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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1996
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[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ____________ to ___________
Commission File Number 1-9953
JONES INTERCABLE, INC.
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Exact name of registrant as specified in charter
Colorado #84-0613514
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State of incorporation I.R.S. employer I.D.#
9697 East Mineral Avenue, Englewood, Colorado 80112
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Address of principal executive office
(303) 792-3111
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Registrant's telephone number
Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section l3 or l5(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No _____
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Shares outstanding of each of the registrant's classes of Common Stock, as of
October 25, 1996.
26,264,523 - Common Stock, $.01 par value per share
5,113,021 - Class A Common Stock, $.01 par value per share
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JONES INTERCABLE, INC. AND SUBSIDIARIES
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I N D E X
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Page
Number
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PART I. FINANCIAL INFORMATION.
Item 1. Financial Statements
Unaudited Consolidated Balance Sheets
September 30, 1996 and December 31, 1995 3
Unaudited Consolidated Statements of Operations
Three and Nine Months Ended September 30, 1996 and 1995 5
Unaudited Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1996 and 1995 6
Notes to Unaudited Consolidated Financial Statements
September 30, 1996 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 12
PART II. OTHER INFORMATION.
Item 6. Exhibits and Reports on Form 8-K 18
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UNAUDITED CONSOLIDATED Jones Intercable, Inc.
BALANCE SHEETS and Subsidiaries
As of September 30, 1996 and December 31, 1995
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<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
ASSETS (Stated in Thousands)
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<S> <C> <C>
CASH AND CASH EQUIVALENTS $ 2,128 $ 2,314
RESTRICTED CASH 1,105 6,357
RECEIVABLES:
Trade receivables, net of allowance for
doubtful accounts of $1,759,000 in September 1996
and $1,056,000 in December 1995 14,066 19,332
Affiliated entities 9,361 14,311
Other 2,447 2,442
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 598,785 475,436
Less-accumulated depreciation (192,787) (171,948)
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405,998 303,488
Franchise costs and other intangible assets, net of
accumulated amortization of $196,518,000 at September 30,
1996 and $171,497,000 at December 31, 1995 485,348 309,813
Investments in domestic cable television
partnerships and affiliates 37,436 45,745
Investment in Bell Cablemedia plc 120,780 99,613
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TOTAL INVESTMENT IN CABLE TELEVISION PROPERTIES 1,049,562 758,659
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DEFERRED TAX ASSET, net of valuation
allowance of $41,385,000 at September 30, 1996 and
$29,253,000 at December 31, 1995 3,862 3,862
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS 76,738 53,222
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TOTAL ASSETS $ 1,159,269 $ 860,499
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</TABLE>
The accompanying notes to unaudited consolidated financial
statements are an integral part of these balance sheets.
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UNAUDITED CONSOLIDATED Jones Intercable, Inc.
BALANCE SHEETS and Subsidiaries
As of September 30, 1996 and December 31, 1995
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<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
LIABILITIES AND SHAREHOLDERS' INVESTMENT (Stated in Thousands)
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<S> <C> <C>
LIABILITIES:
Accounts payable and accrued liabilities $ 65,283 $ 69,411
Subscriber prepayments and deposits 3,231 5,579
Subordinated debentures and other debt 462,947 462,714
Credit Facility 352,000 30,000
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TOTAL LIABILITIES 883,461 567,704
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SHAREHOLDERS' INVESTMENT:
Class A Common Stock, $.01 par value, 60,000,000
shares authorized; 26,264,523 and 26,212,055 shares issued
at September 30, 1996 and December 31, 1995, respectively 263 262
Common Stock, $.01 par value, 5,550,000 shares
authorized; 5,113,021 shares issued at September 30, 1996
and December 31, 1995 51 51
Additional paid-in capital 395,212 394,875
Unrealized holding gain on marketable securities 56,285 42,504
Accumulated deficit (176,003) (144,897)
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TOTAL SHAREHOLDERS' INVESTMENT 275,808 292,795
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TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $ 1,159,269 $ 860,499
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</TABLE>
The accompanying notes to unaudited consolidated financial
statements are an integral part of these balance sheets.
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<TABLE>
<CAPTION>
UNAUDITED CONSOLIDATED Jones Intercable, Inc.
STATEMENTS OF OPERATIONS and Subsidiaries
For the three and nine months ended September 30, 1996 and 1995
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For the Three Months Ended For the Nine Months Ended
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September 30, September 30, September 30, September 30,
1996 1995 1996 1995
(Stated in Thousands Except Per Share Data)
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<S> <C> <C> <C> <C>
REVENUES FROM CABLE TELEVISION OPERATIONS:
Cable Television Revenue
Subscriber service fees $ 64,710 $ 31,843 $ 180,852 $ 96,064
Management fees 4,740 5,503 14,594 16,130
Fund Fee and Brokerage Fee - - 15,483 -
Non-cable Revenue 5,693 7,390 24,367 20,249
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TOTAL REVENUES 75,143 44,736 235,296 132,443
COSTS AND EXPENSES:
Cable Television Expenses
Operating expenses 33,762 18,223 95,342 56,168
General and administrative expenses * 4,235 1,722 11,180 5,755
Non-cable operating, general and administrative 5,757 7,526 24,546 21,261
Depreciation and amortization 30,654 12,796 84,692 37,621
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OPERATING INCOME 735 4,469 19,536 11,638
OTHER INCOME (EXPENSE):
Interest expense (17,620) (13,252) (50,188) (36,305)
Equity in losses of affiliated entities (1,695) (779) (3,703) (2,675)
Interest income 573 4,990 3,065 12,793
Gain on the sale of assets 2,873 - 2,873 -
Other, net (2,074) 123 (2,689) 50
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LOSS BEFORE INCOME TAXES (17,208) (4,449) (31,106) (14,499)
Income tax benefit - - - -
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NET LOSS $ (17,208) $ (4,449) $ (31,106) $ (14,499)
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PRIMARY LOSS PER SHARE: $ (.55) $ (.14) $ (.99) $ (.46)
======= ======= ========= ========
AVERAGE NUMBER OF CLASS A COMMON AND
COMMON SHARES OUTSTANDING 31,378 31,271 31,371 31,263
======= ======= ========= ========
</TABLE>
* Of the total general and administrative expenses, approximately $1,380,000 and
$606,000 for the three months ended September 30, 1996 and 1995, respectively,
and approximately $3,244,000 and $1,826,000 for the nine months ended September
30, 1996 and 1995, respectively, represent related party expenses.
The accompanying notes to unaudited consolidated financial
statements are an integral part of these statements.
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<TABLE>
<CAPTION>
UNAUDITED CONSOLIDATED STATEMENTS OF Jones Intercable, Inc.
CASH FLOWS and Subsidiaries
For the nine months ended September 30, 1996 and 1995
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For the Nine Months Ended
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September 30, 1996 September 30, 1995
(Stated in Thousands Except Per Share Data)
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (31,106) $ (14,499)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 84,692 37,621
Equity in losses of affiliates 3,703 2,675
Class A Stock option expense 195 195
Decrease in restricted cash 5,252 -
Decrease (increase) in trade receivables 3,679 (2,192)
Decrease (increase) in other receivables, prepaid
expenses and other assets (13,602) (15,065)
Increase (decrease) in accounts payable, accrued
liabilities and subscriber prepayments and deposits (6,489) (10,154)
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Net cash provided by (used in) operating activities 46,324 (1,419)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of cable television systems (298,020) -
Deposit on cable television system (12,000) (6,000)
Investment in affiliates - (3,500)
Purchase of property and equipment (66,033) (39,974)
Other, net 2,217 (1,758)
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Net cash used in investing activities (373,836) (51,232)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 322,000 -
Proceeds from the sale of Senior Notes, net - 196,500
Decrease in accounts receivable from affiliated entities 4,950 15,218
Proceeds from Class A stock options 149 -
Other, net 227 -
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Net cash provided by financing activities 327,326 211,718
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Increase (decrease) in Cash and Cash Equivalents (186) 159,067
Cash and Cash Equivalents, beginning of period 2,314 79,842
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Cash and Cash Equivalents, end of period $ 2,128 $ 238,909
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</TABLE>
The accompanying notes to unaudited consolidated financial
statements are an integral part of these statements.
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NOTES TO UNAUDITED CONSOLIDATED Jones Intercable, Inc.
FINANCIAL STATEMENTS and Subsidiaries
(1) This Form 10-Q is being filed by Jones Intercable, Inc. and its
subsidiaries (the "Company"). This Form 10-Q is being filed in conformity with
the SEC requirements for unaudited financial statements and does not contain all
of the necessary footnote disclosures required for a fair presentation of the
Balance Sheets, Statements of Operations and Statements of Cash Flows in
conformity with generally accepted accounting principles. However, in the
opinion of management, this data includes all adjustments, consisting only of
normal recurring accruals, necessary to present fairly the Company's financial
position at September 30, 1996 and December 31, 1995 and its results of
operations and cash flows for the three and nine months ended September 30, 1996
and 1995. Results of operations for these periods are not necessarily indicative
of results to be expected for the full year.
(2) The Company has completed the following acquisitions, exchanges and sales
in 1996:
Acquisitions
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On January 10, 1996, the Company purchased the cable television systems
serving Manassas, Manassas Park, Haymarket and portions of unincorporated Prince
William County, all in the State of Virginia (the "Manassas System") from an
unaffiliated party. The purchase price of the Manassas System was $71,000,000.
The purchase was funded by borrowings available under the Company's revolving
credit facility. The Company paid Jones Financial Group, Ltd. ("Financial
Group"), a subsidiary of Jones International, Ltd., a fee of $896,000 upon
closing of this transaction for acting as the Company's financial advisor in
connection with this transaction. All fees paid to Financial Group by the
Company are based upon 90% of the estimated commercial rate charged by
unaffiliated financial advisors. The Manassas System passes approximately 39,300
homes and serves approximately 26,600 basic subscribers.
On February 28, 1996, the Company purchased from 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 from 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 from 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.
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On April 11, 1996, the Company purchased from 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 also purchased from 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 also purchased from 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.
Exchanges
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On February 29, 1996, the Company, pursuant to an asset exchange agreement
(the "TWEAN Exchange Agreement") with Time Warner Entertainment-Advance/Newhouse
Partnership ("TWEAN"), an unaffiliated cable television system operator,
conveyed to TWEAN the Carmel System, the Orangeburg System and the Tampa System
and cash in the amount of $3,500,000. 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 Georges
County, all in Maryland (the "South Prince Georges 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
South 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.
On April 12, 1996, the Company, pursuant to an asset exchange agreement
(the "Time Warner Exchange Agreement") with Time Warner Entertainment Company,
L.P. ("Time Warner"), an unaffiliated cable television operator, 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
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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.
Sales
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On June 14, 1996, the Company completed the sale of Galactic Radio, Inc.,
a wholly-owned subsidiary, to Jones Global Group, Inc., an affiliated company.
Galactic Radio, Inc. owns and operates Jones Satellite Networks, Inc. and
Superaudio. The sale price was $17.2 million. The Company's Board of Directors
requested and received a fairness opinion related to this sale from an
unaffiliated investment banking firm. The sales price was paid in the form of
984,968 ADSs of Bell Cablemedia, plc. The number of ADSs represents the
purchase price of $17.2 million divided by the 30-day average closing price of
an ADS for the 30-day period immediately preceding the closing date. As a
result of this transaction, the Company now directly owns 7.2 million ADSs of
Bell Cablemedia. Due to the related party nature of this transaction, no gain
is reflected in the accompanying financial statements.
On July 31, 1996, the Company sold Jones Satellite Programming, Inc.
("JSP"), a wholly-owned subsidiary, to an unaffiliated party for $2,873,871.
The Company recorded a gain of approximately $2,873,000 upon the closing of this
sale. JSP provided satellite programming to satellite dish owners.
The pro forma effect of the above-described acquisitions and exchanges of
cable television properties and the sales of non-strategic subsidiaries on the
Company's results of operations for the nine months ended September 30, 1996 are
presented in the following unaudited tabulation:
<TABLE>
<CAPTION>
For the nine months ended September 30, 1996:
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Acquisitions/
As Reported Exchanges Sales Pro Forma
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<S> <C> <C> <C> <C>
Revenues $ 235,296 $ 11,109 $ (8,962) $ 237,443
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Operating Income $ 19,536 $ 651 $ 455 $ 20,642
=========== =========== ========= =========
Net Loss $ (31,106) $ (2,700) $ 455 $ (33,351)
=========== =========== ========= =========
Loss Per Share $ (.99) $ (1.06)
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</TABLE>
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The pro forma effect of the above-described acquisitions, exchanges and
sales as well as the acquisition of the cable television system serving areas in
and around Augusta, Georgia (the "Augusta System") in October 1995 and the cable
television system serving areas in and around Dale City, Virginia in November
1995 on the Company's results of operations for the nine months ended September
30, 1995 are presented in the following unaudited tabulation:
<TABLE>
<CAPTION>
For the nine months ended September 30, 1995:
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Acquisitions/
As Reported Exchanges Sales Pro Forma
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<S> <C> <C> <C> <C>
Revenues $ 132,443 $ 86,918 $ (13,421) $ 205,940
======= ========= ========= ===========
Operating Income $ 11,638 $ (8,087) $ 685 $ 4,236
======= ========= ========= ===========
Net Loss $ (14,499) $ (34,820) $ 685 $ (48,634)
======= ========= ========= ===========
Loss Per Share $ (.46) $ (1.56)
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</TABLE>
(3) On August 16, 1996, the Company entered into an agreement with an
unaffiliated party to sell the cable television systems serving areas in and
around Walnut Valley and Oxnard, both in the state of California, for
$104,000,000. The closing of this transaction is subject to a number of
conditions including obtaining necessary governmental and other third party
consents.
(4) On April 1, 1996, Cable TV Fund 11-B, Ltd. ("Fund 11-B"), one of the
Company's managed limited partnerships, sold the cable television system serving
areas in and around Lancaster, New York to an unaffiliated third party for
$84,000,000. Upon closing, Fund 11-B repaid its indebtedness, a sales tax
liability and a $2,100,000 brokerage fee to The Jones Group, Ltd., a wholly
owned subsidiary of the Company. The remaining proceeds were distributed to Fund
11-B's partners. The Company, as general partner of Fund 11-B, received a
distribution of $14,000,000 related to this transaction. Funds received in
payment of the brokerage fee and the general partner distribution were used to
reduce amounts outstanding on the Company's revolving credit facility.
(5) On July 30, 1996, the Company entered into an agreement with Maryland Cable
Partners, L.P., an unaffiliated party, to purchase the cable television system
serving the communities of Berwyn Heights, Bladensburg, Bowie, Brentwood,
Cheverly, College Park, Colmar Manor, Cottage City, Edmonston, Glenarden,
Greenbelt, Hyattsville, Landover Hills, Laurel, Mt. Rainer, New Carrollton,
North Brentwood, Riverdale, Takoma Park, University Park and portions of Prince
Georges County, all in the State of Maryland (the "North Prince Georges County
System"). The purchase price is $235,000,000, subject to downward adjustment if
the seller does not meet certain equivalent basic subscriber and/or annualized
gross revenue thresholds as of the closing date. The North Prince Georges County
System passes approximately 150,000 homes and is expected to serve approximately
87,000 equivalent basic subscribers generating approximately $52,000,000 in
annualized gross revenues at closing. This transaction is expected to close in
the first half of 1997. It is expected that the purchase of the North Prince
Georges County System will be funded by cash on hand and by borrowings under the
Company's revolving credit facility. The Company will pay Financial Group a fee
of $2,115,000 upon closing of this transaction for acting as the Company's
financial advisor in connection with this transaction. All fees paid to
Financial Group by the Company are based upon 90% of the estimated commercial
rate charged by unaffiliated financial advisors. The North Prince Georges County
System is contiguous to the Company's South Prince Georges County System. The
acquisition of the North Prince Georges County System will allow the Company to
serve all 160,000 subscribers in Prince Georges County and bring the Company's
total subscriber count in the Washington, D.C. area to approximately 384,000
subscribers.
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(6) On October 25, 1996, the Company entered into an asset exchange agreement
with United CATV, Inc., an unaffiliated party, which is an affiliate of Tele-
Communications, Inc. Pursuant to the exchange agreement, the Company will convey
to United CATV, Inc. the cable television system serving areas in and around
Evergreen, Idaho Springs and Jefferson County, all in the State of Colorado, in
exchange for the cable television system serving areas in and around Annapolis,
Southern Anne Arundel County and the Naval Academy, all in the State of Maryland
(the "Annapolis System"), and cash in the amount of $2,500,000 (subject to
normal closing adjustments). Such systems serve approximately 25,700 basic
subscribers. The Company will pay Jones Financial Group a fee upon completion of
this exchange agreement for acting as the Company's financial advisor in
connection with this transaction. All fees paid to Financial Group by the
Company are based upon 90% of the estimated commercial rate charged by
unaffiliated financial advisors. This transaction is expected to be completed in
the first half of 1997.
(7) On September 17, 1996, the Company amended its reducing revolving credit
facility to increase the maximum amount available to $600 million and to reduce
by 1/8% the rates of interest charged on any amounts outstanding. On October 29,
1996, the Company, through Jones Cable Holdings II, Inc. ("JCH II"), a wholly-
owned subsidiary, entered into an additional $600 million credit facility. The
new credit facility consists of a $300 million reducing revolving credit
facility and a $300 million 364 day revolving credit facility. The reducing
revolving credit facility allows for borrowing through the final maturity date
of December 31, 2005. The maximum amount available reduces quarterly beginning
March 31, 2000 through the final maturity date of December 31, 2005. The 364 day
revolving credit facility allows for borrowings through the 364th day subsequent
to the closing date of the loan, at which time any outstanding borrowings
automatically convert to a term loan payable in semi-annual installments
commencing June 30, 2001 with final maturity on December 31, 2005. Interest on
amounts outstanding will vary from the Base Rate (which generally approximates
the prime rate) to Base Rate plus 1/4% or LIBOR plus 1/2% to 1 1/4%, depending
on certain financial covenants. A commitment fee of 1/8% to 3/8% per year on
unused amounts is also required.
(8) Net income (loss) per share of Class A Common Stock and Common Stock is
based on the weighted average number of shares outstanding during the periods.
Common stock equivalents were not significant to the computation of primary
earnings (loss) per share.
(9) For purposes of the Consolidated Statements of Cash Flows, the Company
considers all highly liquid investments purchased with a maturity of three
months or less to be cash equivalents. No amounts were paid or received relating
to income taxes during the three and nine months ended September 30, 1996 and
1995. Approximately $60,137,000 and $41,927,000 of interest expense was paid
during the nine months ended September 30, 1996 and 1995, respectively. Other
than the sale of Galactic Radio, Inc. described in Note 2, there were no
material non-cash investing or financing transactions recorded during the nine
month periods ended September 30, 1996 and 1995.
(10) Certain prior period amounts have been reclassified to conform to the
current period presentation.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
- -------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
- -----------------------------------
FINANCIAL CONDITION
The Company historically has grown by acquiring and developing cable
television systems for both itself and its managed limited partnerships,
primarily in suburban areas with attractive demographic characteristics. The
Company intends to liquidate its Company-managed limited partnerships as such
partnerships achieve their investment objectives and as opportunities for sales
of partnership cable television systems arise in the marketplace over the next
several years. In accordance with this strategy, the Company has begun to
market certain of the cable television systems owned by its managed limited
partnerships.
The Company is implementing a balanced strategy of acquiring cable
television systems from Company-managed limited partnerships and from third
parties. As part of this process, certain systems owned by the Company and its
managed partnerships may be sold to third parties and Company-owned systems may
be exchanged for systems owned by other cable system operators. It is the
Company's plan to cluster its cable television properties, to the extent
feasible, in geographic areas. Clustering systems should enable the Company to
obtain operating efficiencies, and it should position the Company to capitalize
on new revenue and business opportunities as the telecommunications industry
evolves. The Company also intends to maintain and enhance the value of its
current cable television systems through capital expenditures. Such
expenditures will include, among others, cable television plant extensions and
the upgrade and rebuild of certain systems. The Company also intends to
institute new services as they are developed and become economically viable.
Acquisitions of cable television systems, the development of new services
and capital expenditures for system extensions and upgrades are subject to the
availability of cash generated from operations, borrowings under the Company's
revolving credit facilities, debt and/or equity financing. In addition, the
Company may explore other financing options such as private equity capital
and/or the sale of additional non-strategic assets. There can be no assurance
that the capital resources necessary to accomplish the Company's acquisition and
development plans will be available on terms and conditions acceptable to the
Company, or at all.
In conjunction with the Company's acquisition strategy, the Company has
acquired the Manassas System, the South Prince Georges County System, the Reston
System and the Savannah System during 1996. The acquisition of such systems has
increased the Company's basic subscriber base by approximately 139,000 basic
subscribers to approximately 577,000 basic subscribers at September 30, 1996. In
addition, these transactions are part of the Company's strategy to cluster its
cable systems. The Manassas System, the South Prince Georges County System and
the Reston System are near other Company-owned and Company-managed systems in
the Washington DC area. The Savannah System is in relative close proximity to
the Company's Augusta System. These transactions are described in detail in Note
2 of the Notes to Unaudited Consolidated Financial Statements.
The Manassas System was purchased for $71,000,000. Funding was provided by
borrowings available under the Company's revolving credit facility. The South
Prince Georges County System and the Reston System were acquired in exchange for
three systems that the Company purchased from managed partnerships. The
$176,479,000 of capital required by this transaction was provided by borrowings
available under the Company's revolving credit facility. The Savannah System was
acquired in exchange for two Company owned cable television systems and three
cable television systems purchased from managed partnerships. In addition to the
two Company-owned cable television systems exchanged, $47,500,000 of capital was
required by this transaction and it was provided by borrowings available under
the Company's revolving credit facility.
-12-
<PAGE>
In addition to the systems acquired during 1996, the Company has entered
into agreements to acquire two additional systems in the Washington DC area. On
July 30, 1996, the Company entered into an agreement to purchase the North
Prince Georges County System for $235,000,000. Funding for this transaction is
expected to be provided by borrowings available under the Company's credit
facilities. On October 25, 1996, the Company entered into an agreement to
exchange certain of its Colorado cable television systems for the Annapolis
System. These transactions are expected to close in the first half of 1997.
These transactions are described in detail in the Notes to Unaudited
Consolidated Financial Statements.
From time to time, the Company makes loans to its managed partnerships,
although it is not required to do so. As of September 30, 1996, the Company had
advanced funds to various managed partnerships and other affiliates of the
Company totaling approximately $9,361,000, a decrease of approximately
$4,950,000 over the amount advanced at December 31, 1995. Of the total balance
of $9,361,000, an advance to Spacelink Fund 4, Ltd. ("Fund 4"), net of reserve,
accounted for approximately $3,537,000, or 38%, of the advance. Funds were
advanced to Fund 4 to fund operations and capital expenditures as well as to
repay amounts outstanding on Fund 4's credit facility. Fund 4 has entered into
an agreement to sell its only remaining cable television system for $3,500,000.
Closing is expected in the first half of 1997. The Company has reserved the
portion of its advance to Fund 4 that exceeds the fair value of Fund 4's assets.
In addition, an advance to Cable TV Fund 14-A, Ltd. ("Fund 14-A") accounted for
approximately $3,455,000, or 37%, of the outstanding balance. It is anticipated
that Fund 14-A will repay this advance in the first quarter of 1997 upon the
sale of its cable television system serving Turnersville, New Jersey. The
remainder of the advances represent funds for capital expansion and improvements
of properties owned by 23 partnerships where additional credit sources were not
then available to the partnerships. None of these advances are individually
significant. These advances reduce the Company's available cash and its
liquidity. The Company anticipates the repayment of these advances over time.
The Company does not anticipate significant increases in the amount advanced to
its managed partnerships during the fourth quarter of 1996. These advances bear
interest at rates equal to the Company's weighted average cost of borrowing.
The Company purchased property, plant and equipment totaling approximately
$66,033,000 during the nine months ended September 30, 1996. Such expenditures
were principally the result of the following: (a) the upgrade and rebuild of the
cable plant in the Alexandria, Virginia and Augusta, Georgia systems; and (b)
new extension projects, drop materials, converters and various maintenance
projects in the Pima County, Arizona; Anne Arundel, Maryland; South Prince
Georges County, Maryland; and Augusta, Georgia systems. Estimated capital
expenditures, excluding acquisitions, for the remainder of 1996 are
approximately $15,000,000. Funding for such expenditures is expected to be
provided by cash generated from operations and borrowings available under the
Company's credit facilities, as discussed below.
Sources of Funds
On October 31, 1995, the Company, through Jones Cable Holdings, Inc.
("JCH"), a wholly owned subsidiary, entered into a $500,000,000 reducing
revolving credit facility with a group of commercial banks (the "JCH Credit
Facility"). On September 17, 1996, JCH amended this revolving credit facility
to allow for borrowings up to $600,000,000 and to reduce by 1/8% the rates of
interest charged on any amounts outstanding. This credit facility required the
transfer of a majority of the Company's cable television properties to JCH. The
entire $600,000,000 commitment is available through March 31, 1999, at which
time the commitment will be reduced quarterly with a final maturity of December
31, 2004. As of September 30, 1996, $352,000,000 was outstanding under this
agreement, which includes the funding of a $12 million downpayment on the North
Prince Georges County System. Interest on outstanding obligations ranges from
Base Rate to Base Rate plus 1/8% or LIBOR plus 1/2% to LIBOR plus 1% based on
certain leverage covenants. In addition, a commitment fee of 3/16% to 3/8% on
the unused commitment is also required. The effective interest rate on amounts
outstanding at September 30, 1996 was 6.07%.
On October 29, 1996, the Company, through Jones Cable Holdings II, Inc.
("JCH II"), a wholly-owned subsidiary, entered into an additional $600 million
credit facility. The new credit facility consists of a
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<PAGE>
$300 million reducing revolving credit facility and a $300 million 364 day
revolving credit facility (the "JCH II Credit Facility"). The reducing revolving
credit facility allows for borrowing through the final maturity date of December
31, 2005. The maximum amount available reduces quarterly beginning March 31,
2000 through the final maturity date of December 31, 2005. The 364 day revolving
credit facility allows for borrowings through the 364th day subsequent to the
closing date of the loan, at which time any outstanding borrowings automatically
convert to a term loan payable in semi-annual installments commencing June 30,
2001 with final maturity on December 31, 2005. Interest on amounts outstanding
will vary from the Base Rate (which generally approximates the prime rate) to
Base Rate plus 1/4% or LIBOR plus 1/2% to 1 1/4%, depending on certain financial
covenants. A commitment fee of 1/8% to 3/8% per year on available, but
unborrowed, amounts is also required.
The new credit facility will provide liquidity for acquisitions and capital
expenditures. The Company anticipates transferring the Savannah System, the
Augusta System and the Pima County, Arizona system to JCH II in November 1996.
Amounts borrowed under the JCH II Credit Facility to complete such transfer will
be used to repay amounts outstanding on the JCH Credit Facility.
On April 1, 1996, Cable TV Fund 11-B, Ltd. ("Fund 11-B"), one of the
Company's managed limited partnerships, sold the cable television system serving
areas in and around Lancaster, New York to an unaffiliated third party for
$84,000,000. Upon closing, Fund 11-B repaid its indebtedness, a sales tax
liability and a $2,100,000 brokerage fee to The Jones Group, Ltd., a wholly
owned subsidiary of the Company. The remaining proceeds were distributed to
Fund 11-B's partners. The Company, as general partner of Fund 11-B, received a
distribution of $14,000,000 related to this transaction. Funds received in
payment of the brokerage fee and the general partner distribution were used to
reduce amounts outstanding on the Company's revolving credit facility.
On August 16, 1996, the Company entered into an agreement with an
unaffiliated party to sell the cable television systems serving areas in and
around Walnut Valley and Oxnard, both in the state of California, for
$104,000,000. The closing of this transaction is subject to a number of
conditions including obtaining necessary governmental and other third party
consents.
As part of the Company's strategy to simplify its corporate structure and
concentrate on its core communications business, the Company has sold two of its
subsidiaries engaged in non-cable businesses, as described below.
On June 14, 1996, the Company completed the sale of Galactic Radio, Inc.,
a wholly-owned subsidiary, to Jones Global Group, Inc., an affiliated company.
Galactic Radio, Inc. owns and operates Jones Satellite Networks, Inc. and
Superaudio. The sale price was $17.2 million. The Company's Board of Directors
requested and received a fairness opinion related to this sale from an
unaffiliated investment banking firm. The sales price was paid in the form of
984,968 ADSs of Bell Cablemedia plc. The number of ADSs represents the purchase
price of $17.2 million divided by the 30-day average closing price of an ADS for
the 30-day period immediately preceding the closing date. As a result of this
transaction, the Company now directly owns 7.2 million ADSs of Bell Cablemedia.
On July 31, 1996, the Company sold Jones Satellite Programming, Inc.
("JSP"), a wholly-owned subsidiary, to an unaffiliated party for $2,873,871.
The Company recognized a gain of approximately $2,873,000 upon closing of this
sale. JSP provided satellite programming to satellite dish owners.
The Company has an effective registration statement relating to the sale of
$600 million of senior debt securities, senior subordinated debt securities,
subordinated debt securities and Class A Common Stock. The Company may, from
time to time, issue securities not to exceed $600 million pursuant to this
registration statement. Proceeds would be used for general corporate purposes,
which may include acquisitions of cable television systems from managed
partnerships and/or from unaffiliated parties, refinancing of indebtedness,
working capital, capital expenditures, and repurchases and redemptions of
securities.
-14-
<PAGE>
The Company has sufficient sources of capital available, consisting of cash
generated from operations and available borrowings from its credit facilities,
to fund its committed acquisition requirements and to meet its operational
needs.
RESULTS OF OPERATIONS
Revenues
The Company derives its revenues from four primary sources: subscriber fees
from Company-owned cable television systems, management fees from revenues
earned by managed limited partnerships, fees and distributions payable upon the
sale of cable television properties owned by managed limited partnerships and
revenues from non-cable television subsidiaries. Total revenues for the three
months ended September 30, 1996 totaled $75,143,000, an increase of $30,407,000
or 68%, over the total of $44,736,000 for the three months ended September 30,
1995. Total revenues for the nine months ended September 30, 1996 totaled
$235,296,000, an increase of $102,853,000, or 78%, over the total of
$132,443,000 for the nine months ended September 30, 1995. These increases
reflect the Company's acquisition of the following cable television systems: the
Augusta System on October 20, 1995; the Dale City System on November 29, 1995;
the Manassas System on January 10, 1996; the Prince Georges County System on
February 29, 1996; the Reston System on February 29, 1996; and the Savannah
System on April 12, 1996 (the "Acquired Systems"). Disregarding the effect of
the acquisition of the Acquired Systems and the sales of Galactic Radio, Inc. on
June 14, 1996, and Jones Satellite Programming, Inc. on July 31, 1996, total
revenues would have increased $4,519,000, or 13%, and $15,501,000, or 15%,
respectively, for the three and nine months ended September 30, 1996.
The Company's subscriber service fees increased $32,867,000, or 103%, to
$64,710,000 for the three months ended September 30, 1996 from $31,843,000 for
the three months ended September 30, 1995. Subscriber service fees for the nine
months ended September 30, 1996 increased $84,788,000, or 88%, to $180,852,000
from $96,064,000 for the nine months ended September 30, 1995. The effect of
the acquisition of the Acquired Systems accounted for $30,795,000, or 94%, and
$78,799,000, or 93%, respectively, of the increases in subscriber service fees
for the three and nine month periods. Disregarding the effect of the
acquisition of the Acquired Systems, subscriber service fees would have
increased $2,072,000, or 8%, and $5,989,000, or 7%, respectively, for the three
and nine month periods ended September 30, 1996. These increases were due
primarily to increases in the number of basic subscribers and basic service rate
adjustments in the cable television systems owned by the Company.
The Company receives management fees generally equal to 5% of the gross
operating revenues of its managed partnerships. Management fees totaled
$4,740,000 for the three months ended September 30, 1996, a decrease of
$763,000, or 14%, over the total of $5,503,000 reported for the three months
ended September 30, 1995. For the nine months ended September 30, 1996,
management fees totaled $14,594,000 compared to $16,130,000 in 1995, a decrease
of $1,536,000, or 10%. These decreases in management fees are the result of the
sale of certain managed systems in 1995 and 1996. Disregarding the effect of
the sale of such managed systems, management fees would have increased $240,000,
or 5%, and $935,000, or 7%, respectively, for the three and nine months ended
September 30, 1996.
In its capacity as the general partner of its managed partnerships, the
Company receives revenues in the form of distributions upon the sale of cable
television properties owned by such partnerships. The Company received a
distribution of $14,000,000 upon the sale of Cable TV Fund 11-B's Lancaster, New
York System in April 1996. No such revenue was recognized during the three and
nine month periods ended September 30, 1995. In addition, The Jones Group,
Ltd., a wholly owned subsidiary of the Company, earns brokerage fees upon the
sale of managed cable television systems to third parties. A brokerage fee of
$2,100,000, less expenses of $617,000, was earned upon the sale of Cable TV Fund
11-B's Lancaster, New York system in April 1996. No such fees were recognized
during the three and nine month periods ended September 30, 1995.
-15-
<PAGE>
The Company operates Jones Futurex, Inc. ("Futurex"), a manufacturer of
various electronic components. In addition, the Company owned and operated
Jones Satellite Networks, Inc. ("JSN"), a distributor of radio programming to
radio stations, a subsidiary of Jones Galactic Radio, Inc., until its sale on
June 14, 1996 and Jones Satellite Programming, Inc. ("JSP"), a distributor of
satellite programming to satellite dish owners, until its sale on July 31, 1996.
Non-cable revenue totaled $5,693,000 for the three months ended September 30,
1996, a decrease of $1,697,000, or 23%, over the $7,390,000 recorded for the
three months ended September 30, 1995. This decrease is due to the sales of JSN
and JSP. For the nine months ended September 30, 1996, non-cable revenue
totaled $24,367,000, compared to $20,249,000 in 1995, an increase of $4,118,000,
or 20%. This increase was due primarily to an increase in the sales of Futurex.
Costs and Expenses
Operating, general and administrative expenses consist primarily of costs
associated with the administration of Company-owned cable television systems,
the administration of managed partnerships and the administration of the non-
cable television entities. The Company is reimbursed by its managed
partnerships for costs associated with the administration of the partnerships.
The principal administrative cost components are salaries paid to corporate and
system personnel, programming expenses, professional fees, subscriber billing
costs, data processing costs, rent for leased facilities, cable system
maintenance expenses and consumer marketing expenses.
Cable operating expenses increased $15,539,000, or 85%, to $33,762,000 for
the three months ended September 30, 1996 from $18,223,000 in 1995. For the
nine months ended September 30, 1996, cable operating expenses increased
$39,174,000, or 70%, to $95,342,000 in 1996 from $56,168,000 in 1995. The
effect of the acquisition of the Acquired Systems accounted for $14,413,000, or
93%, and $35,969,000, or 92%, respectively, of the increases for the three and
nine month periods. Disregarding the effect of the acquisition of the Acquired
Systems, cable operating expense would have increased $1,126,000, or 7%, and
$3,205,000, or 7%, respectively, for the three and nine months ended September
30, 1996. These increases were due primarily to increases in basic and tier
programming costs.
Cable general and administrative expense increased $2,513,000, or 146%, to
$4,235,000 for the three months ended September 30, 1996 from $1,722,000 in
1995. For the nine months ended September 30, 1996, cable general and
administrative expense increased $5,425,000, or 94%, to $11,180,000 in 1996 from
$5,755,000 in 1995. Cable general and administrative expenses are allocated to
all owned and managed cable television systems based on total revenues. As the
Company acquires cable television systems and transitions from a management
company to an operating company, it will be allocated its proportionate
percentage of the total general and administrative expenses. Disregarding the
effect of the Acquired Systems, cable general and administrative expenses would
have decreased $230,000, or 12%, and $504,000, or 8%, respectively, for the
three and nine month periods ended September 30, 1996. These decreases are due
to effective cost controls relating to general and administrative expense.
Non-cable operating, general and administrative expense decreased
$1,769,000, or 24%, to $5,757,000 for the three months ended September 30, 1996
from $7,526,000 in 1995. This decrease is due to the sales of JSN and JSP. For
the nine months ended September 30, 1996, non-cable operating, general and
administrative expense increased $3,285,000, or 15%, to $24,546,000 in 1996 from
$21,261,000 in 1995. This increase is due primarily to increases in the
expenses of Futurex.
Depreciation and amortization increased $17,858,000, or 140%, to
$30,654,000 for the three months ended September 30, 1996 from $12,796,000 in
1995. For the nine months ended September 30, 1996, depreciation and
amortization increased $47,071,000, or 125%, to $84,692,000 in 1996 from
$37,621,000 in 1995. Depreciation and amortization relating to the Acquired
Systems was primarily responsible for these increases.
-16-
<PAGE>
Operating Income
Operating income decreased $3,734,000 to $735,000 for the three months
ended September 30, 1996 from $4,469,000 in 1995. This decrease is due
primarily to the increase in depreciation and amortization. For the nine months
ended September 30, 1996, operating income increased $7,898,000, or 68%, to
$19,536,000 in 1996 from $11,638,000 in 1995. This increase was due primarily
to the fee and distribution revenue recognized upon the sale of Cable TV Fund
11-B's Lancaster, New York cable television system in April 1996.
The cable television industry generally measures the performance of a cable
television company in terms of cash flow or operating income before depreciation
and amortization. The value of a cable television company is often determined
using multiples of cable television system cash flow. This measure is not
intended to be a substitute or improvement upon the items disclosed on the
financial statements, rather it is included because it is an industry standard.
Operating income before depreciation and amortization increased $14,124,000, or
82%, to $31,389,000 for the three months ended September 30, 1996 from
$17,265,000 in 1995. For the nine months ended September 30, 1996, operating
income before depreciation and amortization increased $54,969,000, or 112%, to
$104,228,000 in 1996 from $49,259,000 in 1995. Disregarding the effect of the
acquisition of the Acquired Systems, operating income before depreciation and
amortization would have increased $1,529,000 or 11%, and $4,826,000, or 12%,
respectively for the three and nine month periods ended September 30, 1996.
Other Income (Expense)
Interest expense increased $4,368,000, or 33%, to $17,620,000 for the three
months ended September 30, 1996 from $13,252,000 in 1995. For the nine months
ended September 30, 1996, interest expense increased $13,883,000, or 38%, to
$50,188,000 in 1996 from $36,305,000 in 1995. These increases are due to higher
outstanding balances on the Company's revolving credit facility. Borrowings
under the credit facility were used in the acquisition of the Acquired Systems.
Equity in losses of affiliated entities increased $916,000, or 118%, to
$1,695,000 for the three months ended September 30, 1996 from $779,000 in 1995.
For the nine month periods, equity in losses of affiliated entities increased
$1,028,000, or 38%, to $3,703,000 in 1996 from $2,675,000 in 1995. These
increases were primarily due to an increase in the recognition of losses from
Jones Customer Service Management, L.L.C., an affiliate that is developing a
subscriber billing and management system.
Interest income decreased $4,417,000, or 89%, to $573,000 for the three
months ended September 30, 1996 from $4,990,000 in 1995. For the nine months
ended September 30, 1996, interest income decreased $9,728,000, or 76%, to
$3,065,000 in 1996 from $12,793,000 in 1995. These decreases were due to a
reduction in cash and cash equivalents. Such cash and cash equivalents were
used in the acquisition of certain of the Acquired Systems.
Net loss increased $12,759,000 to $17,208,000 for the three months ended
September 30, 1996 from $4,449,000 in 1995. For the nine months ended September
30, 1996, net loss increased $16,607,000, or 115%, to $31,106,000 in 1996 from
$14,499,000 in 1995. These increases were due primarily to the increases in
depreciation and amortization expense and interest expense.
-17-
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In connection with that certain litigation entitled Luva Vaughan et al
------------------
V. Jones Intercable, Inc. et al. Case No. CV 94-3652, filed in the Circuit
- -------------------------------
Court for Jackson County, Missouri previously reported, a trial to the Court was
held in April and May 1996. On September 20, 1996, the Court entered judgment
in favor of Jones Intercable, Inc. (the "Company") and taxed costs to the
plaintiffs. In the Judgment, the Court (a) denied plaintiffs' motion for
reconsideration of the Court's prior decision granting summary judgment in favor
of the Company on the claim in the litigation relating to the payment by Jones
Intercable Investors, L.P. (the "Partnership") of a brokerage commission; (b)
held that plaintiffs did not establish that demand was made on the Company for
the relief sought or that such a demand would have been futile; and (c) advised
that the proper procedure for the selection of appraisers under the Limited
Partnership Agreement of the Partnership is that the Company selects one
appraiser on its own behalf and one appraiser on behalf of the Partnership and
that these two appraisers select the third appraiser. The time for filing
motions for a new trial and for filing an appeal has not yet expired.
Item 6. Exhibits and Reports on Form 10-K.
a) Exhibits
15) Letter Regarding Unaudited Interim Financial Statements.
27) Financial Data Schedule
28) Accountants' Review letter, dated October 29, 1996.
b) Reports on Form 8-K
Report on Form 8-K dated August 28, 1996, reported that on August
16, 1996 the Company entered into assets purchase agreements with
an unaffiliated party to sell the cable television systems serving
areas in and around Oxnard and Walnut Valley, both in the state of
California.
-18-
<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, thereunto duly authorized.
JONES INTERCABLE, INC.
/S/Kevin P. Coyle
-----------------------------------
Kevin P. Coyle
(Group Vice President/Finance)
Dated: November 8, 1996
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<PAGE>
Exhibit 15
November 8, 1996
Jones Intercable, Inc. and Subsidiaries:
We are aware that Jones Intercable, Inc. has incorporated by reference in its
Registration Statements on Form S-8, File Nos. 33-3087, 33-25577, 33-52813, and
33-54596, and on Form S-3, File Nos. 33-62537, and 33-62539 its Form 10-Q for
the quarter ended September 30, 1996, which includes our report dated October
29, 1996 covering the unaudited interim financial information contained therein.
Pursuant to Regulation C of the Securities Act of 1933, that report is not
considered a part of the registration statements or a report prepared or
certified by our firm within the meaning of Sections 7 and 11 of the Securities
Act of 1933.
Very truly yours,
ARTHUR ANDERSEN LLP
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<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 3,233
<SECURITIES> 0
<RECEIVABLES> 14,066
<ALLOWANCES> 1,759
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 598,785
<DEPRECIATION> (192,787)
<TOTAL-ASSETS> 1,159,269
<CURRENT-LIABILITIES> 0
<BONDS> 814,947
0
0
<COMMON> 314
<OTHER-SE> 275,494
<TOTAL-LIABILITY-AND-EQUITY> 1,159,296
<SALES> 0
<TOTAL-REVENUES> 235,296
<CGS> 0
<TOTAL-COSTS> 215,760
<OTHER-EXPENSES> (454)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 50,188
<INCOME-PRETAX> (31,106)
<INCOME-TAX> 0
<INCOME-CONTINUING> (31,106)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (31,106)
<EPS-PRIMARY> (.99)
<EPS-DILUTED> (.99)
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<PAGE>
Exhibit 28
REVIEW REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------------
To the Board of Directors and Shareholders
of Jones Intercable, Inc.:
We have made a review of the accompanying condensed consolidated balance sheet
of JONES INTERCABLE, INC. (a Colorado corporation) and subsidiaries as of
September 30, 1996, and the related condensed consolidated statements of
operations and cash flows for the three and nine-month periods ended September
30, 1996 and 1995. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists primarily of applying analytical review procedures to the
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the consolidated financial statements referred to above for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Jones Intercable, Inc., and
subsidiaries as of December 31, 1995 (not presented herein), and, in our report
dated March 1, 1996, we expressed an unqualified opinion on that statement. In
our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of September 30, 1996, is fairly stated in all
material respects in relation to the consolidated balance sheet from which it
has been derived.
ARTHUR ANDERSEN LLP
Denver, Colorado,
October 29, 1996
