<PAGE>
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): February 29, 1996
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>
Item 2. Acquisition of Assets
---------------------
All of the following information previously was disclosed in the
Report of Jones Intercable, Inc. (the "Company") for the transition period June
1, 1995 through December 31, 1995, which was filed by the Company with the
Securities and Exchange Commission ("SEC") on March 13, 1996, and is being
restated herein in the context of the Company's filing of the historical and pro
forma financial information required by Item 7 of SEC Form 8-K:
In August 1995, the Company entered into an asset exchange agreement
(the "TWEAN Exchange Agreement") with Time Warner Entertainment-Advance/Newhouse
Partnership ("TWEAN"), an unaffiliated cable television operator. The Company
subsequently assigned the TWEAN Exchange Agreement to Jones Cable Holdings,
Inc.("JCH"), a wholly owned subsidiary. On February 29, 1996, JCH conveyed to
TWEAN the cable television systems serving areas in and around Carmel, Indiana
(the "Carmel System"), Orangeburg, South Carolina (the "Orangeburg System") and
Tampa, Florida (the "Tampa System") and cash in the amount of $3,500,000,
subject to normal closing adjustments. In return, JCH received substantially all
of the assets of cable television systems serving Andrews Air Force Base,
Capitol Heights, Cheltenham, District Heights, Fairmont Heights, Forest Heights,
Morningside, Seat Pleasant, Upper Marlboro and portions of Prince Georges
County, Maryland (the "Prince Georges County System") and a portion of Fairfax
County, Virginia (the "Reston System"). Taking into account the aggregate
purchase price paid by JCH for the Carmel System, the Orangeburg System and the
Tampa System, which were acquired by JCH on February 28, 1996, plus the
$3,500,000 cash consideration paid by JCH to TWEAN, the aggregate consideration
paid for the Prince Georges County System and the Reston System was
approximately $176,468,000.
2
<PAGE>
Item 7. Financial Statements and Exhibits
---------------------------------
a. Financial statements of businesses acquired.
The historical financial statements of the Prince Georges County cable
television system are included in the enclosed financial statements of Time
Warner Entertainment-Advance/Newhouse Partnership.
The historical financial statements of the Reston System are included
in the enclosed financial statements of Warner Capital Communications of Reston,
a division of Time Warner Entertainment - Advance/Newhouse Partnership.
b. Pro forma financial information. Pro forma financial statements of
Jones Intercable, Inc. reflecting the acquisitions of the Prince Georges County
System and the Reston System.
c. Exhibits.
2.1 Purchase and Sale Agreement dated as of August 11, 1995
between IDS/Jones Growth Partners 87-A, Ltd. and the
Company. (1)
2.2 Purchase and Sale Agreement dated as of August 11, 1995
between Jones Cable Income Fund 1-B, Ltd. and the
Company. (1)
2.3 Purchase and Sale Agreement dated as of August 11, 1995
between Cable TV Fund 12-BCD Venture and the Company. (1)
2.4 Asset Exchange Agreement dated as of August 11, 1995
between Time Warner Entertainment-Advance/Newhouse
Partnership and the Company. (1)
(1) Incorporated by reference from the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1995.
3
<PAGE>
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: May 13, 1996 By: /s/ Kevin P. Coyle
------------------------------
Kevin P. Coyle
Group Vice President/Finance
4
<PAGE>
Financial Statements
Prince George's County
A Cable System Included in the Partnership
of Time Warner Entertainment -
Advance/Newhouse
April 1, 1995 through December 31, 1995
with Report of Independent Auditors
<PAGE>
Prince George's County
A Cable System Included in the Partnership of
Time Warner Entertainment - Advance/Newhouse
Financial Statements
April 1, 1995 through December 31, 1995
CONTENTS
Report of Independent Auditors........................................ 1
Financial Statements
Balance Sheet......................................................... 2
Statement of Operations............................................... 3
Statement of Changes in Partners' Capital............................. 4
Statement of Cash Flows............................................... 5
Notes to Financial Statements......................................... 6
<PAGE>
[LOGO OF ERNEST & YOUNG LLP]
Report of Independent Auditors
To the Management of Jones Intercable, Inc.
We have audited the accompanying balance sheet of Prince George's County, a
cable system included in the partnership of Time Warner Entertainment -
Advance/Newhouse ("TWEAN") as of December 31, 1995, and the related statements
of operations, changes in partners' capital and cash flows for the period from
April 1, 1995 through December 31, 1995. These financial statements are the
responsibility of Prince George's County management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit 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 audit provides 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 Prince George's County as of
December 31, 1995, and its results of operations and its cash flows for the
period from April 1, 1995 through December 31, 1995, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
April 12, 1996
1
<PAGE>
Prince George's County
A Cable System Included in the Partnership of
Time Warner Entertainment - Advance/Newhouse
Balance Sheet
(in thousands)
December 31, 1995
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash $ 287
Accounts receivable, less allowance for
doubtful accounts of $26 1,090
Prepaid expenses and other assets 290
Property, plant and equipment, at cost:
Land, buildings and improvements 2,021
Distribution system 29,801
Vehicles and other equipment 4,890
Construction in progress 1,651
--------
38,363
Less accumulated depreciation (22,683)
--------
Net property, plant and equipment 15,680
Franchise costs, less accumulated
amortization of $263 63
Receivable from TWEAN 9,713
--------
Total assets $ 27,123
========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 78
Accrued liabilities 1,788
Due to affiliated companies 561
--------
2,427
Partners' capital 24,696
--------
Total liabilities and partners' capital $ 27,123
========
</TABLE>
See accompanying notes.
2
<PAGE>
Prince George's County
A Cable System Included in the Partnership of
Time Warner Entertainment - Advance/Newhouse
Statement of Operations
(in thousands)
April 1, 1995 through December 31, 1995
<TABLE>
<CAPTION>
REVENUES
<S> <C>
Service $27,095
Connection and other 1,580
-------
28,675
EXPENSES
Operating and origination 8,099
Programming purchased from affiliated 2,498
companies
Selling, general and administrative 5,167
Depreciation and amortization 3,039
Interest expense 15
-------
18,818
-------
Net income $ 9,857
=======
</TABLE>
See accompanying notes.
3
<PAGE>
Prince George's County
A Cable System Included in the Partnership of
Time Warner Entertainment - Advance/Newhouse
Statement of Changes in Partners' Capital
(in thousands)
April 1, 1995 through December 31, 1995
<TABLE>
<CAPTION>
<S> <C>
Contribution of partners' capital at $14,839
April 1, 1995
Net income for the period from April 1,
1995 through 9,857
December 31, 1995
-------
Partners' capital at December 31, 1995 $24,696
=======
</TABLE>
See accompanying notes.
4
<PAGE>
Prince George's County
A Cable System Included in the Partnership of
Time Warner Entertainment - Advance/Newhouse
Statement of Cash Flows
(in thousands)
April 1, 1995 through December 31, 1995
<TABLE>
<CAPTION>
OPERATING ACTIVITIES
<S> <C>
Net income $ 9,857
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 3,039
Changes in operating assets and
liabilities:
Accounts receivable and prepaid (1,199)
expenses
Accounts payable and accrued 1,274
liabilities
--------
Net cash provided by operating 12,971
activities
INVESTING ACTIVITIES
Purchases of property, plant and (2,972)
equipment, net
Increase in receivable from TWEAN (9,713)
--------
Net cash used in investing activities (12,685)
Net decrease in cash 286
Cash at beginning of year 1
--------
Cash at end of year $ 287
========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Interest paid $ 15
========
</TABLE>
See accompanying notes.
5
<PAGE>
Prince George's County
A Cable System Included in the Partnership of
Time Warner Entertainment - Advance/Newhouse
Notes to Financial Statements
1. DESCRIPTION OF BUSINESS
Prince George's County (the "System"), a cable system included in the
partnership of Time Warner Entertainment - Advance/Newhouse ("TWEAN"), is
principally engaged in the operation of a cable television business. Such
operations consist primarily of selling video programming which is distributed
to subscribers for a monthly fee. The System operates in the City of Largo,
Maryland and surrounding areas under nonexclusive franchise agreements which
expire at various times beginning July 1997.
On April 1, 1995, Time Warner Entertainment Company, L.P. ("TWE"), contributed
2.9 million subscribers (for a two-thirds interest) and Advance/Newhouse ("A/N")
contributed 1.5 million subscribers (for a one-third interest) to form TWEAN, a
joint venture that TWE manages. TWE is a limited partnership between certain
subsidiaries of Time Warner Inc., the general partners, and a subsidiary of US
WEST, Inc., the limited partner's.
Assets (primarily property, plant and equipment) and liabilities of the System
were included in the A/N contribution at historical amounts. The statements of
operations, partners' capital and cash flows are presented under the accounting
policies of TWEAN for the period from April 1, 1995 through December 31, 1995.
The System has no separate legal status or existence. The System resources are
under the control of TWEAN management. The System assets are legally available
for the satisfaction of debts of TWEAN, not solely those appearing in the
accompanying statements, and its debts may result in claims against assets not
appearing therein. The System is one of several cable systems included in the
partnership of TWEAN and transactions and the terms thereof may be arranged by
and among members of the affiliated group.
6
<PAGE>
Prince George's County
A Cable System Included in the Partnership of
Time Warner Entertainment - Advance/Newhouse
Notes to Financial Statements
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PROPERTY, PLANT AND EQUIPMENT
Depreciation is provided on the straight-line basis over the estimated useful
lives of the assets as follows:
Buildings and improvements 10-20 years
Distribution system 5-15 years
Vehicles and other equipment 3-11 years
In March 1995, the FASB issued Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," ("FAS 121") effective for fiscal years beginning
after December 15, 1995. The new rules establish standards for the recognition
and measurement of impairment losses on long-lived assets and certain intangible
assets. The Company expects that the adoption of FAS 121 will not have a
material effect on its financial statements.
FRANCHISE COSTS
Costs incurred in acquiring cable television franchises are capitalized and then
amortized on a straight-line basis over various periods not in excess of the
life of the applicable franchise agreement.
DEFERRED INCOME
Recognition of income from subscribers billed in advance is deferred until the
services are rendered.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and footnotes thereto.
Actual results could differ from those estimates.
7
<PAGE>
Prince George's County
A Cable System Included in the Partnership of
Time Warner Entertainment - Advance/Newhouse
Notes to Financial Statements
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CONCENTRATION OF CREDIT RISK
A significant portion of the customer base is concentrated within the local
geographical area of the cable system. The division generally extends credit to
its customers and the ultimate collection of accounts receivable could be
affected by the local economy. Management performs continuous credit evaluations
of its customers and may require cash in advance or other special arrangements
from certain customers. Management does not believe that there is any
significant credit risk which could have a material effect on the financial
condition of the division.
INCOME TAXES
Income or loss of the System is included in separate income tax returns of the
TWEAN partners. Accordingly, no income taxes are reflected in the System
financial statements.
3. RELATED PARTY TRANSACTIONS
The balance sheet includes an amount receivable from TWEAN (see Note 6)
representing the balance of excess cash flow generated by the system and
transferred to TWEAN. Amounts transferred are not subject to repayment and do
not bear interest.
The statement of revenues and expenses and changes in net assets includes
charges for programming and promotional services provided by Home Box Office and
other affiliates of TWE. These charges are based upon customary rates. Total
charges allocated to the System aggregated $2,498,000 for the period from April
1, 1995 through December 31, 1995.
8
<PAGE>
Prince George's County
A Cable System Included in the Partnership of
Time Warner Entertainment - Advance/Newhouse
Notes to Financial Statements
4. COMMITMENTS
Rental expense for all operating leases, principally office, equipment and pole
attachments, approximated $332,000 for the period from April 1, 1995 through
December 31, 1995. Future minimum rental payments required under noncancelable
operating leases are summarized as follows:
<TABLE>
<CAPTION>
Year ended December 31:
<S> <C>
1996 $ 281,000
1997 288,000
1998 295,000
1999 302,000
2000 310,000
Thereafter 264,000
----------
$1,740,000
==========
</TABLE>
5. BENEFIT PLANS
Effective April 1, 1995, the System has participated in the Time Warner Cable
Pension Plan (the "Pension Plan"), a noncontributory defined benefit pension
plan, and the Time Warner Cable Employees Savings Plan (the "Savings Plan"), a
defined contribution plan, both of which are administered by a committee
appointed by the Board of Representatives of TWE and cover substantially all
employees.
Benefits under the Pension Plan are determined based on formulas which reflect
employees' years of service and compensation levels during their employment
period. Total pension cost for the period from April 1, 1995 through December
31, 1995 approximated $82,000.
The System's contributions to the Savings Plan can amount to up to 6.67% of the
employees' compensation during the plan year. The Board of Representatives of
TWE has the right in any year to set the maximum amount of the System's
contribution. Defined contribution plan expense for the period from April 1,
1995 through December 31, 1995 approximated $38,000.
9
<PAGE>
Prince George's County
A Cable System Included in the Partnership of
Time Warner Entertainment - Advance/Newhouse
Notes to Financial Statements
6. SUBSEQUENT EVENT
On February 29, 1996, certain System assets, excluding the receivable from
TWEAN, and certain liabilities were traded pursuant to an asset exchange
agreement between TWEAN and Jones Intercable, Inc.
10
<PAGE>
Financial Statements
Warner Cable Communications
(Fairfax County, Virginia)
A Division of Time Warner
Entertainment-Advance/Newhouse Partnership
Year ended December 31, 1995
with Report of Independent Auditors
<PAGE>
Warner Cable Communications
(Fairfax County, Virginia)
A Division of Time Warner Entertainment-Advance/Newhouse Partnership
Financial Statements
Year ended December 31, 1995
INDEX TO AUDITED FINANCIAL STATEMENTS
Report of Independent Auditors...................................... 1
Statement of Assets, Liabilities and Net Assets..................... 2
Statement of Revenues and Expenses and Changes in Net Assets........ 3
Statement of Cash Flows............................................. 4
Notes to Financial Statements....................................... 5
<PAGE>
Report of Independent Auditors
The General Partner
Time Warner Entertainment-Advance/Newhouse Partnership
Stamford, Connecticut
We have audited the accompanying statement of assets, liabilities and net assets
of Warner Cable Communications (Fairfax County, Virginia), a division
of Time Warner Entertainment-Advance/Newhouse Partnership, as of December 31,
1995, and the related statements of revenues and expenses and changes in net
assets and cash flows for the year then ended. These financial statements are
the responsibility of the Division's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets, liabilities and net assets of Warner Cable
Communications (Fairfax County, Virginia), a division of Time Warner
Entertainment-Advance/Newhouse Partnership, at December 31, 1995, and its
revenues and expenses and changes in net assets and its cash flows for the year
then ended in conformity with generally accepted accounting principles.
May 2, 1996
1
<PAGE>
Warner Cable Communications
(Fairfax County, Virginia)
A Division of Time Warner Entertainment-Advance/Newhouse Partnership
Statement of Assets, Liabilities and Net Assets
December 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Cash $ 66,124
Accounts receivable, net of allowance for doubtful
accounts of $25,985 276,768
Prepaid expenses and other assets 33,505
Property, plant and equipment, at cost (Note 2):
Land, building and improvements $ 168,487
Distribution system 14,148,225
Vehicles and other equipment 733,143
Construction in progress 588
-----------
15,050,443
Less accumulated depreciation (7,925,300)
-----------
Net property, plant and equipment 7,125,143
Franchise costs and other intangible assets, less
accumulated amortization of $272,639 190,254
----------
$7,691,794
==========
LIABILITIES AND NET ASSETS
Accounts payable $ 91,191
Accrued liabilities 417,210
Subscribers' advance payments 164,405
----------
Total current liabilities 672,806
Net assets (Note 1) 7,018,988
----------
$7,691,794
==========
</TABLE>
See notes to financial statements.
2
<PAGE>
Warner Cable Communications
(Fairfax County, Virginia)
A Division of Time Warner Entertainment-Advance/Newhouse Partnership
Statement of Revenues and Expenses and Changes in Net Assets
Year ended December 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Revenues:
Service $5,368,406
Connection and other 929,483
----------
$ 6,297,889
Expenses:
Operating and origination 2,375,300
Selling, general and administrative 971,119
Depreciation and amortization (Note 2) 1,047,636
Interest 163,793
----------
4,557,848
-----------
Net income 1,740,041
Net assets at beginning of year 7,212,992
Net payments to Time Warner Entertainment-
Advance/Newhouse Partnership (1,934,045)
-----------
Net assets at end of year $ 7,018,988
===========
</TABLE>
See notes to financial statements.
3
<PAGE>
Warner Cable Communications
(Fairfax County, Virginia)
A Division of Time Warner Entertainment-Advance/Newhouse Partnership
Statement of Cash Flows
Year ended December 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
OPERATING ACTIVITIES
Net income $1,740,041
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,047,636
Changes in noncash working capital:
Accounts receivable, prepaid expenses, and
other assets 10,531
Accounts payable, accrued liabilities, and
subscribers' advance payments 9,286
----------
Net cash provided by operating activities $ 2,807,494
INVESTING ACTIVITIES
Purchases of property, plant and equipment (859,800)
FINANCING ACTIVITIES
Net payments to Time Warner Entertainment-
Advance/Newhouse Partnership (1,934,045)
-----------
Net increase in cash 13,649
Cash at beginning of year 52,475
-----------
Cash at end of year $ 66,124
===========
</TABLE>
See notes to financial statements.
4
<PAGE>
Warner Cable Communications
(Fairfax County, Virginia)
A Division of Time Warner Entertainment-Advance/Newhouse Partnership
Notes to Financial Statements
Year ended December 31, 1995
1. Description of Business
Warner Cable Communications (Fairfax County, Virginia) (the Division), a
division of Time Warner Entertainment-Advance/Newhouse Partnership (TWE-A/N), is
principally engaged in the cable television business. Such operations consist
primarily of selling video programming which is distributed to subscribers for a
monthly fee through a network of coaxial cables. The Division operates in the
County of Fairfax, Virginia, under a nonexclusive franchise agreement which is
in effect until 2003.
On April 1, 1995, Time Warner Entertainment Company, L.P. (TWE) formed TWE-A/N,
a general partnership, with Advance/Newhouse Partnership (Advance/Newhouse). The
TWE and Advance/Newhouse interests in TWE-A/N are 66.67% and 33.33%,
respectively. The assets of the Division were contributed to TWE-A/N, which is
managed by, and an affiliate of TWE.
The Division has no separate legal status or existence. The Division's resources
and existence are at the disposal of TWE-A/N management, subject to contractual
commitments by TWE-A/N to perform certain long-term contracts within the present
divisional structure. The Division's assets are legally available for the
satisfaction of debts of TWE-A/N, not solely those appearing in the accompanying
statements; and its debts may result in claims against assets not appearing
therein. The Division is one of several divisions and affiliates of TWE-A/N, and
transactions and the terms thereof may be arranged by and among members of the
affiliated group.
2. Significant Accounting Policies
Property, Plant and Equipment
Depreciation is provided on the straight-line basis over the estimated useful
lives of the assets as follows:
Building and improvements 5-25 years
Distribution system 3-15 years
Vehicles and other equipment 3-10 years
5
<PAGE>
Warner Cable Communications
(Fairfax County, Virginia)
A Division of Time Warner Entertainment-Advance/Newhouse Partnership
Notes to Financial Statements (continued)
2. Significant Accounting Policies (continued)
Franchise Costs and Other Intangible Assets
The Division has deferred costs incurred to acquire the franchises and other
intangible assets. Amortization of these costs is provided on the straight-line
basis over the term of the franchise agreement.
Income Taxes
As a U.S. partnership, TWE-A/N is not subject to federal and state income
taxation. As a result, a provision for income taxes has not been included in the
financial statements.
Statement of Cash Flows
For purposes of this statement, cash includes all highly liquid investments
purchased with original maturities of three months or less.
Financial Statements
The financial statements have been prepared in accordance with generally
accepted accounting principles, which require the use of management's estimates
and assumptions. Actual results could differ from these estimates.
3. Related Party Transactions
There is a charge equivalent to income taxes of $707,000 included in Net
Payments to TWE-A/N.
Interest charged to the Division for January through March by TWE was computed
by multiplying the Division's estimated debt by the TWE effective interest rate.
The TWE effective interest rate was 7.6%. For April through December, the
TWE-A/N interest expense was allocated to the Division based on the ratio of the
Division's net assets to total TWE-A/N net assets. During the year ended
December 31, 1995, interest charges aggregated $163,793.
6
<PAGE>
Warner Cable Communications
(Fairfax County, Virginia)
A Division of Time Warner Entertainment-Advance/Newhouse Partnership
Notes to Financial Statements (continued)
3. Related Party Transactions (continued)
The Division records charges for a portion of TWE-A/N's selling, general and
administrative expenses ($211,064 for the year ended December 31, 1995), which
are allocated by TWE-A/N to its divisions and affiliates based upon subscriber
levels.
The statement of revenues and expenses and changes in net assets includes
charges for programming and promotional services provided by Home Box Office and
other affiliates of TWE-A/N. These charges are based upon customary rates.
4. Leases
Rental expenses for all operating leases, principally office rent, for the year
ended December 31, 1995, amounted to $136,541. The Division has no significant
noncancelable rental commitments.
5. Benefit Plans
The Division participates in a noncontributory defined benefit pension plan (the
Pension Plan) which is maintained by TWE-A/N and covers substantially all
employees. Benefits under the Pension Plan are determined based on formulas
which reflect the employees' years of service and average compensation for the
highest five consecutive years of the last ten years of service. Total pension
cost for the year ended December 31, 1995, was $25,513.
Prior to April 1, 1995, the Division participated in a defined contribution plan
maintained by TWE (The Time Warner Cable Employees' Savings Plan). Effective
April 1, 1995, this Savings Plan was amended, restated and renamed the Cable
Employees' Savings Plan (The Savings Plan). The Savings Plan covers
substantially all employees. The Division's contributions to the Savings Plan
can amount to up to 6.67% of the employee's eligible compensation during the
plan year. The plan sponsor has the right in any year to set the maximum amount
of the Division's contribution. Defined contribution plan expense totaled
$10,907 for the year ended December 31, 1995.
7
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS
On February 28, 1996, Jones Intercable, Inc. and subsidiaries (the
"Company") purchased pursuant to a purchase and sale agreement with IDS/Jones
Growth Partners 87-A, Ltd., one of the Company's managed limited partnerships,
the cable television system serving areas in and around Carmel, Indiana (the
"Carmel System"). The purchase price was $44,235,333, which was the average of
three separate independent appraisals of the fair market value of the Carmel
System. The purchase of the Carmel System was funded by borrowings available
under the Company's revolving credit facility. The Carmel System passes
approximately 24,400 homes and serves approximately 19,200 basic subscribers.
On February 28, 1996, the Company purchased pursuant to a purchase and sale
agreement with Jones Cable Income Fund 1-B, Ltd., one of the Company's managed
limited partnerships, the cable television system serving areas in and around
Orangeburg, South Carolina (the "Orangeburg System"). The purchase price was
$18,347,667, which was the average of three separate independent appraisals of
the fair market value of the Orangeburg System. The purchase of the Orangeburg
System was funded by borrowings available under the Company's revolving credit
facility. The Orangeburg System passes approximately 16,530 homes and serves
approximately 12,500 basic subscribers.
On February 28, 1996, the Company purchased pursuant to a purchase and sale
agreement with the Cable TV Fund 12-BCD Venture (the "Venture"), a joint venture
of three of the Company's managed limited partnerships, the cable television
system serving areas in and around Tampa, Florida (the "Tampa System"). The
purchase price was $110,395,667, which was the average of three separate
independent appraisals of the fair market value of the Tampa System. The
purchase of the Tampa System was funded by borrowings available under the
Company's revolving credit facility. The Tampa System passes approximately
128,500 homes and serves approximately 65,000 basic subscribers.
On August 11, 1995, the Company entered into an asset exchange agreement
(the "TWEAN Exchange Agreement") with Time Warner Entertainment-Advance/Newhouse
Partnership ("TWEAN"), an unaffiliated cable television system operator.
Pursuant to the TWEAN Exchange Agreement, on February 29, 1996, the Company
conveyed to TWEAN the Carmel System, the Orangeburg System and the Tampa System
and cash in the amount of $3,500,000 (subject to normal closing adjustments). In
return, the Company received from TWEAN the cable television systems serving
Andrews Air Force Base, Capitol Heights, Cheltenham, District Heights, Fairmount
Heights, Forest Heights, Morningside, Seat Pleasant, Upper Marlboro, and
portions of Prince George's County, all in Maryland (the "Prince George's County
System"), and portions of Fairfax County, Virginia (the "Reston System"). These
systems serve approximately 86,500 subscribers. This transaction was considered
a non-monetary exchange of similar productive assets for accounting purposes and
the Prince Georges County System and the Reston System were recorded at the
historical cost of the assets given up plus the $3,500,000 cash consideration.
The Company paid Financial Group a $1,668,000 fee upon the completion of the
TWEAN Exchange Agreement as compensation to it for acting as the Company's
financial advisor. All fees paid to Financial Group by the Company are based
upon 90% of the estimated commercial rate charged by unaffiliated financial
advisors.
The following Unaudited Pro Forma Consolidated Financial Statements reflect
the acquisition of the Prince Georges County System and the Reston System. The
Unaudited Pro Forma Consolidated Balance Sheet
<PAGE>
reflects the acquisition of the Prince Georges County System and the Reston
System as if the transaction had occurred as of December 31, 1995. In addition,
the Unaudited Pro Forma Consolidated Balance Sheet reflects the purchase of the
cable television system serving areas in and around Manassas, Virginia (the
"Manassas System"), which was completed on January 10, 1996, as if the
transaction had occurred as of December 31, 1995. The Unaudited Pro Forma
Statement of Operations reflects the acquisition of the Prince Georges County
System and the Reston System, as well as acquisitions of the Manassas System,
the cable television system serving areas in and around Dale City, Virginia (the
"Dale City System") and the cable television system serving areas in and around
Augusta, Georgia (the "Augusta System"), as if the transactions had occurred
January 1, 1995.
The capital required to complete the acquisition of the Prince Georges
County System and the Reston System was provided by the Company's Revolving
Credit Facility.
The Unaudited Pro Forma Financial Statements should be read in conjunction
with the Notes to Unaudited Financial Statements. The Unaudited Pro Forma
Statements of Operations are based on historical data and may not be indicative
of actual results obtained due to these transactions.
2
<PAGE>
JONES INTERCABLE, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Pro Forma Adjustments
----------------------------
As Prince George/
Reported Manassas Reston Pro Forma
12/31/95 System Systems 12/31/95
-------- -------- -------------- ----------
<S> <C> <C> <C> <C>
CASH AND CASH EQUIVALENTS $ 2,314 $ - $ - $ 2,314
RESTRICTED CASH 9,770 - - 9,770
RECEIVABLES 36,085 350 1,728 38,163
INVESTMENT IN CABLE TELEVISION
PROPERTIES
Property, plant and equipment, net 303,488 17,750 44,120 365,358
Franchise Costs and Other Intangibles,
net 309,813 54,372 134,027 498,212
Investments in Domestic Partnerships 45,745 - - 45,745
Investments in Foreign Partnerships 99,613 - - 99,613
-------- ------- -------- ----------
Total investment 758,659 72,122 178,147 1,008,928
DEFERRED TAX ASSET, NET 3,862 - - 3,862
DEPOSITS, PREPAIDS AND OTHER 49,809 (2,802) 52 47,059
-------- ------- -------- ----------
TOTAL ASSETS $860,499 $69,670 $179,927 $1,110,096
======== ======= ======== ==========
LIABILITIES AND SHAREHOLDERS'
INVESTMENT
LIABILITIES
Accounts payable and accrued liabilities $ 69,411 $ - $ - $ 69,411
Subscriber prepayments and deposits 5,579 20 60 5,659
Subordinated debentures and other debt 462,714 - - 462,714
Credit Facility 30,000 69,650 179,867 279,517
-------- ------- -------- ----------
Total liabilities 567,704 69,670 179,927 817,301
-------- ------- -------- ----------
SHAREHOLDERS' INVESTMENT
Class A Common Stock 262 - - 262
Common Stock 51 - - 51
Additional Paid-in Capital 394,875 - - 394,875
Accumulated Deficit (144,897) - - (144,897)
Unrealized Gain 42,504 - - 42,504
-------- ------- -------- ----------
Total shareholders' investment 292,795 292,795
-------- ------- -------- ----------
Total Liabilities and Shareholders' Investment $860,499 $69,670 $179,927 $1,110,096
======== ======= ======== ==========
</TABLE>
3
<PAGE>
JONES INTERCABLE, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
For the year ended December 31, 1995
<TABLE>
<CAPTION>
Pro Forma Adjustments
As ----------------------------
Reported Other Prince George/
12/31/95 Acquisitions Reston Systems Total
-------- ------------ -------------- --------
(In Thousands Except Per Share Data)
<S> <C> <C> <C> <C>
REVENUES FROM CABLE
TELEVISION OPERATIONS:
Cable Television Revenue
Subscriber service fees $135,350 $ 57,343 $ 44,660 $237,353
Management fees 21,462 (1,215) (2,085) 18,162
Non-cable Revenue 32,026 - - 32,026
-------- -------- -------- --------
TOTAL REVENUES 188,838 56,128 42,575 287,541
COSTS AND EXPENSES:
Cable Television Expenses
Operating expenses 77,638 29,013 22,770 129,421
General and administrative
expenses 8,284 3,787 2,903 14,974
Non-cable operating, general
and administrative 32,382 - - 32,382
Depreciation and amortization 55,805 30,842 17,648 104,295
-------- -------- -------- --------
OPERATING INCOME 14,729 (7,514) (746) 6,469
OTHER INCOME (EXPENSE):
Interest expense (49,552) (6,895) (12,354) (68,801)
Equity in income (losses)
of affiliated entities (58) - - (58)
Interest income 14,383 (11,350) - 3,033
Other, net (526) - - (526)
-------- -------- -------- --------
LOSS BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM (21,024) (25,759) (13,100) (59,883)
Income tax provision - - - -
-------- -------- -------- --------
LOSS BEFORE EXTRAORDINARY
ITEM (21,024) (25,759) (13,100) (59,883)
EXTRAORDINARY ITEM
Loss on early extinguishment of debt, net
of related income taxes (692) - - (692)
-------- -------- -------- --------
NET LOSS $(21,716) $(25,759) $(13,100) $(60,575)
======== ======== ======== ========
</TABLE>
4
<PAGE>
NOTES TO UNAUDITED PRO FORMA
FINANCIAL STATEMENTS
(1) The Unaudited Pro Forma Consolidated Financial Statements reflect the
acquisition of the Prince Georges County System and the Reston System. The
Unaudited Pro Forma Consolidated Balance Sheet reflects the acquisition of the
Prince Georges County System and the Reston System as if the transaction had
occurred as of December 31, 1995. In addition, the Unaudited Pro Forma
Consolidated Balance Sheet reflects the purchase of the cable television system
serving areas in and around Manassas, Virginia (the "Manassas System"), which
was completed on January 10, 1996, as if the transaction had occurred as of
December 31, 1995. The Unaudited Pro Forma Statement of Operations reflects the
acquisition of the Prince Georges County System and the Reston System, as well
as acquisitions of the Manassas System, the cable television system serving
areas in and around Dale City, Virginia (the "Dale City System") and the cable
television system serving areas in and around Augusta, Georgia (the "Augusta
System"), as if the transactions had occurred January 1, 1995.
(2) The basis for the Unaudited Pro Forma Consolidated Statements of Operations
are the historical financials of the Company, the Prince Georges County System,
the Reston System, the Dale City System, the Augusta System and the Manassas
System. The depreciation and amortization of the acquired systems has been
adjusted to reflect the Company's basis in the assets. Interest expense and
interest income have been adjusted as a result of changes in debt balances and
cash due to the above transactions. In addition, management fee revenue has been
reduced to reflect the sale of certain partnership systems in connection with
the above acquisitions.
5
