO BE ELECTED BY HOLDERS OF COMMON STOCK
Mr. Glenn R. Jones has served as Chairman of the Board of Directors
and Chief Executive Officer of the Company since its formation in 1970, and he
was President from June 1984 until April 1988. Mr. Jones was elected a member
of the Executive Committee of the Board of Directors in April 1985. Mr. Jones
is the sole shareholder, President and Chairman of the Board of Directors of
Jones International, Ltd. He is also Chairman of the Board of Directors of the
subsidiaries of the Company and of certain other affiliates of the Company.
Mr. Jones was appointed Vice Chairman of the Board of Directors of Bell Canada
International Inc. in February 1995. Mr. Jones has been involved in the cable
television business in various capacities since 1961, is a past and present
member of the Board of Directors of the National Cable Television Association,
and is a former member of its Executive Committee. Mr. Jones is a past
director and member of the Executive Committee of C-Span. Mr. Jones has been
the recipient of several awards including the Grand Tam Award in 1989, the
highest award from the Cable Television Administration and Marketing Society;
the Chairman's Award from the Investment Partnership Association, which is an
association of sponsors of public syndications; the cable television industry's
Public Affairs Association President's Award in 1990, the Donald G. McGannon
award for the advancement of minorities and women in cable; the STAR Award from
American Women in Radio and Television, Inc. for exhibition of a commitment to
the issues and concerns of women in television and radio; and the Women in
Cable Accolade in 1990 in recognition of support of this organization. Mr.
Jones is also a founding member of the James Madison Council of the Library of
Congress and is on the Board of Governors of the American Society of Training
and Development. He is 65 years old.
Mr. Derek H. Burney was appointed a Director of the Company on
December 20, 1994 and Vice Chairman of the Board of Directors on January 31,
1995. He is also a member of the Executive Committee of the Board of
Directors. Mr. Burney joined BCE Inc., Canada's largest telecommunications
company, in January 1993 as Executive Vice President, International. He has
been the Chairman of Bell Canada International Inc., a subsidiary of BCE, since
January 1993 and, in addition, has been Chief Executive Officer of BCI since
July 1993. Prior to joining BCE, Mr. Burney served as Canada's ambassador to
the United States from 1989 to 1992. Mr. Burney also served as chief of staff
to the Prime Minister of Canada from March 1987 to January 1989 where he was
directly involved with the negotiation of the U.S. - Canada Free Trade
Agreement. In July 1993, he was named an Officer of the Order of Canada. Mr.
Burney is chairman of Bell Cablemedia plc. He is a director of Mercury
Communications Limited, Videotron Holdings plc, Tele-Direct (Publications)
Inc., Teleglobe Inc., Bimcor Inc., Maritime Telegraph and Telephone Company,
Limited, Moore Corporation Limited and Northbridge Programming Inc. He is 55
years old.
8
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Ms. Christine Jones Marocco was appointed a Director of the Company on
December 20, 1994. She is the daughter of Glenn R. Jones. Ms. Marocco is also
a director of Jones International, Ltd. She is 39 years old.
Mr. James J. Krejci was President of the International Division of
International Gaming Technology, International headquartered in Reno, Nevada,
until March 1995. Prior to joining IGT in May 1994, Mr. Krejci was Group Vice
President of Jones International, Ltd. and was Group Vice President of the
Company. He also served as an officer of Jones Futurex, Inc., a subsidiary of
the Company engaged in manufacturing and marketing data encryption devices,
Jones Interactive, Inc., a subsidiary of Jones International, Ltd. providing
computer data and billing processing facilities and Jones Lightwave, Ltd., a
company owned by Jones International, Ltd. and Mr. Jones, and several of its
subsidiaries engaged in the provision of telecommunications services until
leaving the Company in May 1994. Mr. Krejci has been a Director of the Company
since August 1987. He is 52 years old.
Mr. James B. O'Brien, the Company's President, joined the Company in
January 1982. Prior to being elected President and a Director of the Company
in December 1989, Mr. O'Brien served as a Division Manager, Director of
Operations Planning/Assistant to the CEO, Fund Vice President and Group Vice
President/Operations. Mr. O'Brien was appointed to the Company's Executive
Committee in August 1993. As President, he is responsible for the day-to-day
operations of the cable television systems managed and owned by the Company.
Mr. O'Brien is also President and a Director of Jones Cable Group, Ltd., Jones
Global Funds, Inc. and Jones Global Management, Inc., all affiliates of the
Company. Mr. O'Brien is a board member of Cable Labs, Inc., the research arm
of the U.S. cable television industry. He also serves as a director of the
Cable Television Administration and Marketing Association and as a director of
the Walter Kaitz Foundation, a foundation that places people of ethnic minority
groups in positions with cable television systems, networks and vendor
companies. He is 45 years old.
Mr. Daniel E. Somers was appointed a Director of the Company on
December 20, 1994 and also serves on the Company's Audit Committee. From
January 1992 to January 1995, Mr. Somers worked as Senior Vice President and
Chief Financial Officer of Bell Canada International Inc. and was appointed
Executive Vice President and Chief Financial Officer on February 1, 1995. He
is also a Director of certain of its affiliates. Prior to joining Bell Canada
International Inc. and since January 1989, Mr. Somers was the President and
Chief Executive Officer of Radio Atlantic Holdings Limited. Mr. Somers is a
member of the North American Society of Corporate Planning, the Financial
Executives Institution and the Financial Analysts Federation. He is 47 years
old.
Mr. Raymond L. Vigil joined the Company in June 1993 as Group Vice
President/Human Resources. Previous to joining the Company, Mr. Vigil served
as Executive Director of Learning with USWest. Prior to USWest, Mr. Vigil
worked in various human resources posts over a 14-year term with the IBM
Corporation. He is 48 years old.
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Mr. Robert S. Zinn was appointed a director of the Company on December
20, 1994. Mr. Zinn joined the Company in January 1991 and is a member of its
Legal Department. He is also Vice President/Legal Affairs of Jones
International, Ltd. Prior to joining the Company, Mr. Zinn was in private law
practice in Denver, Colorado for over 25 years. He is 58 years old.
Mr. David K. Zonker was appointed a director of the Company on
December 20, 1994. Mr. Zonker has been the President of Jones International
Securities, Ltd., a subsidiary of Jones International, Ltd. since January 1984
and he has been its Chief Executive Officer since January 1988. From October
1980 until joining Jones International Securities, Ltd. in January 1984, Mr.
Zonker was employed by the Company. Mr. Zonker is a member of the Board of
Directors of various affiliates of the Company, including Jones International
Securities, Ltd. Mr. Zonker is licensed by the National Association of
Securities Dealers, Inc. and he is a past chairman of the Investment Program
Association, a trade organization based in Washington, D.C. that promotes
direct investments. He is a member of the Board of Trustees of Graceland
College, Lamoni, Iowa; the International Association of Financial Planners and
the American and Colorado Institutes of Certified Public Accountants. He is 41
years old.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE ABOVE NOMINEES.
During the fiscal year ended May 31, 1994, the Board of Directors of
the Company met ten times. The Board of Directors of the Company took all
other action by unanimous written consent, in accordance with the provisions of
the Colorado Corporation Code.
Messrs. Jones, Burney and O'Brien are the current members of the
Executive Committee of the Board of Directors, which was established in April
1985. Mr. O'Brien was appointed to the Executive Committee in August 1993, and
Mr. Burney was appointed to the Executive Committee in January 1995. The
Executive Committee of the Board took all action during fiscal year ended May
31, 1994 by unanimous written consent. Messrs. Somers, _________ and _______
are the current members of the Audit Committee of the Board of Directors, which
was established in March 1982. They were appointed in January 1995. The Audit
Committee formally met once during fiscal year ended May 31, 1994. Messrs.
Burney and Somers are the current members of the Executive Officer Option
Committee which was established in 1993. They were appointed in January 1995.
The Executive Officer Option Committee took all action during fiscal year ended
May 31, 1994 by unanimous written consent. In January 1995, a Compensation
Committee of the Board of Directors was established; the current members of the
Compensation Committee are ___________, ____________ and __________.
10
<PAGE> 13
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following table sets forth certain information relating to the
compensation during the past three fiscal years of those persons who were at
May 31, 1994, the Chief Executive Officer and the other four most highly
compensated executive officers of the Company.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- ------
NAME AND FISCAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
------------------ ---- ------ ----- ------- ------------
<S> <C> <C> <C> <C> <C>
Glenn R. Jones 1994 $530,420 $630,000 418,708 (1) $136,226(3)
Chairman of the Board 1993 684,651 600,000 230,000 (1)(2) 13,540(3)
and Chief Executive 1992 520,020 300,000 0 480(3)
Officer
James B. O'Brien 1994 $196,568 $52,500 12,307 (1) $19,404(3)
President 1993 196,568 85,000 6,300 (1) 5,740(3)
1992 189,000 72,000 0 480(3)
Kevin P. Coyle 1994 $168,559 45,000 5,008 (1) $12,814(3)
Group Vice President of 1993 157,530 40,000 0 $6,618(3)
Finance 1992 150,027 40,000 0 480(3)
Christopher J. Bowick 1994 $153,458 $45,000 5,317 (1) $11,907(3)
Group Vice President/ 1993 139,507 41,850 -0- -0-(3)
Technology 1992(4) 88,013 43,439 -0- -0-(3)
Elizabeth M. Steele 1994 $187,207 $30,000 0 $16,080(3)
Vice President, General 1993 187,207 36,000 0 5,480(3)
Counsel and Secretary 1992 200,008 20,000 0 433(3)
Carl E. Vogel (5) 1994 135,686 $85,000 -0- $17,821(3)
1993 141,965 50,000 37,500 (1) 5,470(3)
1992 136,506 65,000 -0- 480(3)
</TABLE>
(1) Represents the number of shares of the Company's Class A Common Stock
underlying the options granted.
(2) Represents 200,000 shares of the Company's Common Stock and 30,000
shares of the Company's Class A Common Stock underlying the options
granted.
(3) The Company's employees are entitled to participate in a 401(k) profit
sharing plan. As of January 1993, certain senior employees of the
Company are eligible to participate in a deferred
11
<PAGE> 14
compensation plan, as an alternative to participation in the 401(k)
profit sharing plan. The amounts shown in the column reflect the
Company's contributions pursuant to these plans for the benefit of the
named person's account.
(4) Mr. Bowick joined the Company as Group Vice President/Technology in
September 1991.
(5) Mr. Vogel resigned as an executive officer of the Company on April 2,
1994.
The following table sets forth information with respect to grants of
stock options during fiscal 1994 for the Executive Officers named in the
Summary Compensation Table.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (2)
---------------------------------------------------------------------- ---------------------------------------
% OF TOTAL
OPTIONS
GRANTED TO
ALL EMPLOYEES EXERCISE
OPTIONS IN FISCAL PRICE EXPIRATION
NAME GRANTED(1) YEAR ($/SHARE) DATE 0% ANNUAL 5% ANNUAL 10% ANNUAL
---- ---------- ---- --------- ---- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Glenn R. Jones 300,000 50% $ 12.65 6/30/98 $ -0- $ 853,171 $2,106,260
118,708 20% $ 13.81 11/9/2003 497,387 1,841,173 3,902,806
James B. O'Brien 12,307 2% $ 13.81 11/9/2003 $ 51,566 $ 190,883 $ 404,622
Kevin P. Coyle 5,008 1% $ 13.81 11/9/2003 $ 20,984 $ 77,675 $ 164,650
Christopher J. 5,317 1% $ 13.81 11/9/2003 $ 22,278 $ 82,467 $ 174,809
Bowick
</TABLE>
(1) Represents the number of shares of the Company's Class A Common Stock
underlying the options granted.
(2) The dollar amounts shown under these columns are the result of
calculations at 0%, 5% and 10% compound growth rates set by the
Securities and Exchange Commission, and therefore are not intended to
forecast possible future appreciation of the Company's stock price.
In all cases, the appreciation is calculated from the award date to
the end of the option term.
The following table sets forth information with respect to stock
option exercises during fiscal year 1994 by the Executive Officers named in the
Summary Compensation Table, including the aggregate value of gains on the date
of exercise. Also shown are the (i) number of shares covered by both
exercisable and unexercisable stock options as of May 31, 1994, and (ii) values
for in-the-money options which represent the spread between the exercise price
of such stock options and the price of the Company's Class A Common Stock as of
May 31, 1994.
12
<PAGE> 15
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY
AT FISCAL YEAR END OPTIONS AT FISCAL
5/31/94 YEAR END 5/31/94
------- ----------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Carl E. Vogel 37,500 $309,375 None/None None/None
</TABLE>
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
Policies. During fiscal year 1994, there was no separate Compensation
Committee of the Board of Directors of Jones Intercable, Inc. Certain stock
option awards were determined during fiscal year 1994 by a Committee of the
Board consisting of Messrs. Thrall and Feltovich, both non-employee directors.
Historically, the policies of the entire Board with respect to executive
compensation have been based on the need to attract and retain key executives
and to compensate them according to (i) their performance, (ii) the Company's
overall performance, and (iii) executive compensation offered by others in the
industry. These policies applied to all executives, not only those whose
compensation appears in the Summary Compensation Table. In 1993, a
compensation advisory committee comprised of then Company directors Patrick J.
Lombardi, James B. O'Brien and Raymond L. Vigil provided oversight review of
all compensation plans, and in accordance with those plans provided
recommendations to Mr. Jones on certain executive compensation matters and
established a new bonus plan, as described below. In January 1995, the Board
of Directors established a Compensation Committee consisting of Messrs.
__________, __________ and ___________. It is expected that this Committee,
with advice from other members of the Board of Directors and other Company
management, will be responsible for executive compensation policies and
decisions in the future.
An executive's compensation consists of an annual salary and
eligibility for annual bonuses and long-term incentives. The Board of
Directors does not pass on each individual item of an executive's compensation.
Mr. Jones, the Company's Chief Executive Officer, upon consultation with the
compensation advisory committee, has been principally responsible for these
determinations, both as to cash and incentive amounts. During the past fiscal
year, while executive salaries remained relatively unchanged, there was
announced an intent to change the direction of executive compensation from a
fixed base pay basis to one which places more emphasis on "at risk", variable
pay. This was first implemented for senior executives by having no regular
merit increases to salary made at the beginning of the fiscal year. Instead,
the consideration of all awards was shifted to year-end, in connection with the
"at risk" bonus determinations, which are directly related to annual
performance.
13
<PAGE> 16
Salaries. Base salaries for executives are primarily market based and
determined according to level of responsibility, scope and impact of decision
making. The Company utilizes annual executive compensation salary surveys
prepared by nationally recognized compensation consulting firms. The Company
utilizes salary surveys which pertain to the telecommunications and cable
industries, and in general seeks to set executive salary levels at
approximately the mid-range of the survey data.
Bonuses. The Board believes that the key to compensation is current
performance of its executives, which largely is recognized through bonus
awards. It is through the bonus program that both individual and corporate
performance is recognized on a year to year basis. In awarding certain bonuses
in December 1993, a defined bonus plan based on meeting specific budgeted
revenue, cash flow and other business objectives was established for all but
the most senior executives in the Company, i.e. those persons who reported
directly to Mr. Jones. Due to the significant impact of the federally-mandated
basic cable rate reduction on the performance of the Company's business during
the past fiscal year, more emphasis was placed on certain aspects of the
Company's operations and extraordinary effort was expended to achieve financial
objectives, resulting in revenues and cash flow exceeding budget by 5%. This
achievement was reflected in the bonus plan awards for fiscal 1994. For the
senior executives who report directly to Mr. Jones, no such formula or specific
factor allocation was used, and their awards reflect a subjective evaluation of
performance. While overall corporate performance is given recognition, it is
the specific performance of the individual during the fiscal year that is given
the greatest weight. Finally, through studies available to the Company, the
Board is aware of what levels of compensation exist for comparably sized (as
well as larger and smaller) companies in its industry and appropriate attention
is paid to such compensation, as well, although individual performance remains
the determinant.
Long-Term Incentives. Long-term incentives for eligible Company
executives and key associates consist primarily of non-qualified employee stock
options which usually vest over a term of five years or more and participation
in a deferred compensation plan or a 401(k) plan. The stock option plan is
intended to promote the long term success of the Company by providing eligible
key executives an opportunity to acquire a proprietary interest in the Company.
The goal of the stock option plan is to focus performance on the attainment of
long-term strategic objectives and align executive financial interests with
those of the shareholders of the Company. In 1993, as an alternative to the
Company's 401(k) Plan, the Company adopted a non-qualified deferred
compensation plan that permits a greater contribution by executives and
therefore greater matching amounts from the Company. The competitive need to
provide a realistic equity incentive for executives and to attract and retain
key executives in a competitive environment was considered by the Board in
establishing an annual long-term incentive stock option plan in 1992 for
executives and certain key associates. During the past fiscal year, the
compensation advisory committee brought a new formula-based approach to option
awards, with the help of a consulting firm. Consultants from Towers Perrin and
Wyatt provided industry comparisons and expert advice on competitive long-term
incentive plan design.
14
<PAGE> 17
Stock Option Awards During Fiscal 1994. During the last fiscal year,
awards of ten-year stock options covering a total of 310,928 shares of stock
were made to executives and key associates on November 9, 1993 (11,963 shares
of stock originally awarded have terminated due to resignations from the
Company). In all instances, the stock options for 37 executives, including the
Chief Executive Officer, were awarded on a formula of stock option grant
multiples (based on surveys of competitive industry long-term incentive plans
and ranged from 40% to 98% of total compensation), with the same exercise price
of $13.81, and the same vesting schedule of twenty-five percent per year and
the same term of ten years. Additionally, 71 key non-executive associates
received options covering 500 to 2,000 shares of stock per associate on the
same terms described above. No other significant option awards were made
during the fiscal year.
Compensation of the Chief Executive Officer. The compensation of Mr.
Jones as Chief Executive Officer of the Company is, and has been, directly
related to the Company's overall performance and his specific annual
contributions to that performance. In particular, his bonus and stock option
award reflect both the Company's performance in fiscal 1994 and, more
specifically, his contribution to direction of the Company during another
critical period in the industry. In fiscal 1994, the impact of the
re-regulation of the cable television industry began to be felt, requiring a
major effort to deal with this issue and to react to it by developing new or
augmented revenue measures. His fiscal year 1994 compensation also took into
account the overall growth of the Company in terms of subscribers of six
percent, subscriber revenues, advertising revenues and fees from managed
limited partnerships, as well as the successful amalgamation of the Company's
United Kingdom properties into Bell Cablemedia plc, which closed after the end
of the fiscal year. In addition, his compensation reflected the direction and
guidance he gave toward attracting Bell Canada International Inc. as a
strategic partner and the expansion of the Company's asset base through the
proposed acquisition of substantially all of the assets of Jones Spacelink,
Ltd. ("Spacelink"), two of the largest and most dramatic transactions in the
Company's history.
Pursuant to an Employment Agreement entered into between the Company
and Mr. Jones in December 1994, in connection with the acquisition by Bell
Canada International Inc. of a 30% equity interest in the Company, Mr. Jones
will be paid an annual base salary of $2.5 million in fiscal year 1995 (which
approximates his fiscal year 1994 combined compensation from the Company and
Spacelink), with an annual cost of living index based adjustment applied to
such amount over the eight-year term of the agreement. In addition, Mr. Jones
will continue to be eligible to participate in Company bonus, stock option and
other employee plans at a level generally commensurate with his previous
participation.
Notwithstanding anything to the contrary contained in any document
filed by the Company with the Securities and Exchange Commission ("SEC"), or
elsewhere, the foregoing report shall not be deemed to be incorporated by
reference by any general statement incorporating this proxy statement into any
filing under the Securities Act of 1933 or the Securities Exchange Act of 1934,
except to the extent the Company specifically incorporates
15
<PAGE> 18
this report by reference therein, and shall not be deemed soliciting material
or otherwise be deemed filed under either of such Acts.
PERFORMANCE GRAPH
TOTAL RETURN TO SHAREHOLDER
PREPARED FOR
JONES INTERCABLE, INC
FISCAL YEAR BASIS: MAY
RETURN RETURN RETURN RETURN RETURN
COMPANY\INDEX NAME 1990 1991 1992 1993 1994
- ------------------ ------ ------ ------ ------ ------
JONES INTERCABLE INC -CL A -42.45 12.50 -8.89 43.90 -10.17
S&P 500 INDEX 16.61 11.79 9.85 11.61 4.26
PEER GROUP -31.97 6.18 6.21 9.29 10.07
INDEXED\CUMULATIVE RETURNS
BASE
PERIOD RETURN RETURN RETURN RETURN RETURN
COMPANY\INDEX NAME 5/1989 5/1990 5/1991 5/1992 5/1993 5/1994
- ------------------ ------ ------ ------ ------ ------ ------
JONES INTERCABLE INC -CL A 100.00 57.55 64.75 58.99 84.89 76.26
S&P 500 INDEX 100.00 116.61 130.36 143.21 159.84 166.64
PEER GROUP 100.00 68.03 72.23 76.72 83.85 92.29
PEER GROUP POPULATION
- ---------------------
ADELPHIA COMMUN -CL A
CABLEVISION SYSTEMS -CL A
CENTURY COMMUN -CL A
COMCAST CABLEVISION-PHILA (Company drops out of peer group at the 5/94 return)
(March is the last available price)
TCA CABLE TV INC
* The peer group return represents a weighted average return. Market
capitalization is used to weight the return at the beginning of each respective
period.
This total shareholders return model assumes reinvested dividends.
Prepared by Standard & Poor's Compustat, a Division of McGraw-Hill Inc.
January 16, 1995
Notwithstanding anything to the contrary contained in any document
filed by the Company with the Securities and Exchange Commission ("SEC"), or
elsewhere, this performance graph shall not be deemed to be incorporated by
reference by any general statement incorporating this proxy statement into any
filing under the Securities Act of 1933 or the Securities Exchange Act of 1934,
except to the extent the Company specifically incorporates this performance
graph by reference therein, and shall not be deemed soliciting material or
otherwise be deemed filed under either of such Acts.
COMPENSATION OF DIRECTORS
Directors of the Company who are not full-time employees of the
Company or any of its affiliates receive $5,000 per fiscal quarter for their
services as Directors, with an additional $1,250 to be paid to each outside
Director for each regularly scheduled quarterly meeting of the Board of
Directors attended in person by such outside Director. No additional
compensation for director service is paid to Directors who are full-time
employees of the Company or any of its affiliates. During fiscal 1994, Messrs.
Feltovich and Thrall were paid directors' fees of $25,000 and $23,750,
respectively. In December 1993, Messrs. Feltovich and Thrall, independent
directors of the Company, were appointed by the Board of Directors to
constitute a special committee regarding the proposed acquisition by the
Company of substantially all of the assets of Spacelink and the proposed
acquisition by Bell Canada International Inc. of shares of the Company's Class
A Common Stock. Each of Messrs. Feltovich and Thrall were compensated $40,000
for their services on the special committee through February 28, 1994.
Commencing March 1, 1994, through the period of discharge of the special
committee in December 1994, Messrs. Thrall and Feltovich were each compensated
at the rate of $175.00 per hour of work performed on behalf of the special
committee. As of the date of this proxy statement, Mr. Thrall has been paid an
additional $46,375 for such work, and Mr. Feltovich has been paid an additional
$52,500 for such work.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 1994, the Company had no compensation committee or
other board committee performing equivalent functions. During fiscal year
1994, Glenn R. Jones, with the assistance of Mr. Vigil, a director of the
Company, and Mr. Lombardi, a director of the Company during fiscal 1994, and
the heads of various departments, with respect to each of their departments,
participated in recommendations and deliberations concerning executive
compensation. Glenn R. Jones, James B. O'Brien, Ruth E. Warren, Timothy J.
Burke and
16
<PAGE> 19
Elizabeth M. Steele, executive officers of the Company, serve as directors of
certain of the Company's affiliates. As individuals, these executive officers
had no transactions with the Company during the fiscal year 1994. The various
transactions between the Company and its affiliates are described in Certain
Transactions below.
CERTAIN TRANSACTIONS
Set forth below is a description of the Company's transactions with
Jones International, Ltd., certain of its subsidiaries and certain affiliates
of the Company during the fiscal year ended May 31, 1994. While the Company
believes that these transactions generally are as favorable as could have been
obtained from unaffiliated third parties, in most instances no third party bids
or appraisals were obtained and certain of the transactions are by their nature
unique to the companies involved. Accordingly, no assurance is given to such
effect. In some instances the amounts of transactions have been rounded to the
nearest thousand. Certain of the transactions described below are expected to
continue during the current fiscal year.
JONES INTERNATIONAL, LTD.
Jones International, Ltd. and certain of its subsidiaries provide
various services to all companies affiliated with International, including the
Company and its managed limited partnerships, including information and data
processing services, office space, programming services and services associated
with the marketing of limited partnership interests as described below. The
corresponding costs of these services are charged to the Company, and the
Company reimburses Jones International, Ltd. accordingly. In some cases, a
portion of certain of these expenses are reallocated to the limited
partnerships managed by the Company pursuant to the terms of the limited
partnership agreements of such limited partnerships.
From time to time during the fiscal year ended May 31, 1994, the
Company carried accounts receivable from Jones International, Ltd. affiliates,
including an advance of $2,000,000. Interest on such receivables is charged at
the Company's average cost of borrowing plus two percent. Interest charged
International for the year ended May 31, 1994, was $298,200. The $2,000,000
advance and interest were paid in January 1995.
Also, certain operating, general and administrative expenses
(principally salaries, which are allocated based on actual time spent by Jones
International, Ltd. employees with respect to the Company) incurred by Jones
International, Ltd. and its various subsidiaries are allocated to the Company.
During fiscal year ended May 31, 1994, Jones International, Ltd. allocated to
the Company $64,171 of such expenses.
JONES INFOMERCIAL NETWORKS, INC.
Jones Infomercial Networks, Inc. ("Jones Infomercial") is a 24-hour a
day infomercial network, distributing program length advertising. This network
is carried on certain Company owned and managed cable television systems. The
Company pays no license fees to Jones
17
<PAGE> 20
Infomercial for such programming. The Company and its managed partnerships,
respectively, do receive one-third of all revenues from sales of
network-advertised products made to customers in franchise areas served by
Company owned and managed partnership systems where the infomercial network is
distributed. Jones Infomercial uses the uplink facility owned by Jones Earth
Segment, Inc., an affiliate, for uplinking its advertising to the Space Segment
transponder. During fiscal year ended May 31, 1994, the Company and its
managed partnerships received revenues from Jones Infomercial of $17,700 and
$91,900, respectively.
JONES INTERACTIVE, INC.
Jones Interactive, Inc. (formerly Jones Information Management, Inc.)
provides information management and data processing services for all companies
affiliated with International, including the Company. Charges to the various
companies generally are based on usage of computer time by each entity. Fees
paid by the Company and its affiliated partnerships to Jones Interactive for
the fiscal year ended May 31, 1994 totaled approximately $4,687,000, of which
$1,219,000 and $3,468,000 were paid by the Company and its managed
partnerships, respectively. Effective as of December 1994, the Company and
other affiliates of International, entered into written agreements with Jones
Interactive, pursuant to which they will pay for services from Jones
Interactive on the basis of cost plus 10%. It is expected that this will
approximate the same relative compensation to Jones Interactive as has been
paid historically.
JONES INTERNATIONAL SECURITIES, LTD.
Jones International Securities, Ltd. served, during fiscal 1994, as
dealer-manager of an offering by Jones United Kingdom Fund, Ltd., the general
partner of which was owned 38% by the Company and the remainder by
International. The dealer-manager received commissions from unaffiliated
limited partner investors totaling $3,237,100 during fiscal year ended May 31,
1994 (10% of the capital contributed by the limited partners), of which
$3,013,190 (9% of the capital contributed by the limited partners) was paid to
unaffiliated broker-dealers that sold limited partnership interests in this
offering. Jones International Securities, Ltd. provides investor support to
certain affiliates of International, including the Company and its
partnerships. Accordingly, the Company paid approximately 26% of Jones
International Securities, Ltd.'s expenses during fiscal 1994, which totaled
approximately $544,000.
JONES PROPERTIES, INC.
The Company is a party to a lease with Jones Properties, Inc. under
which the Company has leased a 101,500 square foot office building in
Englewood, Colorado in which the Company's corporate offices are located. The
lease, which commenced in 1985, has a 15-year term with three 5-year renewal
options. The annual rent is currently $24.00 per square foot, plus operating
expenses and will not, by the terms of the lease, exceed such amount during the
remainder of the 15-year term. The Company has subleased approximately 26% of
the building to International and certain other affiliates on the same terms
and
18
<PAGE> 21
conditions as the above-mentioned lease. Payment to Jones Properties, Inc. by
the Company and its managed partnerships, net of subleasing revenues, for the
year ended May 31, 1994 was approximately $1,753,000, of which $455,780 was
paid by the Company.
JONES SPACE SEGMENT, INC.
In fiscal 1993, the Company entered into a license agreement with
Jones Space Segment, Inc. ("Space Segment") to use a non-preemptible
transponder on a domestic communications satellite that Space Segment currently
leases. Under this agreement the Company agreed to pay $2,400,000 per year.
In December 1993, the Company terminated the original license agreement and
entered into a new license agreement with Space Segment. Under the new license
agreement, which expired December 31, 1994, the Company, Jones Infomercial
Networks, Inc. ("PIN") and Jones Computer Network, Ltd. ("JCN"), both of which
are affiliates of International, had a license to use the transponder for their
respective purposes. Under the new agreement, the Company agreed to pay Space
Segment $200,000 per month from January 1994 through March 1994; the Company
and PIN each agreed to pay $100,000 per month beginning April 1994 and until
the launch of JCN, in September 1994; and thereafter the Company, PIN and JCN
would each pay $66,667 per month. For the seven months ended December 31,
1993, the Company paid $1,500,000 under the original agreement, and for the
five months ended May 31, 1994, the Company paid $800,000 under the new
agreement.
MIND EXTENSION UNIVERSITY, INC.
Cable television systems owned by the Company and its managed
partnerships receive educational video programming from Mind Extension
University, Inc. ("ME/U"), which is controlled by International for a fee based
upon the number of subscribers receiving the programming. Payments to ME/U
with respect to programming provided to cable television systems owned by the
Company and its managed partnerships totaled approximately $484,100 in fiscal
1994, of which $103,400 was paid by the Company.
During fiscal 1992 and 1993, the Company invested $10,000,000 in ME/U
for 25% of the Class A Common Stock of ME/U, and also agreed to provide to ME/U
certain advertising avails and administrative and marketing considerations.
The number of shares of Class A Common Stock of ME/U issued to the Company was
based on the average of two separate independent appraisals of ME/U. In 1993
the Company also made advances totaling $15,000,000 to MEU. Of these advances,
one-half will be converted into shares of Class A Common Stock of ME/U at a
price equal to the value of such shares as established by the next equity
investment in ME/U by an unaffiliated party. Any amount not converted into
equity will earn interest at the Company's weighted average cost of borrowing
plus two percent. In 1994, the Company made an additional $5,000,000 advance
to ME/U; interest is charged at the Company's weighted average cost of
borrowing plus two percent. Interest charged to ME/U for the year ended May
31, 1994, was $920,000. Interest on all advances to ME/U has been paid through
November 30, 1994. At November 30, 1994, the Company's aggregate investment in
ME/U totaled $30,000,000.
19
<PAGE> 22
____________________
In addition to transacting business with International and its
subsidiaries, the Company, and its managed limited partnerships have engaged in
transactions with other affiliates of the Company. Set forth below is a
description of such transactions during the fiscal year ended May 31, 1994.
Certain of the transactions described below are expected to continue during the
Company's current fiscal year.
JONES FINANCIAL GROUP, LTD.
Jones Financial Group, Ltd. ("Jones Financial Group") performs
services for the Company and certain of its affiliates as its agent in
connection with acquisitions and sales of cable systems, joint venture and
other financing arrangements. The Company has entered into a Financial
Services Agreement with Jones Financial Group to render financial advisory and
related services to the Company for a fee equal to 90% of the fees that would
be charged to the Company by unaffiliated third parties for the same or
comparable purposes. The Company will pay Jones Financial Group an annual
$1,000,000 retainer as an advance against payments due pursuant to this
agreement and will reimburse Jones Financial Group for its reasonable
out-of-pocket expenses. The term of the Financial Services Agreement is for
eight years. Jones Financial Group and BCI have entered into a separate
agreement pursuant to which BCI is entitled to receive one-half of the net fees
earned (gross fees less reasonable and customary operating expenses) by Jones
Financial Group under the Financial Services Agreement.
During the fiscal year ended May 31, 1994, the Company paid Jones
Financial Group $500,000 of the $1,000,000 annual retainer. The remaining
$500,000 was paid in fiscal 1995. Any amounts due to Jones Financial Group by
the Company are applied against the retainer. The Company paid Jones Financial
Group an advisory fee of L.414,854 (approximately $632,600) in fiscal 1995 for
its services to the Company in connection with the Company's transfer of all of
its interests in its cable/telephony properties in the United Kingdom to Bell
Cablemedia. In connection with the closing of the purchase by BCI of a 30%
equity interest in the Company, the Company agreed to pay Jones Financial Group
a fee of $2,000,000, which was paid in December 1994. In addition, the Company
paid BCI $600,000 to cover expenses incurred by BCI in connection with the
acquisition by BCI of its 30% equity interest in the Company.
THE JONES GROUP, LTD.
The Jones Group, Ltd. ("Jones Group") performs brokerage services for
the Company and its managed partnerships and collects fees for these services
in connection with acquisitions from and sales to unaffiliated parties of cable
television properties. Jones Group was owned by Jones Spacelink, Ltd. (80%)
and the Company (20%), but as of December 20, 1994, is 100% owned by the
Company. Brokerage fees paid to Jones Group by the Company and its managed
partnerships during the fiscal year ended May 31, 1994 totaled $680,000, all of
which was paid by the Company.
20
<PAGE> 23
SUPERAUDIO
Cable television systems owned by the Company and its managed
partnerships receive stereo audio programming from Superaudio, a joint venture
owned 50% by a subsidiary of Jones Galactic Radio, Inc. (which is now
controlled by the Company) and 50% by an unrelated party, for a fee based upon
the number of subscribers receiving the programming. Payments to Superaudio
with respect to programming provided to the cable television systems owned by
the Company and its managed partnerships totaled approximately $636,700 in
fiscal 1994, of which approximately $151,800 was paid by the Company.
JONES GLOBAL GROUP, INC.
Jones Global Group, Inc. is a corporation owned 38% by the Company and
62% by International ("Global Group"). Global Group and the Company owned
interests in cable/telephony properties in the United Kingdom. In July 1994,
the Company and Global Group transferred all of their interests in their
cable/telephony properties in the United Kingdom to Bell Cablemedia plc, a
public limited company incorporated under the laws of England and Wales ("Bell
Cablemedia") in exchange for American Depositary Shares ("ADSs") representing
Ordinary Shares of Bell Cablemedia. The Company and Global Group,
respectively, paid advisory fees of L.414,854 (approximately $632,600) and
L.251,812 (approximately $384,000) to Jones Financial Group, for its services
to the Company and Global Group in connection with the aforementioned
transactions. The allocation of these advisory fees was based on the ratio of
ADSs of Bell Cablemedia received by the Company and Global Group. As a result
of these transactions, the Company and Global Group no longer own any direct
interest in cable/telephony properties in the United Kingdom. The Company and
Global Group do, however, own indirect interests in cable/telephony properties
in the United Kingdom through their respective investments in Bell Cablemedia.
The Company directly and indirectly owns approximately 11.6% of Bell Cablemedia
through its direct ownership of 6,225,796 ADSs and its indirect ownership of
974,162 ADSs, representing 38% of the 2,563,584 ADSs owned by Global Group.
Messrs. Glenn R. Jones, a director and Chief Executive Officer of the Company
and Global Group, and Patrick J. Lombardi, a director and officer of Global
Group, have become members of the board of directors of Bell Cablemedia.
JONES SPANISH HOLDINGS, INC.
Jones Spanish Holdings, Inc. ("Spanish Holdings"), is owned 38% by the
Company and 62% by International, and has explored cable television system
acquisition, development and operation opportunities in Spain. In October
1994, Spanish Holdings and Jones International Spanish Investments, Inc.
transferred all of their interests in their cable/telephony properties in Spain
to Bell Cablemedia in exchange for a total of 190,148 ADSs representing 950,740
Ordinary Shares of Bell Cablemedia. Such shares subsequently were transferred
to the Company in repayment of advances made to finance the Spanish operations.
As a result of
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this transaction, the Company and its affiliates no longer own any direct
interest in cable/telephony properties in Spain.
____________________
In addition to the foregoing described transactions, the Company has
engaged in certain transactions in connection with the acquisition by BCI of
shares of the Company's Class A Common Stock. Set forth below is a description
of these transactions.
On December 20, 1994, contemporaneous with the closing of the
acquisition by BCI of shares of the Company's Class A Common Stock,
1. International and Mr. Glenn R. Jones and certain affiliates of
International (collectively, the "Grantors") entered into option agreements
providing for the grant of options to Morgan Guaranty Trust Company of New
York, acting as agent for BCI, to purchase all of the shares of the Company's
Common Stock held, directly or indirectly, by International, Mr. Jones and the
affiliates of International in consideration for the payment by BCI to the
Grantors of an option deposit of $19.00 for each share of the Company's Common
Stock owned by Grantors on the date of the execution of the option agreements.
This option deposit payment resulted in the Grantors receiving approximately
$54,684,869 from BCI.
2. The Company entered into an Employment Agreement with Mr.
Glenn R. Jones (the "Employment Agreement") pursuant to which the Company
agreed to employ Mr. Jones as Chief Executive Officer of the Company for a
period of up to eight years. Under the terms of the Employment Agreement, Mr.
Jones is to receive a base compensation of $2,500,000 in fiscal year 1995
(which approximates his fiscal year 1994 combined compensation from the Company
and Jones Spacelink, Ltd.), with an annual cost of living index based
adjustment. In addition, Mr. Jones is entitled to participate in the Company's
bonus, stock option and other employee plans at a level generally commensurate
with his previous participation. No other employee of the Company has an
employment agreement with the Company.
3. BCI, International, Glenn R. Jones and the Company entered
into certain arrangements concerning the operation and governance of the
Company and other related matters pursuant to a Shareholders Agreement
("Shareholders Agreement"). Certain provisions of the Shareholders Agreement
grant to Mr. Jones, International and their affiliates the right to use a
number of channels on cable television systems now or hereafter owned or
controlled by the Company for distribution of their programming networks for a
period of 15 years after closing; BCI was also granted a similar right for a
fewer number of channels. International was granted certain non-exclusive
rights to provide the Company with goods and services on competitive terms
which will, at the Company's discretion, be pursuant to competitive bidding or
other processes. BCI was granted identical rights pursuant to a Supply and
Services Agreement among the Company and BCI.
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<PAGE> 25
PROPOSAL 2. TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES
OF CLASS A COMMON STOCK
The Board of Directors has adopted a resolution setting forth a
proposal to amend the Company's Articles of Incorporation to increase the
number of authorized shares of Class A Common Stock from 30,000,000 shares to
60,000,000 shares and directing that it be submitted to a vote at the Annual
Meeting of Shareholders.
The resolution, as adopted by the Board of Directors, is as follows:
RESOLVED, that the Board of Directors of the Corporation
recommends that the first sentence of the Fifth Article shall be
amended by striking out and eliminating the sentence in its entirety,
and substituting in its stead the following:
"The number of shares which this Corporation shall
have authority to issue shall be an aggregate of 65,550,000
shares, which shall be divided into two classes: 5,550,000
shares of Common Stock, each share having a par value of $.01,
and 60,000,000 shares of Class A Common Stock, each share
having a par value of $.01."
FURTHER RESOLVED, that the foregoing proposal be submitted to
the shareholders of the Corporation at the Annual Meeting of
Shareholders.
On May 31, 1994, the Company entered into an Exchange Agreement and
Plan of Reorganization and Liquidation (the "Spacelink Agreement") providing
for the acquisition by the Company of substantially all of the assets of Jones
Spacelink, Ltd., an affiliate, in exchange for the issuance by the Company of
3,900,000 shares of the Company's Class A Common Stock. Also on May 31, 1994,
the Company entered into a Stock Purchase Agreement (the "BCI Agreement") with
BCI pursuant to which, among other matters, (i) the Company agreed to issue up
to 7,414,300 shares of the Company's Class A Common Stock and (ii) BCI agreed
to invest up to an additional $141,106,750 for shares of the Company's Class A
Common Stock to maintain its 30% equity interest in the event the Company makes
future equity offerings. At the same time, BCI, International, Mr. Jones and
the Company entered into a Shareholders Agreement pursuant to which the Company
granted to BCI the right to purchase its ownership percentage of securities
which the Company may sell or otherwise issue from time to time (other than
shares of Class A Common Stock issued pursuant to any convertible debt or
debentures). A material reason for the Company entering into the BCI Agreement
was to provide a significant infusion of equity capital into the Company to
implement the Company's plans of continued growth through the acquisition of
cable television systems and to increase the Company's ability to access the
public equity and debt markets.
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<PAGE> 26
Other than the issuances of the Company's Class A Common Stock
described in the foregoing paragraph, the approximately 1,200,000 shares of the
Company's Class A Common Stock that are subject to options granted by the
Company, and 1,282,649 shares of the Company's Class A Common Stock that may be
subject to conversion under senior debt securities of the Company, the Company
has not entered into any commitments or agreements to issue additional shares
of Class A Common Stock. However, the Board of Directors unanimously believes
that additional shares are necessary for the Company to realize the full
benefits of the BCI Agreement and to enable the Company to promptly and
appropriately respond to business opportunities, such as opportunities to raise
additional equity capital or to finance acquisitions with Class A Common Stock,
and to take corporate action on, for example, stock dividends, stock splits and
employee benefit plans. Given the number of shares of Class A Common Stock
currently available for issuance, which is approximately 1,400,000 shares, the
Company will not be able to effect certain of these transactions without
increasing the authorized number of shares of Class A Common Stock. The cost,
prior notice requirements and delay involved in obtaining shareholder approval
at the time that corporate action may become desirable could eliminate the
opportunity to effect the action or reduce the expected benefits.
The additional authorized shares of Class A Common Stock, as is the
case with the presently authorized shares of Class A Common Stock will not be
subject to preemptive rights, except for certain rights granted by the Company
to BCI as described above, and, as a result thereof, the shareholders of the
Company, except BCI, will not necessarily be able to obtain additional shares
of the Class A Common Stock upon the same terms as those upon which the Company
may offer such shares to others. Subject to BCI's right to consent to certain
issuances of the Company's capital stock, as provided in the Shareholders
Agreement, the additional shares may be issued by the Board of Directors
without further authorization by the shareholders except in the case of certain
mergers or consolidations, or other transactions involving stock issuances that
require shareholder approval under Colorado law. It is possible that under
certain circumstances the issuance of all or some of such shares may result in
dilution of shareholders' voting rights and per share equity in the earnings
and assets of the Company. Shareholders should consider that the possible
impact on dividends is likely to be minimal in view of the fact that the
Company has never paid cash dividends and does not intend to pay dividends in
the foreseeable future. The Company intends to retain earnings for use in
financing its future growth.
The authorization of additional shares is not intended to serve as an
anti-takeover defense. However, such authorization would have such an effect
if the Board of Directors should choose to place authorized but unissued shares
in the control of a person or persons friendly to the Board.
As of March 1, 1995, 1,388,678 shares of Class A Common Stock were
authorized but unissued and not reserved for issuance.
The amendment to the Company's Articles of Incorporation requires the
affirmative vote of the holders of two-thirds of the shares of the Class A
Common Stock, two-thirds of the
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<PAGE> 27
shares of the Common Stock and two-thirds of the total shares entitled to vote
thereon. Shareholders shall be entitled to one vote for each share of Class A
Common Stock and one vote for each share of Common Stock held. Mr. Glenn R.
Jones and Bell Canada International Inc., beneficially own, respectively, 10%
and 38% of the shares of the Company's Class A Common Stock, and Mr. Jones
beneficially owns 56% of the Company's Common Stock. Mr. Jones and Bell Canada
International Inc. have indicated that such shares will be voted in favor of
this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
PROPOSAL 3. PROPOSAL TO RATIFY SELECTION OF AUDITORS
The Board of Directors of the Company has approved the selection of
the firm of Arthur Andersen & Co., certified public accountants, 717
Seventeenth Street, Denver, Colorado, to serve as the independent auditors for
the Company for the fiscal year ending May 31, 1995. The firm of Arthur
Andersen & Co. served as the Company's independent accountants and examined the
Company's financial statements for the fiscal year ended May 31, 1994.
The Company has been informed by Arthur Andersen & Co. that neither
that firm nor any of its partners has any financial interest, direct or
indirect, in the Company, and that neither that firm nor any of its partners
has had any connection with the Company in the capacity of promoter, or
underwriter, voting trustee, directors, officer or employee.
A representative of Arthur Andersen & Co. is expected to be present at
the Annual Meeting and will be given an opportunity to make a statement if he
or she so desires, and will be available to respond to appropriate questions
from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
ANNUAL REPORT AND FINANCIAL INFORMATION
Each shareholder of record as of the Record Date has been mailed a
copy of the Company's Annual Report to Shareholders for the fiscal year ended
May 31, 1994.
The Company will furnish without charge a copy of the Company's Annual
Report on Form 10-K (without exhibits) filed with the United States Securities
and Exchange Commission, including the financial statements and financial
statement schedules, to any person requesting a copy in writing and stating
that he was the beneficial owner of shares of Class A Common Stock or Common
Stock of the Company on the Record Date. Requests and inquiries should be
addressed to
25
<PAGE> 28
Ms. Kelly Swindell
Jones Intercable, Inc.
9697 East Mineral Avenue
P.O. Box 3309
Englewood, Colorado 80155-3309
Neither the Company's Annual Report to Shareholders nor the Form 10-K
Report is to be regarded as proxy soliciting material or as a communication by
means of which a solicitation is to be made.
By Order of the Board of Directors,
Elizabeth M. Steele
Vice President, Secretary
and General Counsel
_________ __, 1995
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<PAGE> 29
PROXY
JONES INTERCABLE, INC.
9697 EAST MINERAL AVENUE
P.O. BOX 3309
ENGLEWOOD, COLORADO 80155-3309
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Glenn R. Jones, James B. O'Brien and
Elizabeth M. Steele, and each of them, as proxies, with the power to appoint
his or her substitute, and hereby authorizes them to represent and to vote as
designated below all the shares of Class A Common Stock and Common Stock of
Jones Intercable, Inc. held of record by the undersigned on __________, 1995 at
the Annual Meeting of Shareholders to be held at the corporate offices of the
Company, 9697 East Mineral Avenue, Englewood, Colorado, at __:00 __.m.,
Mountain Time, on __________, 1995, and at any adjournment thereof.
1. ELECTION OF DIRECTORS
TO BE COMPLETED ONLY BY HOLDERS OF CLASS A COMMON STOCK
FOR nominees listed below (Except as marked to the contrary below) _____
WITHHHOLD AUTHORITY to vote for the nominees listed below _____
William E. Frenzel, Donald R. Jacobs, Philip R. Ladouceur and
Robert B. Zoellick
INSTRUCTION: To withhold authority to vote for any individual nominee listed
above, write that nominee's name in the space provided below.
________________________________________________________________________________
TO BE COMPLETED ONLY BY HOLDERS OF COMMON STOCK
FOR nominees listed below (Except as marked to the contrary below) _____
WITHHOLD AUTHORITY to vote for the nominees listed below _____
Glenn R. Jones, Derek H. Burney, Christine Jones Marocco, James J. Krejci,
James B. O'Brien, Daniel E. Somers, Raymond L. Vigil, Robert S. Zinn and
David K. Zonker
INSTRUCTION: To withhold authority to vote for any individual nominee listed
above, write that nominee's name in the space provided below.
________________________________________________________________________________
(continued on other side)
<PAGE> 30
2. Approval of an Amendment to the Corporation's Articles of Incorporation
to increase the number of authorized shares of the Corporation's Class A
Common Stock from 30,000,000 shares to 60,000,000 shares.
3. RATIFICATION OF APPOINTMENT OF ARTHUR ANDERSEN & CO. AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDED MAY 31, 1995.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote "FOR" this Proposal.
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE DIRECTORS NAMED IN ITEM 1 AND "FOR" PROPOSALS 2 and 3.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW.
When shares are held by joint tenants, both should sign. When signing as
attorney, as executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full corporate name
by President or other authorized officer. If a partnership, please sign
in partnership name by authorized person.
Dated: ______________________________________________________________________
Signature ___________________________________________________________________
________________________________________________________________________________
Signature if Jointly Held
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
