<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 12, 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 7. Financial Statements
--------------------
The following described financial statements are being filed as an
amendment to the Form 8-K dated April 23, 1996 of Jones Intercable, Inc. in
connection with the acquisition by Jones Cable Holdings, Inc., a wholly owned
subsidiary of Jones Intercable, Inc., of the cable television system operating
in and around Savannah, Georgia.
a. Financial statements of businesses acquired. Historical financial
-------------------------------------------
statements of Cablevision of Savannah, a system included in Time Warner
Entertainment Company, L.P., as of December 31, 1995 and December 31, 1994 and
for the years then ended and for the period ended March 31, 1996.
b. Pro forma financial information. Pro forma financial statements of
-------------------------------
Jones Intercable, Inc. reflecting the acquisition of the Savannah System.
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS
On April 11, 1996, Jones Intercable, Inc. and subsidiaries (the "Company")
purchased pursuant to an asset purchase agreement with Jones Spacelink Income
Partners 87-1, L.P., a Colorado limited partnership managed by the Company, the
cable television systems serving the communities of Lodi, Burbank, Lafayette
Township, New London, Bailey Lakes, Savannah Shreve, Jeromesville, West
Lafayette, Loudonville, Perrysville, Creston, Gloria Glens, Sterling, Seville,
Westfield Center, Chippewa, Lake Area, Rittman, West Salem, Bloomville, Spencer,
Polk and Congress, all in the State of Ohio (the "Lodi System"). The purchase
price was $25,706,000, which was the average of three separate independent
appraisals of the fair market value of the Lodi System. The purchase of the
Lodi System was funded by available borrowings under the Company's revolving
credit facility. The Lodi System passes approximately 20,600 homes and serves
approximately 15,200 basic subscribers.
On April 11, 1996, the Company purchased pursuant to an asset purchase
agreement with Jones Spacelink Income/Growth Fund 1-A, Ltd., a Colorado limited
partnership managed by the Company, the cable television system serving the
areas in and around Ripon, Wisconsin (the "Ripon System"). The purchase price
was $3,712,667, which was the average of three separate independent appraisals
of the fair market value of the Ripon System. The purchase of the Ripon System
was funded by available borrowings under the Company's revolving credit
facility. The Ripon System passes approximately 2,500 homes and serves
approximately 2,450 basic subscribers.
On April 11, 1996, the Company purchased pursuant to a second asset
purchase agreement with Jones Spacelink Income/Growth Fund 1-A, Ltd. the cable
television system serving the areas in and around Lake Geneva, Wisconsin (the
"Lake Geneva System"). The purchase price was $6,345,667, which was the average
of three separate independent appraisals of the fair market value of the Lake
Geneva System. The purchase of the Lake Geneva System was funded by available
borrowings under the Company's revolving credit facility. The Lake Geneva
System passes approximately 5,400 homes and serves approximately 3,600 basic
subscribers.
On September 1, 1995, the Company entered into an asset exchange agreement
(the "Time Warner Exchange Agreement") with Time Warner Entertainment Company,
L.P. ("Time Warner"), an unaffiliated cable television operator. Pursuant to
the Time Warner Exchange Agreement, on April 12, 1996, the Company conveyed to
Time Warner the cable television systems serving Hilo, Hawaii (the "Hilo
System") and Kenosha, Wisconsin (the "Kenosha System") as well as the Lodi
System, the Ripon System, the Lake Geneva System and cash in the amount of
$11,735,667. The Hilo System and the Kenosha System serve approximately 17,300
and 28,400 basic subscribers, respectively, and pass approximately 23,000 and
39,000 homes, respectively. In return, the Company received from Time Warner
the cable television systems serving the communities in and around Savannah,
Georgia (the "Savannah System"). This transaction was considered a non-monetary
exchange of similar productive assets for accounting purposes and the Savannah
System was recorded at the historical cost of the assets given up plus the
$11,735,667 cash consideration. The Savannah System passes approximately
100,000 homes and serves approximately 63,000 subscribers. The Company paid
Financial Group a $1,286,000 fee upon the completion of the Time Warner 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.
<PAGE>
The Unaudited Pro Forma Consolidated Balance Sheet reflects the
acquisition of the Savannah System as if the transaction had occurred as of
March 31, 1996. The Unaudited Pro Forma Statement of Operations for the three
months ended March 31, 1996 reflects the acquisition of the Savannah System, as
well as the acquisition of the cable television systems serving areas in and
around Manassas, Virginia (the "Manassas System"), Prince Georges County,
Maryland (the "Prince Georges County System") and Reston, Virginia (the "Reston
System"), as if the transactions had occurred on January 1, 1996. The Unaudited
Pro Forma Consolidated Statement of Operations for the year ended December 31,
1995, reflects the acquisition of the Savannah System, the Prince Georges County
System, the Reston System and the Manassas System, as well as the acquisition of
the cable television systems serving areas in and around Dale City, Virginia
(the "Dale City System") and Augusta, Georgia (the "Augusta System).
The capital required to complete the acquisition of the Savannah 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
MARCH 31, 1996
<TABLE>
<CAPTION>
Pro Forma
Adjustments
-----------
As
Reported Savannah Pro Forma
3/31/96 System 3/31/96
----------- ----------- -----------
<S> <C> <C> <C>
CASH AND CASH EQUIVALENTS $ 5,625 $ - $ 5,625
RESTRICTED CASH 1,750 - 1,750
RECEIVABLES 30,736 - 30,736
INVESTMENT IN CABLE TELEVISION
PROPERTIES
Property, plant and equipment, net 372,283 12,197 384,480
Franchise Costs and Other Intangibles,
net 480,541 36,589 517,130
Investments in Domestic Partnerships 44,859 - 44,859
Investments in Foreign Partnerships 101,169 - 101,169
----------- ----------- -----------
Total investment 998,852 48,786 1,047,638
DEFERRED TAX ASSET, NET 3,862 - 3,862
DEPOSITS, PREPAIDS AND OTHER 55,127 - 55,127
----------- ----------- -----------
TOTAL ASSETS $ 1,095,952 $ 48,786 $ 1,144,738
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS'
INVESTMENT
LIABILITIES
Accounts payable and accrued liabilities $ 64,071 $ - $ 64,071
Subscriber prepayments and deposits 5,578 - 5,578
Subordinated debentures and other debt 462,535 - 462,535
Credit Facility 284,000 48,786 332,786
----------- ----------- -----------
Total liabilities 816,184 48,786 864,970
----------- ----------- -----------
SHAREHOLDERS' INVESTMENT
Class A Common Stock 262 - 262
Common Stock 51 - 51
Additional Paid-in Capital 395,081 - 395,081
Accumulated Deficit (159,686) - (159,686)
Unrealized Gain 44,060 - 44,060
----------- ----------- -----------
Total shareholders' investment 279,768 279,768
----------- ----------- -----------
Total Liabilities and Shareholders' Investment $ 1,095,952 $ 48,786 $ 1,144,738
=========== =========== ===========
</TABLE>
3
<PAGE>
JONES INTERCABLE, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
For the year three months ended March 31, 1996
<TABLE>
<CAPTION>
Pro Forma Adjustments
As --------------------------------
Reported Other Savannah
3/31/96 Acquisitions System Total
------- -------------- ---------- ---------
(In Thousands Except Per Share Data)
<S> <C> <C> <C> <C>
REVENUES FROM CABLE
TELEVISION OPERATIONS:
Cable Television Revenue
Subscriber service fees $ 52,342 $ 8,675 $ 1,858 $ 62,875
Management fees 5,080 (350) (92) 4,638
Non-cable Revenue 9,565 - - 9,565
------- ------ ------ -------
TOTAL REVENUES 66,987 8,325 1,766 77,078
COSTS AND EXPENSES:
Cable Television Expenses
Operating expenses 27,884 4,912 381 33,177
General and administrative
expenses 2,937 538 7 3,482
Non-cable operating, general
and administrative 9,932 - - 9,932
Depreciation and amortization 25,361 3,128 1,011 29,500
------- ------ ------ -------
OPERATING INCOME 873 (253) 367 987
OTHER INCOME (EXPENSE):
Interest expense (15,099) (2,189) (832) (18,120)
Equity in losses
of affiliated entities (886) - - (886)
Interest income 1,026 - - 1,026
Other, net (703) - - (703)
------- ------ ------ -------
LOSS BEFORE INCOME TAXES (14,789) (2,442) (465) (17,696)
Income tax provision - - - -
------- ------ ------ -------
NET LOSS $ (14,789) $ (2,442) $ (465) $ (17,696)
======= ====== ====== =======
</TABLE>
4
<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 Savannah
12/31/95 Acquisitions System 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 $ 102,003 $ 7,813 $ 245,166
Management fees 21,462 (3,300) (364) 17,798
Non-cable Revenue 32,026 - - 32,026
-------- ------- ------- -------
TOTAL REVENUES 188,838 98,703 7,449 294,990
COSTS AND EXPENSES:
Cable Television Expenses
Operating expenses 77,638 51,783 2,185 131,606
General and administrative
expenses 8,284 6,690 (87) 14,887
Non-cable operating, general
and administrative 32,382 - - 32,382
Depreciation and amortization 55,805 48,490 4,321 108,616
-------- ------- ------- -------
OPERATING INCOME 14,729 (8,260) 1,030 7,499
OTHER INCOME (EXPENSE):
Interest expense (49,552) (19,249) (3,325) (72,126)
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) (38,859) (2,295) (62,178)
Income tax provision - - - -
-------- ------- ------- -------
LOSS BEFORE EXTRAORDINARY
ITEM (21,024) (38,859) (2,295) (62,178)
EXTRAORDINARY ITEM
Loss on early extinguishment of debt, net
of related income taxes (692) - - (692)
-------- ------- ------- -------
NET LOSS $ (21,716) $ (38,859) $ (2,295) $ (62,870)
======== ======= ======= =======
</TABLE>
5
<PAGE>
NOTES TO UNAUDITED PRO FORMA
FINANCIAL STATEMENTS
(1) The Unaudited Pro Forma Consolidated Balance Sheet reflects the acquisition
of the Savannah System as if the transaction had occurred as of March 31, 1996.
The Unaudited Pro Forma Statement of Operations for the three months ended March
31, 1996 reflects the acquisition of the Savannah System, as well as the
acquisition of the cable television systems serving areas in and around
Manassas, Virginia (the "Manassas System"), prince Georges County, Maryland (the
"Prince Georges County System") and Reston, Virginia (the "Reston System"), as
if the transactions had occurred on January 1, 1996. The Unaudited Pro Forma
Consolidated Statement of Operations for the year ended December 31, 1995,
reflects the acquisition of the Savannah System, the Prince Georges County
System, the Reston System and the Manassas System, as well as the acquisition of
the cable television systems serving areas in and around Dale City, Virginia
(the "Dale City System") and Augusta, Georgia (the "Augusta System").
(2) The basis for the Unaudited Pro Forma Consolidated Statements of Operations
are the historical financials of the Company, the Savannah System, 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.
6
<PAGE>
Cablevision of Savannah
(A Cable System Included in Time Warner Entertainment Company, L.P.)
Financial Statements
Years ended December 31, 1995 and 1994
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Auditors............................................ 1
Balance Sheets for the three months ended March 31, 1996 (Unaudited)
and the years ended December 31, 1995 and 1994........................... 2
Statements of Operations for the three months ended March 31, 1996
and 1995 (Unaudited) and for the years ended December 31, 1995 and 1994.. 3
Statements of Changes in Partners' Capital for the years ended
December 31, 1995 and 1994 and for the three months ended
March 31, 1996 (Unaudited)............................................... 4
Statements of Cash Flows for the three months ended March 31, 1996
and 1995 (Unaudited) and for the years ended December 31, 1995 and 1994.. 5
Notes to Financial Statements............................................. 6
</TABLE>
<PAGE>
[LETTERHEAD OF ERNST & YOUNG LLP APPEARS HERE]
Report of Independent Auditors
To the General Partners of
Time Warner Entertainment Company, L.P.
We have audited the accompanying balance sheets of Cablevision of Savannah
("Savannah"), a cable system included in Time Warner Entertainment Company, L.P.
("TWE"), as of December 31, 1995 and 1994, and the related statements of
operations, changes in partners' capital and cash flows for the years then
ended. These financial statements are the responsibility of Savannah'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 Savannah, a cable system
included in TWE, at December 31, 1995 and 1994, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
May 15, 1996
1
<PAGE>
Cablevision of Savannah
(A Cable System Included in Time Warner Entertainment Company, L.P.)
Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
MARCH 31
1996 DECEMBER 31
(UNAUDITED) 1995 1994
----------------------------------
ASSETS
<S> <C> <C> <C>
Cash $ 91 $ 373 $ 242
Accounts receivable, less allowance for
doubtful
accounts of $60 (unaudited) in 1996, 1,322 578 557
$72 in 1995 and $141 in 1994
Prepaid expenses and other assets 15 16 30
Property, plant and equipment, at cost:
Land, buildings and improvements 1,842 1,840 1,506
Distribution system 39,896 39,656 37,613
Vehicles and other equipment 4,340 4,315 4,090
Construction in progress 767 314 373
----------------------------------
46,845 46,125 43,582
Less accumulated depreciation (24,311) (23,715) (21,437)
----------------------------------
Net property, plant and equipment 22,534 22,410 22,145
Cable franchise costs, net 6,083 6,144 5,684
Total assets $ 30,045 $ 29,521 $ 28,658
==================================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 589 $ 357 $ 412
Accrued expenses 1,847 1,938 1,504
Due to affiliated companies 315 310 295
Payable to Time Warner Entertainment
Company, L.P. 597 1,528 5,860
----------------------------------
3,348 4,133 8,071
Partners' capital 26,697 25,388 20,587
Total liabilities and partners' capital $ 30,045 $ 29,521 $ 28,658
==================================
</TABLE>
See accompanying notes.
2
<PAGE>
Cablevision of Savannah
(A Cable System Included in Time Warner Entertainment Company, L.P.)
Statements of Operations
(In thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31 DECEMBER 31
1996 1995 1995 1994
----------------------------------------
<S> <C> <C> <C> <C>
(Unaudited)
REVENUES
Service $6,259 $5,485 $23,036 $21,599
Connection and other 338 381 1,455 1,414
----------------------------------------
6,597 5,866 24,491 23,013
----------------------------------------
EXPENSES
Operating and origination 1,626 1,464 6,071 5,887
Programming purchased from
affiliated companies 474 457 1,830 1,747
Selling, general and administrative 1,294 1,348 5,041 4,007
Depreciation and amortization 807 808 3,277 3,376
Interest expense to affiliates 1,080 678 3,453 2,092
Loss on retirement of fixed assets 7 9 18 17
----------------------------------------
5,288 4,764 19,690 17,126
----------------------------------------
Net income $1,309 $1,102 $ 4,801 $ 5,887
========================================
</TABLE>
See accompanying notes.
3
<PAGE>
Cablevision of Savannah
(A Cable System Included in Time Warner Entertainment Company, L.P.)
Statements of Changes in Partners' Capital
(In thousands)
Balance at January 1, 1994 $14,700
Net income for the year ended December 31, 1994 5,887
---------
Balance at December 31, 1994 20,587
Net income for the year ended December 31, 1995 4,801
=========
Balance at December 31, 1995 25,388
Net income for the three months ended March 31, 1996 1,309
(unaudited)
---------
Balance at March 31, 1996 (unaudited) $26,697
=========
See accompanying notes.
4
<PAGE>
Cablevision of Savannah
(A Cable System Included in Time Warner Entertainment Company, L.P.)
Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31 DECEMBER 31
1996 1995 1995 1994
-----------------------------------------
<S> <C> <C> <C> <C>
(Unaudited)
OPERATING ACTIVITIES
Net income $1,309 $ 1,102 $ 4,801 $ 5,887
Adjustments for noncash and
nonoperating items:
Depreciation and amortization 807 808 3,277 3,376
Loss on retirement of fixed assets 7 9 18 17
Changes in assets and liabilities:
Accounts receivable, prepaid expenses
and other assets (743) 352 (7) 195
Accounts payable and accrued expenses 141 (165) 379 (145)
-----------------------------------------
Net cash provided by operations 1,521 2,106 8,468 9,330
INVESTING ACTIVITIES
Capital expenditures (871) (873) (3,306) (3,384)
Acquisition of cable franchise cost (1) (587) (699) (3)
expenditures
-----------------------------------------
Net cash used in investing activities (872) (1,460) (4,005) (3,387)
FINANCING ACTIVITIES
Net (decrease) increase in payable to
Time Warner Entertainment Company, L.P. (931) 71 (4,332) (5,713)
-----------------------------------------
Net cash used in financing activities (931) 71 (4,332) (5,713)
Net (decrease) increase in cash (282) 717 131 230
Cash at beginning of year 373 242 242 12
-----------------------------------------
Cash at end of year $ 91 $ 959 $ 373 $ 242
=========================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Interest paid $1,080 $ 678 $ 3,453 $ 2,092
=========================================
</TABLE>
See accompanying notes.
5
<PAGE>
Cablevision of Savannah
(A Cable System Included in Time Warner Entertainment Company, L.P.)
Notes to Financial Statements
December 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Cablevision of Savannah ("Savannah"), a cable system included in Time Warner
Entertainment Company, L.P. ("TWE"), 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. Savannah
operates in the City of Savannah, Georgia and surrounding areas under
nonexclusive franchise agreements which expire at various times through the year
2009.
TWE is a limited partnership between certain subsidiaries of Time Warner Inc.
("Time Warner"), the general partners, and a subsidiary of US WEST, Inc.
("USW"), the limited partner. In 1995, Time Warner acquired the aggregate
limited partnership interests previously held by subsidiaries of Toshiba
Corporation and ITOCHU Corporation. Savannah has no separate legal status or
existence. Savannah's resources are under the control of TWE management, subject
to contractual commitments by TWE to perform certain long-term contracts within
Savannah's present structure. Savannah's assets are legally available for the
satisfaction of debts of TWE, not solely those appearing in the accompanying
statements, and its debts may result in claims against assets not appearing
therein. Savannah is one of several cable systems included in TWE, and
transactions and the terms thereof may be arranged by and among members of the
affiliated group.
GENERAL
Information with respect to the three months ended March 31, 1995 and 1996 is
unaudited. The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with Rule 10-01 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments which are necessary for a fair statement of the
results for the interim periods have been made. All such adjustments are of a
normal, recurring nature.
The results for the three months ended March 31, 1996 are not necessarily
indicative of the results of operations for the full year.
6
<PAGE>
Cablevision of Savannah
(A Cable System Included in Time Warner Entertainment Company, L.P.)
Notes to Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 5--20 years
Distribution system 8--15 years
Vehicles and other equipment 3--10 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.
Advertising Costs
Advertising costs are expensed upon the first exhibition of the advertisement.
Advertising expense amounted to $389,000 and $320,000 in 1995 and 1994,
respectively.
DEFERRED INCOME
Recognition of income from subscribers billed in advance is deferred until the
services are rendered.
7
<PAGE>
Cablevision of Savannah
(A Cable System Included in Time Warner Entertainment Company, L.P.)
Notes to Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
effect the amounts reported in the financial statements and footnotes thereto.
Actual results could differ from those estimates.
CONCENTRATION OF CREDIT RISK
A significant portion of the customer base is concentrated within the local
geographical area of the cable system. Savannah 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
Savannah.
INCOME TAXES
Income or loss of Savannah is included in separate income tax returns of the TWE
partners. Accordingly, no income taxes are reflected in the Savannah financial
statements.
2. RELATED PARTIES
TWE provides services in the form of banking and treasury functions, plant
engineering, design and construction administration, employee benefit plan
administration, corporate legal services and other services of a general and
administrative nature. Management fees charged for such services aggregated
$164,000 (unaudited), $313,000 (unaudited) $826,000 and $670,000 for the three
months ended March 31, 1996 and 1995, and the years ended December 31, 1995 and
1994, respectively, and are included in the statements of operations.
8
<PAGE>
Cablevision of Savannah
(A Cable System Included in Time Warner Entertainment Company, L.P.)
Notes to Financial Statements (continued)
2. RELATED PARTIES (CONTINUED)
The statement of operations includes charges for programming and promotional
services provided by Home Box Office and other affiliates of TWE. Such charges
were based upon customary rates. Total charges allocated to Savannah aggregates
$474,000 (unaudited), $457,000 (unaudited), $1,830,000 and $1,747,000 for the
three months ended March 31, 1996 and 1995, and the years ended December 31,
1995 and 1994, respectively.
Interest charged to Savannah by TWE was computed based on the average interest
rate on TWE's outstanding borrowings and TWE's average debt to capital ratio
applied to Savannah's average net assets. Total interest expense was $1,100,000
(unaudited), $678,000 (unaudited) $3,400,000 and $2,100,000 for the three months
ended March 31, 1996 and 1995, and the years ended December 31, 1995 and 1994,
respectively.
3. COMMITMENTS
Rental expense for all operating leases, principally office, equipment and pole
attachments, approximated $68,000 (unaudited), $85,000 (unaudited), $339,000 and
$328,000 for the three months ended March 31, 1996 and 1995, and the years ended
December 31, 1995 and 1994, respectively, and are included in the statements of
operations. Future minimum rental payments required under noncancelable
operating leases are summarized as follows:
TOTAL RENTAL
COMMITMENT
------------
Year ended December 31:
1996 $47,000
1997 18,000
1998 3,000
1999 --
2000 and thereafter --
------------
$68,000
============
9
<PAGE>
Cablevision of Savannah
(A Cable System Included in Time Warner Entertainment Company, L.P.)
Notes to Financial Statements (continued)
4. BENEFIT PLANS
Savannah participates 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 was $44,000 (unaudited), $45,000 (unaudited),
$125,000 and $159,000 for the three months ended March 31, 1996 and 1995, and
the years ended December 31, 1995 and 1994, respectively.
Savannah's contributions to the Savings Plan can represent up to 6.67% of the
employees' compensation during the plan year. TWE's Board of Representatives has
the right in any year to set the maximum amount of Savannah's annual
contribution. Defined contribution plan expense was $12,000 (unaudited), $15,000
(unaudited), $54,000 and $64,000 for the three months ended March 31, 1996 and
1995, and the years ended December 31, 1995 and 1994, respectively.
5. SUBSEQUENT EVENT
On April 12, 1996, certain Savannah assets, excluding the receivable from TWE,
and certain liabilities were traded pursuant to an asset exchange agreement
between TWE and Jones Intercable, Inc.
10
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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: June 25, 1996 By: /s/ LARRY W. KASCHINSKE
-----------------------
Larry W. Kaschinske
Controller
(Principal Accounting Officer)
