<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 10, 1995
JONES INTERCABLE, INC.
(Exact name of registrant as specified in its charter)
Colorado 1-9953 84-0613514
-------- ------ ----------
(State of Organization) (Commission File No.) (IRS Employer
Identification No.)
P.O. Box 3309, Englewood, Colorado 80155-3309 (303) 792-3111
- --------------------------------------------- --------------
(Address of principal executive office and Zip Code (Registrant's
telephone no.
including area code)
<PAGE> 2
Item 5. Other Events
Jones Intercable, Inc. (the "Registrant") has previously
reported that it has agreed to acquire the cable television system serving
areas in and around Augusta, Georgia from Cable TV Fund 12-B, Ltd., one of the
Registrant's managed limited partnerships. The purchase price for the system
is $141,718,000, subject to normal closing adjustments.
Historical financial statements for the Augusta system to be
acquired by the Registrant, and pro forma financial statements reflecting the
proposed acquisition are being filed as Exhibits herewith.
Item 7. Financial Statements and Exhibits
a. Audited Financial Statements of the Augusta System for the
years 1992, 1993 and 1994.
b. Pro Forma Financial Statements of Jones Intercable, Inc.
c. Purchase and Sale Agreement dated February 22, 1995 between
Cable TV Fund 12-B, Ltd. and Jones Intercable, Inc.
2
<PAGE> 3
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 hereunto duly authorized.
JONES INTERCABLE, INC.,
a Colorado corporation
Dated: March 10, 1995 By: /s/ Elizabeth M. Steele
----------------------------
Elizabeth M. Steele
Vice President
3
<PAGE> 4
HISTORICAL FINANCIAL STATEMENTS
The following financial statements of Cable TV Fund 12-B (the
"Partnership") present the financial condition of the Partnership as of
December 31, 1994 and 1993 and the results of operations for the three years in
the period ended December 31, 1994. The Partnership's only operating cable
television system is the cable television system serving areas in and around
Augusta, Georgia (the "Augusta System"). In addition to the Augusta System,
the Partnership owns 9 percent minority interest in Cable TV Fund 12-BCD
Venture, which is reflected as loss in excess of investment in cable television
venture on the balance sheets and equity in loss of cable television joint
venture on the statements of operations. The Partnership will retain its
investment in the Venture, therefore it should be disregarded in analyzing the
historical statements in reference to the Augusta System.
<PAGE> 5
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Cable TV Fund 12-B:
We have audited the accompanying balance sheets of CABLE TV
FUND 12-B (a Colorado limited partnership) as of December 31, 1994 and 1993,
and the related statements of operations, partners' capital (deficit) and cash
flows for each of the three years in the period ended December 31, 1994. These
financial statements are the responsibility of the General Partner's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of Cable TV
Fund 12-B as of December 31, 1994 and 1993, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1994, in conformity with generally accepted accounting principles.
/S/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Denver, Colorado,
March 8, 1995.
<PAGE> 6
CABLE TV FUND 12-B
(A Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
----------------------------------
ASSETS 1994 1993
------ ------------- -------------
<S> <C> <C>
CASH $ 3,782,989 $ 4,856,992
TRADE RECEIVABLES, less allowance for doubtful receivables of
$79,128 and $90,839 at December 31, 1994 and 1993, respectively 860,247 1,011,740
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 78,503,036 74,468,377
Less- accumulated depreciation (37,429,022) (30,740,891)
------------- -------------
41,074,014 43,727,486
Franchise costs, net of accumulated amortization of $25,063,424
and $22,377,932 at December 31, 1994 and 1993, respectively 14,051,348 16,736,840
Loss in excess of investment in cable television joint venture (1,804,126) (622,087)
------------- -------------
Total investment in cable television properties 53,321,236 59,842,239
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 578,713 374,054
------------- -------------
Total assets $ 58,543,185 $ 66,085,025
============= =============
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
<PAGE> 7
CABLE TV FUND 12-B
(A Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
-----------------------------------
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1994 1993
- ------------------------------------------- ------------ ------------
<S> <C> <C>
LIABILITIES:
Debt $ 39,959,041 $ 43,831,074
Accounts payable-
Trade 63,438 136,325
General Partner 112,495 163,266
Accrued liabilities 924,648 1,091,860
Subscriber prepayments 113,843 124,535
------------ ------------
Total liabilities 41,173,465 45,347,060
------------ ------------
COMMITMENTS AND CONTINGENCIES (Note 7)
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (305,152) (271,470)
------------ ------------
(304,152) (270,470)
------------ ------------
Limited Partners-
Net contributed capital (111,035 units outstanding at
December 31, 1994 and 1993) 47,645,060 47,645,060
Accumulated deficit (29,971,188) (26,636,625)
------------ ------------
17,673,872 21,008,435
------------ ------------
Total liabilities and partners' capital (deficit) $ 58,543,185 $ 66,085,025
============ ============
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
<PAGE> 8
CABLE TV FUND 12-B
(A Limited Partnership)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES $26,956,006 $26,975,209 $25,369,064
COSTS AND EXPENSES:
Operating, general and administrative 13,932,687 13,054,665 12,052,351
Management fees and allocated overhead from
General Partner 3,392,884 3,205,800 2,964,400
Depreciation and amortization 9,380,877 8,897,796 8,415,058
----------- ----------- -----------
OPERATING INCOME 249,558 1,816,948 1,937,255
----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (2,555,513) (2,343,606) (2,889,857)
Other, net 119,749 126,128 18,335
----------- ----------- -----------
Total other income (expense) (2,435,764) (2,217,478) (2,871,522)
----------- ----------- -----------
LOSS BEFORE EQUITY IN NET LOSS OF
CABLE TELEVISION JOINT VENTURE (2,186,206) (400,530) (934,267)
EQUITY IN NET LOSS OF CABLE
TELEVISION JOINT VENTURE (1,182,039) (1,063,449) (1,366,385)
----------- ----------- -----------
NET LOSS $(3,368,245) $(1,463,979) $(2,300,652)
=========== =========== ===========
ALLOCATION OF NET LOSS:
General Partner $ (33,682) $ (14,640) $ (23,007)
=========== =========== ===========
Limited Partners $(3,334,563) $(1,449,339) $(2,277,645)
=========== =========== ===========
NET LOSS PER LIMITED PARTNERSHIP UNIT $ (30.03) $ (13.05) $ (20.51)
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 111,035 111,035 111,035
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
<PAGE> 9
CABLE TV FUND 12-B
(A Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------
1994 1993 1992
------------ ------------- -----------
<S> <C> <C> <C>
GENERAL PARTNER:
Balance, beginning of period $ (270,470) $ (255,830) $ (232,823)
Net loss for period (33,682) (14,640) (23,007)
------------ ------------- -----------
Balance, end of period $ (304,152) $ (270,470) $ (255,830)
============ ============= ===========
LIMITED PARTNERS:
Balance, beginning of period $ 21,008,435 $ 22,457,774 $24,735,419
Net loss for period (3,334,563) (1,449,339) (2,277,645)
------------ ------------- -----------
Balance, end of period $ 17,673,872 $ 21,008,435 $22,457,774
============ ============= ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
<PAGE> 10
CABLE TV FUND 12-B
(A Limited Partnership)
STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------
1994 1993 1992
----------------- ---------------- ---------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,368,245) $(1,463,979) $(2,300,652)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 9,380,877 8,897,796 8,415,058
Amortization of interest rate protection contract - - 33,963
Equity in net loss of cable television joint venture 1,182,039 1,063,449 1,366,385
Decrease (increase) in trade receivables 151,493 (109,776) (302,528)
Decrease (increase) in deposits, prepaid expenses
and deferred charges (211,913) 119,594 (409,048)
Increase (decrease) in trade accounts payable,
accrued liabilities and subscriber prepayments (250,791) 134,104 141,333
Increase (decrease) in amount due General Partner (50,771) (125,767) 73,264
----------------- ----------- -----------
Net cash provided by operating activities 6,832,689 8,515,421 7,017,775
----------------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (4,034,659) (4,096,862) (3,840,518)
----------------- ----------- -----------
Net cash used in investing activities (4,034,659) (4,096,862) (3,840,518)
----------------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 124,133 74,766 162,465
Repayment of debt (3,996,166) (3,041,200) (2,090,548)
----------------- ----------- -----------
Net cash used in financing activities (3,872,033) (2,966,434) (1,928,083)
----------------- ----------- -----------
Increase (decrease) in cash (1,074,003) 1,452,125 1,249,174
Cash, beginning of period 4,856,992 3,404,867 2,155,693
----------------- ----------- -----------
Cash, end of period $ 3,782,989 $ 4,856,992 $ 3,404,867
================= =========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 2,806,739 $ 2,374,601 $ 2,606,651
================= =========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
<PAGE> 11
CABLE TV FUND 12-B
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION AND PARTNERS' INTERESTS
Formation and Business
Cable TV Fund 12-B, Ltd. (the "Partnership"), a Colorado
limited partnership, was formed on June 5, 1985, under a public program
sponsored by Jones Intercable, Inc. The Partnership was formed to acquire,
construct, develop and operate cable television systems. Jones Intercable,
Inc., a publicly held Colorado corporation, is the "General Partner" and
manages the Partnership. The General Partner and its subsidiaries also own and
operate cable television systems. In addition, the General Partner manages
cable television systems for other limited partnerships for which it is general
partner and, also, for affiliated entities.
In addition to the Augusta, Georgia cable television system,
which it directly owns, the Partnership owns an approximate 9 percent interest
in Cable TV Fund 12-BCD Venture (the "Venture"), through a capital contribution
made to the Venture in April 1986 of $12,437,500. The Venture acquired certain
cable television systems in New Mexico, California and Florida during 1986.
The Venture incurred losses of $12,876,242, $11,584,416 and $14,884,365 in
1994, 1993 and 1992, respectively, of which $1,182,039, $1,063,449 and
$1,366,385 was allocated to the Partnership during 1994, 1993 and 1992,
respectively.
Contributed Capital
The capitalization of the Partnership is set forth in the
accompanying statements of partners' capital (deficit). No limited partner is
obligated to make any additional contributions to partnership capital.
The General Partner purchased its interest in the Partnership
by contributing $1,000 to partnership capital.
All profits and losses of the Partnership are allocated 99
percent to the limited partners and 1 percent to the General Partner, except
for income or gain from the sale or disposition of cable television properties,
which will be allocated to the partners based upon a formula set forth in the
partnership agreement, and interest income earned prior to the first
acquisition by the Partnership of a cable television system, which was
allocated 100 percent to the limited partners.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Records
The accompanying financial statements have been prepared on
the accrual basis of accounting in accordance with generally accepted
accounting principles. The Partnership s tax returns are also prepared on the
accrual basis.
Investment in Cable Television Joint Venture
The Partnership s investment in the Venture is accounted for
under the equity method due to the Partnership s influence on the Venture as a
General Partner. The operations of the Venture are significant to the
Partnership and should be reviewed in conjunction with these financial
statements. Reference is made to the accompanying financial statements of the
Venture on pages 31 to 41.
<PAGE> 12
Property, Plant and Equipmen
Depreciation of property, plant and equipment is provided
primarily using the straight-line method over the following estimated service
lives:
<TABLE>
<S> <C>
Cable distribution systems 5 - 12 years
Equipment and tools 3 - 5 years
Office furniture and equipment 5 years
Buildings 10 - 20 years
Vehicles 3 years
</TABLE>
Replacements, renewals and improvements are capitalized and
maintenance and repairs are charged to expense as incurred.
Intangible Assets
Costs assigned to franchises are being amortized using the
straight-line method over the following remaining estimated useful lives:
Franchise costs 4 - 9 years
Revenue Recognition
Subscriber prepayments are initially deferred and recognized
as revenue when earned.
(3) TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
Management Fees, Distribution Ratios and Reimbursement
The General Partner manages the Partnership and receives a fee
for its services equal to 5 percent of the gross revenues of the Partnership,
excluding revenues from the sale of cable television systems or franchises.
Management fees for the years ended December 31, 1994, 1993 and 1992 (excluding
the Partnership s nine percent interest in the Venture) were $1,347,800,
$1,348,760 and $1,268,453, respectively.
Any partnership distributions made from cash flow (defined as
cash receipts derived from routine operations, less debt principal and interest
payments and cash expenses) are allocated 99 percent to the limited partners
and 1 percent to the General Partner. Any distributions other than interest
income on limited partnership subscriptions earned prior to the acquisition of
the Partnership s first cable television system or from cash flow, such as from
the sale or refinancing of a system or upon dissolution of the Partnership,
will be made as follows: first, to the limited partners in an amount which,
together with all prior distributions, will equal the amount initially
contributed by the limited partners; the balance, 75 percent to the limited
partners and 25 percent to the General Partner.
The Partnership reimburses the General Partner for certain
allocated overhead and administrative expenses. These expenses represent the
salaries and related benefits paid for corporate personnel, rent, data
processing services and other corporate facilities costs. Such personnel
provide engineering, marketing, administrative, accounting, legal and investor
relations services to the Partnership. Allocations of personnel costs are
based primarily on actual time spent by employees of the General Partner with
respect to each partnership managed. Remaining overhead costs are allocated
based on revenues and/or the cost of assets managed for the partnership.
Effective December 1, 1993, the allocation method was changed to be based only
on revenue, which the General Partner believes provides a more accurate method
of allocation. Systems owned by the General Partner and all other systems
owned by partnerships for which Jones Intercable, Inc. is the General Partner
are also allocated a proportionate share of these expenses. The General
Partner believes that the methodology used in allocating overhead and
administrative expenses is reasonable. Reimbursements by the Partnership to
the General Partner for allocated overhead and administrative expenses
(excluding the Partnership s nine percent interest in the Venture) were
$2,045,084, $1,857,040, and $1,695,947 in 1994, 1993, and 1992, respectively.
<PAGE> 13
The Partnership was charged interest on amounts due the
General Partner at a rate which approximated the General Partner's weighted
average cost of borrowing. Total interest charged the Partnership by the
General Partner was $9,903, $-0- and $29,205 in 1994, 1993 and 1992,
respectively.
Payments to/from Affiliates for Programming Services
The Partnership receives programming from Superaudio, The Mind
Extension University and Jones Computer Network, affiliates of the General
Partner. Payments to Superaudio totaled $39,929, $40,882 and $40,430 in 1994,
1993 and 1992, respectively. Payments to The Mind Extension University totaled
$36,178, $23,769 and $23,165 in 1994, 1993 and 1992, respectively. Payments to
Jones Computer Network, which initiated service in 1994, totaled $5,373.
The Partnership receives a commission from Product Information
Network, an affiliate of Intercable, based on a percentage of advertising sales
and number of subscribers. Product Information Network, which initiated
service in 1994, paid commissions to the Partnership totalling $24,531.
(4) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment as of December 31, 1994 and
1993, consisted of the following:
<TABLE>
<CAPTION>
December 31,
-----------------------------------
1994 1993
------------ ------------
<S> <C> <C>
Cable distribution system $ 74,244,802 $ 70,454,984
Equipment and tools 1,124,216 1,042,724
Office furniture and equipment 996,451 967,465
Buildings 644,202 638,475
Vehicles 1,364,365 1,235,729
Land 129,000 129,000
------------ ------------
78,503,036 74,468,377
Less- Accumulated depreciation (37,429,022) (30,740,891)
------------ ------------
$ 41,074,014 $ 43,727,486
============ ============
</TABLE>
(5) DEBT
<TABLE>
<CAPTION>
Debt consists of the following: December 31,
----------------------------------
1994 1993
----------- -----------
<S> <C> <C>
Lending institutions-
Term loan $39,770,000 $43,650,000
Capital lease obligations 189,041 181,074
----------- -----------
$39,959,041 $43,831,074
=========== ===========
</TABLE>
The balance outstanding on the Partnership s credit facility
as of December 31, 1994 was $39,770,000. On December 31, 1991, the then
outstanding principal balance of $48,500,000 was converted to a term loan
payable in 12 consecutive quarterly installments beginning March 31, 1992 and
ending December 31, 1994. The Partnership paid $3,880,000 in such installments
during 1994. In December 1994, the General Partner refinanced the credit
facility to extend the life of the term loan to December 31, 1999. The term
loan will continue to be payable in consecutive quarterly installments.
Interest on this agreement is at the Partnership s option of the base rate plus
1/2 percent, where base rate is defined as the greater of the Prime Rate or the
Federal Funds Rate plus 1/2 percent, or the CD rate plus 1-5/8 percent or the
London Interbank Offered Rate plus 1-1/2 percent. This loan is expected to be
paid in full upon closing of the sale of the Augusta System to the General
Partner as discussed in Note 8.
<PAGE> 14
The effective interest rates on outstanding obligations as of
December 31, 1994 and 1993 were 7.64 percent and 4.98 percent, respectively.
Installments due on debt principal for each of the five years
in the period ending December 31, 1999, respectively, are: $5,027,962,
$7,016,462, $9,004,962, $8,967,155 and $9,942,500. At December 31, 1994,
substantially all of the Partnership s property, plant and equipment secured
the above indebtedness.
(6) INCOME TAXES
Income taxes have not been recorded in the accompanying
financial statements because they accrue directly to the partners. The Federal
and state income tax returns of the Partnership are prepared and filed by the
General Partner.
The Partnership s tax returns, the qualification of the
partnership as such for tax purposes, and the amount of distributable
partnership income or loss are subject to examination by Federal and state
taxing authorities. If such examinations result in changes with respect to the
Partnership s qualification as such, or in changes with respect to the
Partnership s recorded income or loss, the tax liability of the general and
limited partners would likely be changed accordingly.
Taxable loss reported to the partners is different from that
reported in the statements of operations due to the difference in depreciation
recognized under generally accepted accounting principles and the expense
allowed for tax purposes under the Modified Accelerated Cost Recovery System
(MACRS). There are no other significant differences between taxable loss and
the net loss reported in the statements of operations.
(7) COMMITMENTS AND CONTINGENCIES
On October 5, 1992, Congress enacted the Cable Television
Consumer Protection and Competition Act of 1992 (the "1992 Cable Act") which
became effective on December 4, 1992. The 1992 Cable Act generally allows for
a greater degree of regulation in the cable television industry. In April
1993, the FCC adopted regulations governing rates for basic and non-basic
services. These regulations became effective on September 1, 1993. Such
regulations caused reductions in rates for certain regulated services. On
February 22, 1994, the FCC adopted several additional rate orders including an
order which revised its earlier-announced regulatory scheme with respect to
rates. The Partnership has filed a cost-of-service showing in its Augusta
System and anticipates no further reductions in rates. The cost-of-service
showing has not received final approval from franchising authorities.
The Partnership rents office and other facilities under
various long-term operating lease arrangements. Rent paid under such lease
arrangements totaled $19,907, $19,575 and $19,351, respectively, for the years
ended December 31, 1994, 1993 and 1992. Minimum commitments for each of the
five years in the period ending December 31, 1999, and thereafter are as
follows:
<TABLE>
<S> <C>
1995 $21,219
1996 16,400
1997 14,400
1998 14,400
1999 7,400
Thereafter 200
-------
$74,019
=======
</TABLE>
<PAGE> 15
(8) SALE OF CABLE TELEVISION SYSTEM
On February 22, 1995, the General Partner entered into a Purchase and
Sale Agreement (the "Agreement") with the Partnership, providing for the sale
by the Partnership to the General Partner of the Augusta System. The purchase
price for the Augusta System is $141,718,000, subject to certain closing
adjustments provided by the Agreement. Closing of the sale is subject to a
number of conditions, including the approval of the transaction by the holders
of a majority of the Partnership s limited partnership interests. The purchase
price represents the average of three separate independent appraisals of the
fair market value of the Augusta System. Subject to the satisfaction of
closing conditions, the transaction is expected to close during 1995. The
Partnership will retain its interest in the Venture.
(9) SUPPLEMENTARY PROFIT AND LOSS INFORMATION
Supplementary profit and loss information for the respective
years are presented below:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------
1994 1993 1992
---------------- ---------------- --------------
<S> <C> <C> <C>
Maintenance and repairs $ 169,466 $ 151,258 $ 171,974
========== ========== ==========
Taxes, other than income and payroll taxes $ 232,068 $ 232,174 $ 224,415
========== ========== ==========
Advertising $ 212,018 $ 136,524 $ 165,447
========== ========== ==========
Depreciation of property, plant and equipment $6,695,385 $6,212,303 $5,729,566
========== ========== ==========
Amortization of intangible assets $2,685,492 $2,685,493 $2,685,492
========== ========== ==========
</TABLE>
<PAGE> 16
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the inclusion of our
report dated March 8, 1995 on Cable TV Fund 12-B, Ltd. for the year ended
December 31, 1994 in the Form 8-K of the Company dated March 10, 1995 and its
Registration Statement No. 33-64604, and further consent to the incorporation
by reference in Registration Statement No. 33-64604 of our reports dated August
29, 1994 included in Jones Spacelink, Ltd.'s Form 10-K for the year ended May
31, 1994, and to all references to our firm included in such registration
statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
March 10, 1995
<PAGE> 17
UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS
The following Unaudited Pro Forma Consolidated Balance Sheet as of
November 30, 1994 and the Unaudited Pro Forma Consolidated Statements of
Operations for the six months ended November 30, 1994 and for the year ended
May 31, 1994 give effect to the proposed purchase of the cable television
system serving areas in and around Augusta, Georgia (the "Augusta System") by
Jones Intercable, Inc. (the "Company"). In addition, the Unaudited Pro Forma
Consolidated Balance Sheet gives effect to the acquisition by the Company of
substantially all of the assets of Jones Spacelink, Ltd. ("Spacelink") on
December 20, 1994 and the purchase by Bell Canada International, Inc. ("BCI")
of 7,414,300 newly issued shares of the Company's Class A Common Stock on
December 20, 1994. The Unaudited Pro Forma Statement of Operations gives
effect to the Spacelink acquisition and the BCI transaction as well as the sale
of the Company's Gaston County, North Carolina cable television system (the
"Gaston System") on July 25, 1994. The Unaudited Pro Forma Consolidated
Financial Statements are based on the historical Consolidated Financial
Statements of the Company and Spacelink under the assumptions and adjustments
set forth in the accompanying Notes to Unaudited Pro Forma Consolidated
Financial Statements.
The Unaudited Pro Forma Consolidated Balance Sheet assumes that the
transactions listed above occurred on November 30, 1994 and the Unaudited Pro
Forma Consolidated Statement of Operations assumes such transactions occurred
June 1, 1993.
On February 22, 1995, the Company entered into a Purchase and Sale
Agreement with Cable TV Fund 12-B, Ltd. (the "Partnership"), providing for the
purchase by the Company of the Augusta System. The purchase price of the
Augusta System, which was determined by the average of three separate
independent appraisals, is $141,718,000, subject to certain closing
adjustments. Closing of the sale is subject to a number of conditions,
including the approval of the limited partners of the Partnership. The Company
believes that the acquisition of the Augusta System is probable. The Company,
as General Partner of the Partnership, would receive a distribution from the
Partnership of approximately $12,500,000 upon the closing of the Augusta System
sale. Such distribution would reduce the basis of assets of the Augusta
System.
The Spacelink transaction was a stock for net assets purchase whereby
the Company issued 3,900,000 shares of Class A Common Stock to acquire
substantially all of the assets and liabilities of Spacelink, excluding
Spacelink's holding of approximately 2.9 million shares of the Company's Common
Stock. The Spacelink transaction was accounted for as (i) the exchange of
ownership interests between entities under common control for the shares issued
to Glenn R. Jones and Jones International, Ltd., which is reflected at
predecessor cost, and (ii) the acquisition of the minority interest of
Spacelink, which is reflected at fair market value. The excess of the market
value of Spacelink's minority interest over the book value is assigned to
goodwill.
On December 20, 1994, BCI purchased 7,414,300 newly issued shares of
the Company's Class A Common Stock at $27.50 per share for $203,893,250. A
portion of the $203,893,250 was used to repay amounts then outstanding under
the Company's and Spacelink's credit facilities of $38,000,000 and $75,000,000,
respectively, with the remainder being used to pay certain fees and held for
future needs.
- 1 -
<PAGE> 18
UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)
On July 25, 1994, the Company sold the Gaston System to an
unaffiliated third party for $36,500,000, subject to certain fees and closing
adjustments. The proceeds from the sale 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 related to this transaction.
The Unaudited Pro Forma Financial Statements should be read in
conjunction with the Notes to Unaudited Pro Forma Financial Statements. The
Unaudited Pro Forma Financial Statements are based on historical data and may
not be indicative of the actual results obtained upon the closing of the above
transactions.
- 2 -
<PAGE> 19
JONES INTERCABLE, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
NOVEMBER 30, 1994
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
---------------------
Other Augusta Pro Forma
As Reported Adjustments Purchase Balance
----------- ----------- ---------- -----------
ASSETS (In Thousands Except Per Share Data)
<S> <C> <C> <C> <C>
CASH AND CASH EQUIVALENTS $ 2,633 $ 91,445 $ (89,555) $ 4,523
RECEIVABLES, net 24,603 5,066 860 30,529
INVESTMENT IN CABLE TELEVISION
PROPERTIES:
Property, plant and equipment, net 162,400 32,314 32,305 227,019
Intangible Assets, net 113,818 44,132 96,913 254,863
Investments, net 98,376 4,391 - 102,767
--------- --------- --------- -----------
TOTAL INVESTMENT IN CABLE
TELEVISION PROPERTIES 374,594 80,837 129,218 584,649
--------- --------- --------- -----------
OTHER ASSETS 30,789 5,358 579 36,726
--------- --------- --------- -----------
TOTAL ASSETS $ 432,619 $ 182,706 $ 41,102 $ 656,427
========= ========= ========= ===========
LIABILITIES AND SHAREHOLDERS'
INVESTMENT
LIABILITIES:
Accounts payable and
accrued liabilities $ 46,449 $ 13,318 $ 1,102 $ 60,869
Subordinated debentures and
other debt 280,918 839 - 281,757
Credit facility 38,000 (38,000) 40,000 40,000
--------- --------- --------- -----------
TOTAL LIABILITIES 365,367 (23,843) 41,102 382,626
--------- --------- --------- -----------
SHAREHOLDERS' INVESTMENT 67,252 206,549 - 273,801
--------- --------- --------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' INVESTMENT $ 432,619 $ 182,706 $ 41,102 $ 656,427
========= ========= ========= ===========
</TABLE>
The accompanying notes to Unaudited Pro Forma Consolidated Financial Statements
are an integral part of this balance sheet.
- 3 -
<PAGE> 20
JONES INTERCABLE, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED NOVEMBER 30, 1994
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
---------------------
Other Augusta Pro Forma
As Reported Adjustments Purchase Balance
----------- ----------- ---------- -----------
(In Thousands Except Per Share Data)
<S> <C> <C> <C> <C>
REVENUES FROM CABLE
TELEVISION OPERATIONS:
Subscriber service fees $ 59,623 $ 9,465 $ 13,550 $ 82,638
Management fees 9,066 1,068 (678) 9,456
Other revenues - 7,369 - 7,369
------------- ---------- ----------- ---------
TOTAL REVENUES 68,689 17,902 12,872 99,463
COSTS AND EXPENSES:
Operating expenses 37,239 12,487 7,047 56,773
General and administrative expenses 3,671 2,129 1,032 6,832
Depreciation and amortization 21,639 4,466 7,000 33,105
------------- ---------- ----------- ---------
OPERATING INCOME 6,140 (1,180) (2,207) 2,753
OTHER INCOME (EXPENSE):
Interest expense (18,329) 1,679 (1,600) (18,250)
Gain on sale of assets 15,496 (15,496) - -
Equity in losses of affiliated entities (917) (635) - (1,552)
Interest income 2,197 25 - 2,222
Other, net 491 (98) - 393
------------- ---------- ----------- ---------
INCOME (LOSS) BEFORE
INCOME TAXES 5,078 (15,705) (3,807) (14,434)
Income tax benefit - - - -
------------- ---------- ----------- ---------
NET INCOME (LOSS) $ 5,078 $ (15,705) $ (3,807) $ (14,434)
============= ========== =========== =========
NET INCOME (LOSS) PER CLASS A
COMMON AND COMMON SHARE $ .26 $ (.46)
============= =========
AVERAGE NUMBER OF CLASS A
COMMON AND COMMON SHARES
OUTSTANDING 19,730 31,244
============= =========
</TABLE>
The accompanying notes to Unaudited Pro Forma Consolidated Financial Statements
are an integral part of this statement.
- 4 -
<PAGE> 21
JONES INTERCABLE, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1994
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
---------------------
Other Augusta Pro Forma
As Reported Adjustments Purchase Balance
----------- ----------- ---------- -----------
(In Thousands Except Per Share Data)
<S> <C> <C> <C> <C>
REVENUES FROM CABLE
TELEVISION OPERATIONS:
Subscriber service fees $ 115,076 $ 13,656 $ 26,956 $ 155,688
Management fees 17,360 2,075 (1,348) 18,087
Other revenues - 11,097 - 11,097
------------ ----------- ------------ ----------
TOTAL REVENUES 132,436 26,828 25,608 184,872
COSTS AND EXPENSES:
Operating expenses 67,098 17,923 13,933 98,954
General and administrative expenses 9,247 4,951 2,045 16,243
Depreciation and amortization 43,831 7,486 14,000 65,317
------------ ----------- ------------ ----------
OPERATING INCOME 12,260 (3,532) (4,370) 4,358
OTHER INCOME (EXPENSE):
Interest expense (36,189) 3,822 (3,200) (35,567)
Equity in losses of affiliated entities (4,624) (1,858) - (6,482)
Interest income 4,695 1,568 - 6,263
Other, net (1,419) 319 - (1,100)
------------ ----------- ------------ ----------
LOSS BEFORE INCOME TAXES (25,277) 319 (7,570) (32,528)
Income tax benefit - 1,312 - 1,312
------------ ----------- ------------ ----------
NET LOSS $ (25,277) $ 1,631 $ (7,570) $ (31,216)
============ =========== ============ ==========
NET LOSS PER CLASS A COMMON
AND COMMON SHARE $ (1.43) $ (1.00)
============ ==========
AVERAGE NUMBER OF CLASS A
COMMON AND COMMON SHARES
OUTSTANDING 17,662 31,244
============ ==========
</TABLE>
The accompanying notes to Unaudited Pro Forma Consolidated Financial Statements
are an integral part of this statement.
- 5 -
<PAGE> 22
NOTES TO UNAUDITED PRO FORMA
FINANCIAL STATEMENTS
The Unaudited Pro Forma Financial Statements were prepared to reflect
the purchase of the substantially all of the assets of Augusta System. In
addition, such financial statements were prepared to reflect the acquisition of
substantially all of the assets of Spacelink on December 20, 1994, the purchase
by BCI of 7,414,300 shares of the Company's Class A Common Stock on December
20, 1994, and the sale by the Company of its Gaston County, North Carolina
cable television system on July 25, 1994.
(1) The Augusta Purchase column of the Unaudited Pro Forma Consolidated
Balance Sheet represents the purchase of the Augusta System as if the purchase
was completed November 30, 1994. On February 22, 1995, the Company entered
into a Purchase and Sale Agreement with Cable TV Fund 12-B, Ltd. (the
"Partnership"), providing for the purchase by the Company of the Augusta
System. The purchase price of the Augusta System, which was determined by the
average of three separate independent appraisals, is $141,718,000, subject to
certain closing adjustments. Closing of the sale is subject to a number of
conditions, including the approval of the limited partners of the Partnership.
The Company, as General Partner of the Partnership, would receive a
distribution from the Partnership of approximately $12,500,000 upon the closing
of the Augusta System sale. Such distribution would reduce the basis of the
assets of the Augusta System. The Company anticipates using cash on hand and
proceeds from borrowings from its credit facility to finance the Augusta System
purchase. For purposes of the Pro Forma Balance Sheet, it is assumed
$40,000,000 will be borrowed from the credit facility. The adjustment was
calculated as follows:
<TABLE>
<S> <C>
Contract purchase price $ 141,718,000
Less: Distribution received
as General Partner (12,500,000)
-----------------
Net Paid 129,218,000
Closing Adjustments
Less: Accounts receivable, net 860,000
Prepaid expenses 579,000
Add: Accounts payable and
Accrued liabilities (1,102,000)
-----------------
Funds required 129,555,000
Proceeds from borrowings (40,000,000)
-----------------
Decrease in cash $ 89,555,000
=================
</TABLE>
The assets of the Augusta System will be allocated to tangible and
intangible assets based on an allocation an by independent appraiser. For
purposes of the Unaudited Forma Balance Sheet, it is assumed that 25 percent of
the net purchase price will be allocated to tangible assets.
(2) The other adjustments column of the Unaudited Pro Forma Consolidated
Balance Sheet reflects the acquisition of substantially all of the assets of
Spacelink and the purchase by BCI of 7,414,300 shares of the Company's Class A
Common Stock as if the transactions occurred on November 30, 1994. The
Spacelink transaction was a stock for net assets purchase whereby the Company
issued 3,900,000 shares of Class A Common Stock to acquire substantially all of
the assets and liabilities of Spacelink, excluding Spacelink's holding of
approximately 2.9 million shares of the Company's Common Stock. The Spacelink
transaction was accounted for as (i) the exchange of ownership interests
between entities under common control for the shares issued to Glenn R. Jones
and Jones International, Ltd., which is reflected at
- 6 -
<PAGE> 23
NOTES TO UNAUDITED PRO FORMA
FINANCIAL STATEMENTS (CONTINUED)
predecessor cost, and (ii) the acquisition of the minority interest of
Spacelink, which is reflected at fair market value. The excess of the market
value of Spacelink's minority interest over the book value of approximately
$16,000,000 is assigned to goodwill. On December 20, 1994, BCI purchased
7,414,300 newly issued shares of the Company's Class A Common Stock at $27.50
per share for $203,893,250. A portion of the $203,893,250 was used to repay
amounts then outstanding under the Company's and Spacelink's credit facilities
of $38,000,000 and $75,000,000, respectively, with the remainder being used to
pay certain fees and held for future needs.
(3) The Unaudited Pro Forma Statements of Operations reflect the purchase
of the Augusta System, the Spacelink transaction, the BCI transaction and the
sale of the Gaston System as if these transactions occurred on June 1, 1993.
The basis for the statements are the historical financials of the Company,
Spacelink and the Partnership. The depreciation and amortization of the
Augusta System has been adjusted to reflect the Company's basis in the assets.
Additional adjustments have been made for the amortization of the excess market
value of Spacelink's minority interest and for interest expense as a result of
changes in debt balances due to the above transaction.
- 7 -
<PAGE> 24
EXHIBIT INDEX
Exhibit No. Exhibit Description Page
- ----------- ------------------- ----
10 Purchase and Sale Agreement dated February 22, 1995
between Cable TV Fund 12-B, Ltd. and Jones
Intercable, Inc.
<PAGE> 1
(15524/KAL)
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is made as of the 22nd day of
February, 1995, by and between CABLE TV FUND 12- B, LTD., a Colorado limited
partnership ("Seller"), and JONES INTERCABLE, INC., a Colorado corporation
("Buyer").
RECITALS
A. Seller owns and operates a cable television system in and
around the Cities of Augusta, Blythe and Hephzibah, Georgia and the Counties of
Burke, Columbia and Richmond, Georgia (the "System").
B. Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, the System upon the terms and conditions set forth in this
Agreement.
AGREEMENT
In consideration of the mutual promises contained in this Agreement
and other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. Purchase and Sale. Subject to the terms and conditions set
forth in this Agreement, Seller shall sell, convey, assign, transfer and
deliver to Buyer, and Buyer shall purchase from Seller, on the Closing Date (as
defined in Paragraph 9 hereof), all of Seller's interest in the System and the
Assets (as defined in Paragraph 2 hereof) then being transferred and sold
pursuant hereto, free and clear of all security interests, liens, pledges,
charges and encumbrances.
2. Assets.
(a) The assets to be conveyed to Buyer hereunder shall consist of
all of the assets and properties of Seller, whether real, personal, tangible or
intangible, of whatever description and wherever located, now owned or used by
Seller
<PAGE> 2
solely in connection with Seller's ownership or operation of the System, except
those items excluded pursuant to subparagraph 2(b) hereof, but including all
additions made between the date hereof and the Closing Date, to the end that
all of Seller's assets owned on the Closing Date which are used or owned solely
in connection with Seller's ownership or operation of the System shall be sold
and transferred to Buyer. Such assets (collectively, the "Assets") shall
include, without limitation:
(i) all of Seller's towers, tower equipment, antennas,
aboveground and underground cable, distribution systems, headend amplifiers,
line amplifiers, earth satellite receive stations and related equipment,
microwave equipment, testing equipment, motor vehicles, office equipment,
furniture and fixtures, supplies, inventory and other physical assets owned or
used by Seller solely in connection with Seller's ownership or operation of the
System;
(ii) the franchises, leases, agreements, permits,
consents, licenses and other contracts, pole line or joint pole agreements,
underground conduit agreements, agreements for the reception or transmission of
signals by microwave, easements, rights-of-way and construction permits, if
any, and any other obligations and agreements between Seller and suppliers and
customers, which are owned or used by Seller solely in connection with Seller's
ownership and operation of the System, substantially all of which are listed on
Exhibit A attached hereto;
(iii) the real property owned and used solely in connection
with the System;
(iv) all accounts receivable of Seller arising in
connection with the System;
(v) all engineering records, files, data, drawings,
blueprints, schematics, maps, reports, lists and plans and processes owned or
developed by or for Seller and intended for use solely in connection with the
System;
-2-
<PAGE> 3
(vi) all promotional graphics, original art work, mats,
plates, negatives and other advertising or related materials developed by or
for Seller and intended for use solely in connection with the System; and
(vii) all of Seller's correspondence files, lists, records
and reports concerning customers and prospective customers of the System,
concerning television stations whose transmissions are or may be carried as a
part of the System and concerning all dealings with Federal, state, and local
regulatory agencies relating to the ownership or operation of the System,
including all reports filed by or on behalf of Seller with the Federal
Communications Commission (the "FCC") in connection with the System and any
Statements of Account of the System filed by or on behalf of Seller with the
United States Copyright Office in connection with the System;
provided however, that Seller shall not transfer to Buyer the licenses and
agreements identified on Exhibit B attached hereto (the "Additional
Agreements") until Seller has obtained the approval of the parties granting the
Additional Agreements to such transfer, whereupon such Additional Agreements
shall be deemed to be included in the assets to be transferred to Buyer
pursuant to this Agreement.
(b) The following properties and assets relating to the System and
its business operations shall be retained by Seller and shall not be sold,
assigned or transferred to Buyer:
(i) cash or cash equivalents on hand or in banks;
(ii) insurance policies and rights and claims thereunder;
(iii) all claims, rights and interest in and to any refunds
for Federal, state or local income or other taxes or fees of any nature
whatsoever for periods prior to the Closing Date, including without limitation,
fees paid to the United States Copyright Office; and
-3-
<PAGE> 4
(iv) assets disposed of in the normal course of business
or with the written consent of Buyer between the date hereof and the Closing
Date.
3. Purchase Price. Subject to the adjustments to be made in
accordance with Paragraph 4 hereof, the total purchase price for the Assets
shall be One Hundred Forty-One Million Seven Hundred Eighteen Thousand and
no/100's Dollars ($141,718,000.00) (the "Purchase Price"), which Purchase Price
represents the average of three separate independent appraisals of the System.
The Purchase Price shall be payable to Seller at Closing in cash, by cashier's
check or by wire transfer of federal funds to a bank or banks designated by
Seller.
4. Adjustments. All adjustments provided for herein with respect
to this transaction shall increase or decrease the Purchase Price, as
appropriate, and shall be made as of the close of business (5:01 p.m., Eastern
local time) on the Closing Date.
(a) Rent, pole rents, franchise fees, taxes, power and utility
fees and deposits, insurance premiums, licenses, customer prepayments and
deposits, and other prepayments and amounts due shall be prorated and debited
or credited to Seller or Buyer, as applicable. For purposes of adjustments
made under this Paragraph 4(a), the subscriber accounts receivable which are
due and payable for and with respect to the month in which the Closing takes
place shall be prorated as of the Closing Date.
(b) The Purchase Price shall be reduced by any accounts payable,
accrued expenses and vehicle lease obligations for which Seller would otherwise
be liable hereunder, but for which the obligation for payment is assumed by
Buyer.
-4-
<PAGE> 5
(c) Seller and Buyer shall jointly determine the adjustments
required by this Paragraph 4 at the Closing. The net amount to which Buyer or
Seller, as the case may be, is entitled pursuant hereto shall be thereupon paid
by Buyer or Seller, as the case may be, by an adjustment to the Purchase Price.
All adjustments made at Closing shall be tentative and shall be subject to
final adjustment within 90 days after Closing.
5. Assumption of Liabilities. Buyer shall assume and discharge
all debts, liabilities and obligations of Seller arising with respect to
periods subsequent to the Closing Date under any franchise, license, permit,
lease, instrument or agreement transferred to Buyer hereunder and, with respect
to periods prior to and including the Closing Date, and shall assume and
discharge all obligations of Seller to the extent that the Purchase Price is
reduced pursuant to Paragraph 4(b) hereof to reflect Buyer's assumption of such
obligations; provided, however, that Buyer shall not assume the Additional
Agreements until Seller has obtained the approval of the parties granting the
Additional Agreements to Seller's transfer of the Additional Agreements to
Buyer, whereupon the Additional Agreements shall be deemed to be included in
the assets to be assumed by Buyer hereunder. Buyer shall indemnify and hold
harmless Seller from and against any and all damages, costs, claims and
expenses (the "Indemnifiable Claims") arising by reason of the ownership,
operation or control of the System after the Closing Date; provided, however,
that Buyer shall not indemnify and hold harmless Seller from any Indemnifiable
Claims arising under Additional Agreements as a result of actions relating to
any period before Seller has obtained the approval of the parties granting the
-5-
<PAGE> 6
Additional Agreements to Seller's transfer of the Additional Agreements to
Buyer. Anything herein to the contrary notwithstanding, there is hereby
excluded from the assumed obligations, and Seller shall retain and discharge,
and indemnify and hold Buyer harmless from and against, any and all
Indemnifiable Claims to the extent they arise (a) out of any debt, liability or
obligation arising with respect to periods prior to the Closing Date for which
no reduction of the Purchase Price has been made pursuant to Paragraph 4(b)
hereof, (b) out of any debt, liability or obligation arising under the
Additional Agreements arising as a result of actions relating to any period
before Seller has obtained the approval of the parties granting the Additional
Agreements to Seller's transfer of the Additional Agreements to Buyer, and (c)
any debt, liability or obligation of Seller not expressly assumed hereunder,
whenever arising.
6. Seller's Representations. Seller hereby represents and
warrants to Buyer that:
(a) Seller is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Colorado. Seller
has all requisite partnership power and authority to own and operate its
properties and to carry on its business as now and where being conducted.
(b) All necessary consents and approvals have been obtained by
Seller for the execution and delivery of this Agreement. The execution and
delivery of this Agreement by Seller has been duly and validly authorized and
approved by all necessary action of Seller; provided, however, that the
approval of the limited partners of Seller of the execution, delivery and
performance of this Agreement
-6-
<PAGE> 7
has not been obtained as of the date hereof, but Seller will cause the Board of
Directors of the general partner of Seller to recommend that the limited
partners grant such approval and will use its best efforts to obtain such
approval, which must be received prior to the Closing. This Agreement is a
valid and binding obligation of Seller, enforceable against it in accordance
with its terms.
(c) Subject to the receipt of any required consents, Seller has
full legal power, right and authority to sell and convey to Buyer legal and
beneficial title to the Assets, and Seller's sale to Buyer shall transfer good
and marketable title thereto, free and clear of all security interests, liens,
pledges, charges and encumbrances of every kind.
(d) The execution, delivery and performance of this Agreement by
Seller will not violate any provision of law and will not, with or without the
giving of notice or the passage of time, conflict with or result in any breach
of any of the terms or conditions of, or constitute a default under, any
mortgage, agreement or other instrument to which Seller is a party or by which
Seller, the Assets or the System are bound. The execution, delivery and
performance of this Agreement by Seller will not result in the creation of any
security interest, lien, pledge, charge or encumbrance upon the Assets or the
System.
7. Conditions Precedent to Buyer's Obligations. The obligations
of Buyer under this Agreement with respect to the purchase and sale of the
Assets shall be subject to the fulfillment on or prior to the Closing Date of
each of the following conditions:
(a) All of the representations and warranties by Seller contained
in this Agreement shall be true and correct in all material respects at and as
of the
-7-
<PAGE> 8
Closing Date. Seller shall have complied with and performed all of the
agreements, covenants and conditions required by this Agreement to be performed
or complied with by it on or prior to the Closing Date.
(b) Seller shall have delivered to Buyer such instruments,
consents and approvals of third parties as are necessary to transfer the Assets
to Buyer pursuant to this Agreement, including, without limitation, evidence of
the approval by the limited partners of Seller of the execution, delivery and
performance of this Agreement.
(c) The statutory waiting period applicable to this Agreement and
the transactions contemplated hereby under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), shall have been
terminated or shall have expired.
8. Conditions Precedent to Seller's Obligations. The obligations
of Seller under this Agreement with respect to the purchase and sale of the
Assets shall be subject to the fulfillment on or prior to the Closing Date of
each of the following conditions:
(a) The statutory waiting period applicable to this Agreement and
the transactions contemplated hereby under the HSR Act shall have been
terminated or shall have expired.
(b) Seller shall have received the approval of the limited
partners of Seller to the execution, delivery and performance of this
Agreement.
(c) Buyer shall have delivered the Purchase Price to Seller in
accordance with Paragraph 3 hereof.
-8-
<PAGE> 9
9. Closing. The closing hereunder (the "Closing") shall be held
in the offices of Seller, 9697 E. Mineral Avenue, Englewood, Colorado 80112, on
such date or dates as the parties hereto shall mutually agree (the "Closing
Date"). At the Closing, all cash, checks, notes, deeds, bills of sale,
certificates of title, assignments and assumptions and other instruments and
documents referred to or contemplated by this Agreement shall be exchanged by
the parties hereto.
10. Brokerage. Seller represents and warrants to Buyer that
Seller will be solely responsible for, and pay in full, any and all brokerage
or finder's fees or agent's commissions or other like payment owing in
connection with Seller's use of any broker, finder or agent in connection with
this Agreement or the transactions contemplated hereby. Buyer represents and
warrants to Seller that Buyer will be solely responsible for, and pay in full,
any and all brokerage or finder's fees or agent's commissions or other like
payment owing in connection with Buyer's use of any broker, finder or agent in
connection with this Agreement or the transactions contemplated hereby. Each
party hereto shall indemnify and hold the other party hereto harmless against
and in respect of any breach by it of the provisions of this Paragraph 10.
11. Miscellaneous.
(a) Buyer shall have the right, upon notice to Seller, to assign
prior to the Closing Date, in whole or in part, its rights and obligations
hereunder to any affiliate of Buyer, including, without limitation, any public
limited partnership or partnerships of which Buyer or any affiliate of Buyer is
a general partner or any joint venture or general partnership of which Buyer,
or any affiliate of Buyer, or
-9-
<PAGE> 10
any of such public limited partnership or partnerships is a constituent
partner, or to any subsidiary of Buyer or other entity controlled by,
controlling or under common control with Buyer, or, subject to Seller's
consent, to any other entity.
(b) From time to time after the Closing Date, Seller shall, if
requested by Buyer, make, execute and deliver to Buyer such additional
assignments, bills of sale, deeds and other instruments of transfer, as may be
necessary or proper to transfer to Buyer all of Seller's right, title and
interest in and to the Assets covered by this Agreement. Such efforts and
assistance shall be without cost to Buyer.
(c) This Agreement embodies the entire understanding and agreement
among the parties concerning the subject matter hereof and supersedes any and
all prior negotiations, understandings or agreements in regard thereto. This
Agreement shall be interpreted, governed and construed in accordance with the
laws of the State of Colorado. This Agreement may not be modified or amended
except by an agreement in writing executed by both Buyer and Seller.
(d) Any sales, use, transfer or documentary taxes imposed in
connection with the sale and delivery of the Assets and the rights acquired by
Buyer under this Agreement shall be paid by Buyer.
[EXECUTION PAGE FOLLOWS]
-10-
<PAGE> 11
IN WITNESS WHEREOF the parties have executed this Agreement as of the
day and year first above written.
SELLER:
------
CABLE TV FUND 12-B, LTD. a
Colorado limited partnership
By: Jones Intercable, Inc., a
Colorado corporation, as its
general partner
By: /s/ James B. O'Brien
-----------------------
Title: President
-----------------------
BUYER:
-----
JONES INTERCABLE, INC.,
a Colorado corporation
By: /s/ Elizabeth Steele
-------------------------------
Title: Vice President
-------------------------------
-11-
<PAGE> 12
EXHIBIT A
(Attached to and made a part of that certain
Purchase and Sale Agreement dated as of
February 22, 1995 by and between
Cable TV Fund 12-B, Ltd.
and Jones Intercable, Inc.)
Intangible Assets
FCC Licenses
1. Business Radio (SMRS) License: WNYU937
2. Earth Station License: E860298
Franchises
1. City of Augusta, Georgia
2. City of Blythe, Georgia
3. County of Burke, Georgia
4. County of Columbia, Georgia
5. City of Hephzibah, Georgia
6. County of Richmond, Georgia
Miscellaneous Agreements
1. Equipment Lease dated July 6, 1984, with Augusta Coca-Cola Bottling
Company for Machine No. 5496, Model No. DN- 246, CAB. Serial No.
2107119.
2. Agreement dated August 31, 1994, with Flight Trac, Inc. for an aerial
signal leakage survey.
3. Alarm System Agreements, all dated July 31, 1990, with Bowman
Intrusion Detection Systems for Remote Site Nos. 1-9.
4. Agreement dated October 28, 1994, with Prather Contracting, Inc. for
construction services.
5. Agreement for Consulting Services dated January 15, 1991, with
Metronet Consulting, Inc.
6. Agreement dated July 1, 1992, as amended, with ASI Market Research,
Inc.
<PAGE> 13
7. Agreement dated July 9, 1990, with American Society of Composers,
Authors and Publishers for music-on-hold service.
8. Agreement Appointing Gurley's Supermarket as a Collection Agent to
Receive Payments of the Company's Bills dated September 30, 1992.
9. Maintenance Agreement dated June 7, 1992, with Xerox Corporation for
copier.
10. Customer Support Maintenance Agreement effective March 17, 1988, with
International Business Machines Corporation for Rolm telephone system.
11. Maintenance Agreement dated April 22, 1988, with Modern Business
Equipment, Inc. for typewriters.
12. Cable Distribution Agreement dated June 10, 1987, with Data
Broadcasting Corporation for the transmission of data services.
13. Sales and Audit Agreement dated July 15, 1994, with Cable Sales, Inc.
14. License to Use Service Observing Equipment Furnished by a Telephone
Company (License No. 239, Docket No. 3823- U) granted to Cable TV Fund
12-B, Limited by the Georgia Public Service Commission on February 21,
1989 to monitor business-related contacts with the general public in
order to improve customer service.
Pole Attachment Agreements
1. Agreement for Joint Use of Jefferson E.M.C. Poles for Television
Antenna Service Attachments dated August 16, 1976, between Jefferson
Electric Membership Corporation and Cablevision of Augusta, Inc. for
Richmond County, Georgia; Letter dated June 24, 1985, consenting to
transfer of the Agreement to Jones Intercable, Inc. or one or more of
its affiliates.
Real Property Leases
1. Lease Agreement dated June 5, 1989, as amended, between Nancy G.
Thomas and Ennis E. Thomas and Jones Intercable, Inc., as general
partner of Cable T. V. Fund 12B Ltd., for a headend site.
2. Lease Agreement dated October 7, 1986, between The Board of
Commissioners of Richmond County, Georgia and Cable TV Fund 12-B, Ltd.
for a microwave antenna and headend site.
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3. Lease Agreement dated October 8, 1986, as amended by Lease Renewal
Agreement dated October 8, 1991, between Ronald George Swank and Cable
T.V. Fund 12-B, Ltd. for a microwave receive site.
4. Lease Agreement dated June 5, 1989, as amended, between David M.
Turner and Varena Turner and Jones Intercable, Inc., as general
partner of Cable T.V. Fund 12B Ltd., for a tower site.
5. Lease Agreement dated February 10, 1990, as amended, between James C.
Wallace and Cable TV Fund 12-B, Ltd. for a tower site.
6. Lease Agreement dated June 20, 1989, as amended, between Carl A.
McGowan and Jones Intercable, Inc., as general partner of Cable T.V.
Fund 12B, Ltd., for a tower site.
Service/Wiring Agreements
1. Agreement dated May 9, 1985 to provide service to the Amida Motel.
2. Agreement dated February 19, 1985 to provide service to the Augusta
Inn.
3. Letter Agreement dated July 12, 1982 to provide service to Bon Air
Life Care Center, Inc.
4. Agreement dated April 19, 1979 to provide service to the Cardinal
Motel.
5. Letter Agreement dated October 11, 1983 to provide service to Econo
Lodge Washington Road.
6. Letter Agreement dated September 12, 1983 to provide service to Econo
Travel Motor Hotel.
7. Letter Agreement dated August 22, 1979 to provide service to Governors
Place.
8. Letter Agreement dated May 31, 1973 to provide service to Horne's
Motor Lodge.
9. Cable Television Installation and Service Subscription Agreement dated
December 1, 1988 to provide service to the Hunters Run Apartments.
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10. Solicitation Mailing List Application dated July 8, 1986 to provide
service to the VA Medical Center.
11. Cable Television Installation Agreement dated November 5, 1993 to
provide service to Keg Pointe II Subdivision.
12. Letter Agreement dated August 22, 1979 to provide service to Master
Economy Inn (Gordon Highway) and Master Economy Inn (Washington Road).
13. Letter Agreement dated June 25, 1982 to provide service to the Maxwell
House Apartments.
14. Agreement dated June 2, 1980 to provide service to the Medical Center
Inn.
15. Letter Agreement dated January 11, 1978 to provide service to the
Georgia War Veterans Home.
16. Letter Agreement dated March 24, 1975 to provide service to the
Holiday Inn of Augusta (Holiday Inn South - Gordon Highway).
17. Letter Agreement dated March 16, 1982 to provide service to the Ramada
Inn, Gordon Highway.
18. Letter Agreement dated March 31, 1982 to provide service to Royal
Palms Motel.
19. Letter Agreement dated August 18, 1982 to provide service to St. John
Towers.
20. Letter Agreement dated July 24, 1981 to provide service to St. Joseph
Hospital.
21. Agreement dated February 15, 1985 to provide service to the Telfair
Inn.
22. Letter Agreement dated January 10, 1984 to provide service to The
Courtyard by Marriott.
23. Agreement dated October 8, 1984 to provide service to the Augusta
Manor.
24. Cable Television Installation and Service Agreement dated October 15,
1992 to provide service to Spring House Apartments.
25. Agreement dated July 1, 1983 to provide service to Centers West
Villas.
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26. Agreement dated August 24, 1984 to provide service to Cliff Channell
Apartments.
27. Agreement dated September 15, 1983 to provide service to Damascus
Woods Association.
28. Letter Agreement dated February 6, 1984 to provide service to the
Glenwood Apartments.
29. Agreement dated May 26, 1983 to provide service to the Heart of
Augusta Motel.
30. Agreement dated November 23, 1984 to provide service to the Oakwood
Village Apartments.
31. Agreement dated May 26, 1983 to provide service to the Oasis Motor
Hotel.
32. Agreement dated November 8, 1983 to provide service to Old Petersburg
Plantation.
33. Agreement dated November 23, 1984 to provide service to the Ramblewood
Apartments.
34. Cable Television Installation Agreement dated March 1, 1989 to provide
service to the Scarlett Oaks Apartments.
35. Cable Television Installation and Service Agreement dated July 24,
1992 to provide service to Heritage Apartments.
36. Cable Television Installation and Service Agreement dated July 24,
1992 to provide service to River Creek Apartments.
Wireline Crossing Agreements
1. Wireline Crossing Agreement (RE-90291) dated February 8, 1989, between
CSX Transportation, Inc. and Jones Intercable, Inc. for a subgrade
CATV cable crossing at a point 619 feet northeastwardly of Milepost
YYG-5, at or near Augusta, Georgia.
2. Wireline Crossing Agreement (RE-92948) dated December 13, 1989,
between CSX Transportation, Inc. and Jones Intercable, Inc. for a
cable crossing at a point 4,329 feet southwardly of Milepost AK-460,
at or near Augusta, Georgia.
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3. Agreement No. 81171 dated March 8, 1973, as amended, between Seaboard
System Railroad, Inc. and Cable TV Fund 12-B, Ltd. for two TV cables
crossing right of way and main track at points 2,414 feet West of
Milepost 3 and 878 feet West of Milepost 6 near Augusta, Georgia.
4. Agreement No. 81172 dated January 8, 1980, as amended, between
Seaboard System Railroad, Inc. and Cable TV Fund 12-B, Ltd. for a TV
cable crossing right of way at intersection of Fenwick and Eighth
Streets, 9,855 feet East of Milepost 2, near Augusta, Georgia.
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EXHIBIT B
(Attached to and made a part of that certain
Purchase and Sale Agreement dated as of
February 22, 1995 by and between
Cable TV Fund 12-B, Ltd.
and Jones Intercable, Inc.)
Assets Not Transferred at Closing
(to be transferred automatically
upon receipt of third party consents)
Miscellaneous Agreements
1. Contract No. 0147428 dated February 28, 1994, with Wells Fargo Armored
Service Corporation for armored car service.
2. Service Agreement dated October 28, 1993, with Jefferson-Pilot
CO-OPPORTUNITIES for cable TV advertising services.
Pole Attachment Agreements
1. Pole Attachment Agreement dated January 14, 1991, between Georgia
Power Company and Cable TV Fund 12-B, Ltd. for the City of Augusta,
Georgia.
2. Pole Attachment Agreement dated January 14, 1991, between Georgia
Power Company and Cable TV Fund 12-B, Ltd. for the unincorporated
area of Columbia County, Georgia.
3. Pole Attachment Agreement dated January 14, 1991, between Georgia
Power Company and Cable TV Fund 12-B, Ltd. for the unincorporated
area of Richmond County, Georgia.
4. Pole Attachment Agreement dated October 28, 1986, between Planters EMC
and Cable TV Fund 12-B, Ltd. for the City of Augusta, Georgia.
5. Agreement for Joint Use of Electric System Poles for Television
Antenna Service Attachments dated January 15, 1986, as amended,
between Oglethorpe Power Corporation and Cable TV Fund 12-B, Ltd.
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6. License Agreement for Pole Attachments and/or Conduit Occupancy dated
March 12, 1986, as amended, between BellSouth Telecommunications, Inc.
d/b/a Southern Bell Telephone and Telegraph Company and Cable TV Fund
12- B, Ltd. for Augusta, Hephzibah and Martinez, Georgia plus
unincorporated Burke, Columbia and Richmond Counties, Georgia.
Wireline Crossing Agreements
1. Wireline Crossing Agreement (RE-94004) dated May 10, 1990, between CSX
Transportation, Inc. and Cable TV Fund 12-B, Ltd. for a CATV cable
crossing at a point 2,263 feet southwest of Milepost YYG-8, at or near
Augusta, Georgia.
2. Wireline Crossing Agreement (RE-90926) dated August 31, 1989, between
CSX Transportation, Inc. and Cable TV Fund 12-B, Ltd. for a fiber
optic cable crossing at a point 1,058 feet southwardly of Milepost
YYG-1, at or near Augusta, Georgia.
3. Agreement dated July 18, 1991 between Central of Georgia Railroad
Company and Cable TV Fund 12-B, Ltd. for an undergrade communications
wire line at Milepost GF-243 minus 1300 feet, at or near Augusta,
Georgia.
4. Agreement dated June 14, 1991 between Central of Georgia Railroad
Company and Cable TV Fund 12-B, Ltd. for an aerial CATV cable crossing
at Milepost GF-236 plus 1597 feet, at or near Hephzibah, Georgia.
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