<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
JONES INTERCABLE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
JONES INTERCABLE, INC.
- --------------------------------------------------------------------------------
(Name of Person Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11*:
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
*Set forth the amount on which the filing fee is calculated and state how it
was determined.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
[LOGO OF JONES INTERCABLE APPEARS HERE]
9697 EAST MINERAL AVENUE
P.O. BOX 3309
ENGLEWOOD, COLORADO 80155-3309
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 3, 1997
The Annual Meeting of the Shareholders of Jones Intercable, Inc. (the
"Company") will be held at the Company's corporate offices, 9697 East Mineral
Avenue, Englewood, Colorado, on Monday, November 3, 1997, at 10:00 a.m.,
Mountain Time, for the following purposes:
1. To elect Directors to serve until the next annual meeting and until
their successors are duly elected and qualified.
2. To vote on a proposal to amend the Company's 1992 Stock Option Plan
to increase the number of shares of Class A Common Stock authorized under
the Company's 1992 Stock Option Plan from 1,800,000 shares to 2,583,455
shares.
3. To ratify the appointment of Arthur Andersen LLP, Certified Public
Accountants, as independent auditors for the Company for the year ending
December 31, 1997.
4. To transact such other business as may properly come before the
Meeting.
Only shareholders of record at the close of business on September 15, 1997
are entitled to notice of, and to vote at, the Annual Meeting.
It is very important that all shareholders be represented at the Annual
Meeting. We urge you to sign and return the enclosed proxy as promptly as
possible--whether or not you plan to attend the Annual Meeting. The proxy
should be returned in the enclosed envelope. You may revoke the proxy at any
time prior to its use by filing with the Company a duly executed proxy bearing
a later date, by voting in person at the Annual Meeting or by giving written
notice of revocation to the Secretary of the Company.
By Order of the Board of Directors
LOGO
Elizabeth M. Steele
Secretary
Dated: September 22, 1997
<PAGE>
[LOGO OF JONES INTERCABLE APPEARS HERE]
9697 EAST MINERAL AVENUE
P.O. BOX 3309
ENGLEWOOD, COLORADO 80155-3309
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD NOVEMBER 3, 1997
Proxies in the form accompanying this statement are being solicited by the
Board of Directors of Jones Intercable, Inc. (the "Company") for use at the
Annual Meeting of Shareholders (the "Meeting") to be held on Monday, November
3, 1997, at 10:00 a.m., Mountain Time, at the Company's corporate offices,
9697 East Mineral Avenue, Englewood, Colorado, and at any adjournments
thereof. A proxy may be revoked by a shareholder at any time prior to its use
by filing with the Company a duly executed proxy bearing a later date, by
voting in person at the Meeting, or by giving written notice of revocation to
the Secretary of the Company.
If the enclosed proxy is properly executed and returned, the shares
represented thereby will be voted in the manner specified. If no specification
is made on the proxy, then the shares shall be voted FOR approval of the
proposals set forth in this Proxy Statement. The proxy will also be voted in
connection with the transaction of such other business as may properly come
before the Meeting or any adjournment thereof. Management knows of no matters,
other than those set forth in this Proxy Statement, to be considered at the
Meeting. If, however, any other matters properly come before the Meeting or
any adjournment thereof, the persons named in the proxy will vote such proxy
in accordance with their best judgment on any such matter. The persons named
in the proxy will also, if in their judgment it is deemed to be advisable,
vote to adjourn the Meeting from time to time.
"Broker non-votes" are proxies with respect to shares held in record name by
brokers or nominees, as to which (i) instructions have not been received from
the beneficial owners or persons entitled to vote and (ii) the broker or
nominee does not have discretionary voting power under applicable national
securities exchange rules or the instrument under which it serves in such a
capacity. With respect to the proposals to be voted on at the Meeting,
abstentions and broker non-votes will have no impact on the outcome of the
voting on such proposals because a majority vote of the shares represented at
the Meeting will be sufficient to determine the voting on all of the
proposals.
Officers, directors and regular employees of the Company may solicit proxies
by telephone, fax or personal interview, as well as by mail. The cost of any
such solicitation will be paid by the Company. Arrangements also have been
made with brokerage firms and other custodians, nominees and fiduciaries who
hold of record Common Stock and Class A Common Stock for the forwarding of
solicitation materials to the beneficial owners thereof. The Company will
request banks, brokerage houses and other institutions, which act as nominees
or fiduciaries for owners of Common Stock and Class A Common Stock, to forward
the solicitation materials to persons for whom they hold shares and to obtain
authorization for the execution of proxies.
As of September 15, 1997, the Company's classes of capital stock entitled to
vote were its Common Stock, $.01 par value, of which 5,113,021 shares were
outstanding, and its Class A Common Stock, $.01 par value, of which 35,544,523
shares were outstanding. Only shareholders of record at the close of business
on September 15, 1997 (the "Record Date") will be entitled to notice of, and
to vote at, the meeting.
The approximate date on which this Proxy Statement is being sent to
shareholders is September 22, 1997.
<PAGE>
SHAREHOLDER PROPOSALS
Shareholder proposals must be received by the Company by April 15, 1998 in
order to be presented at the next Annual Meeting of Shareholders.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT
The following table sets forth certain information regarding ownership of
the Company's Common Stock or Class A Common Stock as of the Record Date by
persons (including any group) known to the Company to be beneficial owners of
more than 5% of either class of stock, the Directors of the Company, each of
the executive officers named in the Executive Compensation Table and the
executive officers and directors of the Company as a group. Under the rules of
the Securities and Exchange Commission, a person (or group of persons) is
deemed to be a "beneficial owner" of a security if he or she, directly or
indirectly, has or shares the power to vote or to direct the voting of such
security, or the power to dispose of or to direct the disposition of such
security. Accordingly, more than one person may be deemed to be a beneficial
owner of the same security. A person is also deemed to be a beneficial owner
of any security which that person has the right to acquire within 60 days.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF OF BENEFICIAL
BENEFICIAL OWNER (1) TITLE OF CLASS OWNERSHIP (2) PERCENT OF CLASS
-------------------- -------------- ----------------- ----------------
<S> <C> <C> <C>
Jones International,
Ltd. Common Stock 2,441,751(3)(4) 47.76
9697 East Mineral
Avenue
Englewood, CO 80112 Class A 2,447,568(3)(5) 6.89
Common Stock
- --------------------------------------------------------------------------------
Glenn R. Jones Common Stock 2,916,151(3)(6) 57.03
9697 East Mineral
Avenue
Englewood, CO 80112 Class A 3,156,110(3)(7) 8.76
Common Stock
- --------------------------------------------------------------------------------
Christopher J.
Bowick Common Stock 2,678 .05
9697 East Mineral
Avenue
Englewood, CO 80112 Class A 9,637(8) .03
Common Stock
- --------------------------------------------------------------------------------
Derek H. Burney Class A 350 less than .01
1000 rue de la Common Stock
Gauchetiere West
Montreal, Quebec,
Canada H3B 4Y8
- --------------------------------------------------------------------------------
Kevin P. Coyle Common Stock 345(9) .01
9697 East Mineral
Avenue
Englewood, CO 80112 Class A 9,726(10) .03
Common Stock
- --------------------------------------------------------------------------------
William E. Frenzel Class A 400 less than .01
1775 Massachusetts Common Stock
Ave., N.W.
Washington, D.C.
20036
- --------------------------------------------------------------------------------
James J. Krejci Class A 5,000 .01
3100 Arapahoe Avenue Common Stock
Boulder, CO 80303
- --------------------------------------------------------------------------------
James B. O'Brien Class A 36,973(11) .10
9697 East Mineral Common Stock
Avenue
Englewood, CO 80112
- --------------------------------------------------------------------------------
Raphael M. Solot Common Stock 300 .01
501 South Cherry
Street
Denver, CO 80222
- --------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS
OF AMOUNT AND NATURE
BENEFICIAL OWNER OF BENEFICIAL
(1) TITLE OF CLASS OWNERSHIP (2) PERCENT OF CLASS
---------------- -------------- ----------------- ----------------
<S> <C> <C> <C>
Ruth E. Warren Common Stock 208 less than .01
9697 East Mineral
Avenue
Englewood, CO
80112 Class A 18,437(12) .05
Common Stock
- -------------------------------------------------------------------------------
Sanford Zisman Common Stock 500(13) .01
3773 Cherry Creek
North Drive
Denver, CO 80209
- -------------------------------------------------------------------------------
Robert B.
Zoellick Class A 300 less than .01
3900 Wisconsin
Avenue, N.W. Common Stock
Washington, D.C.
20016
- -------------------------------------------------------------------------------
All executive
officers and Common Stock 2,920,182 57.11
directors as a
group
(19 persons) Class A 3,247,933(14) 9.00
Common Stock
- -------------------------------------------------------------------------------
Christine Jones
Marocco Common Stock 2,742,537(15) 53.64
25 East End
Avenue, #14F
New York, NY
10288 Class A
Common Stock 108,748(16) .31
- -------------------------------------------------------------------------------
Bell Canada
International Common Stock 2,878,151(17)(21) 56.29
BVI VI Limited
Arawak Chamber
Road Town
Tortola, BVI
- -------------------------------------------------------------------------------
Bell Canada
International Class A 12,782,500(18)(21) 35.96
BVI III Limited Common Stock
Arawak Chamber
Road Town
Tortola, BVI
- -------------------------------------------------------------------------------
The Capital Group
Companies, Inc. Class A 4,647,500(19)(21) 13.08
333 South Hope
Street Common Stock
Los Angeles, CA
90071
Capital
Research and Class 3,230,000(19)(21) 9.09
Management
Company Common Stock
- -------------------------------------------------------------------------------
Neuberger &
Berman Class A 1,862,652(20)(21) 5.24
605 Third Avenue Common Stock
New York, NY
10158
- -------------------------------------------------------------------------------
</TABLE>
(1) Directors who are not listed in this beneficial ownership table do not
beneficially own any of the Company's shares. Shares shown as subject to
options means that such options are exercisable within 60 days.
(2) Unless otherwise noted, all persons indicated in the table have full
voting and investment power with respect to the share ownership
described.
(3) Glenn R. Jones, Chairman of the Board of Directors and Chief Executive
Officer of the Company, owns all of the outstanding shares of Jones
International, Ltd. ("International") and is deemed to be the beneficial
owner of all shares of the Company owned by International. By virtue of
this ownership, Mr. Jones controls approximately 37% of the total votes
to be cast by all shareholders of the Company's shares on matters not
requiring a class vote, because, with regard to such matters, a share of
Common Stock has one vote and a share of Class A Common Stock has 1/10th
of a vote. The holders of Class A Common Stock, as a class, are able to
elect the greater of 25% or the next highest whole number of the
Company's Board of Directors. Thus, holders of the Class A Common Stock,
as a class, are presently entitled to elect four Directors.
(4) Includes 38,000 shares held by International; 2,239,416 shares held by
the Jones International Grantor Business Trust; 100,400 shares held by
Jones Entertainment Group, Ltd.; 35,707 shares held by Jones Space
Segment, Inc.; 27,585 shares held by Jones Global Group, Inc.; and 643
shares held by Jones Interdigital, Inc. International may be deemed to be
the beneficial owner of all shares of Common Stock owned by Jones
Entertainment Group, Ltd., Jones Space Segment, Inc., Jones Global Group,
Inc. and Jones Interdigital, Inc.
3
<PAGE>
(5) Includes 2,223,414 shares held by International; 136,946 shares held by
Jones Entertainment Group, Ltd.; 48,705 shares held by Jones Space
Segment, Inc.; 37,626 shares held by Jones Global Group, Inc.; and 877
shares held by Jones Interdigital, Inc. International may be deemed to be
the beneficial owner of all shares of Class A Common Stock owned by Jones
Entertainment Group, Ltd., Jones Space Segment, Inc., Jones Global Group,
Inc. and Jones Interdigital, Inc.
(6) Includes 474,400 shares held by the Glenn Jones Grantor Business Trust;
38,000 shares held by International; 2,239,416 shares held by the Jones
International Grantor Business Trust; 100,400 shares held by Jones
Entertainment Group, Ltd.; 35,707 shares held by Jones Space Segment,
Inc.; 27,585 shares held by Jones Global Group, Inc.; and 643 shares held
by Jones Interdigital, Inc.
(7) Includes 226,893 shares owned by Mr. Jones; 481,649 shares deemed to be
held by Mr. Jones pursuant to exercisable stock options; 2,223,414 shares
held by International; 136,946 shares held by Jones Entertainment Group,
Ltd.; 48,705 shares held by Jones Space Segment, Inc.; 37,626 shares held
by Jones Global Group, Inc.; and 877 shares held by Jones Interdigital,
Inc.
(8) Represents shares deemed to be held by Mr. Bowick pursuant to exercisable
stock options.
(9) Includes 320 shares held by Mr. Coyle's wife.
(10) Includes 9,657 shares deemed to be held by Mr. Coyle pursuant to
exercisable stock options.
(11) Includes 26,973 shares deemed to be held by Mr. O'Brien pursuant to
exercisable stock options.
(12) Includes 11,673 shares deemed to be held by Ms. Warren pursuant to
exercisable stock options.
(13) Represents shares held by Sanford Zisman PC Profit Sharing Trust.
(14) Includes 550,589 shares deemed to be held by various executive officers
and directors pursuant to exercisable stock options.
(15) Includes 12,370 shares held by Mrs. Marocco; 357 shares held by the
Joseph Michael Marocco Irrevocable Trust; 15,994 shares held by the
Christine Jones Marocco Irrevocable Trust; 2,239,416 shares held by the
Jones International Grantor Business Trust in which Mrs. Marocco has
shared voting power; and 474,400 shares held by the Glenn Jones Grantor
Business Trust in which Mrs. Marocco has shared voting power.
(16) Includes 64,113 shares held by Mrs. Marocco; 970 shares held by the
Joseph Michael Marocco Irrevocable Trust; 33,665 shares held by the
Christine Jones Marocco Irrevocable Trust; and 10,000 shares held by Mrs.
Marocco's husband. Mrs. Marocco disclaims beneficial ownership of the
shares held by her husband. Mrs. Marocco's husband is a principal in a
firm that may from time to time invest in the Company's securities. Mrs.
Marocco disclaims beneficial ownership of any securities of the Company
that said firm purchases or in which Mr. Marocco may therefor have an
interest.
(17) Bell Canada International Inc. ("BCI"), the sole shareholder of Bell
Canada International BVI VI Limited, may be deemed to have beneficial
ownership of the 2,878,151 shares of Common Stock covered by Option
Agreements dated December 20, 1994 among The Bank of New York, acting as
agent for BCI, and the Glenn Jones Grantor Business Trust, the Jones
International Grantor Business Trust, Jones Entertainment Group, Ltd.,
Jones Space Segment, Inc., Jones Global Group, Inc. and Jones
Interdigital, Inc.
(18) BCI is deemed to be the beneficial owner of the 12,782,500 shares of
Class A Common Stock owned by its wholly owned subsidiary, Bell Canada
International BVI III Limited.
(19) The Capital Group Companies, Inc. is the parent holding company of a
group of investment management companies, including Capital Research and
Management Company, that hold investment power and, in some cases, voting
power over shares of the Company's Class A Common Stock. The Capital
Group Companies, Inc. has sole voting power over 1,379,700 shares, shared
voting power over no shares and sole dispositive power over 4,647,500
shares. Capital Research and Management Company has no sole or shared
voting power and sole dispositive power over 3,230,000 shares.
(20) Neuberger & Berman has sole voting power over 477,700 shares, shared
voting power over 1,019,900 shares and shared dispositive power over
1,862,652 shares.
(21) This information is based upon filings made by the shareholders with the
Securities and Exchange Commission, copies of which were provided to the
Company.
4
<PAGE>
PROPOSAL 1. ELECTION OF DIRECTORS
Directors are elected to hold office until the next Annual Meeting of
Shareholders and until their successors shall be elected and shall qualify. In
the absence of instructions to the contrary, the proxies designated by the
Board of Directors on the form of proxy enclosed will vote the shares
represented by them in favor of the nominees listed below. Each of the persons
nominated is currently a member of the Board of Directors. Although management
does not anticipate that such an event will occur, if a nominee named in this
Proxy Statement is unable to serve as a Director at the time of the Annual
Meeting, the proxy will be voted for a nominee to be designated by the present
Board of Directors.
The Company's Articles of Incorporation provide that, with respect to the
election of Directors, the holders of Class A Common Stock, voting as a
separate class, are entitled to elect that number of Directors constituting
25% of the total membership of the Board of Directors. If such 25% is not a
whole number, holders of Class A Common Stock are entitled to elect the
nearest higher whole number of directors constituting 25% of the membership of
the Board of Directors. Holders of Common Stock, voting as a separate class,
are entitled to elect the remaining directors.
Pursuant to the terms of the Shareholders Agreement dated as of December 20,
1994 among Glenn R. Jones, Jones International, Ltd., Bell Canada
International Inc. ("BCI") and the Company (the "Shareholders Agreement"), the
Company's Board of Directors consists of thirteen members. Four members of the
Board of Directors are to be elected by holders of Class A Common Stock, and
nine members of the Board of Directors are to be elected by holders of Common
Stock. The parties to the Shareholders Agreement have agreed that, of the four
Class A Directors, BCI will be entitled, but not required, to designate one
Director and the remaining three Directors, which shall be Independent
Directors (as such term is defined in the Shareholders Agreement), will be
jointly designated by Glenn R. Jones and BCI. The parties to the Shareholders
Agreement also have agreed that Mr. Jones will be entitled, but not required,
to designate seven of the nine Common Directors and that BCI will be entitled,
but not required, to designate two of the nine Common Directors.
Of the thirteen persons set forth below as nominees for the position of
Director of the Company, William E. Frenzel, Donald L. Jacobs, Robert Kearney
and Robert B. Zoellick have been designated as nominees to be elected by
holders of Class A Common Stock. Mr. Kearney was designated by BCI. Messrs.
Frenzel, Jacobs and Zoellick were jointly designated by Glenn R. Jones and
BCI, and they will serve as Independent Directors. Glenn R. Jones, Derek H.
Burney, Robert E. Cole, James J. Krejci, James B. O'Brien, Raphael M. Solot,
Howard O. Thrall, Siim A. Vanaselja and Sanford Zisman have been designated as
the nominees to be elected by holders of Common Stock. Messrs. Jones, Cole,
Krejci, O'Brien, Solot, Thrall and Zisman have been designated by Mr. Jones.
Messrs. Burney and Vanaselja have been designated by BCI.
Each share of Common Stock and Class A Common Stock has one vote in the
election of the Directors to be elected by that class. The Company's Articles
of Incorporation provide that cumulative voting shall not be allowed in the
election of Directors. With respect to the Directors to be elected by the
holders of Class A Common Stock, the four nominees receiving the highest
number of votes cast in favor of their election at the Meeting, in person or
by proxy, will be elected to the Board of Directors. With respect to the
Directors to be elected by the holders of Common Stock, the nine nominees
receiving the highest number of votes cast in favor of their election at the
Meeting, in person or by proxy, will be elected to the Board of Directors.
Pursuant to the terms of the Shareholders Agreement, to which the Company is a
party, the Company is required to recommend to the shareholders of the Company
the election to the Company's Board of Directors of each of the nominees
designated by Mr. Jones and BCI and solicit proxies for each such nominee from
all holders of voting securities entitled to vote thereon. Each of BCI and Mr.
Jones have agreed to vote or cause to be voted all of the shares of the
Company owned or controlled by them at any meeting of the shareholders of the
Company in favor of their mutual nominees to the Company's Board of Directors.
5
<PAGE>
DIRECTORS TO BE ELECTED BY HOLDERS OF CLASS A COMMON STOCK
Mr. William E. Frenzel was appointed a director of the Company in April
1995. Mr. Frenzel has been a Guest Scholar since 1991 with the Brookings
Institution, a research organization located in Washington D. C. Until his
retirement in January 1991, Mr. Frenzel served for twenty years in the United
States House of Representatives, representing a district in the State of
Minnesota, where he was a member of the House Ways and Means Committee and its
Trade Subcommittee, the Congressional Representative to the General Agreement
on Tariffs and Trade (GATT), the Ranking Minority Member on the House Budget
Committee and a member of the National Economic Commission. Mr. Frenzel also
served in the Minnesota Legislature for eight years. He is a Distinguished
Fellow of the Tax Foundation, Vice Chairman of the Eurasia Foundation, a Board
Member of the U.S.-Japan Foundation, the Close-Up Foundation, Sit Mutual Funds
and Chairman of the Japan-America Society of Washington. He is 69 years old.
Mr. Donald L. Jacobs was appointed a director of the Company in April 1995.
Mr. Jacobs is a retired executive officer of TRW. Prior to his retirement in
1992, he was Vice President and Deputy Manager of the Space and Defense
Sector; prior to that appointment, he was the Vice President and General
Manager of the Defense Systems Group and prior to his appointment as Group
General Manager, he was President of ESL, Inc., a wholly owned subsidiary of
TRW. During his career, Mr. Jacobs served on several corporate, professional
and civic boards. He is 59 years old.
Mr. Robert Kearney was appointed a director of the Company in July 1997. Mr.
Kearney is a retired executive officer of Bell Canada. Prior to his retirement
in December 1993, Mr. Kearney was the President and Chief Executive Officer of
Bell Canada. He served as Chairman of BCE Canadian Telecom Group in 1994 and
as Deputy Chairman of BCI Management Limited in 1995. During his career, Mr.
Kearney served in a variety of capacities in the Canadian, American and
International Standards organizations, and he has served on several corporate,
professional and civic boards. He is 61 years old.
Mr. Robert B. Zoellick was appointed a director of the Company in April
1995. Mr. Zoellick is Executive Vice President for Housing and Law of Fannie
Mae, a federally chartered and stockholder-owned corporation that is the
largest housing finance investor in the United States. From August 1992 to
January 1993, Mr. Zoellick served as Deputy Chief of Staff of the White House
and Assistant to the President. From May 1991 to August 1992, Mr. Zoellick
served concurrently as the Under Secretary of State for Economic and
Agricultural Affairs and as Counselor of the Department of State, a post he
assumed in March 1989. From 1985 to 1988, Mr. Zoellick served at the
Department of Treasury in a number of capacities, including Counselor to the
Secretary. Mr. Zoellick received the Alexander Hamilton and Distinguished
Service Awards, highest honors of the Departments of Treasury and State,
respectively. The German Government awarded him the Knight Commanders Cross
for his work on German unification. Mr. Zoellick currently serves on the
boards of Alliance Capitol, Said Holdings, the Council on Foreign Relations,
the Congressional Institute, the German Marshall Fund of the U.S., the
European Institute, the National Bureau of Asian Research, the American
Council on Germany, American Institute for Contemporary German Studies and the
Overseas Development Council. He is 44 years old.
DIRECTORS TO BE ELECTED BY HOLDERS OF COMMON STOCK
Mr. Glenn R. Jones has served as Chairman of the Board of Directors and
Chief Executive Officer of the Company since its formation in 1970, and he was
President from June 1984 until April 1988. Mr. Jones is the sole shareholder,
President and Chairman of the Board of Directors of Jones International, Ltd.
He is also Chairman of the Board of Directors of the subsidiaries of the
Company and of certain other affiliates of the Company. Mr. Jones has been
involved in the cable television business in various capacities since 1961, is
a member of the Board of Directors and the Executive Committee of the National
Cable Television Association. In addition, Mr. Jones is a member of the Board
of Governors for the American Society for Training and Development, and a
member of the Board of Education Council of the National Alliance of Business.
Mr. Jones is also a founding member of the James Madison Council of the
Library of Congress. Mr. Jones has been the
6
<PAGE>
recipient of several awards including the Grand Tam Award in 1989, the highest
award from the Cable Television Administration and Marketing Society; the
President's Award from the Cable Television Public Affairs Association in
recognition of Jones International's educational efforts through Mind
Extension University (now Knowledge TV); the Donald G. McGannon Award for the
advancement of minorities and women in cable from the United Church of Christ
Office of Communications; the STAR Award from American Women in Radio and
Television, Inc. for exhibition of a commitment to the issues and concerns of
women in television and radio; the Cableforce 2000 Accolade awarded by Women
in Cable in recognition of the Company's innovative employee programs; the
Most Outstanding Corporate Individual Achievement Award from the International
Distance Learning Conference for his contributions to distance education; the
Golden Plate Award from the American Academy of Achievement for his advances
in distance education; the Man of the Year named by the Denver chapter of the
Achievement Rewards for College Scientists; and in 1994 Mr. Jones was inducted
into Broadcasting and Cable's Hall of Fame. He is 67 years old.
Mr. Derek H. Burney was appointed a director of the Company in December 1994
and Vice Chairman of the Board of Directors in January 1995. Mr. Burney joined
BCE Inc., Canada's largest telecommunications company, in January 1993 as
Executive Vice President, International. He has been the Chairman of Bell
Canada International Inc., a subsidiary of BCE, since January 1993 and, in
addition, has been Chief Executive Officer of BCI since July 1993. Prior to
joining BCE, Mr. Burney served as Canada's ambassador to the United States
from 1989 to 1992. Mr. Burney also served as chief of staff to the Prime
Minister of Canada from March 1987 to January 1989 where he was directly
involved with the negotiation of the U.S.--Canada Free Trade Agreement. In
July 1993, he was named an Officer of the Order of Canada. He also is a
director of Cable & Wireless Communications plc, Tele-Direct (Publications)
Inc., Teleglobe Inc., Bimcor Inc., Rio Algom Limited, The Montreal General
Hospital Corporation, The Japan Society, Moore Corporation Limited,
Northbridge Programming Inc. and certain subsidiaries of BCI. He is 57 years
old.
Mr. Robert E. Cole was appointed a director of the Company in March 1996.
Mr. Cole is currently self-employed as a partner of First Variable Insurance
Marketing and is responsible for marketing to National Association of
Securities Dealers, Inc. firms in northern California, Oregon, Washington and
Alaska. From 1993 to 1995, Mr. Cole was the Director of Marketing for Lamar
Life Insurance Company; from 1992 to 1993, Mr. Cole was Senior Vice President
of PMI Inc., a third party lender serving the special needs of Corporate Owned
Life Insurance (COLI) and from 1988 to 1992, Mr. Cole was the principal and
co-founder of a specialty investment banking firm that provided services to
finance the ownership and growth of emerging companies, productive assets and
real property. Mr. Cole is a Certified Financial Planner and a former United
States Naval Aviator. He is 64 years old.
Mr. James J. Krejci is President and CEO of Imagelink Technologies, Inc., a
privately financed company with leading technology in the desktop or personal
computer videoconferencing market. Prior to joining Imagelink Technologies in
July 1996, Mr. Krejci was President of the International Division of
International Gaming Technology, the world's largest gaming equipment
manufacturer, with headquarters in Reno, Nevada. Prior to joining IGT in May
1994, Mr. Krejci was Group Vice President of Jones International, Ltd. and he
also was Group Vice President of the Company. He also served as an officer of
subsidiaries of Jones International, Ltd. until leaving the Company in May
1994. Mr. Krejci started his career as an electronics research engineer with
the Allen-Bradley Company, then moved to the 3M Company, General Electric and
Becton Dickinson until March 1985 when he joined Jones International, Ltd. Mr.
Krejci has been a director of the Company since August 1987. He is 55 years
old.
Mr. James B. O'Brien, the Company's President, joined the Company in January
1982. Prior to being elected President and a director of the Company in
December 1989, Mr. O'Brien served as a Division Manager, Director of
Operations Planning/Assistant to the CEO, Fund Vice President and Group Vice
President/Operations. Mr. O'Brien was appointed to the Company's Executive
Committee in August 1993. As President, he is responsible for the day-to-day
operations of the cable television systems managed and owned by the Company.
Mr. O'Brien is a board member of Cable Labs, Inc., the research arm of the
U.S. cable television
7
<PAGE>
industry. He also serves as Chairman-elect and as a director of the Cable
Television Administration and Marketing Association and serves on the
Executive Committee and as a director of the Walter Kaitz Foundation, a
foundation that places people of ethnic minority groups in positions with
cable television systems, networks and vendor companies. He is 48 years old.
Mr. Raphael M. Solot was appointed a director of the Company in March 1996.
Mr. Solot is an attorney and has practiced law for 32 years with an emphasis
on franchise, corporate and partnership law and complex litigation. He is 64
years old.
Mr. Howard O. Thrall was appointed a director of the Company in March 1996.
Mr. Thrall had previously served as a director of the Company from December
1988 to December 1994. Mr. Thrall is Senior Vice President--Corporate
Development for First National Net, Inc., a leading service provider for the
mortgage banking industry, and he heads First National Net's Washington, D.C.
regional office. From September 1993 through July 1996, Mr. Thrall served as
Vice President of Sales, Asian Region, for World Airways, Inc. headquartered
at the Washington Dulles International Airport. From 1984 until August 1993,
Mr. Thrall was with the McDonnell Douglas Corporation, where he concluded as a
Regional Vice President, Commercial Marketing with the Douglas Aircraft
Company subsidiary. Mr. Thrall is also a management and international
marketing consultant, having active assignments with Cheong Kang Associates
(Korea), Aero Investment Alliance, Inc. and Western Real Estate Partners,
among others. He is 50 years old.
Mr. Siim A. Vanaselja was appointed a director of the Company in August
1996. Mr. Vanaselja joined BCE Inc., Canada's largest telecommunications
company, in February 1994 as Assistant Vice-President, International Taxation.
In June 1994, he was appointed Assistant Vice-President and Director of
Taxation, and in February 1995, Mr. Vanaselja was appointed Vice-President,
Taxation. On August 1, 1996, Mr. Vanaselja was appointed the Chief Financial
Officer of Bell Canada International Inc., a subsidiary of BCE Inc. Prior to
joining BCE Inc. and since August 1989, Mr. Vanaselja was a partner in the
Toronto office of KPMG Peat Marwick Thorne. Mr. Vanaselja has been a member of
the Institute of Chartered Accountants of Ontario since 1982 and is a member
of the Canadian Tax Foundation, the Tax Executives Institute and the
International Fiscal Association. He is 41 years old.
Mr. Sanford Zisman was appointed a director of the Company in June 1996. Mr.
Zisman is a member of the law firm, Zisman & Ingraham, P.C. of Denver,
Colorado and has practiced law for 32 years, with an emphasis on tax, business
and estate planning and probate administration. Mr. Zisman currently serves as
a member of the Board of Directors of Saint Joseph Hospital, the largest
hospital in Colorado, and he has served as Chairman of the Board, Chairman of
the Finance Committee and Chairman of the Strategic Planning Committee of the
hospital. Since 1992, he has also served on the Board of Directors of Maxim
Series Fund, Inc., a subsidiary of Great-West Life Assurance Company. He is 57
years old.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE ABOVE NOMINEES.
8
<PAGE>
During the calendar year ending December 31, 1996, the Board of Directors of
the Company met seven times. The Board of Directors of the Company took all
other action by unanimous written consent, in accordance with the provisions
of the Colorado Business Corporation Act.
During 1996, Messrs. Jones, Burney and O'Brien were the members of the
Executive Committee of the Board of Directors, which was established in April
1985. The Executive Committee of the Board took all action during the calendar
year ending December 31, 1996 by unanimous written consent. During 1996,
Messrs. Jacobs, Vanaselja and Zoellick were the members of the Audit Committee
of the Board of Directors, which was established in March 1982. The Audit
Committee met three times during the calendar year ending December 31, 1996.
Messrs. Burney and MacDonald were the members of the Executive Officer Option
Committee of the Board of Directors, which was established in 1992. The
Executive Officer Option Committee was dissolved on October 7, 1996. The
Executive Officer Option Committee did not meet during the calendar year
ending December 31, 1996. During 1996, Messrs. Jones, Burney and Jacobs were
the members of the Compensation Committee of the Board of Directors, which was
established in January 1995. The Compensation Committee met seven times during
the calendar year ending December 31, 1996. In July 1997, Mr. Kearney replaced
Mr. Burney on both the Executive Committee and the Compensation Committee.
EXECUTIVE COMPENSATION
Compensation Summary
The following table sets forth certain information relating to the
compensation paid by the Company during the Company's past two fiscal years
ended May 31, 1995 and 1994 and for the twelve months ended December 31, 1996
and 1995 to those persons who were, at December 31, 1996, the Chief Executive
Officer and the other four most highly compensated executive officers of the
Company.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
NAME AND ANNUAL COMPENSATION AWARDS
PRINCIPAL ------------------- ------------ ALL OTHER
POSITION YEAR (1) SALARY BONUS OPTIONS COMPENSATION(2)
--------- -------- ------ ----- ------- ---------------
<S> <C> <C> <C> <C> <C>
Glenn R. Jones
(3) YE 12/31/96 $2,620,102 $ 0 0 $157,380
Chairman of the
Board YE 12/31/95 2,500,067 0 125,937(8) 150,006
and Chief Execu-
tive FYE 5/31/95 1,401,846 900,000 122,269(8) 135,623
Officer
James B. O'Brien
(4) YE 12/31/96 $ 240,961 $163,366 0 $ 25,978
President YE 12/31/95 230,866 139,870 17,000(8) 19,852
FYE 5/31/95 224,961 250,000 14,387(8) 28,498
Kevin P. Coyle
(5) YE 12/31/96 $ 184,185 $ 72,750 0 $ 15,558
Group Vice Pres-
ident/ YE 12/31/95 177,160 74,895 8,085(8) 15,811
Finance FYE 5/31/95 173,616 45,000 7,762(8) 12,814
Christopher J.
Bowick(6) YE 12/31/96 $ 169,302 $ 96,872 0 $ 15,152
Group Vice Pres-
ident/ YE 12/31/95 162,211 48,725 7,850(8) 10,159
Technology FYE 5/31/95 158,061 54,529 7,378(8) 12,756
Ruth E. Warren
(7) YE 12/31/96 $ 170,454 $ 77,327 0 $ 12,558
Group Vice Pres-
ident/ YE 12/31/95 163,314 49,056 7,860(8) 9,644
Operations FYE 5/31/95 149,854 50,126 7,418(8) 7,888
</TABLE>
- --------
(1) In 1995, the Company changed its fiscal year from a year ending May 31 to
a calendar year ending December 31.
9
<PAGE>
(2) The Company's employees are entitled to participate in a 401(k) profit
sharing plan. Certain senior employees of the Company are also eligible to
participate in a deferred compensation plan. The amounts shown in the
column reflect the Company's contributions pursuant to these plans for the
benefit of the named person's account.
(3) Mr. Jones' salary, bonus, options and all other compensation for the
transition period 6/1/95 through 12/31/95 were $1,458,391, $0, 125,937 and
$87,504, respectively.
(4) Mr. O'Brien's salary, bonus, options and all other compensation for the
transition period 6/1/95 through 12/31/95 were $137,133, $139,870, 17,000
and $8,228, respectively.
(5) Mr. Coyle's salary, bonus, options and all other compensation for the
transition period 6/1/95 through 12/31/95 were $104,820, $53,007, 8,085 and
$6,289, respectively.
(6) Mr. Bowick's salary, bonus, options and all other compensation for the
transition period 6/1/95 through 12/31/95 were $96,352, $48,725, 7,850 and
$5,781, respectively.
(7) Ms. Warren's salary, bonus, options and all other compensation for the
transition period 6/1/95 through 12/31/95 were $97,007, $49,056, 7,860 and
$5,236, respectively.
(8) Represents the number of shares of the Company's Class A Common Stock
underlying the options granted.
During the year ended December 31, 1996, no options were granted to or
exercised by any of the Executive Officers named in the Summary Compensation
Table.
Compensation of Directors
Directors of the Company who are not full-time employees of the Company or
any of its affiliates receive $5,000 per fiscal quarter for their services as
director, with an additional $1,250 to be paid to each such director for each
regularly scheduled quarterly meeting of the Board of Directors attended in
person. No additional compensation for director service is paid to directors
who are full-time employees of the Company or any of its affiliates.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires certain persons, including
directors and officers of the Company, to file reports of ownership and changes
in ownership of the Company's securities with the Securities and Exchange
Commission. The Company is required to disclose in this Proxy Statement any
late or missed filings of those reports during 1996 by its officers (as such
term is defined in the rules promulgated under Section 16 of the Exchange Act),
directors and 10% shareholders. Based upon the Company's review of the
reporting forms received by it and representations from certain persons that no
Form 5 reports were required to be filed by those persons, the Company believes
that all filing requirements applicable to its officers, directors and 10%
shareholders were complied with during 1996 except that shareholder Christine
Jones Marocco inadvertently failed to timely file a report to show a change in
form of ownership of 11,150 shares of Class A Common Stock from indirect to
direct.
Employment Agreement with the Company's Chief Executive Officer
On December 20, 1994, the Company entered into an Employment Agreement with
Glenn R. Jones (the "Employment Agreement") pursuant to which the Company
agreed to employ Mr. Jones as Chief Executive Officer of the Company for a
period of up to eight years from December 20, 1994. Under the terms of the
Employment Agreement, Mr. Jones received a base salary of $2,500,000 in fiscal
year 1995 (which approximated his fiscal year 1994 combined compensation from
the Company and Jones Spacelink, Ltd.) and in the years thereafter he is
entitled to an annual cost of living index based salary adjustment. In
addition, Mr. Jones is entitled to participate in the Company's bonus, stock
option and other employee plans at a level generally commensurate with his
participation prior to December 1994. No other employee of the Company has an
employment agreement with the Company.
Compensation Committee Interlocks and Insider Participation
A Compensation Committee of the Board of Directors was established in January
1995. Glenn R. Jones, Robert Kearney and Donald L. Jacobs are the current
members of the Compensation Committee. Mr. Jones is
10
<PAGE>
the Chief Executive Officer and a director of the Company, and Messrs. Kearney
and Jacobs are directors of the Company. Glenn R. Jones, James B. O'Brien and
Elizabeth M. Steele, executive officers of the Company, serve as directors of
certain of the Company's affiliates. As individuals, these executive officers
had no transactions with the Company in 1996.
1997 COMPENSATION COMMITTEE REPORT ON 1996 EXECUTIVE COMPENSATION
Policies. The policies of the Compensation Committee of the Board of
Directors with respect to executive compensation will continue to be based on
the Company's need to attract and retain key executives and to compensate them
according to (i) their performance, (ii) the Company's overall performance and
(iii) executive compensation offered by others in the industry.
In January 1995, the Board of Directors established a Compensation Committee
to provide oversight review of all compensation plans and, in accordance with
those plans, provided guidance on certain executive compensation matters. The
members of the Compensation Committee during 1996 and the first half of 1997
were Glenn R. Jones, Derek H. Burney and Donald L. Jacobs. Robert Kearney
replaced Derek Burney as a member of the Compensation Committee effective July
3, 1997. It is expected that the Compensation Committee, with advice from
other members of the Board of Directors and other Company management, will
continue to be responsible for executive compensation policies and decisions
in the future.
An executive's compensation consists primarily of an annual salary and
eligibility for annual bonuses and long-term incentives. The Compensation
Committee does not pass on each individual item of an executive's
compensation. Mr. Jones, the Company's Chief Executive Officer, upon
consultation with the Compensation Committee, is principally responsible for
these determinations, both as to cash and incentive amounts.
Salaries. Base salaries for executives are primarily market-based and
determined according to level of responsibility, scope and impact of decision
making. The Company utilizes annual executive compensation salary surveys
prepared by nationally recognized compensation consulting firms which pertain
to the telecommunications and cable industries. In general, the Company seeks
to set executive salary levels at approximately the mid-range of the survey
data.
Bonuses. The Compensation Committee believes that the basis of short-term
incentive compensation is the current performance of the Company's executives,
which largely is recognized through cash bonus awards. It is through the bonus
program that both individual and corporate performance is recognized on a
year-to-year basis. A defined bonus plan based on meeting specific budgeted
revenue, cash flow, capital management, customer service, best practices, and
performance versus peer group has been established for all but the most senior
executives in the Company, i.e., those persons who report directly to Mr.
Jones. For the senior executives who report directly to Mr. Jones, no such
formula or specific factor allocation generally is used, and their awards
primarily reflect a subjective evaluation of performance. While overall
corporate performance is given recognition, it is the specific performance of
the individual during the year that is given the greatest weight. Finally,
through studies available to the Company, the Compensation Committee is aware
of existing levels of compensation for companies in the telecommunications and
cable industries, and appropriate attention is paid to such compensation,
although individual performance remains the prime factor.
Long-Term Incentives. Long-term incentives for eligible Company executives
and key associates consist of qualified and non-qualified employee stock
options which usually vest over a term of five years or more and participation
in a deferred compensation plan and/or a 401(k) plan. The competitive need to
provide a realistic equity incentive for executives and to attract and retain
key executives in a competitive environment was considered by the Board in
establishing an annual long-term incentive stock option plan in 1992 for
executives and certain key associates. The stock option plan is intended to
promote the long-term success of the Company by providing eligible key
executives an opportunity to acquire a proprietary interest in the Company.
The goal of the stock option plan is to focus performance on the attainment of
long-term strategic objectives and align executive financial interests with
those of the shareholders of the Company. In 1993, the Company adopted a non-
qualified deferred compensation plan that permits a greater contribution by
executives and therefore greater matching amounts from the Company.
11
<PAGE>
Stock Option Awards During 1996. During 1996, awards of ten year stock
options covering a total of 3,540 shares of Class A Common Stock were made to
key associates in June 1996, with an exercise price of $13.25.
Compensation of the Chief Executive Officer. Pursuant to an Employment
Agreement entered into between the Company and Mr. Jones in December 1994 in
connection with the acquisition by Bell Canada International Inc. of a 30%
equity interest in the Company, Mr. Jones was paid an annual base salary of
$2.5 million in 1995. Mr. Jones received a 4.8% cost of living increase on
December 20, 1995, increasing his base salary to $2,620,000. Mr. Jones
received a 3.6% cost of living increase on December 20, 1996, increasing his
base salary to $2,714,320. In addition, Mr. Jones will continue to be eligible
to participate in Company bonus, stock option and other employee plans at a
level generally commensurate with his level of participation prior to December
1994.
Past and future stock option awards to Mr. Jones reflect both the Company's
performance and, more specifically, his contribution to the direction of the
Company during this critical period in the industry. Mr. Jones received an
award in February 1997 of ten year stock options covering a total of 110,937
shares of Class A Common Stock with an exercise price of $9.25 based on his
and the Company's performance during 1996.
1996 Company Performance Considered by the Compensation Committee. The
following is a summary of the Company's 1996 achievements that were considered
by the Compensation Committee in making its recommendations about executive
compensation:
In 1996, the Company successfully executed a clustering strategy by
acquiring cable systems with operations in contiguous regions or on the basis
of operating characteristics. Acquisitions included Manassas, Virginia
(January 1996), South Prince Georges County, Maryland (February 1996), Reston,
Virginia (February 1996) and Savannah, Georgia (April 1996). These
acquisitions increased the Company's owned subscriber base from slightly more
than 300,000 subscribers at December 31, 1995 to almost 600,000 subscribers at
December 31, 1996.
The Company has also been successful in simplifying its core cable business
by selling non-strategic assets (Jones Galactic Radio, Inc. and Jones
Satellite Programming, Inc.), selling a portion of its investment in Jones
Global Group, Inc. and liquidating cable systems that did not fit its
clustering strategy (Hilo, Hawaii and Kenosha, Wisconsin). The Company also
liquidated a number of partnership systems and continued its transition from a
management company to an operating company. At December 31, 1995, only 51% of
the Company's net asset value was derived from owned cable systems versus 89%
at December 31, 1996.
Finally, the Company's core cable business had exceptional results. Basic
customers grew at an annual rate of 3.2% in 1996 as compared with an industry
average of 1.9% and cash flow grew at an annual rate of 12% in 1996 as
compared with an industry average of 8.4%. The Company also expanded new
businesses such as telephony, paging, long-distance telephone resale and
digital technology.
Submitted by the Compensation Committee of the Board of Directors of Jones
Intercable Inc.:
Glenn R. Jones,
Derek H. Burney and
Donald L. Jacobs
June 30, 1997
12
<PAGE>
Notwithstanding anything to the contrary contained in any document filed by
the Company with the Securities and Exchange Commission, or elsewhere, the
foregoing report of the Company's Compensation Committee shall not be deemed
to be incorporated by reference by any general statement incorporating this
proxy statement into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent the Company specifically
incorporates this report by reference therein, and shall not be deemed
soliciting materials or otherwise be deemed filed under either of such acts.
PERFORMANCE GRAPH
The following graph represents a comparison of total shareholder returns for
a five-year period among the Company, the Standard & Poors 500 Index and
publicly traded companies that are members of the Company's cable television
industry peer group.
[GRAPH WITH PLOT POINTS APPEARS HERE]
Peer Group Companies:
- ------------------------------------------
ADELPHIA COMMUN -CL A
CABLEVISION SYSTEMS -CL A
CENTURY COMMUN -CL A
COMCAST CABLEVISION-PHILA
TCA CABLE TV INC
13
<PAGE>
CERTAIN TRANSACTIONS
Set forth below is a description of the Company's transactions with Jones
International, Ltd. ("International"), certain of its subsidiaries and certain
other affiliates of the Company during the year ended December 31, 1996. While
the Company believes that these transactions generally are as favorable as
could have been obtained from unaffiliated third parties, in most instances no
third party bids or appraisals were obtained and certain of the transactions
are by their nature unique to the companies involved. Accordingly, no
assurance is given to such effect. In some instances the amounts of
transactions have been rounded to the nearest thousand. Certain of the
transactions described below are expected to continue during the current
fiscal year.
JONES INTERNATIONAL, LTD.
International and certain of its subsidiaries provide various services to
the Company and its managed limited partnerships, including information and
data processing services, office space and programming services, as described
below. The costs of these services are charged to the Company, and the Company
reimburses International accordingly. In some cases, a portion of certain of
these expenses are reallocated to the Company's managed partnerships pursuant
to the terms of the limited partnership agreements of such limited
partnerships.
JONES GALACTIC RADIO, INC.
Jones Galactic Radio, Inc. is a company now owned by Jones International
Networks, Ltd., an affiliate of International. The Company sold Jones Galactic
Radio, Inc. on June 14, 1996. The Company receives satellite programming from
Superaudio, a joint venture between Jones Galactic Radio, Inc. and an
unaffiliated entity. Payments made by the Company to Jones Galactic Radio,
Inc. for programming provided to the Company's owned cable television systems
for the period from June 15, 1996 to December 31, 1996 totaled $119,000.
JONES EDUCATION COMPANY
Jones Education Company ("JEC"), a company owned 63% by International, 9% by
Glenn R. Jones, 12% by BCI and 16% by the Company, operates the television
network, Knowledge TV. Knowledge TV provides programming related to computers
and technology; business, careers and finance; health and wellness; and global
culture and languages. JEC sells its television programming to certain cable
television systems owned by the Company. Payments by the Company to JEC with
respect to television programming provided by JEC to cable television systems
owned by the Company for the year ended December 31, 1996 totaled
approximately $818,000.
JONES FINANCIAL GROUP, LTD.
Jones Financial Group, Ltd. ("Financial Group") performs services for the
Company as its agent in connection with negotiations regarding various
financial arrangements of the Company. Financial Group is owned 81% by
International and 19% by Glenn R. Jones. In December 1994, the Company entered
into a Financial Services Agreement with Financial Group pursuant to which
Financial Group has agreed to render financial advisory and related services
to the Company for a fee equal to 90% of the fees that would be charged to the
Company by unaffiliated third parties for the same or comparable purposes. The
Company pays Financial Group an annual $1,000,000 retainer as an advance
against payments due pursuant to this agreement and reimburses Financial Group
for its reasonable out-of-pocket expenses. The term of the Financial Services
Agreement is for eight years from December 1994. Financial Group and BCI have
entered into a separate agreement pursuant to which BCI is entitled to receive
one-half of the net fees earned (gross fees less reasonable and customary
operating expenses) by Financial Group under the Financial Services Agreement.
During the year ended December 31, 1996, the Company paid Financial Group fees
totalling $3,850,000 as compensation to Financial Group for acting as the
Company's financial advisor in connection with the Company's acquisitions of
the Manassas System, the South Prince Georges County System, the Reston System
and the Savannah System.
14
<PAGE>
JONES GLOBAL GROUP, INC.
On June 14, 1996, the Company completed the sale of Jones Galactic Radio,
Inc., which was a wholly owned subsidiary of the Company, to Jones Global
Group, Inc., a company then owned 38% by the Company and 62% by International,
for $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 represented 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. Jones Global Group, Inc. subsequently
sold Jones Galactic Radio, Inc. to Jones International Networks, Ltd., another
affiliate of International. As described below, the Company subsequently
reduced its investment in Jones Global Group, Inc. and now owns 20% of Jones
Global Group, Inc.
JONES INTERACTIVE, INC.
Jones Interactive, Inc. ("Interactive"), a wholly owned subsidiary of
International, provides information management and data processing services
for operating companies affiliated with International. Charges to the various
operating companies are based on usage of computer time by each entity. The
amount charged to the Company and its managed partnerships by Interactive for
the year ended December 31, 1996 totaled $5,784,000. Approximately 40% of this
amount was paid by the Company, and the remainder was allocated to and paid by
the Company's managed partnerships.
JONES PROPERTIES, INC.
Jones Properties, Inc. is a wholly owned subsidiary of International. The
Company is a party to a lease with Jones Properties, Inc. under which the
Company has leased a 101,500 square foot office building in Englewood,
Colorado. The lease agreement, as amended, has a 15-year term expiring July
2000, with three 5-year renewal options. The annual rent is not to exceed
$24.00 per square foot, plus operating expenses. The Company has subleased
approximately 46% of the building to International and certain other
affiliates on the same terms and conditions of the above-mentioned lease. Rent
payments to Jones Properties, Inc. by the Company, net of subleasing
reimbursements, for the year ended December 31, 1996 were approximately
$1,467,000. Approximately 40% of this amount was paid by the Company, and the
remainder was allocated to and paid by the Company's managed partnerships.
MIND EXTENSION INSTITUTE, INC.
Mind Extension Institute, Inc. ("MEI"), a subsidiary of Jones Education
Company, provides cable-related instructional videos and other training
materials to multiple system operators, including the Company and its
affiliates. During the year ended December 31, 1996, the Company and its
affiliates paid MEI approximately $75,580 for these materials.
PRODUCT INFORMATION NETWORK
The Product Information Network Venture (the "PIN Venture") is a venture
among a subsidiary of Jones International Networks, Ltd., an affiliate of
International, and two unaffiliated cable system operators. The PIN Venture
operates the Product Information Network ("PIN"), which is a 24-hour network
that airs long-form advertising generally known as "infomercials." PIN has an
affiliation agreement with the Company that expires on February 1, 2005. The
PIN Venture generally makes incentive payments of approximately 60% of its net
advertising revenue to the cable systems that carry its programming. Most of
the Company's owned cable television systems carry PIN for all or part of each
day. Aggregate payments received by the Company from the PIN Venture relating
to the Company's owned cable television systems totaled approximately $466,000
for the year ended December 31, 1996.
15
<PAGE>
GREAT AMERICAN COUNTRY
The Great American Country network provides country music video programming
to certain of the Company's owned systems. This network is owned and operated
by Great American Country, Inc., a subsidiary of Jones International Networks,
Ltd., an affiliate of International. During the year ended December 31, 1996,
the Company paid Great American Country, Inc. $281,400 for programming
provided by Great American Country to Company-owned cable television systems.
CERTAIN TRANSACTIONS RELATED TO BCI'S ACQUISITION OF COMPANY STOCK
In addition to the foregoing transactions, the Company has engaged in
certain transactions arising from agreements entered into on December 20, 1994
relating to the acquisition by BCI of shares of the Company's Class A Common
Stock. The transactions described below are expected to continue through 1997.
On December 20, 1994, contemporaneous with the closing of the acquisition by
BCI of shares of the Company's Class A Common Stock:
1. International and Glenn R. Jones and certain affiliates of International
(collectively, the "Grantors") entered into option agreements providing for
the grant of options to Morgan Guaranty Trust Company of New York, acting as
agent for BCI, to purchase all of the shares of the Company's Common Stock
then held, directly or indirectly, by International, Mr. Jones and the
affiliates of International. BCI purchased such options at a price of $19.00
for each share of the Company's Common Stock owned by Grantors on the date of
the execution of the option agreements. This option payment resulted in the
Grantors receiving approximately $54,684,869 from BCI. This amount will not
offset against the exercise price for the shares of Common Stock under the
option agreements should BCI elect to exercise these options in the future.
2. The Company entered into an Employment Agreement with Glenn R. Jones (the
"Employment Agreement") pursuant to which the Company agreed to employ Mr.
Jones as Chief Executive Officer of the Company for a period of up to eight
years from December 20, 1994. Under the terms of the Employment Agreement, Mr.
Jones received a base salary of $2,500,000 in fiscal year 1995 (which
approximated his fiscal year 1994 combined compensation from the Company and
Jones Spacelink, Ltd.), and in the years thereafter he is entitled to an
annual cost of living index based salary adjustment. In addition, Mr. Jones is
entitled to participate in the Company's bonus, stock option and other
employee plans at a level generally commensurate with his participation prior
to December 1994.
3. BCI, International, Glenn R. Jones and the Company entered into certain
arrangements concerning the operation and governance of the Company and other
related matters pursuant to a Shareholders Agreement (the "Shareholders
Agreement"). Certain provisions of the Shareholders Agreement grant to Mr.
Jones, International and their affiliates the right to use a number of
channels on cable television systems now or hereafter owned or controlled by
the Company for distribution of their programming networks for a period of 15
years after December 1994; BCI was also granted a similar right for a fewer
number of channels. International was granted certain non-exclusive rights to
provide the Company with goods and services on competitive terms which will,
at the Company's discretion, be pursuant to competitive bidding or other
processes.
4. The Company entered into a Supply and Services Agreement with BCI.
Pursuant to the Supply and Services Agreement, BCI provides the Company with
access to the expert advice of personnel from BCI and its affiliates for the
equivalent of three man-years on an annual basis. The Company has agreed to
pay an annual fee of $2,000,000 to BCI during the term of the agreement.
Payments made by the Company under the Supply and Services Agreement during
the year ended December 31, 1996 totaled $2,000,000.
5. The Company entered into a Secondment Agreement with BCI. Pursuant to the
Secondment Agreement, BCI provided twelve secondees during 1996. These
secondees worked for the Company and its managed partnerships. The Company
reimbursed BCI for the full employment costs of such individuals. The Company
16
<PAGE>
reimbursed BCI $1,138,000 during the year ended December 31, 1996.
Approximately 40% of this amount was paid by the Company, and the remainder
was allocated to and paid by the Company's managed partnerships.
THE COMPANY'S EQUITY INVESTMENTS IN AFFILIATES
The Company has equity investments in the following affiliated entities:
1. Until December 1996, the Company owned a 38% interest in Jones Global
Group, Inc. ("Global Group"), a Colorado corporation, and International owned
the remaining 62% interest. In December 1996, Global Group redeemed 225 shares
of its stock held by the Company at a price of $39,778.61 per share, for an
approximate redemption price of $8,950,188. The redemption price is subject to
adjustment based on the results of an appraisal.The redemption price was paid
in the form of a promissory note bearing interest at 6% per annum and has been
paid in full except for $60,000, which is being withheld by Global Group
pending the completion of the aforementioned appraisal. As a result of this
redemption, the Company now owns a 20% interest in Global Group, and
International owns an 80% interest in Global Group.
2. At December 31, 1996, the Company held 7,210,764 ADSs of Bell Cablemedia
plc. The Company acquired 6,225,796 ADSs in 1994 by contributing all of its
cable/telephony properties in the United Kingdom and Spain to Bell Cablemedia.
The Company acquired an additional 984,968 ADSs upon the sale of Jones
Galactic Radio, Inc. to Jones Global Group, Inc. in June 1996. In April 1997,
the Company converted its 7,210,764 Bell Cablemedia ADSs into 25,017,385
ordinary shares of Cable & Wireless Communications plc ("CWC"), the company
into which Bell Cablemedia was merged. In April and May 1997, the Company sold
all 25,017,385 of its CWC ordinary shares for an aggregate sales price of
$109,276,000.
3. The Company is the general partner of Jones Intercable Investors, L.P., a
Colorado limited partnership, which was formed on September 18, 1986, and the
Company owns a 1% general partner interest. In a series of transactions, the
Company purchased limited partnership units, giving the Company an approximate
19% limited partner interest in Jones Intercable Investors, L.P. The Company's
net investment in this partnership totaled approximately $3,253,000 at
December 31, 1996. Based upon the quoted market price of $13.63 per unit at
December 31, 1996, the quoted market value of this investment was
approximately $21,708,000 on such date.
4. During 1992, the Company invested $10,000,000 in Mind Extension
University, Inc. ("ME/U"), an affiliated company and a subsidiary of JEC, for
25% of the stock of ME/U, which also received certain advertising avails and
administrative and marketing considerations from the Company. It is through
the ME/U subsidiary that JEC operates Knowledge TV. The number of shares of
Class A Common Stock of ME/U issued to the Company was based on the average of
two separate independent appraisals of ME/U. Through its acquisition of the
assets of Jones Spacelink, Ltd., the Company obtained an additional 13%
interest in ME/U in December 1994. In 1996, additional issuances of ME/U's
Class A Common Stock reduced the Company's investment in ME/U to 26%.
5. In 1993, 1994 and 1995, the Company advanced a total of $20,000,000 to
ME/U. Interest on such advances was charged at the Company's weighted average
cost of borrowing plus 2%. On April 11, 1995, the Company converted its
advances to ME/U into shares of Class A Common Stock of JEC, the parent
company of ME/U, for an approximately 17% equity interest in JEC. In 1996,
subsequent issuances of JEC's Class A Common Stock reduced the Company's
investment in JEC to 16%. JEC is an affiliate of International.
6. The Company and Jones Cyber Solutions, Ltd. ("JCS"), an indirect
subsidiary of International, have formed a venture, known as Jones Customer
Service Management, L.L.C., for the purpose of developing a subscriber billing
and management system. As of December 31, 1996, the Company had invested
$5,200,000 in the venture. JCS is performing the basic system development work
for the venture and is being paid periodically on a time and materials basis,
plus 10% of the amount charged, for its own service. Upon the completion of
the billing and management system software, the Company and JCS will have
license rights to use such system in perpetuity. The venture will also perform
additional services for the Company in the implementation of the new
subscriber billing and management system. The venture intends to subcontract
such maintenance and conversion
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services to JCS on the basis of time and materials plus 10% of the amount of
the JCS services. The venture will grant to JCS the exclusive right to
distribute the system to third parties for a period of five years for a
commission on the license fees to be earned by the venture from such
licensing.
PROPOSAL 2. TO AMEND THE COMPANY'S 1992 STOCK OPTION PLAN TO INCREASE THE
NUMBER OF SHARES OF CLASS A COMMON STOCK AUTHORIZED UNDER THE PLAN
The Board of Directors of the Company on April 17, 1992, by unanimous vote,
adopted, subject to shareholder approval, the Company's 1992 Stock Option Plan
(the "Plan"). The shareholders of the Company approved the Plan at the Annual
Meeting of Shareholders held on August 20, 1992. As of September 15, 1997, of
the 1,800,000 shares of Class A Common Stock authorized under the Plan,
options to acquire 1,608,401 shares of Class A Common Stock granted pursuant
to the Plan remained outstanding or had been exercised. Management of the
Company believes that the Plan has enhanced the Company's ability to attract
and retain key employees who have contributed to the Company's growth and
success.
So that the Company may continue to attract and retain key employees, in
August 1997 the Board of Directors of the Company, by unanimous written
consent, adopted, subject to shareholder approval, an amendment to the Plan to
increase the number of shares of Class A Common Stock authorized under the
Plan from 1,800,000 shares to 2,583,455 shares. Of the 1,800,000 shares of
Class A Common Stock authorized under the Plan, options to acquire 191,599
shares of Class A Common Stock remain available for grant. It is proposed that
783,455 additional shares of Class A Common Stock be allocated to the Plan so
that options to acquire a total of 975,054 shares of Class A Common Stock
would be available for grant under the Plan. By the terms of the Plan,
shareholder approval is required for an increase in the maximum number of
shares of Class A Common Stock available for options under the Plan.
Pursuant to Section 2.6(a)(i)(A) of the Shareholders Agreement, after the
effective date of the Shareholders Agreement the Company is permitted to issue
employee stock options in an amount not to exceed options to purchase
2,000,000 shares of Class A Common Stock without the prior written consent of
BCI. As of September 15, 1997, there were 1,024,946 shares of Class A Common
Stock that either were subject to unexercised outstanding stock options
granted after December 20, 1994 (the effective date of the Shareholders
Agreement) or were held outright as a consequence of the exercise of stock
options granted after December 20, 1994. Therefore, the total number of shares
of Class A Common Stock for which options may be granted by the Company
without BCI's prior written consent is 975,054. Because there are currently
191,599 shares of Class A Common Stock currently available under the Plan, the
number of additional shares of Class A Common Stock that are proposed to be
allocated to the Plan total 783,455. If the shareholders approve the proposed
increase in the maximum number of shares of Class A Common Stock available for
options under the Plan by 783,455, the number of shares authorized by the Plan
will equal the number of shares authorized by the Shareholders Agreement.
If, in the future, management of the Company determines that it would be in
the best interests of the Company to grant options to acquire shares of Class
A Common Stock in excess of the 975,054 shares that would be authorized under
the Plan if the current proposal to amend the Plan is approved by the
Company's shareholders, any such grants would be subject to the approval of
the Company's Board of Directors and BCI, and, if management desired to make
the grants pursuant to the Plan, an increase in the number of shares of Class
A Common Stock authorized under the Plan would be necessary and would be
subject to shareholder approval.
A favorable majority vote of the shares represented at the Meeting, in
person or by proxy, will be necessary to approve the proposed amendment to the
Plan. For this purpose, holders of Common Stock and holders of Class A Common
Stock will vote as a single class; the holders of Common Stock will have one
vote for each share held and the holders of Class A Common Stock will have
one-tenth (1/10) of a vote for each share held.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL 2.
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PROPOSAL 3. TO RATIFY SELECTION OF AUDITORS
The Board of Directors of the Company has approved the selection of the firm
of Arthur Andersen LLP, certified public accountants, 717 Seventeenth Street,
Denver, Colorado, to serve as the independent auditors for the Company for the
year ending December 31, 1997.
The Company has been informed by Arthur Andersen LLP that neither that firm
nor any of its partners has any financial interest, direct or indirect, in the
Company, and that neither that firm nor any of its partners has had any
connection with the Company in the capacity of promoter, or underwriter, voting
trustee, director, officer or employee.
A representative of Arthur Andersen LLP is expected to be present at the
Meeting and will be given an opportunity to make a statement if he or she so
desires, and will be available to respond to appropriate questions from
shareholders.
In order to ratify the selection of the firm of Arthur Andersen LLP as the
Company's independent auditors for the year ending December 31, 1997, a
favorable majority vote of the shares represented at the Meeting, in person or
by proxy, will be necessary to approve the proposal. For this purpose, holders
of Common Stock and holders of Class A Common Stock will vote as a single
class; the holders of Common Stock will have one vote for each share held and
the holders of Class A Common Stock will have one-tenth (1/10) of a vote for
each share held.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL 3.
ANNUAL REPORT AND FINANCIAL INFORMATION
Each shareholder of record as of the Record Date has been mailed a copy of
the Company's Annual Report on Form 10-K for the year ended December 31, 1996,
a copy of the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997 and a copy of the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1997. The Company will furnish without charge a copy
of the Company's 1996 Annual Report to any person requesting a copy in writing
and stating that he was the beneficial owner of shares of Class A Common Stock
or Common Stock of the Company on the Record Date. Requests and inquiries
should be addressed to:
Ms. Kelly Swindell
Jones Intercable, Inc.
9697 East Mineral Avenue
P.O. Box 3309
Englewood, CO 80155-3309
The Company's Annual Report on Form 10-K for the year ended December 31, 1996
and the Company's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1997 and June 30, 1997 are not to be regarded as proxy soliciting materials
or as communications by means of which a solicitation is to be made.
By Order of the Board of Directors,
[SIGNATURE OF ELIZABETH M. STEELE
APPEARS HERE]
Elizabeth M. Steele
Vice President, Secretary
and General Counsel
September 22, 1997
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PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
JONES INTERCABLE, INC.
9697 EAST MINERAL AVENUE
P.O. BOX 3309
ENGLEWOOD, COLORADO 80155-3309
The undersigned hereby appoints Glenn R. Jones, James B. O'Brien and Eliza-
beth M. Steele, and each of them, as proxies, with the power to appoint his or
her substitute, and hereby authorizes them to represent and to vote as desig-
nated below all the shares of Class A Common Stock and Common Stock of Jones
Intercable, Inc. held of record by the undersigned on September 15, 1997 at
the Annual Meeting of Shareholders to be held at the corporate offices of the
Company, 9697 East Mineral Avenue, Englewood, Colorado, at 10:00 a.m., Moun-
tain Time, on Monday, November 3, 1997, and at any adjournment thereof.
(CONTINUED ON OTHER SIDE)
FOLD AND DETACH HERE
<PAGE>
Please mark
your votes as [X]
indicated in
this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE DIRECTORS NAMED IN ITEM
1A AND ITEM 1B AND FOR PROPOSALS 2 AND 3.
Item 1A-Election of directors by the holders of WITHHELD
Class A Common Stock. FOR FOR ALL
William E. Frenzel, Donald L. Jacobs, [ ] [ ]
Robert Kearney and Robert B. Zoellick
WITHHELD FOR: (Write that nominee's name in the
space provided below).
- -----------------------------------------------
Item 1B-Election of directors by the holders of WITHHELD
Common Stock. FOR FOR ALL
Glenn R. Jones, Derek H. Burney, Robert E. [ ] [ ]
Cole, James J. Krejci, James B. O'Brien,
Raphael M. Solot, Howard O. Thrall, Siim A.
Vanaselja and Sanford Zisman
WITHHELD FOR: (Write that nominee's name in the
space provided below).
- -----------------------------------------------
Proposal 2- A proposal to amend the Company's FOR AGAINST ABSTAIN
1992 Stock Option Plan to increase the number of [ ] [ ] [ ]
shares of Class A Common Stock authorized under
the 1992 Stock Option Plan from 1,800,000 shares
to 2,583,455 shares.
Proposal 3-Ratification of the Appointment of
Arthur Andersen LLP as the Company's independent [ ] [ ] [ ]
auditors for the year ending December 31, 1997.
Item 4-In their discretion, the Proxies are
authorized to vote upon such other business as [ ] [ ] [ ]
may properly come before the Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE DIRECTORS NAMED IN ITEM 1A AND ITEM 1B AND "FOR" PROPOSALS 2
AND 3.
Signature(s) __________________________ Date _______________________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
