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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended February 28, 1995
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ____________ to ___________
Commission File Number 0-8947
JONES INTERCABLE, INC.
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Exact name of registrant as specified in charter
Colorado #84-0613514
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State of incorporation I.R.S. employer I.D.#
9697 East Mineral Avenue, Englewood, Colorado 80112
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Address of principal executive office
(303) 792-3111
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Registrant's telephone number
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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Shares outstanding of each of the registrant's classes of Common Stock, as of
April 3, 1995.
5,113,021 - Common Stock, $.01 par value
26,158,305 - Class A Common Stock, $.01 par value
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JONES INTERCABLE, INC. AND SUBSIDIARIES
I N D E X
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Page
Number
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PART I. FINANCIAL INFORMATION.
Item 1. Financial Statements
Unaudited Consolidated Balance Sheets
February 28, 1995 and May 31, 1994 3
Unaudited Consolidated Statements of Operations
Three and Nine Months Ended February 28, 1995 and 1994 5
Unaudited Consolidated Statements of Cash Flows
Nine Months Ended February 28, 1995 and 1994 6
Notes to Unaudited Consolidated Financial Statements
February 28, 1995 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 12
PART II. OTHER INFORMATION.
Item 6. Exhibits and Reports on Form 8-K 18
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UNAUDITED CONSOLIDATED
BALANCE SHEETS Jones Intercable, Inc.
As of February 28, 1995 and May 31, 1994 and Subsidiaries
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February 28, May 31,
1995 1994
ASSETS (Stated in Thousands)
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CASH AND CASH EQUIVALENTS $ 82,809 $ 4,239
RECEIVABLES:
Trade receivables, net of allowance for
doubtful accounts of $915,800 in February
and $393,900 in May 9,475 5,563
Affiliated entities 15,821 15,611
Other 3,604 715
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 350,231 292,381
Less-accumulated depreciation (149,807) (121,235)
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200,424 171,146
Franchise costs, net of accumulated
amortization of $102,620,000 in February
and $76,113,800 in May 78,641 73,769
Cost in excess of interests in net assets
purchased, net of accumulated amortization
of $6,990,000 in February and $5,918,600 in May 61,630 39,306
Noncompete agreement, net of accumulated
amortization of $1,216,000 in February and
$739,900 in May 429 412
Subscriber lists, net of accumulated
amortization of $38,112,000 in February and
$30,421,500 in May 15,384 18,524
Investments in cable television partnerships
and affiliates 37,128 34,346
Investment in foreign cable television properties 60,978 57,752
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TOTAL INVESTMENT IN CABLE TELEVISION PROPERTIES 454,614 395,255
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DEFERRED TAX ASSET, net of valuation
allowance of $32,391,000 in February and
$37,785,000 in May 3,862 3,862
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS 30,581 23,240
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TOTAL ASSETS $ 600,766 $ 448,485
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The accompanying notes to unaudited consolidated financial
statements are an integral part of these balance sheets.
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UNAUDITED CONSOLIDATED
BALANCE SHEETS Jones Intercable, Inc.
As of February 28, 1995 and May 31, 1994 and Subsidiaries
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February 28, May 31,
1995 1994
LIABILITIES AND SHAREHOLDERS' INVESTMENT (Stated in Thousands)
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LIABILITIES:
Accounts payable and accrued liabilities $ 41,782 $ 37,260
Subscriber prepayments and deposits 5,959 5,275
Subordinated debentures and other debt 281,447 280,907
Credit facility - 63,000
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TOTAL LIABILITIES 329,188 386,442
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SHAREHOLDERS' INVESTMENT:
Class A Common Stock, $.01 par value, 30,000,000
shares authorized; 26,132,188 and 14,817,088 shares
issued at February 28 and May 31 261 148
Common Stock, $.01 par value, 5,550,000 shares
authorized; 5,113,021 and 4,913,021 shares issued
at February 28 and May 31 51 49
Additional paid-in capital 394,576 175,316
Accumulated deficit (123,310) (113,470)
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TOTAL SHAREHOLDERS' INVESTMENT 271,578 62,043
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TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $ 600,766 $ 448,485
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The accompanying notes to unaudited consolidated financial
statements are an integral part of these balance sheets.
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UNAUDITED CONSOLIDATED
STATEMENTS OF OPERATIONS
For the three and nine months ended February 28, Jones Intercable, Inc.
1995 and 1994 and Subsidiaries
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For the Three Months Ended For the Nine Months Ended
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February 28, February 28, February 28, February 28,
1995 1994 1995 1994
(In Thousands Except Per Share Data)
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REVENUES:
Cable Television Revenue
Subscriber service fees $ 31,808 $ 26,079 $ 84,104 $ 77,131
Management fees 5,064 4,334 14,130 12,970
Non-cable revenue 6,445 2,079 11,847 5,824
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TOTAL REVENUES 43,317 32,492 110,081 95,925
COSTS AND EXPENSES:*
Cable Television Expenses
Operating 19,030 13,464 48,746 41,433
General and Administrative 1,953 2,431 5,332 6,646
Non-cable operating, general and administrative 6,931 2,363 12,821 6,024
Depreciation and amortization 12,022 11,063 33,661 32,045
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OPERATING INCOME 3,381 3,171 9,521 9,777
OTHER INCOME (EXPENSE):
Interest expense (9,042) (9,371) (27,371) (26,921)
Gain on sale of assets - - 15,496 -
Equity in losses of affiliated entities (1,309) (999) (2,226) (3,078)
Interest income 2,795 955 4,992 2,731
Other, net 23 (277) 514 (658)
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INCOME (LOSS) BEFORE INCOME TAXES (4,152) (6,521) 926 (18,149)
Income tax benefit - - - -
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NET INCOME (LOSS) $ (4,152) $ (6,521) $ 926 $ (18,149)
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NET INCOME (LOSS) PER CLASS A
COMMON AND COMMON SHARE $ (.15) $ (.38) $ .04 $ (1.06)
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AVERAGE NUMBER OF CLASS A
COMMON AND COMMON SHARES
OUTSTANDING 28,697 17,188 22,686 17,167
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* Of the total operating, general and administrative expenses, approximately
$565,800 and $1,125,200 for the three months ended February 28, 1995 and 1994,
respectively, and approximately $2,194,800 and $3,497,400 for the nine months
ended February 28, 1995 and 1994, respectively, represent related party
expenses, principally related to rent and information services.
The accompanying notes to unaudited consolidated financial
statements are an integral part of these statements.
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UNAUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS Jones Intercable, Inc.
For the nine months ended February 28, 1995 and 1994 and Subsidiaries
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For the Nine Months Ended
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February 28, February 28,
1995 1994
(Stated in Thousands)
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 926 $ (18,149)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Gain on sale of assets (15,496) -
Class A Common Stock option expense 197 87
Depreciation and amortization 33,661 32,045
Increase in trade receivables (93) (492)
Equity in losses of affiliated entities 2,226 3,078
Increase in other receivables,
deposits, prepaid expenses and other assets (4,371) (1,344)
Increase in accounts payable,
accrued liabilities and subscriber
prepayments and deposits 1,381 (299)
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Net cash provided by operating activities 18,431 14,926
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CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in Mind Extension University (4,242) (11,618)
Purchase of property and equipment (26,888) (17,195)
Purchase of cable television system - (27,880)
Sale of cable television system 35,587 -
Investments in cable television partnerships
and affiliates (6,459) (22,943)
Acquisition costs (5,187) -
Other, net 1,880 2,390
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Net cash used in investing activities (5,309) (77,246)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt (154,500) -
Proceeds from borrowings 16,500 69,000
BCI Investment 203,893
Equity acquisition fees (2,000) -
Proceeds from the issuance of Stock 1,225 283
Increase in accounts receivable from
affiliated entities (210) (4,027)
Other, net 540 (162)
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Net cash provided by financing activities 65,448 65,094
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Increase In Cash and Cash Equivalents 78,570 2,774
Cash and Cash Equivalents, beginning of period 4,239 1,131
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Cash and Cash Equivalents, end of period $ 82,809 $ 3,905
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</TABLE>
The accompanying notes to unaudited consolidated financial
statements are an integral part of these statements.
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NOTES TO UNAUDITED CONSOLIDATED Jones Intercable, Inc.
FINANCIAL STATEMENTS and Subsidiaries
(1) This Form 10-Q is being filed by Jones Intercable, Inc. (the
"Company") in conformity with the SEC requirements for unaudited financial
statements and does not contain all of the necessary footnote disclosures
required for a fair presentation of the Balance Sheets, Statements of
Operations and Statements of Cash Flows in conformity with generally accepted
accounting principles. However, in the opinion of management, this data
includes all adjustments, consisting only of normal recurring accruals,
necessary to present fairly the Company's financial position at February 28,
1995 and May 31, 1994 and its results of operations and cash flows for the
three and nine months ended February 28, 1995 and 1994. Results of operations
for these periods are not necessarily indicative of results to be expected for
the full year.
(2) On December 19, 1994, the shareholders of the Company approved an
Exchange Agreement and Plan of Reorganization and Liquidation dated May 31,
1994, as amended, between the Company and Jones Spacelink, Ltd. ("Spacelink")
providing for the acquisition by the Company of substantially all of the assets
of Spacelink and the assumption by the Company of all of the liabilities of
Spacelink. On December 20, 1994, the Company acquired all of the assets of
Spacelink (except for the 2,859,240 shares of the Company's Common Stock owned
by Spacelink) and assumed all of the liabilities of Spacelink (other than
liabilities with respect to shareholders exercising dissenters' rights) in
exchange for 3,900,000 shares of the Company's Class A Common Stock. Spacelink
is effecting its complete liquidation and is distributing the aforesaid shares
of the Company's Class A Common Stock and Common Stock to its shareholders,
other than to any dissenting shareholders. The Company incurred costs related
to this transaction, totaling $5,187,000 at February 28, 1995, which have been
considered part of the purchase price of Spacelink. The pro forma effect of
this transaction, which has been accounted for using the purchase method, on
the Company's results of operations is presented in the following unaudited
tabulation:
Nine months ended February 28, 1995:
(In thousands except per share data)
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As
Reported Adjustments Pro Forma
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Revenues $ 110,081 $ 19,266 $ 129,347
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Operating Income $ 9,521 $ (2,875) $ 6,646
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Net Income (Loss) $ 926 $ (7,307) $ (6,381)
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Net Income (loss) per Class A Common
and Common Share $ .04 $ (.28)
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Nine months ended February 28, 1994:
(In thousands except per share data)
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As
Reported Adjustments Pro Forma
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Revenues $ 95,925 $ 25,325 $ 121,250
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Operating Income $ 9,777 $ (1,551) $ 8,226
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Net Loss $ (18,149) $ (3,565) $ (21,714)
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Net Loss per Class A Common
and Common Share $ (1.06) $ (1.26)
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(3) In May 1994, the Company and Bell Canada International Inc. ("BCI")
entered into an agreement whereby BCI agreed to acquire an approximate 30
percent economic interest in the Company through the purchase of Class A Common
Stock of the Company. On December 19, 1994, the shareholders of the Company
approved the agreement. Under the terms of the agreement, BCI is to invest
$400,000,000 in the Company over time. The original investment was made in two
installments: the purchase by BCI of 2,500,000 newly issued shares of Class A
Common Stock of the Company at $22 per share for $55,000,000 in the fourth
quarter of fiscal 1994, and the purchase by BCI of 7,414,300 newly issued
shares of Class A Common Stock of the Company at $27.50 per share for
$203,893,250 in the third quarter of fiscal 1995, resulting in BCI owning an
approximate 30 percent economic interest in the Company for a total
consideration of approximately $258,900,000. The $55,000,000 was used to
reduce amounts then outstanding under the Company's revolving credit facility.
A portion of the $203,893,250 was used to repay all amounts then outstanding
under the Company's and Spacelink's credit facilities of $38,000,000 and
$75,000,000, respectively, to pay fees of $2,000,000 to Jones Financial Group
Ltd. ("Jones Financial Group"), an affiliate of Jones International, Ltd.
("International") with the remainder being held for future needs. BCI also has
committed to invest up to an additional $141,100,000 to maintain its 30 percent
interest in the event the Company offers additional Class A Common Stock. BCI
has the right to maintain or increase its ownership by investing amounts beyond
the $400,000,000 commitment.
Also on December 20, 1994, International, which is wholly owned by
Glenn R. Jones, Chairman and Chief Executive Officer of the Company, as well as
certain subsidiaries of International, and Mr. Jones individually, granted BCI
options to acquire 2,878,151 shares of the Common Stock of the Company. Except
in limited circumstances, the option will only be exercisable during the eighth
year after December 20, 1994. The exercise of such options would result in BCI
holding a sufficient number of shares of the Common Stock of the Company to
enable BCI to elect 75 percent of the Company's Board of Directors. BCI also
has invested in a number of affiliates of International which are engaged in
the telecommunications and distribution businesses. BCI is a wholly owned
subsidiary of BCE Inc., Canada's largest telecommunications company.
(4) On January 7, 1994, the Company entered into an agreement with
Bresnan Communications Company ("Bresnan") to sell the Company's Gaston County,
North Carolina cable television system (the "Gaston System") to Bresnan for
$36,500,000, subject to normal closing adjustments. Closing on this
transaction occurred July 25, 1994. The Company paid The Jones Group, Ltd.
(the "Jones Group"), an affiliate, $912,500 for brokerage services related to
this sale. Prior to December 20, 1994, the Jones Group was owned 20% by the
Company and 80% by Spacelink. Upon the completion of the acquisition of the
assets of Spacelink, the Jones Group became a wholly owned subsidiary of the
Company. Proceeds from the sale of the Gaston System were used to repay
amounts then outstanding on the Company's credit facility. The Company
recognized a gain before income taxes of $15,496,400, or $.88 per share,
related to this transaction.
(5) 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
66,600 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
occur in the summer of 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. Funding for the Augusta System purchase is
expected to be provided from the net proceeds of the Senior Notes offering
discussed in note 9.
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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 existing 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. Funding for the Virginia Systems acquisition is
expected to be provided from the net proceeds from the Senior Notes offering
discussed in note 9 and from cash on hand.
(6) During fiscal 1992 and 1993, the Company invested $10,000,000 in Mind
Extension University, Inc., ("ME/U"), an affiliate of International that
provides distance educational programming through affiliated and unaffiliated
cable television systems, for 25% of the stock of ME/U, which also received
certain advertising avails and administrative and marketing considerations from
the Company. Through its acquisition of the assets of Spacelink, the Company
acquired an additional 13% interest in ME/U in December 1994. Spacelink had
acquired such interest in fiscal 1991 for $3,135,000. In fiscal 1993 and
fiscal 1994, the Company also made advances totaling $20,000,000 to ME/U. On
April 11, 1995, the Company agreed to convert its advances to ME/U into shares
of Class A Common Stock of Jones Education Networks, Inc. ("JEN"), the parent
company of ME/U. JEN is an affiliate of International and, in addition to its
51% ownership of ME/U, JEN owns an 81% interest in Jones Computer Network, Ltd.
The Company will own an approximate 17% interest in JEN.
(7) The Company entered into a license agreement with Jones Space
Segment, Inc. ("Space Segment"), an affiliate of International, to use a
non-preemptible transponder on a domestic communications satellite that Space
Segment currently leases. Under the 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
terms of the agreement, the Company agreed to pay Space Segment $200,000 per
month from January 1994 through March 1994 and the Company and PIN each agreed
to pay $100,000 per month beginning April 1994 and until the launch of JCN, in
September 1994. Thereafter the Company, PIN and JCN each paid $66,667 per
month. The Company recognized $572,000 and $2,100,000 of rental expense related
to these lease agreements during the nine months ended February 28, 1995 and
1994, respectively.
(8) The Company owns a 38% interest in Jones Global Group, Ltd. ("Jones
Global Group"), a Colorado corporation of which 62% is owned by International.
On July 22, 1994, Jones Global Group and certain of Jones Global Group's wholly
owned subsidiaries 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, in exchange for
3,663,584 American Depository Shares ("ADSs") representing 18,317,920 Ordinary
Shares of Bell Cablemedia. Also on July 22, 1994, the Company and certain of
its wholly owned subsidiaries transferred all of their interests in their
cable/telephony properties in the United Kingdom to Bell Cablemedia in exchange
for 6,035,648 ADSs representing 30,178,240 Ordinary Shares of Bell Cablemedia.
As a result of these transactions, the Company and Jones Global Group no longer
own any direct interest in cable/telephony properties in the United Kingdom.
Jones Spanish Holdings, Inc. ("Spanish Holdings") is an affiliate indirectly
owned 38% by the Company and 62% by International. On October 13, 1994,
Spanish Holdings and Jones International Spanish Investments, Inc., a
subsidiary of International, 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 will be transferred to the Company in repayment of advances
made to finance such affiliates' 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.
Prior to the closing of these transactions, Bell Cablemedia was
indirectly owned 80% by BCI and 20% by Cable and Wireless plc ("C&W"). The
Company's, Jones Global Group's and Spanish Holdings' agreement to contribute
their United Kingdom and Spanish holdings to Bell Cablemedia was contingent
upon the successful completion of Bell Cablemedia's initial public offering,
which closed on July 22, 1994. The initial offering price for the ADSs was
$17.00 per ADS. As part of the initial offering, Jones Global Group sold
1,100,000 ADSs providing net cash proceeds of $17,547,888 to Jones Global
Group.
The ADSs received by the Company and its affiliates are "restricted
securities" within the meaning of Rule 144 promulgated under the Securities Act
of 1933 (the "Securities Act"), and the Company and its affiliates will not be
able to sell their ADSs unless an exemption from registration under the
Securities Act is available or unless its ADSs are sold under the terms of a
shelf registration statement that is required to be available to the Company,
its affiliates and others for the three years following July 20, 1994.
The Company directly or indirectly owns approximately 11.6% of the
issued and outstanding shares of Bell Cablemedia. The Company and its wholly
owned subsidiaries own 6,225,796 ADSs. The Company also indirectly owns
974,162 ADSs, representing 38% of the 2,563,584 ADSs owned by Jones Global
Group and its wholly owned subsidiaries. In the aggregate, the Company's
direct and indirect investment in 7,199,958 ADSs had a quoted market value of
approximately $143,999,000, based on the quoted market price of $20.00 per ADS
on April 3, 1995. Due to the affiliated nature of the transactions and the
Company's indirect continuing interest in the UK properties, the investment in
Bell Cablemedia is reflected at the Company's cost. At February 28, 1995, the
Company's net investment in Bell Cablemedia totaled approximately $60,978,000.
The Company paid an advisory fee of L.414,854 (approximately
$632,600) to Jones Financial Group in fiscal 1995 for its services to the
Company in connection with the aforementioned United Kingdom transactions.
Jones Global Group paid an advisory fee of L.251,812 (approximately $384,000)
to Jones Financial Group for its services to Jones Global Group in connection
with the aforementioned United Kingdom transactions. Jones Financial Group is
owned by International and Glenn R. Jones.
(9) On June 18, 1993, the Company filed two shelf registration statements
with the Securities and Exchange Commission relating to $500,000,000 of Senior
Debt Securities, Senior Subordinated Debt Securities and Subordinated Debt
Securities and 6,000,000 shares of Class A Common Stock of the Company.
Pursuant to a stock offering, the Company sold 2,500,000 shares of Class A
Common Stock to BCI in the fourth quarter of fiscal 1994. On March 23, 1995,
the Company completed the sale of $200 million of 9 5/8% Senior Notes due 2002.
The Senior Notes mature on March 15, 2002. The Senior Notes bear interest from
the date of issuance at the rate of 9 5/8% per annum, payable semi-annually on
March 15 and September 15 of each year, commencing September 15, 1995. The
Senior Notes are not redeemable prior to maturity and are not subject to any
sinking fund. The Senior Notes are senior unsecured obligations of the
Company, ranking equally with all other senior unsecured obligations of the
Company. The Company anticipates that a portion of the net proceeds of
$196,500,000 from the Senior Notes will be used for the Company's acquisition
of the Augusta System. The remaining proceeds, together with cash on hand, are
expected to be used for the Company's acquisition of the Virginia Systems. The
proceeds from the sale of additional securities, if any, would be added to the
general funds of the Company and may be used to make acquisitions of cable
television systems or interests therein.
(10) Net income (loss) per share of Class A Common Stock and Common Stock
is based on the weighted average number of shares outstanding during the
periods. Common stock equivalents were not significant to the computation of
primary earnings (loss) per share. Conversion of the Convertible Subordinated
Debentures to Class A Common Stock was assumed for calculation of fully diluted
earnings per share and is not presented for the periods in which the
calculation was anti-dilutive.
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(11) For purposes of the Consolidated Statements of Cash Flows, the
Company considers all highly liquid investments purchased with a maturity of
three months or less to be cash equivalents. No amounts were paid or received
relating to income taxes during the nine months ended February 28, 1995 and
1994. Approximately $29,377,000 and $30,592,700 of interest expense was paid
during the nine months ended February 28, 1995 and 1994, respectively. As
described in Note 8, on July 22, 1994, the Company and certain of its wholly
owned subsidiaries transferred all of their interests in their cable/telephony
properties in the United Kingdom to Bell Cablemedia plc, in exchange for
6,035,648 ADSs representing 30,178,240 Ordinary Shares of Bell Cablemedia. On
October 13, 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. As described in Note 2, on
December 20, 1994, the Company acquired substantially all of the assets of
Spacelink and assumed all of the liabilities of Spacelink in exchange for
3,900,000 shares of the Company's Class A Common Stock. There were no other
material non-cash investing or financing transactions recorded during the first
nine months of fiscal 1995 and 1994.
(12) Due to an amendment to the Colorado Business Corporation Act
effective July 1, 1994, the Company changed its accounting for treasury stock.
Shares held in treasury have been retired and classified as authorized but
unissued shares.
(13) Certain prior period amounts have been reclassified to conform to the
current period presentation.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
The Company intends to grow by implementing a balanced strategy
directed at acquiring cable television systems from Company-managed limited
partnerships and from third parties. The Company also intends to maintain and
enhance the value of its current cable television systems through capital
expenditures. Such expenditures will include, among others, cable television
plant extensions and the upgrade and rebuild of certain systems. Such
acquisitions and capital expenditures are subject to the availability of cash
generated from operations, debt and/or equity financing. The capital resources
to accomplish these strategies are expected to be provided by the items
discussed below.
In May 1994, the Company and Bell Canada International Inc. ("BCI")
entered into an agreement whereby BCI agreed to acquire an approximate 30
percent economic interest in the Company through the purchase of Class A Common
Stock of the Company. The shareholders of the Company approved the transaction
on December 19,1994. Under the terms of the agreement, BCI will invest $400
million over time. To date, BCI has purchased 9,914,300 shares of the
Company's Class A Common Stock for approximately $258,900,000 resulting in BCI
owning an approximate 30 percent economic interest in the Company. The Company
used a portion of the proceeds from BCI's investments to repay outstanding debt
balances on the Company's and Spacelink's credit facilities, with the remainder
being held for future needs. BCI has committed to invest an additional
$141,100,000 to maintain its 30 percent interest in the event the Company
offers additional Class A Common Stock. BCI has the right to maintain or
increase its ownership by investing amounts beyond the $400,000,000 commitment.
The Company currently has two effective shelf registration statements
relating to $500,000,000 of debt securities and 6,000,000 shares of Class A
Common Stock of the Company. The Company may sell securities under such shelf
registration statements based on market conditions and financial needs of the
Company. Pursuant to a stock offering, the Company sold 2,500,000 shares of
Class A Common Stock to BCI in the fourth quarter of fiscal 1994. On March 23,
1995, the Company completed the sale of $200 million of 9 5/8% Senior Notes due
2002. The Company anticipates that a portion of the net proceeds from the
Senior Notes will be used for the acquisition of the cable television system
serving the areas in and around Augusta, Georgia (the "Augusta System") as
discussed below. The remaining proceeds, together with cash on hand, are
expected to be used to acquire the cable television systems serving Manassas,
Manassas Park, Haymarket and portions of Price William County, all in the State
of Virginia (the "Virginia Systems"). The proceeds from the sale of additional
securities, if any , would be added to the general funds of the Company and may
be used to make acquisitions of cable television systems or interests therein.
On December 8, 1992, the Company entered into a $300,000,000 reducing
revolving credit agreement with a number of commercial banks. The amount of
borrowings available under this agreement remains at $300,000,000 through May
31,1995, after which availability is reduced quarterly until expiration on
November 30, 2000. As of February 28, 1995, no amounts were outstanding under
this credit agreement. Interest on amounts outstanding under the credit
agreement range from LIBOR plus .75% to LIBOR plus 1.625% depending upon
whether certain financial ratios have been achieved. For the nine months ended
February 28, 1995, the Company's effective interest rate on amounts outstanding
under the credit agreement was 7.51%.
During the nine months ended February 28, 1995, the Company generated
approximately $18,400,000 from operating activities. Such funds were
principally used to fund capital expenditures. The Company's cash balance at
February 28, 1995, was $82,809,000. Such balance reflects the remaining cash,
after repaying certain debt amounts, from the investments in the Company by
BCI. On March 23, 1995, the Company
-12-
<PAGE> 13
completed the sale of $200 million of Senior Notes. Upon completion of this
offering, the Company's cash balance was approximately $281,000,000.
From time to time, the Company has made loans to its managed limited
partnerships, although it is not required to do so. As of February 28, 1995,
the Company had advanced funds to various managed partnerships and other
affiliates of the Company totaling approximately $15,821,000, an increase of
approximately $210,000 over the amount advanced at May 31, 1994. A significant
portion of these advances represent funds for capital expansion and
improvements of properties owned by partnerships where additional credit
sources were not then available to the partnerships. These advances reduce the
Company's available cash and its liquidity. The Company anticipates the
repayment of these advances over time. These advances bear interest at rates
equal to the Company's weighted average cost of borrowing.
The Company has sufficient liquidity from cash on hand, cash
generated from operations, the net proceeds from the $200 million Senior Notes
and availability under its credit facility to meet its current needs.
In conjunction with the Company's acquisition strategy, the Company
has entered into the following agreements:
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
66,600 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
occur in the summer of 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.
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 existing 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.
The Company purchased property, plant and equipment totaling
approximately $26,888,000 during the nine months ended February 28, 1995. Such
expenditures were principally the result of the following: (a) the upgrade and
rebuild of the cable plant in the Alexandria, Virginia; North Augusta, South
Carolina and Anne Arundel, Maryland systems; (b) new extension projects, drop
materials and various maintenance projects in the Pima County, Arizona; Anne
Arundel, Maryland and Charles County, Maryland systems; and (c) converters and
drop materials in the Walnut Valley and Oxnard, California systems. Estimated
capital expenditures for the
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<PAGE> 14
remainder of fiscal 1995 are approximately $9,000,000. Funding for such
expenditures is expected to be provided by cash on hand and cash generated from
operations.
On December 19, 1994, the shareholders of the Company approved an
Exchange Agreement and Plan of Reorganization and Liquidation dated May 31,
1994, as amended, between the Company and Jones Spacelink, Ltd. ("Spacelink")
providing for the acquisition by the Company of substantially all of the assets
of Spacelink and the assumption by the Company of all of the liabilities of
Spacelink. On December 20, 1994, the Company acquired all of the assets of
Spacelink (except for the 2,859,240 shares of the Company's Common Stock owned
by Spacelink) and assumed all of the liabilities of Spacelink (other than
liabilities with respect to shareholders exercising dissenters' rights) in
exchange for 3,900,000 shares of the Company's Class A Common Stock. Spacelink
is effecting its complete liquidation and is distributing the aforesaid shares
of the Company's Class A Common Stock and Common Stock to its shareholders,
other than to any dissenting shareholders. The Company incurred costs related
to this transaction, totaling $5,187,000 at February 28, 1995, which have been
considered part of the purchase price of Spacelink. The Company has accounted
for this transaction using the purchase method.
The Company owns a 38% interest in Jones Global Group, Ltd. ("Jones
Global Group"), a Colorado corporation of which 62% is owned by International.
On July 22, 1994, Jones Global Group and certain of Jones Global Group's
wholly- owned subsidiaries 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, in
exchange for 3,663,584 American Depository Shares ("ADSs") representing
18,317,920 Ordinary Shares of Bell Cablemedia. Also on July 22, 1994, the
Company and certain of its wholly-owned subsidiaries transferred all of their
interests in their cable/telephony properties in the United Kingdom to Bell
Cablemedia in exchange for 6,035,648 ADSs representing 30,178,240 Ordinary
Shares of Bell Cablemedia. As a result of these transactions, the Company and
Jones Global Group no longer own any direct interest in cable/telephony
properties in the United Kingdom. Jones Spanish Holdings, Inc. ("Spanish
Holdings") is an affiliate indirectly owned 38% by the Company and 62% by
International. On October 13, 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 will be transferred to the Company in repayment of advances
made to finance such affiliates' Spanish operations. As a result of this
transaction, the Company and its affiliates no longer own any direct interest
in cable/telephony properties in Spain.
During fiscal 1992 and 1993, the Company invested $10,000,000 in Mind
Extension University, Inc., ("ME/U"), an affiliate of International that
provides distance educational programming through affiliated and unaffiliated
cable television systems, for 25% of the stock of ME/U, which also received
certain advertising avails and administrative and marketing considerations from
the Company. Through its acquisition of the assets of Spacelink, the Company
acquired an additional 13% interest in ME/U in December 1994. Spacelink had
acquired such interest in fiscal 1991 for $3,135,000. In fiscal 1993 and
fiscal 1994, the Company also made advances totaling $20,000,000 to ME/U. On
April 11, 1995, the Company agreed to convert its advances to ME/U into shares
of Class A Common Stock of Jones Education Networks, Inc. ("JEN"), the parent
company of ME/U. JEN is an affiliate of International and, in addition to its
51% ownership of ME/U, JEN owns an 81% interest in Jones Computer Network, Ltd.
The Company will own an approximate 17% interest in JEN.
Regulatory Matters. Congress enacted the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act"), which became
effective on December 4, 1992. This legislation has caused significant changes
to the regulatory environment in which the cable television industry operates.
The 1992 Cable Act generally imposes a greater degree of regulation on the
cable television industry. Under the 1992 Cable Act's definition of effective
competition, nearly all cable systems in the United States, including almost
all of those owned and managed by the Company, are subject to rate regulation
of basic cable services. In addition, the 1992 Cable Act allows the FCC to
regulate rates for non-basic service tiers other than premium services in
response to complaints filed by franchising authorities and/or cable
subscribers. In April 1993, the
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<PAGE> 15
FCC adopted regulations governing rates for basic and non-basic services. The
FCC's rules became effective on September 1, 1993. In compliance with these
rules, the Company reduced rates charged for certain regulated services
effective September 1, 1993.
On February 22, 1994, however, the FCC adopted several additional
rate orders including orders which revised its earlier-announced regulatory
scheme with respect to rates and established interim cost-of-service
regulations. The FCC's February 22, 1994 regulations generally require rate
reductions, absent a successful cost-of-service showing, of 17% of September
30, 1992 rates, adjusted for inflation, channel modifications, equipment costs,
and increases in programming costs. The new regulations became effective on
May 15, 1994, but operators could elect to defer rate reductions to July 14,
1994, so long as they made no changes in their rates and did not restructure
service offerings between May 15 and July 14.
After analyzing the effects of the two methods of rate regulation,
the Company elected to file cost-of-service showings for the following
Company-owned cable television systems: Jefferson County, Colorado; Charles
County, Maryland; Pima County, Arizona; Alexandria, Virginia; and North
Augusta, South Carolina. For these systems, the Company anticipates no further
reductions in revenues or operating income before depreciation and amortization
resulting from the FCC's rate regulations. The cost-of-service showings have
not yet received final approval from franchising authorities, however, and
there can be no assurance that the cost-of-service showings will prevent
further rate reductions until such final approvals are received. The Company
complied with the February 22, 1994 benchmark regulations and reduced rates in
its Oxnard and Walnut Valley, California; Hilo, Hawaii; Panama City Beach,
Florida; and Kenosha, Wisconsin cable television systems. The Company will
continue its efforts to mitigate the effect of such rate reductions in these
systems. The Company's Anne Arundel, Maryland cable television system is
subject to effective competition as defined by the 1992 Cable Act, and as a
result, is not subject to the rate regulation.
RESULTS OF OPERATIONS
Revenues. Historically, the Company has derived its revenues from
three primary sources; subscriber fees from Company-owned cable television
systems, management fees from revenues earned by managed limited partnerships
and fees and distributions payable upon the sale of cable television properties
owned by managed limited partnerships. The Company also derives revenue from
certain non-cable television subsidiaries. Total revenues for the three months
ended February 28, 1995 increased $10,825,000 or 33%, from $32,492,000 in
fiscal 1994 to $43,317,000 in the current fiscal year. Total revenues for the
nine months ended February 28, 1995 increased $14,156,000, or 15%, from
$95,925,000 in fiscal 1994 to $110,081,000 in the current fiscal year. These
increases are reflective of the Company's acquisition of Spacelink's assets on
December 20, 1994, and the purchase of the cable television system serving
North Augusta, South Carolina (the "North Augusta System") in December 1993.
The positive effect on revenue of these acquisitions was somewhat offset by the
sale of the Company's Gaston County, North Carolina cable television system
(the "Gaston System") on July 22, 1994. On a pro forma basis, disregarding the
effect of these acquisitions and sales, total revenues increased $2,781,000, or
9%, and $5,695,000, or 6%, for the three and nine months ended February 28,
1995 as compared to fiscal 1994.
The Company's subscriber service fees increased $5,729,000, or 22%,
from $26,079,000 in fiscal 1994 to $31,808,000 in fiscal 1995. Disregarding
the effect of the Spacelink acquisition, the North Augusta System purchase and
the sale of the Gaston System, subscriber service fees increased $1,172,000, or
5%. Such increase is due primarily to increases in basic subscribers and
premium subscriptions and an increase in advertising sales revenue. For the
nine months ended February 28, 1995, subscriber service fees increased
$6,973,000, or 9%, from $77,131,000 in fiscal 1994 to $84,104,000 in fiscal
1995. Disregarding the effect of the acquisition of Spacelink's assets, the
North Augusta System purchase and the sale of the Gaston System, such
subscriber service fees increased $1,999,000, or 3%. This increase is due to
increases in basic subscribers and premium subscriptions and increases in
advertising sales revenue, which somewhat mitigated the effect of the reduction
in basic rates due to rate regulations issued by the FCC in implementing the
1992 Cable Act.
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<PAGE> 16
The Company receives management fees generally equal to 5% of the
gross operating revenues from its managed partnerships. For the three months
ended February 28, 1995, management fees increased $730,000, or 17%, from
$4,334,000 in fiscal 1994 to $5,064,000 in fiscal 1995. For the nine month
periods, management fees increased $1,160,000, or 9%, from $12,970,000 in
fiscal 1994 to $14,130,000 in fiscal 1995. Such increases are due to the
acquisition of Spacelink's assets, which included general partner interests in
a number of managed limited partnerships and to increases in operating revenues
in the Company's managed partnerships. Partnership revenues have increased as
a result of increases in basic subscribers, as well as increases in revenue
from pay-per-view, advertising sales and the installation of service. These
increases somewhat mitigated the effect of the reduction in basic rates in the
Company's managed partnerships due to the FCC's basic rate regulations.
In its capacity as the general partner of its managed partnerships,
the Company also receives revenues in the form of distributions upon the sale
of cable television properties owned by such partnerships. No such revenues
were received during the first nine months of fiscal 1995 or 1994.
The Company also now operates a number of non-cable television
subsidiaries. These subsidiaries include a distributor of satellite
programming to satellite dish owners, Jones Futurex, Inc. ("Futurex"), a
manufacturer of various electronic components, and Jones Satellite Networks,
Inc. ("JSN"), a distributor of radio programming to radio stations. Futurex
and JSN were acquired as assets of Spacelink. Revenues for the three months
ended February 28, 1995 from these subsidiaries increased $4,366,000 from
$2,079,000 in fiscal 1994 to $6,445,000 in fiscal 1995. Approximately
$3,182,000 of this increase was due to the acquisition of Futurex and JSN. For
the nine month periods, non-cable revenue increased $6,023,000 from $5,824,000
in fiscal 1994 to $11,847,000 in fiscal 1995. This increase is due to the
acquisition of Futurex and JSN as well as increases in the sale of satellite
programming to satellite dish owners.
Expenses. Operating and general and administrative expenses consist
primarily of costs associated with the administration of Company-owned cable
television systems, the administration of the managed partnerships and the
administration of the non-cable television entities. The principal cost
components are salaries paid to corporate and system personnel, programming
expenses, professional fees, subscriber billing costs, rent for lease
facilities, cable system maintenance expenses and consumer marketing expenses.
Cable operating expenses for the three months ended February 28, 1995
increased $5,566,000, or 41% from $13,464,000 in fiscal 1994 to $19,030,000 in
fiscal 1995. Disregarding the effect of the acquisition of Spacelink's assets,
the purchase of the North Augusta System and the sale of the Gaston System,
such expenses increased $1,537,000, or 12%. For the nine month periods, cable
operating expenses increased $7,313,000, or 18%, from $41,433,000 in fiscal
1994 to $48,746,000 in fiscal 1995. Disregarding the effect of the acquisition
of Spacelink's assets, the purchase of the North Augusta System and the sale of
the Gaston System, such expenses increased $3,106,000, or 8%. The increases in
operating costs are primarily due to increases in premium and satellite
programming costs. In addition, the Company incurred marketing, public
relations and other expense associated with the FCC's new rate regulations.
Cable general and administrative expenses for the three months ended
February 28, 1995 decreased $478,000, or 20%, from $2,431,000 in fiscal 1994 to
$1,953,000 in fiscal 1995. For the nine month periods, cable general and
administrative expenses decreased $1,314,000, or 20%, from $6,646,000 in fiscal
1994 to $5,332,000 in fiscal 1995. Such decreases are primarily the result of
the decrease in transponder fees paid to an affiliate.
Non-cable operating, general and administrative expense for the three
months ended February 28, 1995 increased $4,568,000 from $2,363,000 in fiscal
1994 to $6,931,000 in fiscal 1995. Such increase is due primarily to the
acquisition of Futurex and JSN in December 1994. For the nine month periods,
non-cable operating, general and administrative expense increased $6,797,000
from $6,024,000 in fiscal 1994 to $12,821,000 in fiscal 1995. This increase is
due to the acquisition of Futurex and JSN in December 1994 as well as increases
in costs associated with the satellite programming business.
-16-
<PAGE> 17
Depreciation and amortization expense for the three months ended
February 28, 1995 increased $959,000, or 9%, from $11,063,000 in fiscal 1994 to
$12,022,000 in fiscal 1995. For the nine month periods, depreciation and
amortization increased $1,616,000, or 5%, from $32,045,000 in fiscal 1994 to
$33,661,000 in fiscal 1995. Such increases are primarily due to the Spacelink
acquisition.
Operating income before depreciation and amortization increased
$1,169,000, or 8%, from $14,234,000 for the three months ended February 28,
1994 to $15,403,000 in fiscal 1995. For the nine months ended February 28,
operating income before depreciation and amortization increased $1,360,000, or
3%, from $41,822,000 in fiscal 1994 to $43,182,000 in fiscal 1995.
For the three months ended February 28, 1995, interest expense
decreased $329,000, or 4%, from $9,371,000 in fiscal 1994 to $9,042,000 in
fiscal 1995. The Company repaid amounts then outstanding on its credit
facility in December 1994 with funds from the investment in the Company by BCI.
For the nine months ended February 28, 1995, interest expense increased
$450,000, or 2%, from $26,921,000 in fiscal 1994 to $27,371,000 in fiscal 1995.
Such increase is due primarily to higher effective interest rates on the
Company's revolving credit facility.
For the nine months ended February 28, 1995, the Company recognized a
gain on the sale of the Gaston System of $15,496,000. No similar transaction
was recognized in fiscal 1994.
Equity in losses of affiliates for the three months ended February 28,
1995 increased $310,000, or 31%, from $999,000 in fiscal 1994 to $1,309,000 in
fiscal 1995. Such increase is primarily due to an increase in losses during
the quarter recognized by the Company related to its 38% investment in Mind
Extension University, Inc. For the nine month periods, equity in losses of
affiliates decreased $852,000, or 28%, from $3,078,000 in fiscal 1994 to
$2,226,000 in fiscal 1995. This decrease is due to the decrease in
year-to-date losses recognized by the Company related to its investment in Mind
Extension University, Inc., the elimination of the equity losses on the
Company's foreign investments and an increase in equity income recognized by
the Company related to its investment in Jones Intercable Investors, L.P., a
Company-managed limited partnership.
Interest income increased $1,840,000 from $955,000 to $2,795,000 for
the three months ended February 28, 1995 compared to fiscal 1994. For the nine
month periods, interest income increased $2,261,000, or 83%, from 2,731,000 in
fiscal 1994 to $4,992,000 in fiscal 1995. Such increases are due to the
increase in cash and cash equivalents as a result of the investment in the
Company by BCI as well as an increase in interest income earned on advances to
Mind Extension University, Inc.
For the three months ended February 28, 1995, net loss decreased
$2,369,000, or 36%, from $6,521,000 in fiscal 1994 to $4,152,000 in fiscal
1995. Such decrease is due primarily to the increase in interest income. The
Company recorded net income of $926,000 for the nine months ended February 28,
1995 compared to a net loss of $18,149,000 for the nine months ended February
28, 1994. This change was primarily the result of the $15,496,000 gain
recognized on the sale of the Gaston System in July 1994. The Company
anticipates the continued recognition of operating income prior to depreciation
and amortization charges, but losses resulting form depreciation, amortization
and interest charges may occur in the future.
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<PAGE> 18
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
15) Letter Regarding Unaudited Interim Financial
Statements.
27) Financial Data Schedule
28) Accountants' Review Letter, dated April 12, 1994.
b) Reports on Form 8-K
1) Current report on form 8-K dated December 23, 1994
reporting (i) Shareholder approval on December 19,
1994 and subsequent acquisition of Spacelink on
December 20, 1994, (ii) Shareholder approval on
December 19, 1994 and subsequent closing on
December 20, 1994 of the Stock Purchase Agreement
between the Company and BCI.
2) Current Report on form 8-K dated February 23, 1995
reporting that the Company had entered into a
Purchase and Sale Agreement providing for the
purchase of the cable television system serving
areas in and around Augusta, Georgia from Cable TV
Fund 12-B, Ltd., a Colorado Limited Partnership for
which the Company serves as General Partner.
3) Current Report on form 8-K dated March 10, 1995
providing certain financial statements and the
Purchase and Sale Agreement related to the purchase
of the Augusta System.
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<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
JONES INTERCABLE, INC.
/S/Kevin P. Coyle
Kevin P. Coyle
(Group Vice President/Finance)
Dated: April 13, 1995
-19-
<PAGE> 20
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description Page
- ------- ----------- ----
<S> <C>
15) Letter Regarding Unaudited Interim Financial
Statements.
27) Financial Data Schedule
28) Accountants' Review Letter, dated April 12, 1995
</TABLE>
<PAGE> 1
Exhibit 15
April 12, 1995
Jones Intercable, Inc. and Subsidiaries:
We are aware that Jones Intercable, Inc., and subsidiaries has
incorporated by reference in its Registration Statement Nos. 33-25577, 33-3087,
33-41392, 33-45161, 33-47030, 33-54596, 33-64602, 33-64604 and 33-52813 its
Form 10-Q for the quarter ended February 28, 1995, which includes our report
dated April 12, 1995 covering the unaudited interim financial information
contained therein. Pursuant to Regulation C of the Securities Act of 1933,
that report is not considered a part of the registration statements or a report
prepared or certified by our firm within the meaning of Sections 7 and 11 of
the Securities Act of 1933.
Very truly yours,
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-START> JUN-01-1994
<PERIOD-END> FEB-28-1995
<CASH> 82,809
<SECURITIES> 0
<RECEIVABLES> 9,475
<ALLOWANCES> 916
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 350,231
<DEPRECIATION> (149,807)
<TOTAL-ASSETS> 600,766
<CURRENT-LIABILITIES> 0
<BONDS> 281,447
<COMMON> 312
0
0
<OTHER-SE> 270,814
<TOTAL-LIABILITY-AND-EQUITY> 600,766
<SALES> 0
<TOTAL-REVENUES> 110,081
<CGS> 0
<TOTAL-COSTS> 100,560
<OTHER-EXPENSES> (18,776)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,371
<INCOME-PRETAX> 926
<INCOME-TAX> 0
<INCOME-CONTINUING> 926
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 926
<EPS-PRIMARY> .04
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
EXHIBIT 28
REVIEW REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders
of Jones Intercable, Inc.:
We have made a review of the accompanying condensed consolidated balance sheet
of JONES INTERCABLE, INC. (a Colorado corporation) and subsidiaries as of
February 28, 1995, the related condensed consolidated statements of operations
for the three-month and nine-month periods ended February 28, 1995 and 1994,
and the related condensed consolidated statements of cash flows for the
nine-month periods ended February 28, 1995 and 1994. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists primarily of applying analytical review
procedures to the financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope than
an audit in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the consolidated financial statements referred to above for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Jones Intercable, Inc., and
subsidiaries as of May 31, 1994 (not presented herein), and, in our report
dated August 22, 1994, we expressed an unqualified opinion on that statement.
In our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of May 31, 1994, is fairly stated in all material
respects in relation to the consolidated balance sheet from which it has been
derived.
ARTHUR ANDERSEN LLP
Denver, Colorado,
April 12, 1995.
