<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+THIS PRELIMINARY PROSPECTUS SUPPLEMENT AND THE INFORMATION CONTAINED HEREIN +
+ARE SUBJECT TO COMPLETION OR AMENDMENT AND PROSPECTIVE PURCHASERS ARE +
+REFERRED TO THE RELATED FINAL PROSPECTUS SUPPLEMENT FOR DEFINITIVE +
+INFORMATION ON ANY MATTER CONTAINED HEREIN. NEITHER THIS PRELIMINARY +
+PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SHALL CONSTITUTE AN +
+OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY +
+SALE OF THESE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, +
+SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION +
+UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject To Completion, dated August 1, 1997
PROSPECTUS SUPPLEMENT
(To Prospectus dated November 27, 1995)
7,843,137 SHARES
[LOGO OF JONES INTERCABLE APPEARS HERE]
CLASS A COMMON STOCK
-------------
All of the shares of Class A Common Stock, $.01 par value per share (the
"Class A Common Stock"), offered hereby (the "Offering") are being sold by
Jones Intercable, Inc. (the "Company"). See "Underwriting." Pursuant to the
Shareholders Agreement (as defined herein), Bell Canada International Inc.
("BCI"), a principal shareholder of the Company, will acquire 2,352,941, or
30%, of the shares of Class A Common Stock offered hereby.
The Company has two classes of common stock: Common Stock, $.01 par value per
share (the "Common Stock"), and Class A Common Stock. The holders of Common
Stock and the holders of Class A Common Stock vote together as a single class
on all matters except with respect to the election of directors and those
matters requiring a class vote under Colorado law. In the election of
directors, the holders of Class A Common Stock, voting as a separate class, are
entitled to elect that number of directors that constitute 25% of the total
membership of the Board of Directors. Holders of the Common Stock, also voting
as a separate class, are entitled to elect the remaining directors. In all
circumstances where the shareholders vote together as a single class, the
holders of Class A Common Stock are entitled to one-tenth of a vote per share
and the holders of Common Stock are entitled to one vote per share. See
"Description of Capital Stock."
On July 31, 1997, the last reported sale price of the Class A Common Stock,
which is traded on the Nasdaq National Market under the symbol "JOINA," was
$12.75 per share.
-------------
SEE "RISK FACTORS" BEGINNING ON PAGE S-7 HEREIN FOR CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
-------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Underwriting
Price to Discounts Proceeds to
Public and Commissions(1) Company(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share........................... $ $ $
- --------------------------------------------------------------------------------
Total(3)............................ $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company, estimated at $200,000.
(3) BCI will purchase its shares from the Underwriters at a price equal to the
price to the public less the underwriting discounts and commissions. The
Company has granted the Underwriters a 30-day option to purchase up to an
aggregate of 1,176,471 additional shares of Class A Common Stock on the
same terms and conditions set forth herein, solely to cover over-
allotments, if any. If such option is exercised in full, the total Price to
Public, Underwriting Discounts and Commissions and Proceeds to Company will
be $ , $ and $ , respectively. See
"Underwriting." Pursuant to the Shareholders Agreement, BCI will acquire
30% of any shares of Class A Common Stock sold pursuant to the exercise of
the over-allotment option.
-------------
The shares of Class A Common Stock offered by this Prospectus Supplement are
offered by the Underwriters subject to prior sale, to withdrawal, cancellation
or modification of the offer without notice, to delivery to and acceptance by
the Underwriters and to certain further conditions. It is expected that
delivery of the shares of Class A Common Stock will be made at the office of
Lehman Brothers Inc., New York, New York on or about August , 1997.
-------------
LEHMAN BROTHERS DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
August , 1997
<PAGE>
[MAP OF CURRENT CABLE TELEVISION SYSTEMS APPEARS HERE]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE CLASS A COMMON
STOCK. SUCH TRANSACTIONS MAY INCLUDE THE PURCHASE OF SHARES OF CLASS A COMMON
STOCK PRIOR TO THE PRICING OF THE OFFERING FOR THE PURPOSE OF MAINTAINING THE
PRICE OF THE CLASS A COMMON STOCK, THE PURCHASE OF SHARES OF CLASS A COMMON
STOCK FOLLOWING THE PRICING OF THE OFFERING TO COVER A SYNDICATE SHORT
POSITION IN THE CLASS A COMMON STOCK OR FOR THE PURPOSE OF MAINTAINING THE
PRICE OF THE CLASS A COMMON STOCK. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
S-2
<PAGE>
THE COMPANY
The Company is engaged primarily in the cable television business, operating
cable systems for itself and for its managed partnerships. The Company
currently is the eighth largest cable television system operator in the United
States, with owned and managed systems totaling approximately 1.4 million
basic subscribers. As of June 30, 1997, on a pro forma basis for all completed
and pending acquisitions and sales of cable systems, Company-owned systems
served approximately 875,000 basic subscribers and systems held by Company-
managed partnerships served approximately 545,000 basic subscribers. See
"Recent Developments." On a pro forma basis for the six months ended June 30,
1997, the Company had annualized revenue of $430,000,000 and annualized
earnings before interest, taxes, depreciation and amortization ("EBITDA") of
$180,000,000. Key elements of the Company's operating strategy include
increasing the number of owned subscribers clustered in attractive demographic
areas and increasing penetration and revenues per subscriber by targeted
marketing, superior customer service and the maintenance of high technical
standards.
Over the last several years, the Company has taken significant steps to
simplify its corporate structure. This process has included the sale of cable
television systems owned by certain managed partnerships to either the Company
or to third parties and the divestiture of certain of the Company's non-
strategic assets. As a result of this strategy, on a pro forma basis as of
June 30, 1997, 62% of total subscribers would have been owned by the Company
compared to 23% in June 1995. During this process, the Company has also made
significant progress in clustering its owned subscribers in two primary groups
of cable systems. The Company's Virginia/Maryland cluster is based primarily
on geography. The Company's suburban cluster is based on similar market and
operating characteristics, rather than geography. These clusters represent
approximately 93% of Company-owned subscribers. The Company believes that its
clustering strategy allows it to obtain both economies of scale and operating
efficiencies, for example in areas such as marketing, administrative and
capital expenditures.
The Virginia/Maryland cluster is comprised of cable systems serving 400,000
basic subscribers in communities in Maryland and Virginia surrounding
Washington, DC and, on a pro forma basis, the suburban cluster is comprised of
five cable systems serving 415,000 basic subscribers. The suburban cluster
includes the Savannah and Augusta, Georgia systems and the Pima County,
Arizona system, and will include the Independence, Missouri and Albuquerque,
New Mexico systems that are to be acquired by the Company.
The Company believes that its systems are characterized by attractive
demographics. The average income per household is approximately $48,300 in the
markets served by the Company, compared to the national median household
income of approximately $44,900. As a result, the Company's systems have
generated monthly average revenue per subscriber in excess of cable television
industry averages during each of the past six years. In 1996, for example, the
Company's monthly average revenue per subscriber was $39.23, or 9.6% above the
industry average. In 1996, new home growth in the markets owned on a pro forma
basis by the Company was 1.86% compared to a national average of 1.49%. The
Company believes that these favorable demographic trends have contributed to
an internal subscriber growth of 3.2% in 1996 and 4.7% in the six months
ending June 30, 1997, compared to the same periods in the prior years. These
growth rates are above the industry average of approximately 2.0% and 2.2%,
respectively. The Company intends to maintain this favorable demographic
profile and will focus any acquisitions on cable systems that will fit into
either of its clusters.
The Company has achieved significant improvements in key measures of
operating performance. During each of the past six quarters ended June 30,
1997, annualized quarterly EBITDA growth has been in excess of 10% on a same
system basis. For 1996, disregarding the effect of the acquisitions and sales
of certain systems, total revenues and EBITDA increased by 8% and 12%,
respectively, compared to 1995. Furthermore, EBITDA growth was 13% for the
second quarter of 1997, compared to the same period in 1996. As a result of
the implementation of the Company's clustering strategy, the sale of certain
of the Company's non-strategic assets and operating efficiencies, the EBITDA
margin has increased from 35% to 41% during the past six quarters.
The Company considers technological innovation to be an important component
of its service offerings and customer satisfaction. The Company has actively
sought to upgrade the technical capabilities of its cable plant in order to
improve reliability, increase channel capacity for the delivery of additional
video programming and
S-3
<PAGE>
facilitate the delivery of new services. As a result of these efforts, 46% of
the Company's currently owned subscribers are served by systems with a
technical capacity of 550 MHz or greater. In Alexandria, Virginia, with the
assistance of BCI, the Company has developed a state-of-the-art 750 MHz system
that has the capability to integrate voice and high-speed data, providing
telephone services and Internet connections via cable modems. The Company
already has begun to offer telephone and, through an affiliate, Internet
programming to residents in certain of the systems that comprise the
Virginia/Maryland cluster. In the multiple dwelling units where the Company's
telephone service has been fully marketed, the telephony penetration rate is
currently approximately 21%. The Company's systems consistently rank high in
customer satisfaction, and results of Company-initiated surveys indicate that
it is scoring higher than the local telephone companies in its service areas.
RECENT DEVELOPMENTS
PROPOSED ACQUISITIONS OF CABLE TELEVISION SYSTEMS
In February 1997, the Company entered into an asset purchase agreement to
acquire the cable television system currently serving 85,900 basic subscribers
in and around Independence, Missouri (the "Independence System") from Jones
Intercable Investors, L.P., a Colorado limited partnership managed by the
Company, for a purchase price of $171,213,667, subject to customary closing
adjustments. This price represents the average of three independent appraisals
of the fair market value of the Independence System. The Company anticipates
that it will receive a limited partner distribution totaling approximately
$25,700,000 from the sale by the partnership of the Independence System
because of the Company's ownership of limited partnership interests in the
partnership. The partnership will pay The Jones Group, Ltd., a wholly-owned
subsidiary of the Company, a $4,280,000 brokerage fee in connection with this
transaction. The Company's acquisition of the Independence System is expected
to be funded by the net proceeds of the Offering and borrowings available
under the Company's credit facilities. The closing of the Company's purchase
of the Independence System is expected to occur in the third quarter of 1997.
See "Risk Factors--Risks Related to Shareholders Agreement."
In July 1997, the Company entered into an asset purchase agreement to
acquire the cable television system currently serving 112,800 basic
subscribers in and around Albuquerque, New Mexico (the "Albuquerque System")
from Cable TV Fund 12-BCD Venture, a venture comprised of three Company-
managed partnerships, for a purchase price of $222,963,267, subject to
customary closing adjustments. This price represents the average of three
independent appraisals of the fair market value of the Albuquerque System. The
Company expects that, subject to an anticipated amendment to the venture's
credit facility, it will receive, from the three partnerships that comprise
the venture, general partner distributions totaling approximately $8,100,000
upon the closing of the sale of the Albuquerque System. The Company
anticipates that the acquisition of the Albuquerque System will be funded by
borrowings available under the Company's credit facilities. The closing of the
Company's purchase of the Albuquerque System is subject to the approval of the
limited partners of each of the three partnerships that comprise the venture
and to the consent of governmental authorities and other third parties, and is
expected to occur during the first quarter of 1998.
RECENT ACQUISITIONS OF CABLE TELEVISION SYSTEMS
In January 1997, the Company purchased the cable television system serving
communities in northern Prince Georges County, Maryland (the "North Prince
Georges County System") from Maryland Cable Partners, L.P., an unaffiliated
entity. The purchase price was $231,367,000 and was funded by borrowings
available under the Company's credit facilities. The North Prince Georges
County System is now operated as part of the Company's Prince Georges County
System in the Virginia/Maryland cluster.
In June 1997, the Company purchased the cable television system serving the
City of Manitowoc, Wisconsin (the "Manitowoc System") from Cable TV Joint Fund
11, a venture comprised of four managed partnerships, for a purchase price of
$16,122,333. The Company received, from the four managed partnerships that
comprise the venture, general partner distributions totaling approximately
$4,556,000. Funding of the net purchase price of $11,566,000 was provided by
borrowings under the Company's credit facilities.
S-4
<PAGE>
RECENT EXCHANGE OF CABLE TELEVISION SYSTEMS
In April 1997, the Company acquired the cable television system serving
areas in and around Annapolis, Maryland (the "Annapolis System") and received
$2,500,000 in cash from an affiliate of Tele-Communications, Inc. in exchange
for the Company's cable television systems serving areas in and around
Evergreen, Idaho Springs and certain portions of Jefferson County, Colorado.
The Annapolis System is now operated as part of the Company's Chesapeake Bay
Group in the Virginia/Maryland cluster.
PROPOSED SALES OF CABLE TELEVISION SYSTEMS
In August 1996, the Company entered into agreements with Century
Communications Corp. pursuant to which the Company agreed to sell its cable
television systems serving areas in and around Walnut Valley, California (the
"Walnut Valley System") and Oxnard, California (the "Oxnard System"), for
$33,493,000 and $70,507,000, respectively, subject to customary closing
adjustments. Although the agreements required that the sale of the systems
occur on or before June 30, 1997, certain closing conditions had not been met
by such date and the closings did not occur. With respect to the sale of the
Walnut Valley System, the closing date has been extended to September 30, 1997
and the Company expects that it will close the sale of the Walnut Valley
System to Century Communications Corp. on or before such date. The agreement
relating to the sale of the Oxnard System to Century Communications Corp. has
expired.
RECENT SALE OF NON-STRATEGIC ASSETS
In April 1997, the Company tendered all of its shares of Bell Cablemedia plc
to Cable & Wireless Communications plc ("CWC") in exchange for shares of CWC.
In April and May 1997, the Company sold all of its shares of CWC for aggregate
sales proceeds of $109,276,000. The Company recognized a gain on this
transaction of $44,563,000 and proceeds from the sale of the Company's CWC
shares were used to reduce outstanding indebtedness under the Company's credit
facilities.
REDEMPTION OF SUBORDINATED DEBENTURES
In July 1997, the Company redeemed all $160,000,000 of its 11.5%
Subordinated Debentures due 2004 (the "11.5% Debentures") at 106.75% of par
value. This redemption was funded using proceeds from the March 1997 sale by
the Company of $250,000,000 of 8 7/8% Senior Notes due 2007 (the "Senior
Notes"). The Company will recognize an extraordinary loss on early
extinguishment of debt of approximately $13,500,000 in the third quarter of
1997 as a result of this redemption.
S-5
<PAGE>
THE OFFERING
Class A Common Stock offered
hereby:
Class A Common Stock offered to the
public...................................... 5,490,196 shares
Class A Common Stock offered to BCI........ 2,352,941 shares
Total..................................... 7,843,137 shares
================
Shares to be outstanding after the
Offering:
Class A Common Stock ...................... 34,107,660 shares
Common Stock .............................. 5,113,021 shares
-----------------
Total .................................... 39,220,681 shares
=================
USE OF PROCEEDS
The net proceeds to the Company from the Offering are estimated to be
$94,800,000, after payment of estimated expenses (assuming no exercise of the
Underwriters' over-allotment option). The Company anticipates that it will use
the net proceeds of the Offering, together with amounts borrowed under the
Company's credit facilities, to acquire the Independence System during the
third quarter of 1997. See "Recent Developments." Pending the use of the net
proceeds to acquire the Independence System, such proceeds will be held in a
separate account and may be invested in money market or other short-term,
interest bearing, investment-grade instruments.
S-6
<PAGE>
RISK FACTORS
An investment in the shares of Class A Common Stock offered hereby involves
certain risks. Prospective investors should consider carefully the following
factors, as well as all of the other information set forth in this Prospectus
Supplement and in the Prospectus dated November 27, 1995 (the "Prospectus"),
in evaluating an investment in the Class A Common Stock offered hereby.
Certain information contained in this Prospectus Supplement, in the Prospectus
and in the documents incorporated by reference contains "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. All statements, other than statements of historical facts, included
in such documents that address activities, events or developments that the
Company expects, believes or anticipates will or may occur in the future,
including such matters as changes in the cable television industry, the
Company's acquisition and clustering strategies, capital expenditures, the
Company's operating strategies, the liquidation of the Company's managed
partnerships, the development of new services and technologies, particularly
those in the telecommunications area, the effects of competition, the
Company's expansion and growth of the Company's operations and other such
matters, are forward-looking statements. These forward-looking statements are
based upon certain assumptions and are subject to a number of risks and
uncertainties. Discussions containing such forward-looking statements may be
found in this Prospectus Supplement under "The Company," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business Overview" and "Business Strategy," as well as elsewhere
in the Prospectus Supplement and in the Prospectus. Actual events or results
may differ materially from those discussed in the forward-looking statements
as a result of various factors, including without limitation the risk factors
set forth below and the matters set forth in the Prospectus Supplement and the
Prospectus generally.
HISTORY OF NET LOSS; EXPECTED FUTURE NET LOSS
The Company has sustained net losses of $8.6 million, $21.7 million and
$62.6 million for the years ended December 31, 1994, 1995 and 1996,
respectively. The Company had net income of $6.7 million for the six months
ended June 30, 1997. The net losses have resulted in an accumulated deficit of
$200.8 million as of June
30, 1997. In addition, earnings have been insufficient to cover fixed charges
in each of the five years ended December 31, 1996. The Company anticipates the
continued recognition of operating income prior to depreciation and
amortization charges, but net losses resulting from depreciation, amortization
and interest expenses may occur in the future. To the extent the Company
recognizes general partner distributions from its managed partnerships and/or
gains on the sale of Company-owned cable television systems in the future,
such losses may be reduced or eliminated; however, there is no assurance as to
the timing or recognition of these distributions or sales.
RISKS ASSOCIATED WITH SUBSTANTIAL LEVERAGE
The Company historically has been highly leveraged and the Company will
remain highly leveraged after the Offering. On a pro forma basis giving effect
to the Offering and the use of proceeds therefrom and the acquisition by the
Company of the Independence System and the Albuquerque System and the sale of
the Walnut Valley System, the Company will have long-term indebtedness of
approximately $1.2 billion and a ratio of long-term indebtedness to annualized
EBITDA for the six months ended June 30, 1997 of 6.6 to 1.0 as of June 30,
1997 (as if the Offering, the acquisitions of the Independence System and the
Albuquerque System and the sale of the Walnut Valley System took place on that
date). The degree to which the Company is leveraged may restrict the Company's
ability to obtain additional financing in the future for working capital,
capital expenditures, acquisitions, general corporate purposes or other
purposes and will require the Company to dedicate a significant portion of the
Company's cash flow from operations to interest payments. The Company would
suffer a material adverse effect if it were unable to meet its debt
obligations.
RISKS RELATED TO SHAREHOLDERS AGREEMENT
Pursuant to the terms of the shareholders agreement dated as of December 20,
1994 among Glenn R. Jones, Jones International, Ltd. ("International"), BCI
and the Company (the "Shareholders Agreement"), International and BCI, the
principal shareholders of the Company, have certain rights and obligations
with-
S-7
<PAGE>
respect to certain transactions proposed by or otherwise affecting the
Company. The Shareholders Agreement confers certain significant consent rights
on BCI. Notwithstanding such rights, the Company can acquire systems from its
managed partnerships (which systems on a pro forma basis as of June 30, 1997
served approximately 545,000 basic subscribers) and can sell, buy or make
investments in other cable television systems in amounts of $50,000,000 or
less, up to an aggregate of $250,000,000, without BCI's consent. The Company
may not, without the prior written consent of BCI, acquire or sell any cable
television systems other than as described above and may not incur debt if the
resulting debt to cash flow ratio of the Company would exceed 7:1. In
addition, pursuant to the terms of the Shareholders Agreement, the principal
shareholders and/or certain of their affiliates have certain rights to
distribute programming on the Company's cable television systems and the first
opportunity to supply certain services and equipment to the Company (on
competitive terms and conditions) and the Company has agreed to regularly
advise and consult with BCI with respect to the Company's strategic, operating
and financial plans and other matters. Because of these and other rights
granted to the Company's principal shareholders under the Shareholders
Agreement, certain actions that the Company might desire to take could be
dependent upon the agreement and cooperation of the Company's principal
shareholders. From time to time, disagreements concerning the Company's
strategic plan, acquisitions and other matters have occurred between the
principal shareholders. These disagreements have been reflected, in some
cases, in divided votes by the Company's Board of Directors (the "Board"). In
particular, the members of the Board designated by BCI voted against the
acquisition of the Independence System. In addition, the three directors
designated by BCI voted against the proposed Offering, and as a consequence of
BCI's position, two of the independent directors voted similarly. Should such
disagreements occur in the future, the Company's ability to implement its
strategic plan or take other actions could be frustrated, delayed or
prevented.
VOTING RIGHTS; CONTROL BY PRINCIPAL SHAREHOLDERS
Holders of Class A Common Stock have limited voting rights compared to the
holders of Common Stock. In all circumstances where the shareholders vote
together as a single class, the holders of Class A Common Stock are entitled
to one-tenth of a vote per share and the holders of Common Stock are entitled
to one vote per share. Glenn R. Jones, the Chairman and Chief Executive
Officer of the Company, beneficially owns 57% of the voting power of the
outstanding Common Stock and 41% of the total voting power of the outstanding
Class A Common Stock and Common Stock combined. Thus, Mr. Jones has the power
to elect the majority of the members of the
Board and to otherwise effectively control all matters requiring shareholder
approval. In addition, BCI beneficially owns 38% of the voting power of the
outstanding Class A Common Stock and 13% of the voting power of the
outstanding Class A Common Stock and Common Stock combined. BCI holds options
to purchase approximately 2.9 million shares of Common Stock of the Company
from Mr. Jones and certain of his affiliates, which, if and when exercised,
would afford BCI effective control of the Company. Except in limited
circumstances, such options will only be exercisable during the 12-month
period following December 20, 2001.
ANTI-TAKEOVER EFFECTS
The voting control of the Company's shares by Mr. Jones and BCI and certain
provisions of the Company's Articles of Incorporation may be deemed to have
certain anti-takeover effects. This voting control may have the effect of
delaying, deferring or preventing a change of control of the Company,
including any business combination with an unaffiliated party, impeding the
ability of the shareholders to replace management even if factors warrant such
a change and affecting the price that investors might be willing to pay in the
future for shares of the Company's Class A Common Stock. Pursuant to the terms
of the Shareholders Agreement, the Company's Board of Directors consists of
thirteen members. The parties to the Shareholders Agreement have agreed that
of the four directors to be elected by the holders of Class A Common Stock,
BCI will be entitled, but not required, to designate for election one director
and the remaining three directors, who shall be independent directors (as such
term is defined in the Shareholders Agreement), will be jointly designated by
Mr. Jones and BCI for election. The parties to the Shareholders Agreement have
also agreed that Mr. Jones will be entitled, but not required, to designate
seven of the nine directors to be elected by the holders of Common Stock and
that BCI will be entitled, but not required, to designate two of the nine
directors to be elected by the holders of Common Stock. The Company has agreed
that in the event that Mr. Jones or BCI chooses to designate one or more
nominees to the Board of Directors pursuant to the terms of the Shareholders
Agreement, the Company will use its reasonable efforts to include such nominee
in the group of nominees proposed by management of the Company for election to
the Board, recommend to the shareholders of the Company each such nominee's
election to the Board and solicit proxies for each such nominee from all
holders of voting securities entitled
S-8
<PAGE>
to vote thereon. In addition, 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 shareholders of the Company, or in any written consent
executed in lieu of such a meeting of shareholders, in favor of their mutual
nominees to the Board of Directors. These provisions may discourage a third
party from attempting to gain control of the Company and may maintain the
incumbency of the Board.
CONFLICTS OF INTEREST; TRANSACTIONS WITH AFFILIATES
The Company has engaged in and expects to continue to engage in certain
transactions with its affiliates. These transactions have involved affiliation
agreements for the distribution of programming owned by affiliated companies
on cable television systems owned or managed by the Company, lease agreements
related to real estate, lease agreements and service agreements related to
certain technical, computer, financial and administrative services provided to
the Company by affiliates and investments in and/or the acquisition of assets
from affiliated companies. For the year ended December 31, 1996, approximately
$466,000 or less than 1% of the Company's pro forma total revenue and
approximately $4.3 million or 2.9% of its pro forma total operating, general
and administrative expenses involved related party transactions. In addition,
in 1996 the Company paid affiliates $3,850,000 for financial advisory services
related to the acquisition of cable television systems and $2,000,000 to BCI
relating to a supply and services agreement. Because certain officers and
directors of the Company are also officers and directors of affiliated
companies, the terms of any agreements between the Company and such affiliates
are not and will not be the result of arm's-length negotiations. There can be
no assurance that the terms of any transactions between the Company and its
affiliates have been or will be as favorable as the Company could obtain from
unrelated parties.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of a substantial number of shares of Class A Common Stock after this
Offering, or the perception that such sales could occur, could adversely
effect the market price of the Class A Common Stock and could impair the
Company's ability to raise capital through the sale of equity securities. Upon
the completion of this Offering, the Company will have 34,107,660 shares of
Class A Common Stock outstanding, assuming the Underwriters'
over-allotment option is not exercised. Of these shares, the 5,490,196 shares
offered to the public hereby together with 13,574,679 shares of Class A Common
Stock currently freely tradeable in the public market, will be freely
tradeable without restriction or further registration under the Securities Act
of 1933, as amended (the "Securities Act"), unless purchased by "affiliates"
of the Company as that term is defined in Rule 144 under the Securities Act
("Rule 144") described below. The 2,644,461 shares of Class A Common Stock
beneficially owned by Mr. Jones, the 10,022,500 shares of Class A Common Stock
owned by BCI, the 2,352,941 shares of Class A Common Stock to be purchased by
BCI in the Offering and the 22,883 shares of Class A Common Stock owned by
other officers and directors of the Company, all of which will be outstanding
upon completion of this Offering, are deemed to be held by affiliates under
Rule 144 and are therefore not freely tradeable. Subject to the lock-up
agreements with certain of such officers, directors and affiliates described
below, however, all of such shares can be sold subject to the timing, volume
and manner of sale restrictions of Rule 144. In addition, there is a currently
effective registration statement covering 2,844,678 of the shares of Class A
Common Stock held by Mr. Jones and his affiliates, and BCI has certain demand
and piggyback registration rights under the Shareholders Agreement with
respect to its shares of Class A Common Stock, which rights will remain in
effect immediately following the Offering. After the Offering, approximately
1,627,366 shares of Class A Common Stock will be issuable upon exercise of
outstanding stock options, of which options for approximately 748,855 shares
are currently exercisable. The shares issuable upon exercise of outstanding
stock options will also be freely tradeable without restriction or future
registration under the Securities Act, unless purchased by affiliates of the
Company. Mr. Jones also beneficially owns 2,916,151 shares of Common Stock, of
which 2,878,151 shares are subject to options to purchase held by BCI.
The Company, each officer and certain directors of the Company and those
affiliates of Mr. Jones which hold shares of Class A Common Stock or Common
Stock have each agreed that it or they will not, for a period of 120 days from
the date of this Prospectus Supplement, directly or indirectly, offer for
sale, sell or otherwise
S-9
<PAGE>
dispose of (or enter into any transaction or devise which is designed to, or
could be expected to, result in the disposition or purchase by any person at
any time in the future of) any shares of Class A Common Stock or Common Stock
of the Company, subject to limited exceptions, without the prior written
consent of the Underwriters. BCI and those directors of the Company designated
by BCI have not made such agreements.
RISKS ASSOCIATED WITH GOVERNMENT REGULATION OF THE CABLE TELEVISION INDUSTRY
The operation of cable television systems is extensively regulated by the
Federal Communications Commission (the "FCC"), some state governments and most
local governments. The Telecommunications Act of 1996 (the "Telecom Act")
altered the regulatory structure governing the nation's telecommunications
providers. It removed barriers to competition in both the cable television
market and the local telephone market. Among other things, it also reduced the
scope of cable rate regulation. The Telecom Act requires the FCC to undertake
a host of implementing rulemakings, the final outcome of which cannot yet be
determined. Moreover, Congress and the FCC have frequently revisited the
subject of cable regulation. Future legislative and regulatory changes could
adversely affect the Company's operations.
RISKS OF COMPETITION
Cable television systems currently experience competition from several
sources.
Broadcast Television. Cable television systems have traditionally competed
with broadcast television, which consists of television signals that the
viewer is able to receive directly without charge using an "off-air" antenna.
The extent of such competition is dependent in part upon the quality and
quantity of signals available by such antenna reception and it has generally
been less difficult for cable operators to obtain higher penetration rates in
rural areas where signals available off-air are more limited than in
metropolitan areas where numerous, high quality off-air signals are often
available without the aid of cable television systems.
Traditional Overbuild. Because cable television franchises are not
exclusive, more than one cable television system may be built in the same
area, known as an "overbuild". The Company has experienced over- builds in
connection with certain systems that it has owned or managed for limited
partnerships and currently
there are overbuilds in both owned and managed systems. The Company's Panama
City Beach System has lost basic subscribers and commercial units to an
overbuilder that continues to provide significant competition and which has
had an adverse effect on that system's operations. One of the Company's
systems in the Chesapeake Bay Group also faces significant competition from an
overbuilder.
DBS. High-powered direct-to-home satellites have made possible the wide-
scale delivery of programming to individuals throughout the United States who
use small roof-top or wall-mounted antennas. Several companies have begun
offering direct broadcast satellite ("DBS") services over the last few years.
Companies offering DBS services use video compression technologies to increase
the channel capacity of their systems to 100 or more channels and to provide
packages of movies, satellite networks and other program services that are
competitive to those provided by cable television systems. DBS service
providers currently cannot offer local programming but at least one future DBS
entrant is attempting to offer customers regional delivery of local broadcast
signals. To date, the Company has not lost a significant number of subscribers
to DBS service providers. The ability of DBS service providers to compete
successfully with the cable television industry will depend on, among other
factors, the availability of DBS services at competitive prices.
Telephone. The Company is now facing competition from telephone companies.
The Telecom Act eliminated the historical federal cross-ownership restrictions
that limited entry by local telephone companies into the cable television
business within their service areas. Several telephone companies have begun
seeking cable television franchises from local governmental authorities and
have begun constructing cable television systems. Several of the Company's
owned or managed systems are facing competition and/or overbuild threats from
local telephone companies. The Company cannot predict at this time the extent
of telephone company competition
S-10
<PAGE>
that will emerge but the entry of telephone companies as direct competitors is
likely to continue over the next several years and such competition could
adversely affect the profitability and market value of the Company's owned and
managed systems. The entry of electric utility companies into the cable
television business as now authorized by the Telecom Act also could have a
similar adverse effect.
Private Cable Systems. The Company's cable television systems also face
competition from private cable television systems, known as Satellite Master
Antenna Television ("SMATV"), serving multi-unit dwellings such as
condominiums, apartment complexes and private residential communities. SMATV
operators may enter into exclusive agreements with apartment owners and
homeowners associations, which may preclude operators of franchised systems
from serving residents of such private complexes.
MMDS and LMDS. Cable television systems also compete with wireless program
distribution services such as multichannel multipoint distribution services
("MMDS") systems, commonly called wireless cable, which are licensed to serve
specific areas. MMDS uses low-powered microwave frequencies to transmit
television programming over-the-air to paying subscribers. The MMDS industry
is less capital intensive than the cable television industry and it is
therefore more practical to construct MMDS systems in areas of lower
subscriber penetration. Wireless cable systems are now in direct competition
with cable television systems in several areas of the country, including the
Company's system in Pima County, Arizona. Telephone companies have recently
acquired or invested in wireless companies and they may use MMDS systems to
provide services within their service areas in lieu of wired delivery systems.
To date, the Company has not lost a significant number of subscribers nor a
significant amount of revenue to MMDS operators competing with the Company's
cable television systems. A series of actions taken by the FCC, however,
including reallocating certain frequencies to the wireless services, are
intended to facilitate the development of wireless cable television systems as
an alternative means of distributing video programming. The FCC recently held
auctions for spectrums that will be used by wireless operators to provide
additional channels of programming over larger distances. In addition, an
emerging technology, Local Multipoint Distribution Services ("LMDS"), could
also pose a significant threat to the cable television industry, if and when
it becomes established. LMDS, sometimes referred to as cellular television,
could have the capability of delivering more than 100 channels of video
programming to a subscriber's home. The potential impact of LMDS is difficult
to assess due to the newness of this technology and the absence of any current
fully operational LMDS systems.
S-11
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company: (i) as of
June 30, 1997, (ii) pro forma to reflect the redemption of the Company's 11.5%
Debentures on July 15, 1997 and (iii) as adjusted to reflect (a) the purchase
of the Independence System for $171,213,667, less the limited partner
distribution to the Company of $25,700,000 and the brokerage fee of
$4,280,000, (b) the purchase of the Albuquerque System for $222,963,267, less
the general partner distribution to the Company of $8,100,000, (c) the sale of
the Walnut Valley System for $33,493,000 and (d) the issuance of the Class A
Common Stock offered hereby at an assumed offering price equal to the closing
price on July 31, 1997 of $12.75 per share.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
------------------------------------------
AS REPORTED PRO FORMA (1) AS ADJUSTED (2)
----------- ------------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents............ $ 6,174 $ 6,174 $ 6,174
========== ========== ==========
Debt:
Revolving credit facilities........ $ 230,500 $ 401,300 $ 629,104
8 7/8% Senior Notes due 2007, net
of unamortized discount........... 248,600 248,600 248,600
9 5/8% Senior Notes due 2002....... 200,000 200,000 200,000
11.5% Subordinated Debentures due
2004.............................. 160,000 -- --
10.5% Subordinated Debentures due
2008.............................. 100,000 100,000 100,000
Other.............................. 3,578 3,578 3,578
---------- ---------- ----------
Total Debt....................... 942,678 953,478 1,181,282
---------- ---------- ----------
Shareholders' Investment:
Class A Common Stock, $.01 par
value, 60,000,000 shares
authorized; 26,264,523 shares
issued as reported, 34,107,660
shares issued as adjusted......... 263 263 341
Common Stock, $.01 par value,
5,550,000 shares authorized;
5,113,021 shares issued........... 51 51 51
Additional paid-in capital......... 395,404 395,404 490,126
Accumulated deficit................ (200,844) (214,344) (191,934)
---------- ---------- ----------
Total Shareholders' Investment... 194,874 181,374 298,584
---------- ---------- ----------
Total Capitalization............. $1,137,552 $1,134,852 $1,479,866
========== ========== ==========
</TABLE>
- --------
(1) Pro forma to reflect the redemption of the 11.5% Debentures on July 15,
1997 at 106.75% of par value, or $170,800,000. The Company recognized an
extraordinary loss on early extinguishment of debt of approximately
$13,500,000, which consisted of the $10,800,000 premium and unamortized
offering costs of approximately $2,700,000.
(2) Reflects (a) the purchase of the Independence System for $171,213,667,
less the limited partner distribution of $25,700,000 and the brokerage fee
of $4,280,000, (b) the purchase of the Albuquerque System for
$222,963,267, less the general partner distribution of $8,100,000, (c) the
sale of the Walnut Valley System for $33,493,000 and (d) the issuance of
the Class A Common Stock offered hereby.
S-12
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth selected financial data regarding the
financial position and operating results of the Company and its subsidiaries.
This data should be read in conjunction with the Company's consolidated
financial statements and the notes thereto appearing in the Company's Annual
Report on Form 10-K for the year ending December 31, 1996 and the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, both of
which are incorporated by reference herein, and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" contained herein.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------------------------- ----------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- ---------- ---------- ----------
(IN THOUSANDS EXCEPT PER SHARE DATA) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues:
Subscriber service
fees................. $ 82,033 $ 99,438 $103,335 $135,350 $ 248,626 $ 116,142 $ 158,312
Management fees....... 16,820 17,255 17,952 21,462 19,104 9,854 9,035
Distributions and
brokerage fees....... -- -- -- -- 15,483 15,483 2,768
Non-cable revenue..... 6,943 7,624 10,602 32,026 28,497 18,674 4,321
-------- -------- -------- -------- ---------- ---------- ----------
Total revenues.......... 105,796 124,317 131,889 188,838 311,710 160,153 174,436
Costs and expenses:
Cable operating
expenses............. 38,579 54,307 55,196 77,638 131,529 61,580 82,746
Cable general &
administrative
expenses............. 9,304 10,034 8,120 8,284 16,586 7,929 10,083
Non-cable operating,
general &
administrative
expenses............. 6,793 7,989 11,810 32,382 28,410 18,789 4,694
Depreciation and
amortization......... 39,597 43,328 45,585 55,805 131,186 54,038 70,433
-------- -------- -------- -------- ---------- ---------- ----------
Operating income (loss). 11,523 8,659 11,178 14,729 3,999 17,817 6,480
Other income (expense):
Interest expense...... (38,112) (40,780) (36,883) (49,552) (67,782) (32,568) (43,703)
Interest income....... 4,851 3,919 5,886 14,383 3,758 2,492 803
Equity in losses of
affiliated entities.. (3,997) (3,817) (3,707) (58) (3,473) (2,008) (2,753)
Gain (Loss) on sale of
assets............... -- (3,231) 15,496 -- 5,262 -- 47,542
Other, net............ (573) (816) (661) (526) (4,424) 369 (1,656)
-------- -------- -------- -------- ---------- ---------- ----------
Income (Loss) before
income taxes,
extraordinary items and
accounting change...... (26,308) (36,066) (8,691) (21,024) (62,660) (13,898) 6,713
Income tax benefit
(provision)............ -- -- -- -- -- -- --
-------- -------- -------- -------- ---------- ---------- ----------
Income (Loss) before
extraordinary items and
accounting change...... (26,308) (36,066) (8,691) (21,024) (62,660) (13,898) 6,713
Extraordinary items--
Loss on early
extinguishment of debt. (11,409) (12,781) -- (692) -- -- --
Cumulative effect of
change in accounting
method
--Change in method of
accounting for
income taxes......... 3,862 -- -- -- -- -- --
-------- -------- -------- -------- ---------- ---------- ----------
Net income (loss)....... $(33,855) $(48,847) $ (8,691) $(21,716) $ (62,660) $ (13,898) $ 6,713
======== ======== ======== ======== ========== ========== ==========
Earnings (Loss) per
share.................. $ (2.63) $ (2.92) $ (0.45) $ (0.69) $ (2.00) $ (.44) $ .21
======== ======== ======== ======== ========== ========== ==========
Ratio of earnings to
fixed charges(1)....... -- -- -- -- -- -- 1.22
OTHER FINANCIAL DATA:
Operating income before
depreciation and
amortization and
excluding distributions
and brokerage fees
(EBITDA)............... $ 51,120 $ 51,987 $ 56,763 $ 70,534 $ 119,702 $ 56,372 $ 74,145
Capital expenditures.... 22,361 20,155 28,801 63,216 95,900 41,373 54,447
BALANCE SHEET DATA (AT
END OF PERIOD):
Total assets............ $434,670 $434,298 $608,289 $860,499 $1,134,129 $1,157,491 $1,253,685
Total debt.............. 382,245 372,908 281,578 492,714 806,147 782,548 942,678
Shareholders'
investment............. 13,996 17,503 271,284 292,795 235,307 293,199 194,874
</TABLE>
- -------
(1) The ratio of earnings to fixed charges has been computed by dividing the
sum of (a) pre-tax income, excluding losses of affiliated entities and (b)
interest expense, by net interest expenses. Interest expense includes
interest expense on all indebtedness (including amortization of deferred
debt issuance costs). Earnings were insufficient to cover fixed charges by
$29,858,000, $45,030,000, $4,984,000, $21,658,000, $59,187,000 and
$11,890,000 for the years ended December 31, 1992, 1993, 1994, 1995, 1996
and the six months ended June 30, 1996, respectively.
S-13
<PAGE>
SELECTED PRO FORMA FINANCIAL DATA
The following unaudited selected pro forma consolidated financial data for
the six months ended June 30, 1997 gives effect to: (i) (a) the purchase of
the North Prince Georges County System on January 31, 1997 for $231,367,000,
(b) the exchange of the Company's Colorado systems for the Annapolis System on
April 15, 1997, (c) the purchase of the Manitowoc System on June 30, 1997 for
a net purchase price of $11,566,000, (d) the sale of the Company's shares of
CWC in April and May 1997 for aggregate sales proceeds of $109,276,000, and
(e) the redemption of the 11.5% Debentures on July 15, 1997, (ii) the proposed
sale of the Walnut Valley System for $33,493,000, (iii) the proposed purchase
of the Independence System for $171,213,667, net of a $25,700,000 limited
partnership distribution and a $4,280,000 brokerage fee and (iv) the proposed
purchase of the Albuquerque System for $222,963,267, net of an $8,100,000
general partner distribution.
The unaudited selected pro forma financial data should be read in
conjunction with the note thereto and the historical financial statements of
the Company, the North Prince Georges County System, the Independence System
and the Albuquerque System, which are incorporated by reference herein. The
unaudited pro forma financial data is based on historical data and may not be
indicative of the actual results to be obtained upon the closing of the above
transactions.
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS (1)
AS ----------------------------------------------
REPORTED OTHER WALNUT PRO
6/30/97 ADJUSTMENTS VALLEY INDEPENDENCE ALBUQUERQUE FORMA
-------- ----------- -------- ------------ ----------- --------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Revenues from
operations:
Subscriber service
fees.................. $158,312 $ 6,093 $ (3,864) $16,449 $24,191 $201,181
Management fees........ 9,035 -- -- (855) (1,313) 6,867
Distributions and
brokerage fee......... 2,768 -- -- -- -- 2,768
Non-cable revenue...... 4,321 -- -- -- -- 4,321
-------- -------- -------- ------- ------- --------
Total revenues....... 174,436 6,093 (3,864) 15,594 22,878 215,137
Costs and expenses:
Cable operating
expenses.............. 82,746 3,414 (2,270) 8,410 12,529 104,829
Cable general and
administrative
expenses.............. 10,083 392 (93) 999 1,459 12,840
Non-cable operating,
general and
administrative
expenses.............. 4,694 -- -- -- -- 4,694
Depreciation and
amortization.......... 70,433 2,528 (720) 7,061 10,743 90,045
-------- -------- -------- ------- ------- --------
Operating income (loss). 6,480 (241) (781) (876) (1,853) 2,729
Other income (expense):
Interest expense....... (43,703) (1,499) 1,088 (1,503) (6,983) (52,600)
Interest income........ 803 -- -- -- -- 803
Equity in losses of
affiliates............ (2,753) -- -- -- -- (2,753)
Gain on sale of
assets................ 47,542 (44,563) -- -- -- 2,979
Other, net............. (1,656) -- -- -- -- (1,656)
-------- -------- -------- ------- ------- --------
Income (Loss) before
income tax and
extraordinary items.... 6,713 (46,303) 307 (2,379) (8,836) (50,498)
Income tax provision.... -- -- -- -- -- --
-------- -------- -------- ------- ------- --------
Income (Loss) before
extraordinary items.... 6,713 (46,303) 307 (2,379) (8,836) (50,498)
Extraordinary item--Loss
on early extinguishment
of debt................ -- (13,500) -- -- -- (13,500)
-------- -------- -------- ------- ------- --------
Net income (loss)....... $ 6,713 $(59,803) $ 307 $(2,379) $(8,836) $(63,998)
======== ======== ======== ======= ======= ========
Earnings (Loss) per
share.................. $ 0.21 $ (2.04)
======== ========
OTHER FINANCIAL DATA:
EBITDA.................. $ 74,145 $ 2,287 $ (1,501) $ 6,185 $ 8,890 $ 90,006
======== ======== ======== ======= ======= ========
Capital expenditures.... $ 54,447 $ 2,000 $ (555) $ 7,300 $ 5,600 $ 68,792
======== ======== ======== ======= ======= ========
</TABLE>
- --------
(1) The unaudited selected pro forma financial data reflects the transactions
listed above as if the transactions occurred on or before January 1, 1997.
The basis for the statement are the historical records of the Company, the
North Prince Georges County System, the Independence System and the
Albuquerque System, which are incorporated by reference herein. The
depreciation and amortization of the Independence System and the
Albuquerque System have been adjusted to reflect the Company's basis in
the assets. In addition, adjustments have been made to interest expense as
a result of changes in debt balances due to these transactions.
S-14
<PAGE>
SUPPLEMENTAL OPERATING DATA
The following table sets forth certain historical and pro forma statistical
information concerning the Company's owned and managed systems.
<TABLE>
<CAPTION>
DECEMBER 31, PRO FORMA
----------------------------------------------------- JUNE 30, JUNE 30,
1992 1993 1994 1995 1996 1997 1997
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Owned systems
Homes passed........... 367,300 386,800 450,600 551,800 892,900 1,077,200 1,411,200
Basic subscribers...... 242,200 263,000 308,900 370,500 584,900 694,400 873,200
Basic penetration(1)... 65.9% 68.0% 68.6% 67.1% 65.5% 64.5% 61.9%
Average monthly revenue
per basic
subscriber(2) ........ $30.26 $31.92 $33.43 $35.35 $39.23 $42.40 $41.16
Managed systems
Homes passed........... 1,544,900 1,588,000 1,624,000 1,603,400 1,380,100 1,263,300 850,700
Basic subscribers...... 895,179 949,300 1,014,300 997,900 865,100 778,900 544,600
Basic penetration(1)... 57.9% 59.8% 62.5% 62.2% 62.7% 61.7% 64.0%
Average monthly revenue
per basic
subscriber(2) ........ $31.18 $31.12 $33.72 $34.68 $35.82 $37.10 $38.25
</TABLE>
- --------
(1) Computed by dividing the number of basic subscribers by the number of
homes passed.
(2) Determined by dividing the total subscriber service fees for the period
indicated by the average number of basic subscribers during the period, and
then dividing by the number of months in such period.
S-15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion of the Company's financial condition and results of
operations contains, in addition to historical information, forward-looking
statements that are based upon certain assumptions and are subject to a number
of risks and uncertainties. The Company's actual results may differ
significantly from the results predicted in such forward-looking statements.
FINANCIAL CONDITION
The Company is implementing a balanced strategy of acquiring cable
television systems from its managed partnerships and from third parties. As
part of this process, certain systems owned by the Company and its managed
partnerships will be sold to third parties and Company-owned systems will be
exchanged for systems owned by other cable system operators. It is the
Company's plan to cluster its cable television properties on the basis of
operating characteristics and/or 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 intends to liquidate its managed partnerships as such
partnerships achieve their investment objectives and as opportunities for
sales of partnership cable television systems arise in the marketplace. In
accordance with this strategy, the Company is marketing for sale many of the
cable television systems owned by its managed partnerships. During the first
six months of 1997, five cable television systems, serving 88,000 basic
subscribers, were sold by managed partnerships. In addition, four cable
television systems, serving 234,300 basic subscribers, are currently under
contract to be sold by managed partnerships, including the Independence System
and the Albuquerque System which are to be sold to the Company.
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.
In implementing the Company's acquisition strategy, the Company acquired the
North Prince Georges County System in January 1997 and the Annapolis System in
April 1997 because they are near other systems owned by the Company in the
Washington, DC area. In addition, the Company purchased the Manitowoc System
in June 1997. The net effect of the acquisitions of such systems and the
disposition of the Company's Colorado cable television systems has increased
the Company's owned basic subscriber base by approximately 98,000 basic
subscribers to approximately 694,000 owned basic subscribers at June 30, 1997.
These transactions are described in detail in the Notes to Unaudited
Consolidated Financial Statements incorporated by reference herein.
The North Prince Georges County System was purchased for $231,367,000.
Funding was provided by borrowings under the Company's credit facilities. The
Annapolis System, together with $2,500,000 in cash, was acquired in exchange
for the Company's Colorado cable television systems. The Manitowoc System was
purchased for a net purchase price of $11,566,000. Funding was provided by
borrowings under the Company's credit facilities.
In addition to the systems already acquired during 1997, the Company has
entered into agreements to acquire the Independence System for $171,213,667
and the Albuquerque System for $222,963,267. The purchase of the Independence
System is expected to close in the third quarter of 1997. The purchase of the
Albuquerque System is expected to close in the first quarter of 1998. These
transactions are described in detail in the Notes to Unaudited Consolidated
Financial Statements incorporated by reference herein.
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
credit facilities, and other debt and/or equity financing. In addition, the
Company is exploring other financing options 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.
S-16
<PAGE>
From time to time, the Company makes loans to its managed partnerships,
although it is not required to do so. As of June 30, 1997, the Company had
advanced funds to various managed partnerships totaling approximately
$4,313,000, an increase of approximately $317,000 over the amount advanced at
December 31, 1996. These advances represent funds for capital expansion and
improvements of properties owned by the Company's managed 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 remainder of 1997. 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
$54,447,000 during the first six months of 1997. Of these capital
expenditures, $45,249,000 is principally the result of the following: (a) the
upgrade and rebuild of the cable plant in the Company's cable television
systems in the Washington, DC area and (b) new extension projects, drop
materials, converters and various maintenance projects in the Pima County,
Arizona, Augusta, Georgia and Washington, DC area systems. The remainder of
the expenditures included $3,012,000 spent on the development of a new
customer care/billing system and $6,186,000 related to the development of
telephone service in Maryland and Virginia. Estimated capital expenditures for
the remainder of 1997 are approximately $50,600,000. Of these estimated
capital expenditures, approximately $43,300,000 will be for cable extensions,
rebuilds and other enhancements in the cable television systems owned by the
Company and $7,300,000 will be for the continued development of a customer
care/billing system. 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
The Company's main sources of capital consist of cash generated from
operations and borrowings available under two revolving credit facilities for
the Company's two principal operating subsidiaries, Jones Cable Holdings, Inc.
("JCH") and Jones Cable Holdings II, Inc. ("JCH II"). Each revolving credit
facility has maximum available borrowings of $600,000,000.
The $600,000,000 JCH revolving credit facility is a reducing revolving
credit facility. 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 date of December 31, 2004. The balance outstanding on JCH's revolving
credit facility at June 30, 1997 was $172,000,000.
The $600,000,000 JCH II revolving credit facility consists of a $300,000,000
reducing revolving credit facility and a $300,000,000 364 day revolving credit
facility. The reducing revolving credit facility allows for borrowings 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 October 28, 1997, at which time any outstanding borrowings convert to
a term loan payable in semi-annual installments commencing June 30, 2001 with
a final maturity date of December 31, 2005. The balance outstanding on the JCH
II revolving credit facility at June 30, 1997 was $58,500,000. This amount was
borrowed under the reducing revolving credit facility.
During April and May 1997, the Company sold all of its 25,017,385 ordinary
shares of CWC for aggregate sales proceeds of $109,276,000. Proceeds from the
sale were used to reduce amounts outstanding under the Company's credit
facilities.
The Company has an effective registration statement relating to the sale of
$600,000,000 of senior debt securities, senior subordinated debt securities,
subordinated debt securities and/or Class A Common Stock. Pursuant to this
registration statement, on March 18, 1997, the Company issued and sold
$250,000,000 of
S-17
<PAGE>
8 7/8% Senior Notes due April 1, 2007. Proceeds from the sale of the Senior
Notes were used to redeem the 11.5% Subordinated Debentures at 106.75% of par
value on July 15, 1997 and for general corporate purposes. Pending the
redemption of the 11.5% Debentures, the Company used the proceeds from the 8
7/8% Senior Notes to reduce amounts outstanding under the Company's credit
facilities. In addition, pursuant to this Offering, the Company plans to issue
7,843,137 shares of its Class A Common Stock for net proceeds of $94,800,000,
after payment of estimated expenses. Such proceeds, together with borrowings
available under the Company's credit facilities, will be used to acquire the
Independence System.
The Company, in its capacity as the general partner of its managed
partnerships, may from time to time receive distributions upon the sale of
cable television systems owned by such partnerships. No such distributions
were received during the six months ended June 30, 1997. In addition, the
Company, through The Jones Group, Ltd., a wholly-owned subsidiary, may receive
brokerage fees upon the sale of the managed partnerships' cable television
systems to third parties. During the six months ended June 30, 1997, the
Company received brokerage fees of $3,695,000, less expenses of $927,000.
In August 1996, the Company entered into agreements with Century
Communications Corp. pursuant to which the Company agreed to sell its Walnut
Valley System and Oxnard System for $33,493,000 and $70,507,000, respectively,
subject to customary closing adjustments. Although the agreements required
that the sale of the systems occur on or before June 30, 1997, certain closing
conditions had not been met by such date and the closings did not occur. With
respect to the sale of the Walnut Valley System, the closing date has been
extended to September 30, 1997 and the Company expects that it will close the
sale of the Walnut Valley System to Century Communications Corp. on or before
such date. The agreement relating to the sale of the Oxnard System to Century
Communications Corp. has expired. Proceeds from the sale of the Walnut Valley
System will be used to reduce amounts outstanding under the Company's credit
facilities.
On December 23, 1996, the Company redeemed 225 of its 380 shares of Jones
Global Group, Inc. ("Global Group") in exchange for a $8,950,188 note
receivable from Global Group. The note was repaid during the first quarter of
1997. As a result of this transaction, the Company recognized a gain of
$2,979,000 in the first quarter of 1997.
The Company has sufficient sources of capital available, consisting of cash
generated from operations and borrowings available under 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 managed
partnerships, fees and distributions payable upon the sale of cable television
properties owned by managed partnerships and revenues from non-cable
television subsidiaries.
Total revenues for the three months ended June 30, 1997 totaled $90,934,000,
a decrease of $2,232,000, or 2%, over the total of $93,166,000 for the three
months ended June 30, 1996. The decrease in revenue was due to the following:
(i) the receipt of a general partner distribution and a brokerage fee totaling
$15,483,000 in the second quarter of 1996, (ii) the sale of two non-cable
subsidiaries in 1996, and (iii) a reduction in management fees due to the sale
of certain cable television systems owned by managed partnerships in 1996 and
1997. The effect of the above reductions were offset, in part, by the effect
of the acquisition of the Savannah, Georgia system in April 1996 and the North
Prince Georges County System in January 1997. Adjusting for the above
transactions, total revenues would have increased $7,639,000, or 9%.
Total revenues for the six months ended June 30, 1997 totaled $174,436,000,
an increase of $14,283,000, or 9%, over the total of $160,153,000 for the six
months ended June 30, 1996. This increase reflects the
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<PAGE>
Company's acquisition of the following: (i) the cable television system
serving Manassas, Virginia on January 10, 1996; (ii) the cable television
system serving South Prince Georges County, Maryland on February 29, 1996;
(iii) the cable television system serving Reston, Virginia on February 29,
1996; (iv) the cable television system serving Savannah, Georgia on April 12,
1996; and (v) the cable television system serving North Prince Georges County,
Maryland on January 31, 1997 (the "Acquired Systems"). The increase in
revenues in the 1997 period from the acquisition of the Acquired Systems was
offset, in part, by the receipt of a general partner distribution and a
brokerage fee totaling $15,483,000 in the second quarter of 1996, the sale of
two non-cable subsidiaries in 1996 as well as a decrease in management fees
due to the sale of certain cable television systems owned by managed
partnerships. Adjusting for the effect of the Acquired Systems, the general
partner distribution and the brokerage fee, the sale of the non-cable
subsidiaries and the decrease in management fees (the "Pro Forma
Adjustments"), total revenues would have increased $13,631,000, or 9%.
The Company's subscriber service fees increased $19,399,000, or 30%, to
$83,199,000 for the three months ended June 30, 1997 from $63,800,000 for the
three months ended June 30, 1996. Subscriber service fees for the six months
ended June 30, 1997 increased $42,170,000, or 36%, to $158,312,000 from
$116,142,000 for the six months ended June 30, 1996. The acquisition of the
Acquired Systems accounted for $12,093,000, or 62%, and $29,119,000, or 69%,
respectively, of the increases in subscriber service fees for the three and
six month periods. With the Pro Forma Adjustments, subscriber service fees
would have increased $7,306,000, or 10%, and $13,051,000, or 9%, respectively,
for the three and six month periods ended June 30, 1997. 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.
Disregarding the effect of acquisitions during the first six months of 1997,
basic subscribers increased 12,977, an annualized increase of 4.7%.
The Company receives management fees generally equal to 5% of the gross
operating revenues of its managed partnerships. Management fees totaled
$4,589,000 for the three months ended June 30, 1997, a decrease of $185,000,
or 4%, over the total of $4,774,000 reported for the three months ended June
30, 1996. For the six months ended June 30, 1997, management fees totaled
$9,035,000 compared to $9,854,000 in 1996, a decrease of $819,000, or 8%.
These decreases in management fees were the result of the sale of certain
cable television systems owned by managed partnerships in 1996 and 1997.
Disregarding the effect of the sale of such cable television systems,
management fees would have increased $230,000, or 5%, and $481,000, or 6%,
respectively, for the three and six months ended June 30, 1997.
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, Ltd.'s
Lancaster, New York system in April 1996. No such revenue was recognized
during the three and six month periods ended June 30, 1997. In addition, the
Company, through The Jones Group, Ltd., a wholly-owned subsidiary, may earn
brokerage fees upon the sale of managed cable television systems to third
parties. The Company earned brokerage fees of $502,000 and $3,695,000,
respectively, less expenses of $264,000 and $927,000, respectively, during the
three and six months ended June 30, 1997. A brokerage fee of $2,100,000, less
expenses of $617,000, was earned in April 1996.
The Company also operates certain non-cable subsidiaries. Non-cable revenue
totaled $2,908,000 for the three months ended June 30, 1997, a decrease of
$6,201,000, or 68%, over the $9,109,000 recorded for the three months ended
June 30, 1996. For the six months ended June 30, 1997, non-cable revenue
totaled $4,321,000, compared to $18,674,000 in 1996, a decrease of
$14,353,000, or 77%. These decreases were due primarily to the sale of Jones
Galactic Radio, Inc. ("GRI") and the assets of Jones Satellite Programming,
Inc. ("JSP") in June 1996 and July 1996, respectively.
Costs and Expenses
Operating, general and administrative expenses consist primarily of costs
associated with the operation and administration of Company-owned cable
television systems, the administration of managed partnerships and the
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<PAGE>
operation and administration of the non-cable subsidiaries. The Company is
reimbursed by its managed partnerships for costs associated with the
administration of the partnerships. The principal cost components are salaries
paid to corporate and system personnel, programming expenses, consumer
marketing expenses, professional fees, subscriber billing costs, data
processing costs, rent for leased facilities and cable system maintenance
expenses.
Cable operating expenses increased $10,215,000, or 30%, to $43,911,000 for
the three months ended June 30, 1997 from $33,696,000 in 1996. For the six
months ended June 30, 1997, cable operating expenses increased $21,166,000, or
34%, to $82,746,000 in 1997 from $61,580,000 in 1996. The acquisition of the
Acquired Systems accounted for $6,583,000, or 64%, and $15,171,000, or 72%,
respectively, of the increases for the three and six month periods. With the
Pro Forma Adjustments, cable operating expense would have increased
$3,632,000, or 9%, and $5,995,000, or 8%, respectively, for the three and six
months ended June 30, 1997. These increases were due primarily to increases in
basic and tier programming costs.
Cable general and administrative expenses increased $750,000, or 17%, to
$5,242,000 for the three months ended June 30, 1997 from $4,492,000 in 1996.
For the six months ended June 30, 1997, cable general and administrative
expenses increased $2,154,000, or 27%, to $10,083,000 in 1997 from $7,929,000
in 1996. As the Company acquires cable television systems on its own behalf
and sells cable television systems owned by managed partnerships, and thereby
transitions from a management company to an operating company, the Company's
proportionate percentage of total general and administrative expenses will
increase. With the Pro Forma Adjustments, cable general and administrative
expenses would have decreased $131,000, or 2%, and $180,000, or 2%,
respectively, for the three and six month periods ended June 30, 1997. These
decreases are due to effective cost controls relating to general and
administrative expense.
Non-cable operating, general and administrative expenses decreased
$6,073,000, or 69%, to $2,784,000 for the three months ended June 30, 1997
from $8,857,000 in 1996. For the six months ended June 30, 1997, non-cable
operating, general and administrative expense decreased $14,095,000, or 75%,
to $4,694,000 in 1997 from $18,789,000 in 1996. These decreases were due
primarily to the sale of GRI and the assets of JSP.
Depreciation and amortization increased $6,224,000, or 22%, to $34,901,000
for the three months ended June 30, 1997 from $28,677,000 in 1996. For the six
months ended June 30, 1997, depreciation and amortization increased
$16,395,000, or 30%, to $70,433,000 in 1997 from $54,038,000 in 1996.
Depreciation and amortization relating to the Acquired Systems was primarily
responsible for these increases.
Operating Income
Operating income decreased $13,348,000 or 77%, to $4,096,000 for the three
months ended June 30, 1997 from $17,444,000 in 1996. For the six months ended
June 30, 1997, operating income decreased $11,337,000, or 64%, to $6,480,000
in 1997 from $17,817,000 in 1996. These decreases were 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. With the Pro Forma Adjustments, operating income before
depreciation and amortization would have increased $4,433,000, or 13%, and
$8,115,000, or 12%, respectively for the three and six month periods ended
June 30, 1997.
Other Income (Expense)
Interest expense increased $6,569,000, or 38%, to $24,038,000 for the three
months ended June 30, 1997 from $17,469,000 in 1996. For the six months ended
June 30, 1997, interest expense increased $11,135,000, or 34%, to $43,703,000
in 1997 from $32,568,000 in 1996. These increases are due to higher
outstanding balances on interest bearing obligations. Borrowings were used to
fund the acquisition of the Acquired Systems.
Equity in losses of affiliated entities decreased $64,000, or 6%, to
$1,058,000 for the three months ended June 30, 1997 from $1,122,000 in 1996.
The decrease was due to a decrease in the losses of Jones Customer
S-20
<PAGE>
Service Management, LLC, which were offset, in part, by an increase in the
losses of Jones Education Company ("JEC"). For the six month periods, equity
in losses of affiliated entities increased $745,000, or 37%, to $2,753,000 in
1997 from $2,008,000 in 1996, due primarily to an increase in the losses of
JEC.
The Company recognized a gain of $44,563,000 on the sale of its 25,017,385
CWC shares in the second quarter of 1997. In addition, the Company recognized
a gain of $2,979,000 on the redemption of its Global Group shares in the first
quarter of 1997. No similar gains were recorded during the three and six
months ended June 30, 1996.
Interest income decreased $1,045,000, or 71%, to $421,000 for the three
months ended June 30, 1997 from $1,466,000 in 1996. For the six months ended
June 30, 1997, interest income decreased $1,689,000, or 68%, to $803,000 in
1997 from $2,492,000 in 1996. These decreases were due to a reduction in
receivables from managed partnerships.
Net income increased $21,663,000 to $22,554,000 for the three months ended
June 30, 1996 from $891,000 for the three months ended June 30, 1996 primarily
due to the gain on the sale of CWC shares. The Company recognized net income
of $6,713,000 for the six months ended June 30, 1997 compared to a net loss of
$13,898,000 in 1996 due primarily to the gain on the sale of CWC shares.
The Company anticipates the continued recognition of operating income prior
to depreciation and amortization charges, but net losses resulting from
depreciation, amortization and interest expenses may occur in the future. To
the extent the Company recognizes general partner distributions from its
managed partnerships and/or gains on the sale of Company-owned systems in the
future, such losses may be reduced or eliminated; however, there is no
assurance as to the timing or recognition of these distributions or sales.
S-21
<PAGE>
BUSINESS OVERVIEW
The Company is engaged primarily in the cable television business, operating
cable systems for itself and for its managed partnerships. The Company
currently is the eighth largest cable television system operator in the United
States, with owned and managed systems totaling approximately 1.4 million
basic subscribers. As of June 30, 1997, on a pro forma basis for all completed
and pending acquisitions and sales of cable systems, Company-owned systems
served approximately 875,000 basic subscribers and systems held by Company-
managed partnerships served approximately 545,000 basic subscribers. See
"Recent Developments." On a pro forma basis for the six months ended June 30,
1997, the Company had annualized revenue of $430,000,000 and annualized EBITDA
of $180,000,000. Key elements of the Company's operating strategy include
increasing the number of owned subscribers clustered in attractive demographic
areas and increasing penetration and revenues per subscriber by targeted
marketing, superior customer service and the maintenance of high technical
standards.
Over the last several years, the Company has taken significant steps to
simplify its corporate structure. This process has included the sale of cable
television systems owned by certain managed partnerships to either the Company
or to third parties and the divestiture of certain of the Company's non-
strategic assets. As a result of this strategy, on a pro forma basis as of
June 30, 1997, 62% of total subscribers would have been owned by the Company
compared to 23% in June 1995. During this process, the Company has also made
significant progress in clustering its owned subscribers in two primary groups
of cable systems. The Company's Virginia/Maryland cluster is based primarily
on geography. The Company's suburban cluster is based on similar market and
operating characteristics, rather than geography. These clusters represent
approximately 93% of Company-owned subscribers. The Company believes that its
clustering strategy allows it to obtain both economies of scale and operating
efficiencies, for example in areas such as marketing, administrative and
capital expenditures.
The Virginia/Maryland cluster is comprised of cable systems serving 400,000
basic subscribers in communities in Maryland and Virginia surrounding
Washington, DC and, on a pro forma basis, the suburban cluster is comprised of
five cable systems serving 415,000 basic subscribers. The suburban cluster
includes the Savannah and Augusta, Georgia systems and the Pima County,
Arizona system, and will include the Independence, Missouri and Albuquerque,
New Mexico systems that are to be acquired by the Company.
The Company believes that its systems are characterized by attractive
demographics. The average income per household is approximately $48,300 in the
markets served by the Company, compared to the national median household
income of approximately $44,900. As a result, the Company's systems have
generated monthly average revenue per subscriber in excess of cable television
industry averages during each of the past six years. In 1996, for example, the
Company's monthly average revenue per subscriber was $39.23, or 9.6% above the
industry average. In 1996, new home growth in the markets owned on a pro forma
basis by the Company was 1.86% compared to a national average of 1.49%. The
Company believes that these favorable demographic trends have contributed to
an internal subscriber growth of 3.2% in 1996 and 4.7% in the six months
ending June 30, 1997, compared to the same periods in the prior years. These
growth rates are above the industry average of approximately 2.0% and 2.2%,
respectively. The Company intends to maintain this favorable demographic
profile and will focus any acquisitions on cable systems that will fit into
either of its clusters.
The Company has achieved significant improvements in key measures of
operating performance. During each of the past six quarters ended June 30,
1997, annualized quarterly EBITDA growth has been in excess of 10% on a same
system basis. For 1996, disregarding the effect of the acquisitions and sales
of certain systems, total revenues and EBITDA increased by 8% and 12%,
respectively, compared to 1995. Furthermore, EBITDA growth was 13% for the
second quarter of 1997, compared to the same period in 1996. As a result of
the implementation of the Company's clustering strategy, the sale of certain
of the Company's non-strategic assets and operating efficiencies, the EBITDA
margin has increased from 35% to 41% during the past six quarters.
The Company considers technological innovation to be an important component
of its service offerings and customer satisfaction. The Company has actively
sought to upgrade the technical capabilities of its cable plant in order to
improve reliability, increase channel capacity for the delivery of additional
video programming and facilitate the delivery of new services. As a result of
these efforts, 46% of the Company's currently owned subscribers are served by
systems with a technical capacity of 550 MHz or greater. In Alexandria,
Virginia, with
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<PAGE>
the assistance of BCI, the Company has developed a state-of-the-art 750 MHz
system that has the capability to integrate voice and high-speed data,
providing telephone services and Internet connections via cable modems. The
Company already has begun to offer telephone and, through an affiliate,
Internet programming to residents in certain of the systems that comprise the
Virginia/Maryland cluster. In the multiple dwelling units where the Company's
telephone service has been fully marketed, the telephony penetration rate is
currently approximately 21%. The Company's systems consistently rank high in
customer satisfaction, and results of Company-initiated surveys indicate that
it is scoring higher than the local telephone companies in its service areas.
BUSINESS STRATEGY
SELECTIVE CLUSTERING
The Company's strategy is to cluster systems on the basis of operating
characteristics or geographic areas. The advantages of such clustering include
economies of scale for both operations and corporate expenditures, positioning
the Company to capitalize on new business opportunities and more effective
regional or broad market advertising. During the past several years, the
Company has made a number of acquisitions focusing on key markets with
attractive demographics, thereby creating clusters of systems based on
location or market characteristics. The Company's Virginia/Maryland cluster,
where the Company owns approximately 400,000 basic subscribers, and the
Company's suburban cluster, which includes five systems serving 415,000 basic
subscribers, reflect this strategy.
SIMPLIFYING CORPORATE STRUCTURE
The Company continues to increase its wholly-owned subscriber base and
simplify its corporate structure through strategic acquisitions, sales of
systems held by managed partnerships to either the Company or to third parties
and the divestiture of non-strategic assets. The focus on directly owning
cable systems in clusters allows the Company to obtain operational economies
ranging from marketing and advertising to administrative costs and capital
expenditures. Non-cable divestitures have included the Company's shareholdings
in CWC, Jones Galactic Radio, Inc. and Jones Satellite Programming, Inc. and a
portion of its shareholdings in Jones Global Group, Inc., which resulted in
aggregate net proceeds to the Company of $138,300,000.
UPGRADING CABLE SYSTEMS
The Company is currently deploying a strategy to upgrade the majority of its
systems to 550 MHz capacity or greater. As a result of this strategy, 46% of
its currently owned subscribers are served by systems with a technical
capacity of 550 MHz or greater and this percentage is projected to grow to
approximately 90% by 1999 (taking into account the acquisition and upgrade of
the Independence System and the Albuquerque System). In its Virginia/Maryland
cluster, the Company is working with BCI to develop a fiber optic ring
structure and to deploy a network that facilitates the provision of telephony
and high speed data services. Going forward, the level of capital expenditures
in a market will be determined by what the Company's management believes is
the potential demand for such advanced services and the system's existing
plant capacity.
PROVIDING NEW PRODUCTS AND SERVICES
The Company is actively looking to incrementally increase revenues per
subscriber through the development of new products and services. For example,
the Company launched telephone service to multiple dwelling units in systems
in its Virginia/Maryland cluster in 1996 and currently has approximately 2,000
subscribers generating average revenues of $17.00 per month per subscriber.
The Company also has begun to offer high speed data transfer services to
business clients and, through an affiliate, Internet programming to
residential customers.
FOCUSING ON CUSTOMER SATISFACTION
The Company strives to provide quality customer service and programming
choices at reasonable rates. The Company's systems consistently rank high in
its surveys of customer satisfaction, and results of such surveys also
indicate that the Company is scoring higher than the local telephone companies
in its service areas in the category of overall customer service. The Company
also employs targeted-marketing tactics that track customer trends and habits
and evaluate the effectiveness of particular product pricing and marketing
strategies. The Company has established stringent internal customer service
standards which it believes has contributed to its subscriber growth and
ongoing loyalty from existing subscribers.
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<PAGE>
THE COMPANY'S OTHER BUSINESSES AND INVESTMENTS
The Company owns two non-cable subsidiaries: The Jones Group, Ltd., which
serves as the cable television system broker for the Company's managed
partnerships, and Jones Futurex, Inc., which manufactures and markets data
encryption products. The Company also owns approximately 16% of Jones
Education Company, which offers a variety of integrated educational
programming, products and services, and has a 26% interest in Mind Extension
University, Inc., the Jones Education Company subsidiary that operates the
Knowledge TV educational programming network. The Company has not made
investments in these companies since April 1995.
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<PAGE>
CABLE TELEVISION SYSTEMS INFORMATION
The following tables set forth certain information concerning the cable
television systems owned or managed by the Company on a pro forma basis, as of
June 30, 1997, to reflect all completed and pending acquisitions and sales of
cable television systems.
<TABLE>
<CAPTION>
MONTHLY
REVENUE
HOMES BASIC BASIC PREMIUM PER BASIC ACQUISITION
PASSED SUBSCRIBERS PENETRATION(1) SUBSCRIBERS SUBSCRIBER(2) DATE
--------- ----------- -------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
OWNED SYSTEMS
-------------
Virginia/Maryland Clus-
ter
Chesapeake Bay Group,
Maryland.............. 181,600 100,400 55.3% 107,400 $39.68 1/88-4/96
Alexandria, Virginia... 62,300 41,200 66.1% 32,600 37.98 11/92
Prince William County,
Virginia.............. 128,100 94,100 73.5% 94,300 44.45 11/95-1/96
Prince Georges County,
Maryland.............. 279,000 164,600 59.0% 216,900 50.58 2/96-1/97
Suburban Cluster
Pima County, Arizona... 73,300 59,300 80.9% 38,000 36.59 2/89
Augusta, Georgia....... 133,600 88,800 66.5% 73,700 39.93 12/93-10/95
Savannah, Georgia...... 104,200 66,100 63.4% 39,500 39.21 4/96
Independence, Missou-
ri.................... 131,800 85,900 65.2% 60,100 33.14 pending
Albuquerque, New Mexi-
co.................... 234,200 112,800 48.2% 60,800 37.58 pending
Other
Oxnard, California..... 54,400 40,800 75.0% 27,900 35.34 2/88
Panama City Beach,
Florida............... 11,800 7,200 61.0% 7,600 29.88 12/94
Celebration, Florida... 300 300 100.0% 200 33.78 1/96
Manitowoc, Wisconsin... 16,600 11,700 70.5% 7,000 28.87 6/97
--------- --------- ---------
Total Owned Systems.. 1,411,200 873,200 61.9% 766,000
--------- --------- ---------
MANAGED SYSTEMS
---------------
Cable TV Fund 12-A
Ft. Myers, Florida..... 70,500 36,500 51.8% 22,600 36.03 5/85
Orland Park, Illinois.. 30,800 21,300 69.2% 14,300 36.65 12/84
Lake County, Illinois.. 28,400 20,100 70.8% 11,400 34.36 5/85
Cable TV Fund 12-BCD
Venture
Palmdale/Lancaster,
California............ 92,900 63,500 68.4% 48,400 37.22 4/86
Cable TV Fund 14-A
Buffalo, Minnesota..... 23,900 12,600 52.7% 7,500 32.95 9/87
Naperville, Illinois... 42,500 24,300 57.2% 12,000 32.17 9/87
Calvert County, Mary-
land.................. 26,300 17,800 67.7% 16,900 41.53 9/87
Cable TV Fund 14-A/B
Venture
Broward County, Flori-
da.................... 89,100 49,900 56.0% 47,100 39.71 3/88
Cable TV Fund 14-B
Sufside Beach, South
Carolina.............. 26,100 21,500 82.4% 19,400 35.99 9/88
Littlerock, Califor-
nia................... 7,800 5,700 73.1% 4,800 36.79 7/89
Cable TV Fund 15-A
Barrington, Illinois... 70,500 47,200 67.0% 36,900 38.83 12/89
South Suburban Chica-
go, Illinois.......... 62,100 37,500 60.4% 30,900 38.41 9/90
Jones Cable Income Fund
1-A
Owatonna/Glencoe, Min-
nesota................ 11,300 8,400 74.3% 4,200 30.39 7/86
Jones Cable Income Fund
1-B/C Venture
Myrtle Creek, Oregon... 9,000 6,500 72.2% 3,800 29.90 12/87
Clearlake Oaks, Cali-
fornia................ 27,800 17,500 62.9% 6,200 28.04 12/87
South Sioux City, Ne-
braska................ 9,000 6,100 67.8% 4,100 31.57 2/88
Southwest Michigan
Group................. 27,100 17,600 64.9% 10,100 33.14 9/88
IDS/Jones Joint Venture
Partners
Aurora, Illinois....... 75,800 48,100 63.5% 24,700 33.37 5/90
Jones Growth Partners
Wheaton, Illinois...... 81,700 54,800 67.1% 35,500 36.06 10/89
Spacelink Income/Growth
1-A
Northeast Indiana
Group................. 21,800 15,000 68.8% 8,000 30.39 11/88
Jones Spacelink Fund 3
Socorro, New Mexico.... 3,000 2,300 76.7% 1,400 30.61 6/85
Grants, New Mexico..... 4,300 3,900 90.7% 1,400 30.29 6/85
Jones Spacelink Fund 5
Lake Almanor, Califor-
nia................... 4,100 3,000 73.2% 1,800 29.44 12/85
Winnemucca, Nevada.... 3,900 2,600 66.7% 3,000 36.55 5/89
Jones/Gateway Partners
Gateway, Florida....... 1,000 900 90.0% 400 29.48 9/89
--------- --------- ---------
Total Managed Sys- 850,700 544,600 376,800
tems................ --------- --------- 64.0% ---------
Total Owned and Man- 2,261,700 1,417,800 1,142,800
aged................ ========= ========= 62.7% =========
</TABLE>
- --------
(1) Computed by dividing the number of basic subscribers by the number of
homes passed.
(2) Determined by dividing the total subscriber service fees for the six
months ended June 30, 1997 by the average number of basic subscribers
during the period, and then dividing by six.
S-25
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Class A Common Stock and Common Stock immediately
prior to the consummation of the Offering by: (i) each person known by the
Company to be the beneficial owner of more than 5% of the Class A Common Stock
or Common Stock, (ii) certain of the Company's directors and (iii) all
directors and executive officers of the Company as a group. Except as
otherwise indicated, each person named in the table has informed the Company
that such person has sole voting and investment power with respect to all
shares beneficially owned by such person. Except as otherwise set forth in the
notes to the table, the address of the principal shareholders is 9697 East
Mineral Avenue, Englewood, Colorado 80112.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK COMMON STOCK
-------------------------- -----------------------
PERCENT
NUMBER PERCENT NUMBER OF
BENEFICIAL OWNER OF SHARES OF SHARES OF SHARES SHARES
---------------- ---------- --------- --------- -------
<S> <C> <C> <C> <C>
Jones International,
Ltd. .................... 2,447,568(1)(2) 9.32 2,441,751(1)(3) 47.76
Glenn R. Jones............ 3,156,110(1)(4) 11.79 2,916,151(1)(5) 57.03
Bell Canada International
Inc. .................... 10,022,500(6) 38.16 -- (7) -- (7)
Christine Jones Marocco... 108,748(8) .41 2,742,537(9) 53.64
Mutuelles AXA group....... 1,325,000(10) 5.05 -- --
AXA
The Equitable Companies
Inc.
The Capital Group
Companies, Inc. ......... 1,555,000(11) 5.92 -- --
Neuberger & Berman........ 1,862,652(12) 7.09 -- --
All executive officers and
directors as a group
(19 persons)............. 3,247,933(13) 12.10 2,920,182 57.11
</TABLE>
- --------
(1) Glenn R. Jones, Chairman of the Board of Directors and Chief Executive
Officer of the Company, owns all of the outstanding shares of
International and is deemed to be the beneficial owner of all shares of
the Company owned by International.
(2) 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.
(3) Includes 38,000 shares held by International; 2,239,416 shares held by
the Jones International Grantor Business Trust in which Mr. Jones has
shared voting power; 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.
(4) Includes 196,893 shares owned by Mr. Jones; 511,649 shares deemed to be
held by Mr. Jones pursuant to currently 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.
(5) Includes 474,400 shares held by the Glenn Jones Grantor Business Trust in
which Mr. Jones has shared voting power; 38,000 shares held by
International; 2,239,416 shares held by the Jones International Grantor
Business Trust in which Mr. Jones has shared voting power; 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.
S-26
<PAGE>
(6) These shares are held by Bell Canada International BVI III Limited, a
wholly-owned subsidiary of BCI. BCI is deemed to be the beneficial owner
of these shares. BCI's address is 1000 rue de la Gauchetiere West,
Montreal, Quebec, Canada H3B4Y8.
(7) BCI, through its wholly-owned subsidiary Bell Canada International BVI IV
Limited, may be deemed to have beneficial ownership of 2,878,151 shares,
or 56%, of the Common Stock pursuant to Option Agreements dated December
20, 1994 among Morgan Guaranty Trust Company 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.
(8) 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. Mrs. Marocco's address is 25 East End Avenue, #14F, New York,
New York 10288.
(9) Includes 12,370 shares held by Mrs. Marocco; 357 shares held by the
Joseph Michael Marocco Irrevocable Trust; 26,707 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.
(10) The Mutuelles AXA group includes AXA Assurances I.A.R.D. Mutuelle, AXA
Assurances Vie Mutuelle, Alpha Assurances I.A.R.D. Mutuelle, Alpha
Assurances Vie Mutuelle and AXA Courtage Assurance Mutuelle (formerly,
Uni Europe Assurance Mutuelle). The Mutuelles AXA group, AXA and The
Equitable Companies Incorporated have sole voting power over 1,310,500
shares and sole dispositive power over 1,325,000 shares. The address of
the Mutuelles AXA group is 101-100 Terrasse Boieldieu, 92042 Paris La
Defense, France. AXA's address is 23 Avenue Matignon, 75008 Paris,
France. The Equitable Companies Incorporated's address is 787 Seventh
Avenue, New York, New York 10019.
(11) The Capital Group Companies, Inc. has sole voting power over 540,000
shares, shared voting power over no shares and sole dispositive power
over 1,555,000 shares. The Capital Group Companies, Inc. is located at
333 South Hope Street, Los Angeles, California 90071.
(12) 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. The address of Neuberger & Berman is 605 Third Avenue,
New York, New York 10158.
(13) Includes 580,589 shares deemed to be held by various executive officers
and directors pursuant to exercisable stock options.
S-27
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an Underwriting Agreement
dated the date hereof (the "Underwriting Agreement") among the Company and
Lehman Brothers Inc. and Donaldson, Lufkin & Jenrette Securities Corporation
(collectively, the "Underwriters"), each of the Underwriters has severally
agreed to purchase from the Company the number of shares of Class A Common
Stock set forth opposite its name below.
<TABLE>
<S> <C>
UNDERWRITER NUMBER OF
----------- SHARES
---------
Lehman Brothers Inc. ............................................
Donaldson, Lufkin & Jenrette Securities Corporation..............
---------
Total.......................................................... 7,843,137
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
to purchase the shares of Class A Common Stock offered hereby are subject to
certain conditions precedent and that the Underwriters will be obligated to
purchase all of such shares if any such shares are purchased.
The Underwriters have advised the Company that the sale of Class A Common
Stock to certain dealers may be made at a concession not in excess of $ per
share and that the Underwriters may allow, and such dealers may reallow,
discounts not in excess of $ per share on sales to certain other dealers.
After the initial public offering, the public offering price, concession and
reallowance may be changed by the Underwriters. BCI will purchase its
2,352,941 shares from the Underwriters net of underwriting discounts and
commissions.
The Company has granted to the Underwriters an option to purchase up to an
additional 1,176,471 shares of Class A Common Stock exercisable solely to
cover over-allotments, at the initial offering price to the public, less the
underwriting discount, shown on the cover page of this Prospectus Supplement.
Such option may be exercised at any time until 30 days after the date of the
Underwriting Agreement. To the extent the option is exercised, each
Underwriter will be committed, subject to certain conditions, to purchase the
number of shares of Class A Common Stock proportionate to such Underwriter's
initial commitment as indicated in the preceding table.
The Company, each officer and certain directors of the Company and those
affiliates of Mr. Jones which hold shares of Class A Common Stock or Common
Stock have each agreed that it or they will not, for a period of 120 days from
the date of this Prospectus Supplement, directly or indirectly, offer for
sale, sell or otherwise dispose of (or enter into any transaction or devise
which is designed to, or could be expected to, result in the disposition or
purchase by any person at any time in the future of) any shares of Class A
Common Stock or Common Stock of the Company, subject to limited exceptions,
without the prior written consent of the Underwriters. BCI and those directors
of the Company designated by BCI have not made such agreements. See "Risk
Factors--Shares Eligible for Future Sale."
The Class A Common Stock is traded on the Nasdaq National Market under the
symbol "JOINA."
The Underwriting Agreement provides that the Company will indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or contribute to payments the Underwriters
may be required to make in respect thereof.
Certain of the Underwriters have from time to time provided customary
investment banking services to the Company and expect in the future to provide
such services, for which they have received and will receive customary fees
and commissions.
Until the distribution of the Class A Common Stock is completed, rules of
the Commission may limit the ability of the Underwriters and certain selling
group members to bid for and purchase shares of Class A Common Stock. As an
exception to these rules, the Underwriters are permitted to engage in certain
transactions that stabilize the price of the Class A Common Stock. Such
transactions may
S-28
<PAGE>
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the Class A Common Stock.
If the Underwriters create a short position in the Class A Common Stock in
connection with the offering (i.e., if they sell more shares of Class A Common
Stock than are set forth on the cover page of this Prospectus Supplement), the
Underwriters may reduce that short position by purchasing shares of Class A
Common Stock in the open market. The Underwriters also may elect to reduce any
short position by exercising all or part of the over-allotment option
described herein.
In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might be in the absence of such purchases.
Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of the Class A Common
Stock. In addition, neither the Company nor any of the Underwriters makes any
representation that the Underwriters will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company acquired a number of cable television systems during 1996 and
1997. The historical financial statements of the significant acquired
businesses filed by the Company with the Commission pursuant to the
requirements of the Exchange Act are hereby incorporated by reference into
this Prospectus Supplement from the Company's Current Reports on Form 8-K
filed on May 14, 1996, June 26, 1996 and August 1, 1997.
LEGAL MATTERS
The validity of the shares of Class A Common Stock will be passed upon for
the Company by Elizabeth M. Steele, Vice President/General Counsel of the
Company. Certain legal matters will be passed upon for the Underwriters by
Simpson Thacher & Bartlett (a partnership that includes professional
corporations), New York, New York.
EXPERTS
The consolidated financial statements of the Company and its subsidiaries
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 and the historical financial statements filed by the Company
with the Current Report on Form 8-K dated August 1, 1997, which are
incorporated herein by reference, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are incorporated herein by reference upon the authority of said
firm as experts in giving said reports. The historical financial statements of
Prince Georges County (a cable system included in the partnership of Time
Warner Entertainment - Advance/Newhouse) as of December 31, 1995 and for the
period from April 1, 1995 to December 31, 1995, and of Warner Cable
Communications (Fairfax County, Virginia), a division of Time Warner
Entertainment - Advance/Newhouse Partnership as of December 31, 1995 and for
the year then ended, filed by the Company with a Current Report on Form 8-K
dated May 14, 1996 and the historical financial statements of Cablevision of
Savannah (a cable system included in Time Warner Entertainment Company, L.P.)
as of December 31, 1995 and 1994, and for the years then ended, filed by the
Company with a Current Report on Form 8-K dated June 26, 1996, which are
incorporated herein by reference, have been audited by Ernst & Young LLP,
independent auditors, as indicated in their reports with respect thereto, and
are incorporated herein by reference upon the authority of said firm as
experts in giving said reports.
S-29
<PAGE>
PROSPECTUS
[LOGO OF JONES INTERCABLE, INC. APPEARS HERE]
SENIOR DEBT SECURITIES, SENIOR SUBORDINATED DEBT SECURITIES,
SUBORDINATED DEBT SECURITIES AND CLASS A COMMON STOCK
----------------
Jones Intercable, Inc. (the "Company") may offer from time to time (i)
debentures, notes and/or other unsecured evidences of indebtedness consisting
of senior debt securities ("Senior Debt Securities"), senior subordinated debt
securities ("Senior Subordinated Debt Securities") and subordinated debt
securities ("Subordinated Debt Securities") in one or more series
(collectively, the "Debt Securities") or (ii) shares of its Class A Common
Stock, par value $.01 per share (the "Class A Common Stock"), or any
combination of the foregoing, having an aggregate initial public offering
price not to exceed U.S. $600,000,000 or the equivalent thereof in one or more
foreign currencies at prices and on terms to be determined at or prior to the
time of sale. The Debt Securities may be issued as convertible Debt Securities
convertible into shares of the Class A Common Stock or into other securities.
The Debt Securities and the Class A Common Stock are collectively referred to
as the "Securities."
Specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in an accompanying prospectus supplement (a
"Prospectus Supplement"), together with the terms of the offering of the
Securities, the initial offering price and the net proceeds to the Company
from the sale thereof. The Prospectus Supplement will set forth, among other
matters, the following with respect to the particular Securities: (i) in the
case of Debt Securities, the specific designation, aggregate principal amount,
ranking as senior debt, senior subordinated debt or subordinated debt,
authorized denominations, maturity, rate or method of calculation of interest
and dates for payment thereof, any conversion, redemption, prepayment or
sinking fund provisions, and the currency, currencies or currency units in
which principal, premium, if any, or interest, if any, is payable and (ii) in
the case of the Class A Common Stock, the number of shares and the terms of
the offering and sale thereof. The Prospectus Supplement will also contain
information, as applicable, about certain United States federal income tax
considerations relating to the Securities in respect of which this Prospectus
is being delivered.
The Company's Class A Common Stock is traded in the over-the-counter market
and is authorized for quotation on the National Market System operated by the
National Association of Securities Dealers, Inc. under the symbol JOINA. Any
Class A Common Stock offered will be listed, subject to notice of issuance, on
such exchange. See "Price Range of Class A Common Stock."
The Company may sell Securities directly to purchasers or through agents or
dealers designated from time to time by the Company or to or through
underwriters. If any agents, dealers or underwriters are involved in the sales
of Securities in respect of which this Prospectus is being delivered, the
names of such agents, dealers or underwriters and any applicable commissions
or discounts will be set forth in the accompanying Prospectus Supplement. The
net proceeds to the Company from the sale of the Securities will be set forth
in the Prospectus Supplement.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAVE THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
----------------
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
The date of this Prospectus is November 27, 1995.
<PAGE>
NO DEALER, SALESPERSON OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR IN ANY ACCOMPANYING PROSPECTUS
SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY AGENT,
DEALER OR UNDERWRITER. THIS PROSPECTUS AND ANY ACCOMPANYING PROSPECTUS
SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THOSE SPECIFICALLY OFFERED HEREBY OR ANY
SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR
ANY ACCOMPANYING PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (herein, together with all
amendments and exhibits, referred to as the "Registration Statement") relating
to the Securities under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information pertaining to the Securities and the Company, reference is made to
the Registration Statement.
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information
with the Commission. Such reports, proxy statements and other information can
be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and
at the following Regional Offices of the Commission: 7 World Trade Center,
Suite 1300, New York, New York 10048, and Northwest Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of any such
material may be obtained at prescribed rates from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Company will furnish to holders of the Securities annual reports
containing audited financial statements accompanied by a report thereon by the
Company's independent certified public accountants.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which have been filed by the Company with the
Commission (File No. 1-9953) pursuant to the requirements of the Exchange Act,
are hereby incorporated by reference: (i) the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1995, as amended, (ii) the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended August 31, 1995,
(iii) the Company's Current Report on Form 8-K dated September 8, 1995, (iv)
the Company's Current Report on Form 8-K dated September 27, 1995, (v) the
Company's Current Report on Form 8-K dated October 10, 1995, (vi) the
Company's Current Report on Form 8-K dated November 1, 1995, (vii) the
Company's Current Report on Form 8-K dated November 10, 1995 and (viii) the
Company's Proxy Statement dated May 19, 1995.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Securities
shall be deemed to be incorporated by reference into this Prospectus and to be
a part hereof from the date any such document is filed. Any statement
contained herein or in a document incorporated or deemed to be incorporated by
reference herein or in any Prospectus Supplement shall be deemed to be
modified or superseded for purposes of the Registration Statement and this
Prospectus or any Prospectus Supplement to the extent that a statement
contained herein or therein (or in any other subsequently filed document which
also is, or is deemed to be, incorporated by reference herein or therein)
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Registration Statement and this Prospectus or any
Prospectus Supplement.
2
<PAGE>
The Company will provide without charge to each person to whom a Prospectus
is delivered, upon written or oral request of such persons, a copy of any or
all of the documents that are incorporated by reference herein, other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into such document). Requests should be directed to Elizabeth M.
Steele, Vice President/General Counsel and Secretary, Jones Intercable, Inc.,
9697 East Mineral Avenue, P.O. Box 3309, Englewood, Colorado 80133-3309, (303)
792-3111.
THE COMPANY
The Company is a Colorado corporation organized in 1970. The Company is
primarily engaged in the cable television business. The Company also holds
equity interests in a number of programming and other cable-related
subsidiaries. At May 31, 1995, the Company had a total of approximately 3,480
employees. The executive offices of the Company are located at 9697 East
Mineral Avenue, Englewood, Colorado 80112, and its telephone number is (303)
792-3111.
The Company develops and operates cable television systems for itself and
for its managed limited partnerships. Based on the number of basic subscribers
served by the Company's owned and managed cable television systems, the
Company is one of the largest cable television operators in the United States.
As of May 31, 1995, the Company owned or managed 55 cable television systems
serving a total of approximately 1,350,000 basic subscribers in 23 states.
Glenn R. Jones, the founder, Chairman, Chief Executive Officer and major
shareholder of the Company, is one of the pioneers in the cable television
industry, and he has been involved in the ownership and operation of cable
television systems since 1970.
The Company has grown by acquiring and developing cable television systems
for both itself and its managed partnerships, primarily in suburban areas with
attractive demographic characteristics. One of the primary factors utilized by
the Company in deciding to acquire a particular cable television system is the
potential of the system for operating cash flow growth and value appreciation.
Key elements of the Company's operating strategy include increasing basic
penetration levels and revenue per subscriber through targeted marketing,
superior customer service and maintenance of high technical standards. The
Company has deployed fiber optic cable wherever practical in its current
rebuild and upgrade projects, which improves system reliability and picture
quality, increases channel capacity and provides the potential for new
business opportunities. The Company has focused on pay-per-view and
advertising as revenue growth opportunities, and expects to continue to do so
in the future.
Within the past several years, and at an increasing pace recently, the cable
television industry has seen much change. With recent announcements of
alliances between cable television companies and telephone, computer and
software companies, the Company believes that the nature of the cable
television business is changing from the traditional coaxial network
delivering video entertainment to a more sophisticated, digital platform
environment where cable systems could be capable of delivering traditional
programming as well as other services, including data, telephone and expanded
educational and entertainment services on an interactive basis. As this
convergence of various technologies progresses, cable television companies
will have to reevaluate their system architecture, upgrade their cable plants
to take advantage of new opportunities and consider clustering their systems
in geographic areas where they can achieve economies of scale and reasonable
returns on the investments made. The Company is, on an on-going basis,
evaluating its position in this changing marketplace and intends, where
possible, to pursue these opportunities as they evolve. The ability of the
Company to do so, however, will be dependent in large part on the availability
of debt and equity financing.
The Company intends to grow by implementing a balanced strategy directed at
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/or such
systems may be exchanged for systems owned by other cable system operators. It
is the Company's plan to
3
<PAGE>
cluster its cable television properties, to the extent feasible, in geographic
areas where it will have an adequate number of subscribers to justify the
capital expenditures required to upgrade its plant and the possible offering
of telephony and other telecommunications services. 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. Acquisitions and capital expenditures are subject to the availability
of cash generated from operations and debt and equity financing. The capital
resources to accomplish these strategies are expected to be provided, in part,
by the net proceeds to the Company from the sale of the Securities.
Glenn R. Jones, the Chairman of the Board of Directors and Chief Executive
Officer of the Company, is deemed to be the beneficial owner of all of the
shares of Class A Common Stock and Common Stock of the Company owned by him
and by Jones International, Ltd., a private company owned 100 percent by Mr.
Jones, and certain of their affiliates. Mr. Jones' direct and indirect stock
ownership in the Company enables him to control the election of a majority of
the Company's Board of Directors and gives him voting power over approximately
41 percent of votes to be cast by all shareholders of the Company on matters
not requiring a class vote. See "Description of Capital Stock."
In December 1994, Bell Canada International Inc. ("BCI"), which has an
approximate 30 percent economic interest in the Company through its indirect
ownership of approximately 38 percent of the Class A Common Stock of the
Company, acquired from Mr. Jones and Jones International, Ltd. and certain of
their affiliates options to purchase all of the shares of the Company's Common
Stock owned by Mr. Jones, Jones International, Ltd. and certain of their
affiliates. These options, if and when exercised, would enable BCI to control
the election of a majority of the Company's Board of Directors. BCI, through
its parent company, BCE Inc., and their affiliates, is engaged in many areas
of the telecommunications business. BCE Inc. is the largest telecommunications
company in Canada and it also is the parent company of Bell Canada, the
largest provider of telecommunications services in Canada. BCI is also
affiliated with Bell Northern Research, Canada's largest research and
development organization, and with Northern Telecom, a leading global
manufacturer of telecommunications equipment. BCI and the Company also are
principal shareholders of Bell Cablemedia plc, which is one of the largest
cable communications companies providing multi-channel television and
telephony services in the United Kingdom.
RECENT DEVELOPMENTS
As part of its strategy of geographically clustering its cable television
systems, the Company has announced several acquisitions of cable television
systems from its managed partnerships and from unaffiliated parties and the
exchange of cable television systems owned or to be acquired by the Company
for cable television systems currently owned by unaffiliated parties. These
acquisitions and exchanges are scheduled to close during the autumn of 1995 or
in the first half of 1996. It is anticipated that the Company will acquire and
hold these cable television systems through a wholly owned subsidiary, Jones
Cable Holdings, Inc. These transactions will increase the Company's basic
subscriber base to approximately 560,000, an increase of approximately
247,000. Funding for these transactions is expected to come from cash on hand,
cash generated from operations and borrowings under the Company's credit
facility, which currently is being renegotiated to have Jones Cable Holdings,
Inc. act as the borrower and to increase the maximum amount available from
$300,000,000 to $500,000,000.
In October 1995, the Company purchased from a managed partnership the cable
television system serving areas in and around Augusta, Georgia (the "Augusta
System") for a purchase price of $142,618,000, subject to normal closing
adjustments. The Augusta System serves approximately 67,000 basic subscribers
and passes approximately 102,000 homes. The Augusta System is contiguous with
the cable television system already owned by the Company serving areas in and
around North Augusta, South Carolina (the "North Augusta System"). Together,
the Augusta System and the North Augusta System form an operating cluster that
will serve approximately 81,700 basic subscribers and pass approximately
125,700 homes.
The Company has agreed to purchase from an unaffiliated party the cable
television systems serving areas in and around Dale City, Lake Ridge,
Woodbridge, Fort Belvoir, Triangle, Dumfries, Quatico, Accoquan
4
<PAGE>
and portions of Prince William County, all in the State of Virginia (the "Dale
City System") for a purchase price of $123,000,000, subject to normal closing
adjustments. These systems serve approximately 50,000 basic subscribers and
pass approximately 64,100 homes. The Company also has agreed to purchase from
unaffiliated companies the cable television systems serving areas in and
around Manassas, Manassas Park, Haymarket and portions of Prince William
County, all in the State of Virginia (the "Manassas System") for a purchase
price of $71,100,000, subject to normal closing adjustments. These systems
serve approximately 26,000 basic subscribers and pass approximately 39,000
homes.
The Company has also agreed to purchase three cable television systems from
various of its managed partnerships and to exchange those systems for cable
television systems currently owned by an unaffiliated party. The Company has
agreed to purchase from a managed partnership the cable television system
serving areas in and around Carmel, Indiana (the "Carmel System") for a
purchase price of $44,235,333, subject to normal closing adjustments. The
Carmel System serves approximately 18,500 basic subscribers and passes
approximately 24,400 homes. The Company has agreed to purchase from a managed
partnership the cable television system serving areas in and around
Orangeburg, South Carolina (the "Orangeburg System") for a purchase price of
$18,347,667, subject to normal closing adjustments. The Orangeburg System
serves approximately 12,000 basic subscribers and passes approximately 16,530
homes. The Company has agreed to purchase from a venture comprised of three
managed partnerships the cable television system serving areas in and around
Tampa, Florida (the "Tampa System") for a purchase price of $110,395,667,
subject to normal closing adjustments. The Tampa System serves approximately
62,500 basic subscribers and passes approximately 125,000 homes. The Company
has also entered into an asset exchange agreement with an unaffiliated cable
television system operator pursuant to which the Company will convey to that
operator substantially all of the assets of the Carmel System, the Orangeburg
System and the Tampa System and cash in the amount of $3,500,000, subject to
normal closing adjustments. In return, the Company will receive substantially
all of the assets of cable television systems serving Andrews Air Force Base,
Capitol Heights, Cheltenham, District Heights, Fairmont Heights, Forest
Heights, Morningside, Seat Pleasant, Upper Marlboro, and portions of Prince
George's County, Maryland (the "Prince George's County System") and a portion
of Fairfax County, Virginia (the "Reston System"). The Prince George's County
System and the Reston System serve approximately 85,000 subscribers.
The Prince George's County System is contiguous to the Company's Alexandria,
Virginia, Calvert County, Maryland and Charles County, Maryland cable
television systems. The Reston System is approximately 12 miles from the
Company's Alexandria, Virginia system. Acquisition of the Prince George's
County System and the Reston System together with the acquisitions of the Dale
City System and the Manassas System discussed above, will, together with cable
television systems already owned or managed by the Company in the area, bring
the total number of basic subscribers owned or managed by the Company in the
Baltimore/Washington, D.C. metropolitan area to approximately 300,000.
The Company has also agreed to purchase four cable television systems from
various of its managed partnerships and to exchange those systems together
with two systems already owned by the Company for cable television systems
currently owned by an unaffiliated party. The Company has agreed to purchase
from a venture comprised of four managed partnerships the cable television
system serving the City of Manitowoc, Wisconsin (the "Manitowoc System") for a
purchase price of $15,735,667, subject to normal closing adjustments. The
Company, as general partner of the partnerships that form the venture, will
receive a distribution of approximately $3,900,000 upon the closing of this
transaction. The Manitowoc System serves approximately 10,500 basic
subscribers and passes approximately 15,400 homes. The Company's acquisition
of the Manitowoc System is subject to the approval of the holders of a
majority of the limited partnership interests of each of the four constituent
partnerships of the venture that owns the Manitowoc System. The Company has
agreed to purchase from a managed partnership the cable television systems
serving areas in and around Lodi, Ohio (the "Lodi System") for a purchase
price of $25,706,000, subject to normal closing adjustments. The Lodi System
serves approximately 14,700 basic subscribers and passes approximately 20,600
homes. The Company has agreed to purchase from a managed partnership the cable
television system serving areas in and around Ripon, Wisconsin (the "Ripon
System") for a purchase price of $3,712,667, subject to normal closing
adjustments. The Ripon System serves approximately 2,450 basic subscribers and
passes approximately 2,500 homes. The Company has agreed to purchase from a
managed partnership the cable television system serving areas in and
5
<PAGE>
around Lake Geneva, Wisconsin (the "Lake Geneva System") for a purchase price
of $6,345,667, subject to normal closing adjustments. The Lake Geneva System
serves approximately 3,400 basic subscribers and passes approximately 5,400
homes. The Company has also entered into an asset exchange agreement with an
unaffiliated cable television system operator pursuant to which the Company
will convey to that operator substantially all of the assets of the Manitowoc
System, the Lodi System, the Ripon System, the Lake Geneva System and the
cable television systems serving areas in and around Kenosha, Wisconsin (the
"Kenosha System") and Hilo, Hawaii (the "Hilo System") currently owned by the
Company. The Hilo System serves approximately 17,000 basic subscribers and
passes approximately 23,000 homes. The Kenosha System serves approximately
27,000 basic subscribers and passes approximately 39,000 homes. In return, the
Company will receive substantially all of the assets of the cable television
system serving areas in and around Savannah, Georgia (the "Savannah System")
and $4,000,000 in cash, subject to normal closing adjustments. The Savannah
System serves approximately 63,000 subscribers and passes approximately
100,000 homes.
In October 1995, Cable TV Fund 11-B, Ltd., one of the Company's managed
partnerships, entered into an agreement with an unaffiliated party to sell its
cable television system serving areas in and around Lancaster, New York (the
"Lancaster System") for a sales price of $84,000,000 in cash, subject to
normal closing adjustments. The Lancaster System serves approximately 38,000
basic subscribers and passes approximately 57,000 homes. The Company, as
general partner of the partnership, will receive a distribution of
approximately $14,262,000 upon the closing of the sale of the Lancaster
System. The closing of this transaction is subject to the approval of the sale
by the holders of a majority of the limited partnership interests of Cable TV
Fund 11-B, Ltd. and is expected to occur during the first half of 1996.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED MAY 31, THREE MONTHS
--------------------------------------------- ENDED AUGUST 31,
1991 1992 1993 1994 1995 1995
-------- ------- -------- -------- ------- ----------------
DOLLARS IN THOUSANDS, EXCEPT RATIOS
<S> <C> <C> <C> <C> <C> <C>
Pre-tax Income (Loss)... $(45,030) $23,383 $(40,266) $(25,277) $(4,001) $(6,420)
Adjustments:
Interest expense...... 44,699 38,129 43,573 36,189 39,939 13,368
Interest charged to
cable
television systems
held
for resale............ (4,598) -- -- -- -- --
Equity in losses of
limited partnerships... 11,233 8,158 2,900 4,624 2,981 923
-------- ------- -------- -------- ------- -------
$ 6,304 $69,670 $ 6,207 $ 15,536 $38,919 $ 7,871
Interest Expense (net).. $ 40,101 $38,129 43,573 36,189 39,939 13,368
-------- ------- -------- -------- ------- -------
Ratio of Earnings to
Fixed Charges(1)....... -- 1.83x -- -- -- --
Coverage deficiency..... $(33,797) $ -- $(37,366) $(20,653) $(1,020) $(5,497)
======== ======= ======== ======== ======= =======
</TABLE>
- --------
(1) The ratio of earnings to fixed charges has been computed by dividing the
sum of (a) pre-tax income, including equity in losses of limited
partnerships, and (b) interest expense net of interest charged to cable
television systems held for resale, by net interest expense.
USE OF PROCEEDS
Except as otherwise described in the Prospectus Supplement relating to a
specific offering of Securities, the net proceeds from the sale of the
Securities will be added to the general funds of the Company and will be used
for general corporate purposes, which may include acquisitions of cable
television systems from managed partnerships and/or from unaffiliated parties,
refinancings of indebtedness, working capital, capital expenditures, and
repurchases and redemptions of securities.
6
<PAGE>
CONCURRENT OFFERING
The Company has filed a registration statement under the Securities Act for
the offering, from time to time, of 2,844,678 shares of its Class A Common
Stock held by various affiliates of the Company. Although this registration
statement has not yet been declared effective, the Company anticipates that it
will be declared effective concurrently with or shortly before or after the
effectiveness of the Registration Statement filed in respect to the offering
made by this Prospectus and that sales of the Class A Common Stock of the
Company by such affiliates may be made from time to time concurrently with the
offering made by this Prospectus. The Company will receive none of the proceeds
of this concurrent offering. The Company also may file additional registration
statements to offer equity or debt securities during the effectiveness of the
Registration Statement filed in connection with the offering made by this
Prospectus.
DIVIDEND POLICY
The Company has never paid a cash dividend with respect to its shares of
Common Stock or Class A Common Stock, and it has no present intention to pay
cash dividends in the foreseeable future. The current policy of the Company's
Board of Directors is to retain earnings to provide funds for the operation and
expansion of its business. Future dividends, if any, will be determined by the
Board of Directors in light of the circumstances then existing, including the
Company's earnings and financial requirements and general business conditions.
If cash dividends are paid in the future, the holders of the Class A Common
Stock will be paid $.005 per share per quarter in addition to the amount
payable per share of Common Stock. Such additional dividends on the Class A
Common Stock are not cumulative but would be adjusted appropriately if cash
dividends are declared with respect to a period other than a quarterly period.
The Company's credit agreements restrict the right of the Company to declare
and pay cash dividends without the consent of the lenders.
PRICE RANGE OF CLASS A COMMON STOCK
The Company's Class A Common Stock is traded in the over-the-counter market
and is authorized for quotation on the National Market System of the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") under
the symbol JOINA. Any shares of Class A Common Stock offered by this Prospectus
will be listed, subject to notice of issuance, on such exchange. The following
table sets forth for the first quarterly period of fiscal 1996 and for each
quarterly period of fiscal 1995 and 1994 the high and low reported closing
prices of the Company's Class A Common Stock as reported by NASDAQ.
<TABLE>
<CAPTION>
PERIOD HIGH LOW
------ ------ -------
<C> <S> <C> <C>
1996 First Quarter........................................ 15 1/2 13 3/8
<CAPTION>
PERIOD HIGH LOW
------ ------ -------
<C> <S> <C> <C>
1995 First Quarter........................................ 15 3/8 12
Second Quarter....................................... 15 3/8 13 5/16
Third Quarter........................................ 16 1/4 11 3/8
Fourth Quarter....................................... 17 1/2 13 1/4
<CAPTION>
PERIOD HIGH LOW
------ ------ -------
<C> <S> <C> <C>
1994 First Quarter........................................ 15 1/4 11 1/4
Second Quarter....................................... 19 12 1/2
Third Quarter........................................ 20 1/4 15
Fourth Quarter....................................... 15 5/8 11
</TABLE>
If shares of the Company's Class A Common Stock are being offered, a recent
last sale price of the Class A Common Stock will be set forth on the cover page
of the Prospectus Supplement.
The Company's Common Stock also is traded in the over-the-counter market and
is quoted on the National Market System of NASDAQ under the symbol JOIN.
7
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 5,550,000 shares of
Common Stock, $.01 par value per share, of which 5,113,021 shares were
outstanding at August 1, 1995, and 60,000,000 shares of Class A Common Stock,
$.01 par value per share, of which 26,158,305 shares were outstanding at such
date.
The outstanding shares of both classes of common stock are not subject to
redemption or to any liability for further calls or assessments, and the
holders of such shares do not have pre-emptive or other rights to subscribe
for additional shares of the Company. All issued and outstanding shares of
Common Stock and Class A Common Stock are validly issued, fully paid and
nonassessable. Dividends in cash, property or shares of the Company may be
paid upon the Common Stock and Class A Common Stock, if declared by the
Company's Board of Directors out of any funds legally available therefor, and
holders of Class A Common Stock have a cash dividend preference over holders
of Common Stock, as described below. Holders of Common Stock and Class A
Common Stock are entitled to share ratably in assets available for
distribution upon any liquidation of the Company, subject to the prior rights
of creditors, although holders of Class A Common Stock have a preference on
liquidation over holders of Common Stock, as described below.
The Class A Common Stock has certain preferential rights with respect to
cash dividends and upon liquidation of the Company. In the event that cash
dividends are paid, the holders of the Class A Common Stock will be paid $.005
per share per quarter in addition to the amount payable per share of Common
Stock. In the case of liquidation, holders of Class A Common Stock will be
entitled to a preference of $1 per share. After such amount is paid, holders
of the Common Stock will then be entitled to receive $1 per share for each
share of Common Stock outstanding. Any remaining amount will be distributed to
the holders of Class A Common Stock and Common Stock on a pro rata basis.
The Class A Common Stock has voting rights that are generally 1/10th of
those held by the Common Stock. In the election of directors, the holders of
Class A Common Stock, voting as a separate class, are entitled to elect that
number of directors that constitute 25 percent of the total membership of the
Board of Directors. Holders of the Common Stock, also voting as a separate
class, are entitled to elect the remaining directors.
As of October 15, 1995, the outstanding shares of Class A Common Stock
constituted approximately 84 percent of the total outstanding shares of
capital stock of the Company but cast only 34 percent of the votes to be cast
in matters to be acted upon by shareholders of the Company not requiring a
class vote, and the outstanding shares of the Company's Common Stock
constituted approximately 16 percent of the outstanding capital stock of the
Company, but cast approximately 66 percent of the votes to be cast by
shareholders of the Company in connection with such matters.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions of
the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement
and any variations from such general terms and provisions applicable to the
Debt Securities so offered will be described in the Prospectus Supplement
relating to such Debt Securities.
The Debt Securities will be general unsecured obligations of the Company.
The Senior Debt Securities will be senior to all subordinated indebtedness of
the Company, including any Senior Subordinated Debt Securities and
Subordinated Debt Securities and pari passu with other senior unsecured
indebtedness of the Company. The Senior Subordinated Debt Securities will be
subordinate in right of payment to any Senior Debt Securities and to certain
other debt obligations of the Company that may be outstanding from time to
time, pari passu with certain other senior subordinated indebtedness of the
Company that may be outstanding from time to time and senior to
8
<PAGE>
certain subordinated indebtedness of the Company that may be outstanding from
time to time, including any Subordinated Debt Securities. The Subordinated
Debt Securities will be subordinate in right of payment to any Senior Debt
Securities and Senior Subordinated Debt Securities and to certain other debt
obligations of the Company that may be outstanding from time to time and pari
passu with certain other subordinated indebtedness of the Company that may be
outstanding from time to time.
The particular terms of each series of Debt Securities offered by a
particular Prospectus Supplement will be described therein. Senior Debt
Securities, Senior Subordinated Debt Securities and Subordinated Debt
Securities will each be issued under a separate indenture (individually an
"Indenture" and collectively the "Indentures") to be entered into prior to the
issuance of such Debt Securities. The Indentures will be substantially
identical except for provisions relating to subordination. There may be a
separate trustee (individually a "Trustee" and collectively the "Trustees")
under each Indenture. It is anticipated that the Senior Debt Securities will
be issued under an Indenture to be executed by the Company and U.S. Trust
Company of California, N.A., as Trustee (the "Senior Indenture"). It is
anticipated that the Senior Subordinated Debt Securities will be issued under
an Indenture to be executed by the Company and First Trust National
Association, as Trustee (the "Senior Subordinated Indenture"). It is
anticipated that the Subordinated Debt Securities will be issued under an
Indenture to be executed by the Company and Bank of America National Trust and
Savings Association, as Trustee (the "Subordinated Indenture"). Specific
information regarding a Trustee under an Indenture will be included in any
Prospectus Supplement relating to the Debt Securities issued thereunder.
The following discussion includes a summary description of all material
terms of the Indentures, other than terms that are specific to a particular
series of Debt Securities and which will be described in the Prospectus
Supplement relating to such series. The following summaries do not purport to
be complete and are subject, and are qualified in their entirety by reference
to, all of the provisions of the Indentures, including the definitions therein
of certain terms capitalized in this Prospectus. Wherever particular sections
or articles or defined terms of the Indentures are referred to herein or in a
Prospectus Supplement, such sections or articles or defined terms are
incorporated herein or therein by reference.
The Debt Securities may be issued from time to time in one or more series.
The particular terms of each series of Debt Securities offered by any
Prospectus Supplement or Prospectus Supplements will be described in such
Prospectus Supplement or Prospectus Supplements relating to such series.
GENERAL
The Indentures will not limit the aggregate principal amount of debentures,
notes or other evidences of indebtedness which may be issued thereunder and
Debt Securities may be issued thereunder in one or more series, in such form
or forms, with such terms and up to the aggregate principal amount authorized
from time to time by the Company.
Reference is made to the Prospectus Supplement for the following terms of
the Debt Securities: (1) the designation (including whether they are Senior
Debt Securities, Senior Subordinated Debt Securities or Subordinated Debt
Securities, whether such Debt Securities are convertible and, if convertible,
into what securities the Debt Securities are convertible), aggregate principal
amount and authorized denominations of the Debt Securities; (2) the percentage
of their principal amount at which such Debt Securities will be issued; (3)
the date or dates on which the Debt Securities will mature or the method of
determination thereof; (4) the rate or rates (which may be fixed or variable)
at which the Debt Securities will bear interest, if any, or the method by
which such rate or rates shall be determined, reset features of the rates, if
any, and the date or dates from which such interest will accrue or the method
by which such date or dates shall be determined; (5) the dates on which any
such interest will be payable and the regular record dates for such interest
payment dates; (6) any mandatory or optional sinking fund or purchase fund or
analogous provisions; (7) if applicable, the date after which and the price or
prices at which the Debt Securities may, pursuant to any optional or mandatory
redemption provisions, be redeemed at the option of the Company or of the
holder thereof and the other detailed terms and provisions of such optional or
mandatory redemption; (8) if applicable, the terms and conditions upon which
the Debt
9
<PAGE>
Securities may be convertible or exchangeable into or exercisable for other
securities (including shares of a class of capital stock of the Company or any
other issuer), including the initial conversion rate, the conversion period
and any other provision in addition to or in lieu of those described herein;
(9) whether such Debt Securities shall be subject to defeasance and, if so,
the terms thereof; (10) any Events of Default provided with respect to the
Debt Securities that are in addition to or different from those described
herein; and (11) any other terms of the Debt Securities.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the principal of (and premium, if any) and interest on the Debt Securities
will be payable, and the Debt Securities will be exchangeable and transfers
thereof will be registrable, at the Corporate Trust Office of the Trustee,
provided that at the option of the Company, payment of any interest may be
made by check mailed to the address of the person entitled thereto as it
appears in the Security Register.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Debt Securities will be issued only in fully registered form, without
coupons, in denominations of $1,000 or any integral multiple thereof. No
service charge will be made for any registration of transfer or exchange of
the Debt Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Debt Securities may be issued under the Indenture as original issue discount
securities to be offered and sold at a discount from the principal amount
thereof. Special federal income tax, accounting and other considerations
applicable to any such original issue discount securities will be described in
the Prospectus Supplement relating thereto.
Unless otherwise indicated in the Prospectus Supplement relating to a
particular series of Debt Securities, the covenants applicable to the Debt
Securities would not necessarily afford holders protection in the event of a
highly leveraged or other transaction involving the Company or in the event of
a material adverse change in the Company's financial condition or results of
operation. Unless otherwise indicated in the Prospectus Supplement relating to
a particular series of Debt Securities, the Debt Securities do not contain any
other provisions that are designed to afford protection in the event of a
highly leveraged transaction involving the Company.
SUBORDINATION
The payment of the principal of (and premium, if any) and interest on the
Subordinated Debt Securities is expressly subordinated, to the extent and in
the manner set forth in any Prospectus Supplement and the Subordinated
Indenture, in right of payment to the prior payment in full of all present and
future Senior Indebtedness (including any Senior Debt Securities and Senior
Subordinated Debt Securities then outstanding) of the Company. Senior
Indebtedness is defined in the Subordinated Indenture as: (1) any indebtedness
of the Company (i) for borrowed money or (ii) evidenced by a note, debenture
or similar instrument (including obligations incurred under leases which are
or may be capitalized under generally accepted accounting principles and
purchase money obligations) given in connection with the acquisition of any
property or assets, including the purchase of cable television systems and
securities, (2) any indebtedness of others described in the preceding clause
(1) for which the Company is responsible or liable as guarantor or otherwise,
(3) any indebtedness now outstanding or hereafter incurred by the Company in
connection with an acquisition by the Company or a subsidiary of the stock or
substantially all of the assets of another person or a merger or consolidation
to which the Company or a subsidiary is a party, for the payment of which the
Company is responsible or liable as obligor, guarantor or otherwise, and (4)
all deferrals, renewals, extensions and refundings of any such indebtedness or
obligations, other than (a) indebtedness as to which, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding,
it is provided that such indebtedness is subordinate in right of payment to
all other indebtedness of the Company or is not superior in right of payment
to the Subordinated Debt Securities or to other indebtedness which is pari
passu with or subordinate to the Subordinated Debt Securities, and (b)
10
<PAGE>
indebtedness of the Company to a subsidiary for money borrowed or advanced.
The Company has outstanding the 11.5 percent Senior Subordinated Debentures
due 2004, the 10.5 percent Senior Subordinated Debentures due 2008 and the 9
5/8 percent Senior Notes due 2002, only the latter of which constitutes Senior
Indebtedness. At August 31, 1995, approximately $219,261,000 of Senior
Indebtedness was outstanding.
Borrowings of the Company from commercial banks historically also have
constituted Senior Indebtedness. At August 31, 1995, and as of the date of
this Prospectus, no borrowings were outstanding under the Company's
$300,000,000 secured revolving credit facility. The Company currently is
renegotiating its credit arrangements with commercial banks that are intended
to result in the transfer of certain of the Company's cable television system
assets to Jones Cable Holdings, Inc., a wholly owned subsidiary of the
Company. It is intended that the subsidiary would then enter into a new
$500,000,000 unsecured revolving credit facility, the borrowings under which
would not constitute Senior Indebtedness. While the Debt Securities will not
technically be subordinate to the indebtedness incurred by Jones Cable
Holdings, Inc. or any other subsidiary of the Company, the Company's cable
television assets that belong to Jones Cable Holdings, Inc. will no longer be
owned directly by the Company and will not be available to satisfy claims of
the holders of the Debt Securities.
The payment of the principal of (and premium, if any) and interest on the
Senior Subordinated Debt Securities is expressly subordinated, to the extent
and in the manner set forth in any Prospectus Supplement and the Senior
Subordinated Indenture, in right of payment to the prior payment in full of
all present and future Senior Indebtedness (including any Senior Debt
Securities then outstanding) of the Company. Senior Indebtedness is defined in
the Senior Subordinated Indenture as set forth in clauses (1), (2), (3) and
(4) above from the Subordinated Indenture; provided, however, that it excludes
only indebtedness that is subordinate in right of payment to any other
indebtedness of the Company and indebtedness of the Company to a subsidiary
for money borrowed or advanced. The Senior Subordinated Debt Securities will
rank senior to the Company's outstanding issues of subordinated indebtedness.
The extent to which the Company may incur Senior Indebtedness and
limitations thereon, if any, are set forth in the accompanying Prospectus
Supplement. If Debt Securities are being offered, the aggregate principal
amount of Senior Indebtedness outstanding as of a recent date will be set
forth in the accompanying Prospectus Supplement.
Upon any payment or distribution of assets of the Company to creditors upon
any dissolution, winding up, total or partial liquidation or reorganization,
whether voluntary or involuntary, or in bankruptcy, insolvency or receivership
or upon an assignment for the benefit of creditors or any other marshalling of
the assets and liabilities of the Company or otherwise, all principal of,
premium, if any, and interest due on all Senior Indebtedness (including any
outstanding Senior Debt Securities) must be paid in full before the holders of
the Senior Subordinated Debt Securities or the Subordinated Debt Securities
are entitled to receive or retain any payment thereon, and principal of,
premium, if any, and interest on the Senior Subordinated Securities must be
paid in full before the holders of the Subordinated Debt Securities are
entitled to receive or retain any payment thereon. Subject to the payment in
full of all Senior Indebtedness, the holders of the Senior Subordinated Debt
Securities or the Subordinated Debt Securities will be subrogated to the
rights of the holders of Senior Indebtedness (as respectively defined in the
Senior Subordinated Indenture and the Subordinated Indenture) to receive
payments or distributions of assets of the Company applicable to Senior
Indebtedness until the Senior Subordinated Debt Securities or Subordinated
Debt Securities are paid in full.
CONVERSION RIGHTS
The terms, if any, on which Debt Securities may be exchanged for or
converted (mandatorily or otherwise) into shares of Class A Common Stock of
the Company or into other securities of the Company or into shares of another
corporation will be set forth in the Prospectus Supplement relating thereto.
See "Description of Capital Stock." The Company currently holds, either
directly or through certain of its wholly owned subsidiaries, 6,225,796
American Depositary Shares ("ADSs") representing 31,128,980 Ordinary Shares of
Bell Cablemedia plc, a cable/telephony company incorporated under the laws of
England and Wales. If Debt Securities convertible into the Company's ADSs are
offered, information about Bell Cablemedia plc and the ADSs will be set forth
in the accompanying Prospectus Supplement.
11
<PAGE>
EVENTS OF DEFAULT, NOTICE AND WAIVER
An Event of Default will be defined in the Indentures with respect to Debt
Securities of any series issued thereunder as a default in payment of
principal or premium, if any, at maturity or upon redemption; a default in
payment of interest subject to applicable grace periods; a failure by the
Company for 60 days after notice to perform any other of the covenants or
agreements in the Indentures; certain events of bankruptcy, insolvency or
reorganization of the Company or any significant subsidiary; or any other
event of default provided with respect to Debt Securities of that series.
Each Indenture will provide that, if an Event of Default shall have occurred
and be continuing, either the Trustee or the holders of 25% in principal
amount of the Debt Securities of such series then outstanding may declare the
principal of all the Debt Securities of such series to be due and payable
immediately, but upon certain conditions such declaration may be annulled and
past defaults may be waived by the holders of a majority in principal amount
of the Debt Securities of such series then outstanding. The holders of a
majority in principal amount of the Debt Securities of such series then
outstanding may also waive any default (except a default in payment of
principal or interest on the Debt Securities of such series) prior to such
declaration.
Each Indenture will require the Company to file a certificate specifying a
default immediately upon becoming aware of such default, and to file annually
with the Trustee a certificate either stating the absence of any default or
specifying any default that exists. Each Indenture will provide that the
Trustee shall, within 90 days after the occurrence of a default, give the
holders of Debt Securities of any series notice of all uncured and unwaived
defaults known to it; provided that, except in the case of default in the
payment of principal or interest on any of the Debt Securities of such series
or the making of any sinking fund payment, the Trustee will be protected in
withholding such notice if the Trustee in good faith determines that the
withholding of such notice is in the interest of such holders. The term
"default" for the purpose of this provision means the occurrence of any of the
Events of Default specified above, excluding any grace periods and
irrespective of the giving of notice.
Each Indenture will contain provisions entitling the Trustee, subject to the
duty of the Trustee during default to act with the required standard of care,
to be indemnified by the holders of Debt Securities of any series before
proceeding to exercise any right or power under the Indenture at the request
of such holders. Each Indenture provides that the holders of a majority in
principal amount of the Debt Securities of such series then outstanding may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, provided that the Trustee may decline to act if such direction is
contrary to law or if the Trustee determines in good faith that the proceeding
so directed would be illegal, would involve it in personal liability or would
be unduly prejudicial to other holders of Debt Securities of such series. Each
Indenture also will restrict the right of holders of Debt Securities of such
series to initiate any suit or proceeding by requiring prior written request
to the Trustee of holders of at least 25% in principal amount of the Debt
Securities of such series.
Reference is made to the Prospectus Supplement relating to any series of
Debt Securities that are original issue discount securities for the particular
provision relating to acceleration of the maturity of a portion of the
principal amount of such original issue discount securities upon the
occurrence of an Event of Default and the continuation thereof.
MERGER OR SALES OF ASSETS
Each Indenture will provide that the Company may merge with another
corporation if the Company is the surviving corporation, or may consolidate
with or merge into another corporation or sell or lease all or substantially
all of its assets to another corporation if (i) immediately after such
transaction no default or event of default under the Indenture shall have
occurred or be continuing, (ii) the resulting, surviving or transferee
corporation is organized and existing under the laws of a state of the United
States or the District of Columbia and (iii) such corporation agrees to pay
promptly when due the principal of and interest on the Debt Securities and
agrees to assume, perform and observe all the covenants and conditions of the
Indenture.
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<PAGE>
MODIFICATION OF THE INDENTURES
The Company and the Trustee, with the consent of the holders of not less
than a majority of the aggregate principal amount of the Debt Securities of
any series affected at the time outstanding, may execute supplemental
indentures adding, changing or eliminating stated provisions of the Indentures
or of any supplemental indenture or modifying in any manner the rights of the
holders of the Debt Securities; however, no such supplemental indenture may
(i) extend the stated maturity of any Debt Securities, reduce the rate or
extend the time of payment of interest thereon, reduce the principal amount
thereof, or impair the right to institute suit for the enforcement of any such
payment on or after the stated maturity thereof (or, in the case of
redemption, on or after the redemption date) without the consent of each
holder of the Debt Securities of such series so affected, (ii) reduce the
aforesaid percentage of any of the Debt Securities, the consent of the holders
of which is required for any such supplemental indenture, without the consent
of the holders of all the Debt Securities of such series then outstanding,
(iii) modify any of the provisions concerning modification of the Indentures
except to increase any such percentage or to provide that certain other
provisions of the Indentures cannot be modified or waived without the consent
of each holder of the Debt Securities of such series so affected, or (iv)
change the terms on which any Debt Securities are convertible or exchangeable
into or exercisable for shares of a class of capital stock of the Company or
any other issuer.
SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE
Each Indenture may be discharged upon payment of the principal of (and
premium, if any) and interest, if any, on all the Debt Securities and all
other sums due thereunder. In addition, the Indentures will provide that if,
within one year of the date the Debt Securities of any series becomes due and
payable, or are to be called for redemption, the Company, if so permitted with
respect to Debt Securities of a particular series, deposits with the Trustee,
in trust for the benefit of the holders thereof, funds sufficient to pay all
sums due for the principal of (and premium, if any) and interest, if any, on
the Debt Securities of such series, as they shall become due or redeemable
and, if certain other conditions are met, the Trustee shall cancel and satisfy
such Indenture with respect to such series to the extent provided therein. The
Prospectus Supplement describing the Debt Securities of such series will more
fully describe the provisions, if any, relating to such cancellation and
satisfaction of the Indenture with respect to such series.
PLAN OF DISTRIBUTION
The Company may sell the Securities on a negotiated or competitive bid basis
to or through underwriters or dealers, and also may sell the Securities
directly to other purchasers or through agents. The Prospectus Supplement will
describe the method of distribution of the Securities.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
If underwriters are used in the offering of the Securities, the names of the
managing underwriter or underwriters and any other underwriters, and the terms
of the transaction, including compensation of the underwriters and dealers, if
any, will be set forth in the Prospectus Supplement relating to such offering.
Only underwriters named in a Prospectus Supplement will be deemed to be
underwriters in connection with the Securities described therein. Firms not so
named will have no direct or indirect participation in the underwriting of
such Securities, although such a firm may participate in the distribution of
such Securities under circumstances entitling it to a dealer's commission. It
is anticipated that any underwriting agreement pertaining to any Securities
will (1) entitle the underwriters to indemnification by the Company against
certain civil liabilities, including liabilities under the Securities Act, or
to contribution for payment which the underwriters may be required to make in
respect thereof, (2) provide that the obligations of the underwriters will be
subject to certain conditions precedent, and (3) provide that the underwriters
generally will be obligated to purchase all the Securities if any are
purchased.
13
<PAGE>
The Company also may sell the Securities to a dealer as principal. In such
event, the dealer may then resell such Securities to the public at varying
prices to be determined by such dealer at the time of resale. The name of the
dealer and the terms of the transaction will be set forth in the Prospectus
Supplement relating thereto.
The Securities also may be offered through agents designated by the Company
from time to time. Any such agent will be named, and the terms of any such
agency will be set forth, in the Prospectus Supplement relating thereto.
Unless otherwise indicated in such Prospectus Supplement, any such agent will
act on a best efforts basis for the period of its appointment.
Dealers and agents named in the Prospectus Supplement may be deemed to be
underwriters (within the meaning of the Securities Act) of the Securities
described therein and, under agreements which may be entered into with the
Company, may be entitled to indemnification by the Company against certain
civil liabilities, including liabilities under the Securities Act, or to
contribution for payments which they may be required to make in respect
thereof.
Underwriters, dealers and agents may engage in transactions with, or perform
services for, the Company in the ordinary course of business.
The anticipated place and time of delivery for the Securities will be set
forth in the Prospectus Supplement.
LEGAL MATTERS
The legality of the Securities offered hereby will be passed upon for the
Company by Elizabeth M. Steele, Vice President/General Counsel and Secretary
of the Company.
EXPERTS
The consolidated financial statements of the Company and its subsidiaries
included in the Company's Annual Report on Form 10-K for the fiscal year ended
May 31, 1995, which are incorporated herein by reference, have been audited by
Arthur Andersen LLP, independent certified public accountants, as indicated in
their report with respect thereto, and are incorporated herein by reference
upon the authority of said firm as experts in giving said reports.
14
<PAGE>
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY REFER-
ENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AU-
THORIZED BY THE COMPANY OR ANY AGENT OR UNDERWRITER. THIS PROSPECTUS SUPPLE-
MENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER
THAN THOSE TO WHICH THEY RELATE OR AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY,TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICI-
TATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Company............................................................... S-3
Recent Developments....................................................... S-4
The Offering ............................................................. S-6
Use of Proceeds........................................................... S-6
Risk Factors.............................................................. S-7
Capitalization............................................................ S-12
Selected Financial Data................................................... S-13
Selected Pro Forma Financial Data......................................... S-14
Supplemental Operating Data............................................... S-15
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... S-16
Business Overview......................................................... S-22
Business Strategy......................................................... S-23
The Company's Other Businesses and Investments............................ S-24
Cable Television Systems Information...................................... S-25
Principal Shareholders.................................................... S-26
Underwriting.............................................................. S-28
Incorporation of Certain Information by Reference......................... S-29
Legal Matters............................................................. S-29
Experts................................................................... S-29
PROSPECTUS
Available Information..................................................... 2
Incorporation of Certain Information by Reference......................... 2
The Company............................................................... 3
Recent Developments....................................................... 4
Ratio of Earnings to Fixed Charges........................................ 6
Use of Proceeds........................................................... 6
Concurrent Offering....................................................... 7
Dividend Policy........................................................... 7
Price Range of Class A Common Stock....................................... 7
Description of Capital Stock.............................................. 8
Description of Debt Securities............................................ 8
Plan of Distribution...................................................... 13
Legal Matters............................................................. 14
Experts................................................................... 14
</TABLE>
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7,843,137 SHARES
[LOGO OF JONES INTERCABLE APPEARS HERE]
CLASS A COMMON STOCK
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PROSPECTUS SUPPLEMENT
August , 1997
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LEHMAN BROTHERS
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
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