JONES CABLE INCOME FUND 1-C LTD, 10-K405, 1999-03-30

JONES CABLE INCOME FUND 1-C LTD
10-K405, 1999-03-30
RADIOTELEPHONE COMMUNICATIONS

Previous: SEPARATE ACCOUNT FOUR OF THE MANUFACTURERS LIFE INS CO OF AM, 24F-2NT, 1999-03-30

Next: GULFWEST OIL CO, NT 10-K, 1999-03-30

<PAGE>

FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to

Commission file number: 0-15714

JONES CABLE INCOME FUND 1-C, LTD.
---------------------------------
(Exact name of registrant as specified in its charter)

Colorado 84-1010419
-------- ----------
(State of Organization) (IRS Employer Identification No.)

P.O. Box 3309, Englewood, Colorado 80155-3309 (303) 792-3111
- --------------------------------------------- --------------
(Address of principal executive office and Zip Code) (Registrant's telephone
no. including area code)

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Limited Partnership
Interests

Indicate by check mark whether the registrants, (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days:

Yes x No
---- -----

Aggregate market value of the voting stock held by non-affiliates of the
registrant: N/A

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K ((S)229.405) is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. X
-----

DOCUMENTS INCORPORATED BY REFERENCE: None

(40871)
<PAGE>

Certain information contained in this Form 10-K Report 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 this Form 10-K Report that address activities,
events or developments that the Partnership or the General Partner expects,
believes or anticipates will or may occur in the future are forward-looking
statements. These forward-looking statements are based upon certain assumptions
and are subject to risks and uncertainties. Actual events or results may differ
from those discussed in the forward-looking statements as a result of various
factors.

PART I.
-------

ITEM 1. BUSINESS
-----------------

The Partnership. Jones Cable Income Fund 1-C, Ltd. (the
"Partnership") is a Colorado limited partnership that was formed pursuant to the
public offering of limited partnership interests in the Jones Cable Income Fund
1 Limited Partnership Program (the "Program"), which was sponsored by Jones
Intercable, Inc. (the "General Partner"). Jones Cable Income Fund 1-A, Ltd. and
Jones Cable Income Fund 1-B, Ltd. ("Fund 1-B") are the other partnerships that
were formed pursuant to the Program. The Partnership and Fund 1-B formed a
general partnership known as Jones Cable Income Fund 1-B/C Venture (the
"Venture") in which the Partnership owns a 60 percent interest and Fund 1-B owns
a 40 percent interest. The Partnership and the Venture were formed for the
purpose of acquiring and operating cable television systems.

The Partnership's only asset is its 60 percent interest in the
Venture. During 1998, the Venture sold its cable television systems serving
subscribers in the communities of Clearlake and Lakeport, California (the
"Clearlake System"), its cable television systems serving communities of Three
Rivers, Schoolcraft/Vicksburg, Constantine/White Pigeon, Dowagiac, Watervliet
and Vandalia, Michigan (the "Southwestern Michigan System") and its cable
television system serving areas in and around South Sioux City, Nebraska (the
"South Sioux City System"). It is anticipated that the Venture will sell its
cable television system serving the communities of Canyonville, Myrtle Creek,
Riddle and Winston, Oregon (the "Myrtle Creek System") in May 1999 to an
unaffiliated party. See Dispositions of Cable Television Systems and Proposed
Disposition of Cable Television System below.

One of the primary objectives of the Venture has been to provide
quarterly cash flow distributions to its partners, primarily from cash generated
through operating activities of the Venture. The Venture's partners in turn
have sought to provide quarterly cash distributions to their partners. The
Venture used cash generated from operations to fund capital expenditures and did
not declare quarterly cash flow distributions during 1998, although it did make
distributions to its partners of $11,000,000 from the proceeds of the sale of
the Clearlake System, $21,200,000 from the proceeds of the sale of the
Southwestern Michigan System and $7,277,700 to its partners from the proceeds of
the sale of the South Sioux City System. The Partnership in turn distributed
its 60 percent share of such amounts to its limited partners. The Venture
anticipates making a distribution to its partners of $6,870,000 in May 1999 from
the proceeds of the sale of the Myrtle Creek System, as described below. The
Partnership in turn will distribute its 60 percent share of such amount to its
limited partners. The Venture does not anticipate resuming cash flow
distributions.

It is anticipated that Comcast Corporation ("Comcast") will acquire a
controlling interest in the General Partner during April 1999. As a result of
this transaction, it is expected that the current management of the General
Partner and a majority of the Board of Directors of the General Partner will be
replaced by Comcast.

Dispositions of Cable Television Systems.

Clearlake System. In January 1998, the Venture sold the Clearlake
----------------
System to an unaffiliated party for a sales price of $21,400,000. From the sale
proceeds, the Venture paid a brokerage fee to The Intercable Group, Ltd., a
subsidiary of the General Partner ("The Intercable Group"), totaling $535,000,
which represents 2.5 percent of the sales price, repaid $9,600,000 of the then
outstanding balance on the Venture's credit facility, settled working capital

2
<PAGE>

adjustments, deposited $300,000 into an indemnity escrow account and then the
Venture distributed the net sale proceeds of $11,000,000 to the Partnership and
Fund 1-B. In February 1998, the Venture distributed $6,625,300 to the
Partnership and $4,374,700 to Fund 1-B and, in turn, the Partnership distributed
the $6,625,300 (approximately $78 for each $500 limited partnership interest, or
$156 for each $1,000 invested in the Partnership) to its limited partners.
Because the distribution to the limited partners of the Partnership together
with all prior distributions did not return the amount initially contributed by
the limited partners to the Partnership plus the limited partners' liquidation
preference provided by the Partnership's limited partnership agreement, the
General Partner did not receive a general partner distribution from the sale
proceeds. Because the sale of the Clearlake System did not represent a sale of
all or substantially all of the Partnership's assets, no vote of the limited
partners of the Partnership was required to approve this sale.

The indemnity escrow period expired on January 9, 1999, and all of the
$300,000 indemnity escrow amount plus interest is available for distribution to
the Partnership and Fund 1-B. The Partnership will receive $189,711 of the
distribution, and the Partnership, in turn, will distribute the $189,711
(approximately $2.00 for each $500 limited partnership interest, or $4.00 for
each $1,000 invested in the Partnership) to the limited partners of the
Partnership. The Partnership anticipates that the distribution of the indemnity
escrow amount will be included with the distribution to be made to the limited
partners from the sale of the Myrtle Creek System, which is anticipated to occur
in May 1999.

Southwestern Michigan System. In July 1998, the Venture sold its
----------------------------
Southwestern Michigan System to three unaffiliated cable television system
operators for an aggregate sales price of $31,250,000, subject to customary
closing adjustments. From the sale proceeds, the Venture paid a brokerage fee
to The Intercable Group totaling $781,250, representing 2.5 percent of the sales
price, repaid $9,500,000 of the then outstanding balance of the Venture's credit
facility, settled working capital adjustments and then the Venture distributed
the remaining net sale proceeds of $21,200,000 to the Partnership and Fund 1-B
in proportion to their ownership interests in the Venture. The Partnership
received $12,768,760 and Fund 1-B received $8,431,240 of such distribution. The
Partnership, in turn, distributed $12,768,760 (approximately $150 for each $500
limited partnership interest, or $300 for each $1,000 invested in the
Partnership) to the limited partners of the Partnership in August 1998. Because
the distribution to the limited partners of the Partnership together with all
prior distributions did not return the amount initially contributed by the
limited partners to the Partnership plus the limited partners' liquidation
preference provided by the Partnership's limited partnership agreement, the
General Partner did not receive a general partner distribution from the sale
proceeds. Because the sale of the Southwestern Michigan System did not
represent a sale of all or substantially all of the Partnership's assets, no
vote of the limited partners was required to approve the sale.

South Sioux City System. In August 1998, the Venture sold its South
-----------------------
Sioux City System to an unaffiliated cable television system operator for an
aggregate sales price of $9,500,000, subject to normal closing adjustments.
From the proceeds of the South Sioux City System's sale, the Venture paid a
brokerage fee to The Intercable Group totaling $237,500, representing 2.5
percent of the sales price, for acting as a broker in the transaction, repaid
$2,000,000 of the then outstanding balance of its credit facility, settled
working capital adjustments and then the Venture distributed the remaining net
sale proceeds of $7,277,700 to the Partnership and Fund 1-B in proportion to
their ownership interests in the Venture. The Partnership received $4,383,359
and Fund 1-B received $2,894,341 of such distribution. The Partnership, in
turn, distributed $4,383,359 (approximately $52 for each $500 limited
partnership interest, or $104 for each $1,000 invested in the Partnership) to
the limited partners of the Partnership in September 1998. Because the
distribution to the limited partners of the Partnership together with all prior
distributions did not return the amount initially contributed by the limited
partners to the Partnership plus the limited partners' liquidation preference
provided by the Partnership's limited partnership agreement, the General Partner
did not receive a general partner distribution from the sale proceeds. Because
the sale of the South Sioux City System did not represent a sale of all or
substantially all of the Partnership's assets, no vote of the limited partners
was required to approve the sale.

Proposed Disposition by the Venture of Cable Television System.

Myrtle Creek System. In September 1998, the Venture entered into an
--------------------
asset purchase agreement with an unaffiliated party providing for the sale of
the Myrtle Creek System for a total sales price of $10,000,000, subject to

3
<PAGE>

customary closing adjustments. The closing of this transaction, which is
expected to occur in May 1999, is subject to the consents of governmental
authorities and third parties with whom the Venture has contracted that are
necessary for the transfer of the Myrle Creek System. Because the sale of the
Myrtle Creek System represents a sale of all of the remaining assets of the
Partnership and Fund 1-B, a vote of the limited partners of the Partnership and
a vote of the limited partners of Fund 1-B will be required to approve this
sale. The General Partner expects to conduct these votes in April 1999.

Upon consummation of the proposed sale of the Myrle Creek System, the
Venture will pay a $250,000 brokerage fee to The Intercable Group, representing
2.5 percent of the sales price, for acting as a broker in the transaction, repay
the balance outstanding on the Venture's credit facility of $2,900,000, settle
working capital adjustments and deposit $500,000 into an indemnity escrow
account. The remaining net sale proceeds of approximately $6,870,000 will be
distributed to the Partnership and Fund 1-B. The Partnership will receive
approximately $4,137,801 and Fund 1-B will receive approximately $2,732,199 of
such distribution. The Partnership, in turn, will distribute the $4,137,801
(approximately $49 for each $500 limited partnership interest, or $98 for each
$1,000 invested in the Partnership) to the limited partners of the Partnership.
Because the distribution to the limited partners of the Partnership together
with all prior distributions will not return the amount initially contributed by
the limited partners to the Partnership plus the limited partners' liquidation
preference provided by the Partnership's limited partnership agreement, the
General Partner will not receive a general partner distribution from the sale
proceeds.

For a period of one year following the closing date, $500,000 of the
sale proceeds will remain in escrow as security for the Venture's agreement to
indemnify the purchaser under the asset purchase agreement. The Venture's
primary exposure, if any, will relate to the representations and warranties made
about the Myrtle Creek System in the asset purchase agreement. Any amounts
remaining from this indemnity escrow account and not claimed by the buyer at the
end of the one-year escrow period plus interest earned on the escrowed funds
will be returned to the Venture. From this amount, the Venture will pay any
remaining liabilities and the Venture will then distribute the balance to its
partners. The Partnership in turn will distribute its 60 percent share of this
amount to its limited partners. The Partnership will continue in existence at
least until any amounts remaining from the indemnity escrow account have been
distributed. Since the Myrtle Creek System represents the only remaining
operating asset of the Venture, and the Partnership's interest in the Venture
represents its only asset, the Partnership and the Venture will be liquidated
and dissolved upon the final distribution of any amounts remaining from the
indemnity escrow account. If any disputes with respect to the indemnification
arise, the Venture and the Partnership would not be dissolved until such
disputes were resolved, which could result in the Venture and the Partnership
continuing beyond 2000.

Taking into account prior distributions to the limited partners from
the operating cash flow, from the net proceeds of the sales of cable television
systems and from the anticipated distribution in the second quarter of 1999 of
the Partnership's portion of net proceeds of the proposed sale of the Myrtle
Creek System (excluding escrowed proceeds), the limited partners of the
Partnership will have received a total of $580 for each $500 limited partnership
interest, or $1,160 for each $1,000 invested in the Partnership.

ITEM 2. PROPERTIES
-------------------

The Venture currently owns the Myrtle Creek System, which it intends
to sell in May 1999 to an unaffiliated third party.

ITEM 3. LEGAL PROCEEDINGS
--------------------------

None.

4
<PAGE>

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------

None.

PART II.
--------

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK
-------------------------------------------------
AND RELATED SECURITY HOLDER MATTERS
-----------------------------------

While the Partnership is publicly held, there is no public market for
the limited partnership interests, and it is not expected that a market will
develop in the future. During 1998, limited partners of the Partnership
conducted "limited tender offers" for interests in the Partnership at prices
ranging from $173 to $200 per interest. As of February 16, 1999, the
approximate number of equity security holders in the Partnership was 4,768.

5
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA
- -------------------------------

<TABLE>
<CAPTION>
For the Year Ended December 31,
------------------------------------------------------------------------------
Jones Cable Income Fund 1-C, Ltd./(a)/ 1998 1997 1996 1995 1994

- -------------------------------------- ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Revenues $ 8,558,726 $18,338,834 $24,624,270 $22,867,228 $21,121,787
Depreciation and Amortization 2,947,988 5,414,431 7,919,508 8,951,345 8,632,481
Operating Income (Loss) (678,676) 536,176 161,479 (1,244,929) (2,243,001)
Consolidated Income (Loss) 34,341,838/(c)/ 17,422,414/(b)/ (2,980,092) (4,371,145) (4,902,676)
Minority Interest in Consolidated (Income) Loss (13,657,749) (6,928,894) 1,185,182 1,738,404 1,949,794
Net Income (Loss) 20,684,089 10,493,520 (1,794,910) (2,632,741) (2,952,882)
Net Income (Loss) per Limited Partnership Unit 243.10/(c)/ 119.47/(b)/ (20.89) (30.64) (34.37)
Distributions per Limited Partnership Unit 279.54/(c)/ 106.22/(b)/ - - -
Weighted Average Number of Limited
Partnership Units Outstanding 85,059 85,059 85,059 85,059 85,059
General Partner's Deficit - (6,448) (337,889) (319,940) (293,613)
Limited Partners' Capital 22,474 3,122,252 1,994,813 3,771,774 6,378,188
Total Assets 3,843,550 30,514,718 47,556,243 50,844,037 54,545,774
Debt 2,417,756 23,624,588 42,559,250 43,104,090 42,383,339
General Partner Advances - - 284,390 109,893 66,224

</TABLE>

(a) This financial information includes the consolidated operations of Jones
Cable Income Fund 1-C, Ltd., which includes the operations of Jones Cable
Income Fund 1-B/C Venture, in which Jones Cable Income Fund 1-C, Ltd. has
an interest of approximately 60 percent.

(b) Consolidated income and distributions resulted primarily from the sale of
the Colorado Systems by Jones Cable Income Fund 1-B/C Venture in January
1997.

(c) Consolidated income and distributions resulted primarily from the sale of
the Clearlake System in January 1998, the Southwest Michigan System in July
1998 and the South Sioux City System in August 1998 by Jones Cable Income
Fund 1-B/C Venture.

6
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- --------------------------------------------------------------------------------
OF OPERATIONS
-------------

JONES CABLE INCOME FUND 1-C, LTD.
---------------------------------

The following discussion of financial condition and results of operations
of Jones Cable Income Fund 1-C, Ltd. (the "Partnership") and Jones Cable Income
Fund 1-B/C Venture (the "Venture") 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 Partnership's and
Venture's actual results may differ significantly from the results predicted in
such forward-looking statements.

FINANCIAL CONDITION
- -------------------

The Partnership owns a 60 percent interest in the Venture and Jones Cable
Income Fund 1-B, Ltd. ("Fund 1-B") owns a 40 percent interest in the Venture.
The accompanying financial statements include 100 percent of the accounts of the
Partnership and those of the Venture's cable systems reduced by Fund 1-B's 40
percent minority interest in the Venture. The Venture's financial condition is
significant to the Partnership and should be reviewed in conjunction with this
discussion.

Clearlake System Sale
---------------------

On January 9, 1998, the Venture sold the Clearlake System to an
unaffiliated party for a sales price of $21,400,000, subject to customary
closing adjustments. From the sale proceeds, the Venture paid a brokerage fee to
The Intercable Group, Ltd. ("The Intercable Group"), a subsidiary of the General
Partner, totaling $535,000, which represented 2.5 percent of the sales price,
repaid $9,600,000 of the then-outstanding balance on the Venture's credit
facility, settled working capital adjustments, deposited $300,000 into an
indemnity escrow account and then the Venture distributed the net sale proceeds
of $11,000,000 to the Partnership and Fund 1-B. The Partnership received
$6,625,300 and Fund 1-B received $4,374,700 of such distribution. The
Partnership, in turn, distributed the $6,625,300 (an approximate return of $78
for each $500 limited partnership interest, or $156 for each $1,000 invested in
the Partnership) to the limited partners of the Partnership in February 1998.
Because this distribution to the limited partners of the Partnership together
with all prior distributions did not return the amount initially contributed by
the limited partners to the Partnership plus the limited partners' liquidation
preference provided by the Partnership's limited partnership agreement, the
General Partner did not receive a general partner distribution from the
Clearlake System's sale proceeds.

The indemnity escrow period expired on January 9, 1999, and all of the
$300,000 indemnity escrow amount plus $14,977 of interest is available for
distribution to the Partnership and Fund 1-B. The Partnership will receive
$189,711 of the distribution, and the Partnership, in turn, will distribute the
$189,711 (approximately $2 for each $500 limited partnership interest, or $4 for
each $1,000 invested in the Partnership) to the limited partners of the
Partnership. The Partnership anticipates that the distribution of the indemnity
escrow amount will be included with the distribution to be made to the limited
partners from the sale of the Myrtle Creek System, which is anticipated to occur
in May 1999.

Southwestern Michigan System Sale
---------------------------------

On July 31, 1998, the Venture sold the Southwestern Michigan System to
three unaffiliated parties for a total sales price of $31,250,000, subject to
customary closing adjustments. From the sale proceeds, the Venture paid a
brokerage fee to The Intercable Group totaling $781,250 representing 2.5 percent
of the sales price, repaid $9,500,000 of the then-outstanding balance of the
Venture's credit facility, settled working capital adjustments and then the
Venture distributed the net sales proceeds of $21,200,000 to the Partnership and
Fund 1-B. The Partnership received $12,768,760 and Fund 1-B received $8,431,240
of such distribution. The Partnership, in turn, distributed the $12,768,760 (an
approximate return of $150 for each $500 limited partnership interest, or $300
for each $1,000 invested in the Partnership) to the limited partners of the
Partnership in August 1998. Because this distribution to the limited partners
of the Partnership together with all prior distributions did not return the
amount initially contributed by the limited partners to the Partnership plus the
limited partners' liquidation preference provided by the Partnership's limited
partnership agreement, the General Partner did not receive a general partner
distribution from the Southwestern Michigan System's sale proceeds.

7
<PAGE>

South Sioux City System Sale
----------------------------

On August 31, 1998, the Venture sold the South Sioux City System to an
unaffiliated party for a sales price of $9,500,000, subject to customary closing
adjustments. From the sale proceeds, the Venture paid a brokerage fee to The
Intercable Group totaling $237,500, representing 2.5 percent of the sales price,
repaid $2,000,000 of the then-outstanding balance on the Venture's credit
facility, settled working capital adjustments and then the Venture distributed
the net sales proceeds of $7,277,700 to the Partnership and Fund 1-B. The
Partnership received $4,383,359 and Fund 1-B received $2,894,341 of such
distribution. The Partnership, in turn, distributed the $4,383,359 (an
approximate return of $52 for each $500 limited partnership interest, or $104
for each $1,000 invested in the Partnership) to the limited partners of the
Partnership in September 1998. Because this distribution to the limited
partners of the Partnership together with all prior distributions did not return
the amount initially contributed by the limited partners to the Partnership plus
the limited partners' liquidation preference provided by the Partnership's
limited partnership agreement, the General Partner of the Partnership did not
receive a general partner distribution from the South Sioux City sale proceeds.

Proposed Myrtle Creek System Sale
---------------------------------

On September 9, 1998, the Venture entered into an asset purchase agreement
providing for the sale of the Myrtle Creek System to an unaffiliated party for a
sales price of $10,000,000, subject to customary closing adjustments. The
closing of this transaction, which is expected to occur in the second quarter of
1999, is subject to the consents of governmental authorities and third parties
with whom the Venture has contracted that are necessary for the transfer of the
Myrtle Creek System. Because the sale of the Myrtle Creek System represents a
sale of all of the remaining assets of the Partnership and Fund 1-B, a vote of
the limited partners of the Partnership and a vote of the limited partners of
Fund 1-B will be required to approve this sale. The General Partner expects to
conduct these votes in April 1999.

Upon consummation of the proposed sale of the Myrtle Creek System, based
upon financial information as of December 31, 1998, the Venture will pay a
brokerage fee to The Intercable Group of $250,000, representing 2.5 percent of
the sales price, for acting as a broker in the transaction, repay the balance
outstanding on the Venture's credit facility of $2,400,000, settle working
capital adjustments and deposit $500,000 into an indemnity escrow account. The
remaining net sales proceeds of approximately $6,870,000 will be distributed to
the Partnership and Fund 1-B. The Partnership will receive approximately
$4,137,801 and Fund 1-B will receive approximately $2,732,199. The Partnership,
in turn, will distribute the $4,137,801 (an approximate return of $49 for each
$500 limited partnership interest, or $98 for each $1,000 invested in the
Partnership) to the limited partners of the Partnership. Because the
distribution to the limited partners of the Partnership together with all prior
distributions will not return the amount initially contributed by the limited
partners to the Partnership plus the limited partners' liquidation preference
provided by the Partnership's limited partnership agreement, the General Partner
of the Partnership will not receive a general partner distribution from the sale
proceeds.

For a period of one year following the closing date, $500,000 of the sale
proceeds will remain in escrow as security for the Venture's agreement to
indemnify the purchaser under the asset purchase agreement. The Venture's
primary exposure, if any, will relate to the representations and warranties made
about the Myrtle Creek System in the asset purchase agreement. Any amounts
remaining from this indemnity escrow account and not claimed by the buyer at the
end of the one-year escrow period plus interest earned on the escrowed funds
will be returned to the Venture. From this amount, the Venture will pay any
remaining liabilities and the Venture will then distribute the balance to its
partners. If the entire $500,000 escrow amount is distributed to the
Partnership and Fund 1-B, of which there can be no assurance, the Partnership
would receive $301,150 and Fund 1-B would receive $198,850. The Partnership, in
turn, would distribute the $301,150 (an approximate return of $3.50 for each
$500 limited partnership interest, or $7 for each $1,000 invested in the
Partnership) to the limited partners of the Partnership. Since the Myrtle Creek
System represents the only operating asset of the Venture, and the Partnership's
interest in the Venture represents its only asset, the Partnership and the
Venture will be liquidated and dissolved upon the final distribution of any
amounts remaining from the indemnity escrow account.

8
<PAGE>

Anticipated Final Distributions
-------------------------------

Taking into account prior distributions to the limited partners from
operating cash flow, from the net proceeds of prior cable television system
sales and from the planned distribution in the second quarter of 1999 of the
Partnership's portion of the net sales proceeds from the sale of the Myrtle
Creek System, excluding all escrowed proceeds, the limited partners of the
Partnership will have received approximately $580 for each $500 limited
partnership interest, or approximately $1,160 for each $1,000 invested in the
Partnership.

For the year ended December 31, 1998, the Venture generated net cash from
operating activities totaling $1,106,303, which is available to fund capital
expenditures and non-operating costs. During 1998, capital expenditures within
the Venture's systems totaled approximately $1,354,000. Approximately 45
percent of these expenditures was for the construction of service drops to
subscribers' homes and approximately 34 percent of these expenditures was for
the construction of new cable plant related to new homes passed. The remainder
was for other capital expenditures used to maintain the value of the Venture's
systems. Funding for these expenditures was provided by cash on hand, cash
generated from operations, and borrowings available under the Venture's credit
facility. Budgeted capital expenditures for 1999 are approximately $50,000.
These capital expenditures will be used to maintain the value of the Venture's
Myrtle Creek System until it is sold. Funding for these expenditures is
expected to come from cash on hand and cash generated from operations. The
Venture is obligated to conduct its business in the ordinary course until the
remaining system is sold.

As discussed above, the Venture utilized a portion of the proceeds from the
sales of its cable television systems to repay portions of the then-outstanding
balances on its credit facility. On November 5, 1998, the commitment on the
credit facility was reduced to $3,000,000. At December 31, 1998, the Venture's
credit facility had $2,400,000 outstanding. The then-outstanding balance of the
credit facility will be repaid upon the sale of the Venture's Myrtle Creek
System. On September 30, 2000, the maximum amount available begins to reduce
quarterly until June 30, 2005 when the amount available will be zero. Interest
on outstanding principal is calculated at the Venture's option of the Base Rate
plus 1/8, or the Euro-Rate plus 1 1/8 percent. The effective interest rate on
amounts outstanding as of December 31, 1998 and 1997 was 6.12 percent and 6.89
percent, respectively.

One of the primary objectives of the Venture has been to provide quarterly
cash flow distributions to the Venture partners, primarily from cash generated
through operating activities of the Venture. The Venture's partners in turn
have sought to provide quarterly cash distributions to their partners. The
Venture used cash generated from operations to fund capital expenditures and did
not declare quarterly cash flow distributions during 1998, although it did make
distributions of $11,000,000 to its partners from the proceeds of the sale of
the Clearlake System in February 1998, $21,200,000 to its partners from the
proceeds of the sale of the Southwestern Michigan System in August 1998 and
$7,277,700 to its partners from the proceeds of the sale of the South Sioux City
System in September 1998. The Partnership and Fund 1-B in turn distributed
their shares of such amounts to their limited partners. The Venture anticipates
making a distribution of $6,870,000 to its partners from the proceeds of the
sale of the Myrtle Creek System in the second quarter of 1999. The Partnership
and Fund 1-B in turn will distribute their shares of such amount to their
limited partners. The Venture does not anticipate resuming cash flow
distributions.

The General Partner believes that the Venture has sufficient sources of
capital available from cash on hand, cash generated from operations and from
borrowings available under its credit facility to meet its anticipated needs
until the Myrtle Creek System is sold.

Year 2000 Issue
- ---------------

The Year 2000 issue is the result of many computer programs being written
such that they will malfunction when reading a year of "00." This problem could
cause system failure or miscalculations causing disruptions of business
processes. Due to the proposed sale of the Myrtle Creek System in May 1999,
which represents the Venture's last remaining operating asset, it is not
anticipated that the Year 2000 issue will have a material effect on the
Partnership.

RESULTS OF OPERATIONS
- ---------------------

All of the Partnership's operations are represented by its approximate 60
percent interest in the Venture.

9
<PAGE>

1998 Compared to 1997-

Revenues of the Venture decreased $9,780,108, or approximately 53 percent,
to $8,558,726 in 1998 from $18,338,834 in 1997. This decrease was a result of
the sale of the Colorado Systems, the Clearlake System, the Southwestern
Michigan System and the South Sioux City System. Disregarding the effect of
these sales, revenues would have increased $37,948, or approximately 2 percent,
to $2,464,765 in 1998 compared to $2,426,817 in 1997. This increase was
primarily due to an increase in basic service revenues. No other single factor
significantly affected these increases in revenues.

Operating expenses consist primarily of costs associated with the operation
and administration of the Venture's cable television systems. The principal
cost components are salaries paid to system personnel, programming expenses,
professional fees, subscriber billing costs, rent for leased facilities, cable
system maintenance expenses and marketing expenses.

Operating expenses decreased $5,078,303, or approximately 49 percent, to
$5,317,589 in 1998 from $10,395,892 in 1997. This decrease was a result of the
sale of the Colorado Systems, the Clearlake System, the Southwestern Michigan
System and the South Sioux City System. Disregarding the effect of these sales,
operating expenses would have increased $12,620, or approximately 1 percent, to
$1,440,814 in 1998 compared to $1,428,194 in 1997. This increase in operating
expenses was due primarily to increases in programming fees. No other
individual factor was significant to this increase in operating expenses.
Operating expenses represented 59 percent of revenues in both 1998 and 1997.

Management fees and allocated overhead from the General Partner decreased
$1,020,510, or approximately 51 percent, to $971,825 in 1998 compared to
$1,992,335 in 1997. This decrease was a result of the sale of the Colorado
Systems, the Clearlake System, the Southwestern Michigan System and the South
Sioux City System. Disregarding the effect of these sales, management fees and
allocated overhead would have decreased $18,531, or approximately 6 percent, to
$318,445 in 1998 compared to $336,976 in 1997. This decrease was primarily due
to a decrease in allocated overhead from the General Partner.

Depreciation and amortization expense decreased $2,466,443, or
approximately 46 percent, to $2,947,988 in 1998 from $5,414,431 in 1997. This
decrease was a result of the sale of the Colorado Systems, the Clearlake System,
the Southwestern Michigan System and the South Sioux City System. Disregarding
the effect of these sales, depreciation and amortization expense would have
increased $22,996, or approximately 3 percent, to $803,876 in 1998 compared to
$780,880 in 1997. This increase was due to an increase in the Venture's
depreciable asset base.

The Venture reported an operating loss of $678,676 in 1998 compared to
operating income of $536,176 in 1997. Disregarding the effect of the sale of
the Colorado Systems, the Clearlake System, the Southwestern Michigan System and
the South Sioux City System, the operating loss would have decreased $20,863, to
$98,370 in 1998 from $119,233 in 1997. This decrease was a result of the
increase in revenues and decrease in allocated overhead from the General Partner
exceeding the increases in operating expenses and depreciation and amortization
expense.

Interest expense decreased $789,564, or approximately 52 percent, to
$731,711 in 1998 compared to $1,521,275 in 1997. This decrease was primarily
due to the lower outstanding balances on the Venture's interest bearing
obligations, as a result of a portion of the proceeds from the sale of the
Colorado Systems, the Clearlake System, the Southwestern Michigan System and the
South Sioux City System being used to repay a portion of the outstanding loan
principal balance.

The Venture reported a gain on the sales of the Clearlake System, the
Southwestern Michigan System and the South Sioux City System totaling
$35,830,323 in 1998 compared to a gain on the sale of the Colorado Systems of
$18,493,041 in 1997.

The Venture reported net income of $34,341,838 in 1998 compared to
$17,422,414 in 1997. This change was primarily due to gains on cable television
systems sales reported in 1998 compared to 1997 as discussed above.

1997 Compared to 1996-

Revenues of the Venture decreased $6,285,436, or approximately 26 percent,
to $18,338,834 in 1998 from $24,624,270 in 1996. This decrease was a result of
the sale of the Colorado Systems. Disregarding the effect of the Colorado
Systems, revenues would have increased $760,134, or approximately 5 percent, to
$17,806,829 in 1997 compared

10
<PAGE>

to $17,046,695 in 1996. Basic service rate increases accounted for approximately
87 percent of the increases in revenues in 1997. No other single factor
significantly affected these increases in revenues.

Operating expenses decreased $3,288,654, or approximately 24 percent, to
$10,395,892 in 1997 from $13,684,546 in 1997. This decrease was a result of the
sale of the Colorado Systems. Disregarding the effect of these sales, operating
expenses would have increased $181,787, or approximately 2 percent, to
$9,552,282 in 1997 compared to $9,370,495 in 1996. This increase in operating
expenses was due primarily to increases in programming fees. No other
individual factor was significant to this increase in operating expenses.
Operating expenses represented 54 percent of revenues in 1997 compared to 56
percent in 1996.

Management fees and allocated overhead from the General Partner decreased
$866,401, or approximately 30 percent, to $1,992,335 in 1997 compared to
$2,858,736 in 1996. This decrease was as a result of the sale of the Colorado
Systems. Disregarding the effect of the sale of the Colorado Systems,
management fees and allocated overhead would have decreased $57,578, or
approximately 3 percent, to $1,938,591 in 1997 compared to $1,996,169 in 1996.
This decrease was primarily due to a decrease in allocated overhead from the
General Partner.

Depreciation and amortization expense decreased $2,505,077, or
approximately 32 percent, to $5,414,431 in 1997 from $7,919,508 in 1996. This
decrease was a result of the sale of the Colorado Systems. Disregarding the
effect of the sale of the Colorado Systems, depreciation and amortization
expense would have decreased $321,866, or approximately 6 percent, to $5,268,978
in 1997 compared to $5,590,844 in 1996. This decrease was due to the maturation
of a portion of the Venture's depreciable asset base.

The Venture's operating income increased $374,697 to $536,176 in 1997 from
$161,479 in 1996. Disregarding the effect of the sale of the Colorado Systems,
operating income would have increased $957,791, to $1,046,978 in 1997 from
$89,187 in 1996. This increase was a result of the increase in revenues and the
decrease in depreciation and amortization expense exceeding the increase in
operating expenses.

Interest expense decreased $1,589,296, or approximately 51 percent, to
$1,521,275 in 1997 compared to $3,110,571 in 1996. This decrease was primarily
due to the lower outstanding balances on the Venture's interest bearing
obligations, as a result of a portion of the proceeds from the sale of the
Colorado Systems being used to repay a portion of the outstanding loan principal
balance.

The Venture reported a gain on the sale of the Colorado Systems of
$18,493,041 in 1997. No similar gain was reported in 1996.

The Venture reported net income of $17,422,414 in 1997 compared to a net
loss of $2,980,092 in 1996. This change was primarily due to the fact that the
Venture reported a gain on the sale of the Colorado Systems in 1997 and no
similar gain was reported in 1996.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- --------------------------------------------------------------------

Interest Rate Risk

The Venture utilizes variable rate long-term debt from its credit facility
to partially finance capital expenditures. Such debt arrangements expose the
Venture and the Partnership to market risk related to changes in interest rates.
The Venture will repay all amounts outstanding on its credit facility upon the
sale of its Myrtle Creek System in the second quarter of 1999. Therefore, the
Venture's and the Partnership's risk from changes in interest rates is not
expected to be significant.

11
<PAGE>

ITEM 8. FINANCIAL STATEMENTS
- -----------------------------

The audited financial statements of the Partnership for the year ended
December 31, 1998 follow.

12
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------

To the Partners of Jones Cable Income Fund 1-C, Ltd.:

We have audited the accompanying consolidated balance sheets of JONES CABLE
INCOME FUND 1-C, LTD. (a Colorado limited partnership) as of December 31, 1998
and 1997, and the related consolidated statements of operations, partners'
capital (deficit) and cash flows for each of the three years in the period ended
December 31, 1998. These financial statements are the responsibility of the
General Partner's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Jones Cable Income Fund 1-C,
Ltd. as of December 31, 1998 and 1997, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Denver, Colorado,
March 12, 1999.

13
<PAGE>

JONES CABLE INCOME FUND 1-C, LTD.
---------------------------------
(A Limited Partnership)

CONSOLIDATED BALANCE SHEETS
---------------------------

<TABLE>
<CAPTION>
December 31,
--------------------------
ASSETS 1998 1997
------ ----------- ------------
<S> <C> <C>
CASH $ 118,938 $ 454,501

TRADE RECEIVABLES, less allowance for doubtful
receivables of $2,507 and $42,753 at December 31, 1998
and 1997, respectively 8,676 362,472

INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 5,763,293 45,101,407
Less- accumulated depreciation (3,331,334) (24,222,527)
----------- ------------

2,431,959 20,878,880

Franchise costs and other intangible assets, net of accumulated
amortization of $3,793,620 and $33,614,162 at
December 31, 1998 and 1997, respectively 833,473 8,342,217
----------- ------------

Total investment in cable television properties 3,265,432 29,221,097

DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 450,504 476,648
----------- ------------

Total assets $ 3,843,550 $ 30,514,718
=========== ============
</TABLE>

The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets.

14
<PAGE>

JONES CABLE INCOME FUND 1-C, LTD.
---------------------------------
(A Limited Partnership)

CONSOLIDATED BALANCE SHEETS
---------------------------

December 31,
---------------------------
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1998 1997
------------------------------------------- ------------ ------------
<S> <C> <C>
LIABILITIES:
Debt $ 2,417,756 $ 23,624,588
Trade accounts payable and accrued liabilities 1,287,365 1,443,578
Subscriber prepayments 32,076 204,337
------------ ------------

Total liabilities 3,737,197 25,272,503
------------ ------------

COMMITMENTS AND CONTINGENCIES (Note 8)

MINORITY INTEREST IN JOINT VENTURE 83,879 2,126,411
------------ ------------

PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated earnings 112,443 105,995
Distributions (113,443) (113,443)
------------ ------------

- (6,448)
------------ ------------

Limited Partners-
Net contributed capital (85,059 units outstanding at
December 31, 1998 and 1997) 34,909,262 34,909,262
Accumulated earnings (deficit) 10,292,917 (10,384,724)
Distributions (45,179,705) (21,402,286)
------------ ------------

22,474 3,122,252
------------ ------------

Total liabilities and partners' capital (deficit) $ 3,843,550 $ 30,514,718
============ ============
</TABLE>

The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets.

15
<PAGE>

JONES CABLE INCOME FUND 1-C, LTD.
---------------------------------
(A Limited Partnership)

CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------

<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
1998 1997 1996
------------ ----------- -----------
<S> <C> <C> <C>
REVENUES $ 8,558,726 $18,338,834 $24,624,270

COSTS AND EXPENSES:
Operating expenses 5,317,589 10,395,892 13,684,546
Management fees and allocated overhead from
General Partner 971,825 1,992,335 2,858,737
Depreciation and amortization 2,947,988 5,414,431 7,919,508
------------ ----------- -----------

OPERATING INCOME (LOSS) (678,676) 536,176 161,479
------------ ----------- -----------

OTHER INCOME (EXPENSE):
Interest expense (731,711) (1,521,275) (3,110,571)
Gain on sales of cable television systems 35,830,323 18,493,041 -
Other, net (78,098) (85,528) (31,000)
------------ ----------- -----------

Total other income (expense) 35,020,514 16,886,238 (3,141,571)
------------ ----------- -----------

CONSOLIDATED INCOME (LOSS) 34,341,838 17,422,414 (2,980,092)

MINORITY INTEREST IN CONSOLIDATED
(INCOME) LOSS (13,657,749) (6,928,894) 1,185,182
------------ ----------- -----------

NET INCOME (LOSS) $ 20,684,089 $10,493,520 $(1,794,910)
============ =========== ===========

ALLOCATION OF NET INCOME (LOSS):
General Partner $ 6,448 $ 331,441 $ (17,949)
============ =========== ===========

Limited Partners $ 20,677,641 $10,162,079 $(1,776,961)
============ =========== ===========

NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $ 243.10 $ 119.47 $ (20.89)
============ =========== ===========

WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 85,059 85,059 85,059
============ =========== ===========
</TABLE>

The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.

16
<PAGE>

JONES CABLE INCOME FUND 1-C, LTD.
---------------------------------
(A Limited Partnership)

CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
------------------------------------------------------

<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
1998 1997 1996
------------ ----------- -----------
<S> <C> <C> <C>
GENERAL PARTNER:
Balance, beginning of year $ (6,448) $ (337,889) $ (319,940)
Net income (loss) for year 6,448 331,441 (17,949)
------------ ----------- -----------

Balance, end of year $- $ (6,448) $ (337,889)
============ =========== ===========

LIMITED PARTNERS:
Balance, beginning of year $ 3,122,252 $ 1,994,813 $ 3,771,774
Distributions (23,777,419) (9,034,640) -
Net income (loss) for year 20,677,641 10,162,079 (1,776,961)
------------ ----------- -----------

Balance, end of year $ 22,474 $ 3,122,252 $ 1,994,813
============ =========== ===========
</TABLE>

The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.

17
<PAGE>

JONES CABLE INCOME FUND 1-C, LTD.
---------------------------------
(A Limited Partnership)

CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------

<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------
1998 1997 1996
------------ ------------ -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 20,684,089 $ 10,493,520 $(1,794,910)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 2,947,988 5,414,431 7,919,508
Gain on sales of cable television systems (35,830,323) (18,493,041) -
Minority interest in consolidated income (loss) 13,657,749 6,928,894 (1,185,182)
Decrease (increase) in trade receivables 353,796 167,553 (5,285)
Increase in deposits, prepaid
expenses and deferred charges (78,522) (265,161) (186,604)
Increase (decrease) in trade accounts payable and
accrued liabilities and subscriber prepayments (328,474) (244,887) 62,641
Increase (decrease) in advances from General Partner - (284,390) 174,497
------------ ------------ -----------

Net cash provided by operating activities 1,406,303 3,716,919 4,984,665
------------ ------------ -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (1,353,584) (4,155,396) (4,617,913)
Proceeds from sales of cable television systems,
net of brokerage fees and escrow 60,296,250 34,125,000 -
------------ ------------ -----------

Net cash provided by (used in) investing activities 58,942,666 29,969,604 (4,617,913)
------------ ------------ -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 1,339,583 17,215,086 273,404
Repayment of debt (22,546,415) (36,149,748) (818,244)
Distribution to Venture Partner (15,700,281) (5,965,360) -
Distributions to Limited Partners (23,777,419) (9,034,640) -
------------ ------------ -----------

Net cash used in financing activities (60,684,532) (33,934,662) (544,840)
------------ ------------ -----------

Decrease in cash (335,563) (248,139) (178,088)

Cash, beginning of year 454,501 702,640 880,728
------------ ------------ -----------

Cash, end of year $ 118,938 $ 454,501 $ 702,640
============ ============ ===========

SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 955,375 $ 1,680,766 $ 3,132,265
============ ============ ===========
</TABLE>

The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.

18
<PAGE>

JONES CABLE INCOME FUND 1-C, LTD.
---------------------------------
(A Limited Partnership)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

(1) ORGANIZATION AND PARTNERS' INTERESTS
------------------------------------

Formation and Business
----------------------

Jones Cable Income Fund 1-C, Ltd. (the "Partnership"), a Colorado limited
partnership, was formed on February 9, l987, under a public program sponsored by
Jones Intercable, Inc. ("Intercable"). The Partnership was formed to acquire,
develop and operate cable television systems. Intercable is the "General
Partner" and manager of the Partnership. The General Partner and its
subsidiaries also own and operate cable television systems. In addition, the
General Partner manages cable television systems for other limited partnerships
for which it is general partner and, also, for other affiliated entities.

At December 31, 1998, the Partnership owned a 60 percent interest in Jones
Cable Income Fund 1-B/C Venture (the "Venture"), through a capital contribution
made to the Venture in November 1987 of $36,681,000. The Venture was formed to
acquire, develop and operate cable television systems. During 1988 and 1987,
the Venture acquired various cable television systems serving the areas in and
around the cities of Brighton and Broomfield, the town of Lochbuie, and portions
of unincorporated Adams, Boulder and Weld Counties, all in the State of Colorado
(the "Colorado Systems"); Clearlake and Lakeport, California (the "Clearlake
System"); Myrtle Creek, Oregon (the "Myrtle Creek System"); South Sioux City,
Nebraska (the "South Sioux City System"); and Three Rivers, Schoolcraft,
Vicksburg, Constantine, White Pigeon, Dowagiac, Watervliet and Vandalia, all in
the State of Michigan (the "Southwestern Michigan System"). The Venture had net
income of $34,341,838 and $17,422,414 in 1998 and 1997, respectively, and
incurred a loss of $2,980,092 in 1996, of which income of $20,684,089 and
$10,493,520 in 1998 and 1997 and a loss of $1,794,910 in 1996 were allocated to
the Partnership.

Colorado Systems Sale
---------------------

On January 24, 1997, the Venture sold the Colorado Systems to an
unaffiliated party for a sales price of $35,000,000. The Venture distributed a
total of $15,000,000 to the Partnership and Jones Cable Income Fund 1-B, Ltd.
("Fund 1-B") in February 1997, which amount represented the net sale proceeds
following the Venture's repayment of a portion of the balance outstanding on its
credit facility and the payment of a brokerage fee to The Intercable Group,
Ltd., a subsidiary of the General Partner ("The Intercable Group"), totaling
$875,000, representing 2.5 percent of the sales price, for acting as a broker in
this transaction. The Partnership received $9,034,640 and Fund 1-B received
$5,965,360 of such distribution. The Partnership, in turn, distributed the
$9,034,640 (approximately $212 for each $1,000 invested in the Partnership) to
the limited partners of the Partnership. Because the distribution to the
limited partners of the Partnership together with all prior distributions did
not return the amount initially contributed by the limited partners to the
Partnership plus the limited partners' liquidation preference provided by the
Partnership's limited partnership agreement, the General Partner did not receive
a general partner distribution from the sale proceeds.

Clearlake System Sale
---------------------

On January 9, 1998, the Venture sold the Clearlake System to an
unaffiliated party for a sales price of $21,400,000, subject to customary
closing adjustments. From the sale proceeds, the Venture paid a brokerage fee
to The Intercable Group totaling $535,000, which represented 2.5 percent of the
sales price, repaid $9,600,000 of the then-outstanding balance on the Venture's
credit facility, settled working capital adjustments, deposited $300,000 into an
indemnity escrow account and then the Venture distributed the net sale proceeds
of $11,000,000 to the Partnership and Fund 1-B. The Partnership received
$6,625,300 and Fund 1-B received $4,374,700 of such distribution. The
Partnership, in turn, distributed the $6,625,300 (an approximate return of $78
for each $500 limited partnership interest, or $156 for each $1,000 invested in
the Partnership) to the limited partners of the Partnership in February 1998.
Because this distribution to the limited partners of the Partnership together
with all prior distributions did not return the amount initially contributed by
the limited partners to the Partnership plus the limited partners' liquidation
preference provided by the Partnership's limited partnership agreement, the
General Partner did not receive a general partner distribution from the
Clearlake System's sale proceeds.

19
<PAGE>

Southwestern Michigan System Sale
---------------------------------

South Sioux City System Sale
----------------------------

Pro Forma
---------

The pro forma effect of the sales of the South Sioux City System, the
Southwestern Michigan System and the Clearlake System on the results of the
Venture's operations for the year ended December 31, 1998 and the sale of the
South Sioux City System, the Southwestern Michigan System, the Clearlake System
and the Colorado Systems on the Venture's operations for the year ended December
31, 1997, assuming the transactions had occurred at the beginning of each year,
is presented in the following unaudited tabulation:

For the Year Ended December 31, 1998
------------------------------------

Pro Forma Unaudited
As Reported Adjustments Pro Forma
------------ ------------- -----------

Revenues $ 8,558,726 $ (6,093,961) $2,464,765
=========== ============ ==========

Operating Loss $ (678,676) $ 580,306 $ (98,370)
=========== ============ ==========

Consolidated Income (Loss) $34,341,838 $(34,723,925) $ (382,087)
=========== ============ ==========

20
<PAGE>

For the Year Ended December 31, 1997
------------------------------------
Pro Forma Unaudited
As Reported Adjustments Pro Forma
----------- ------------- -----------

Revenues $18,338,834 $(15,912,017) $2,426,817
=========== ============ ==========

Operating Income (Loss) $ 536,176 $ (655,409) $ (119,233)
=========== ============ ==========

Consolidated Income (Loss) $17,422,414 $(17,878,366) $ (455,952)
=========== ============ ==========

Proposed Myrtle Creek System Sale
---------------------------------

For a period of one year following the closing date, $500,000 of the sale
proceeds will remain in escrow as security for the Venture's agreement to
indemnify the purchaser under the asset purchase agreement. The Venture's
primary exposure, if any, will relate to the representations and warranties made
about the Myrtle Creek System in the asset purchase agreement. Any amounts
remaining from this indemnity escrow account and not claimed by the buyer at the
end of the one-year escrow period plus interest earned on the escrowed funds
will be returned to the Venture. From this amount, the Venture will pay any
remaining liabilities and the Venture will then distribute the balance to its
partners. If the entire $500,000 escrow amount is distributed to the
Partnership and Fund 1-B, of which there can be no assurance, the Partnership
would receive $301,150 and Fund 1-B would receive $198,850. The Partnership, in
turn, would distribute the $301,150 (an approximate return of $3.50 for each
$500 limited partnership interest, or $7 for each $1,000 invested in the
Partnership) to the limited partners of the Partnership. Since the Myrtle Creek
System represents the only operating asset of the Venture, and the Partnership's
interest in the Venture represents its only asset, the Partnership and the
Venture will be liquidated and dissolved upon the final distribution of any
amounts remaining from the indemnity escrow account.

Contributed Capital
-------------------

The capitalization of the Partnership is set forth in the accompanying
consolidated statements of partners' capital (deficit). No limited partner is
obligated to make any additional contributions to partnership capital.

The General Partner purchased its interest in the Partnership by
contributing $1,000 to partnership capital.

All profits and losses of the Partnership are allocated 99 percent to the
limited partners and 1 percent to the General Partner, except for income or gain
from the sale or disposition of cable television properties, which will be

21
<PAGE>

allocated to the partners based upon the formula set forth in the Partnership
Agreement and interest income earned prior to the first acquisition by the
Partnership of a cable television system, which was allocated 100 percent to the
limited partners.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------

Accounting Records
------------------

The accompanying consolidated financial statements have been prepared on
the accrual basis of accounting in accordance with generally accepted accounting
principles. The Partnership's tax returns are also prepared on the accrual
basis.

The preparation of financial statements in conformity with generally
accepted accounting principles requires the General Partner's management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Principles of Consolidation
---------------------------

The accompanying consolidated financial statements include 100 percent of
the accounts of the Partnership and those of the Venture, reduced by Jones Cable
Income Fund 1-B, Ltd.'s 40 percent minority interest in the Venture.

All interpartnership accounts and transactions have been eliminated.

Property, Plant and Equipment
-----------------------------

Depreciation of property, plant and equipment is provided primarily using
the straight-line method over the following estimated service lives:

Cable distribution systems 5 - 15 years
Equipment and tools 5 - 7 years
Office furniture and equipment 3 - 5 years
Buildings 30 years
Vehicles 3 - 4 years

Replacements, renewals and improvements are capitalized and maintenance and
repairs are charged to expense as incurred.

Property, plant and equipment and the corresponding accumulated
depreciation are written off as certain assets become fully depreciated and are
no longer in service.

22
<PAGE>

Intangible Assets
-----------------

Costs assigned to franchises, a noncompete agreement and costs in excess of
interests in net assets purchased are amortized using the straight-line method
over the following remaining estimated useful lives:

Franchise costs 1 - 13 years
Noncompete agreement 1 year
Costs in excess of interests in net
assets purchased 31 years

Revenue Recognition
-------------------

Subscriber prepayments are initially deferred and recognized as revenue
when earned.

(3) TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
----------------------------------------------------

Management Fees, Distribution Ratios and Reimbursements
-------------------------------------------------------

The General Partner manages the Partnership and the Venture and receives a
fee for its services equal to 5 percent of the gross revenues of the Venture,
excluding revenues from the sale of cable television systems or franchises.
Management fees paid to the General Partner by the Venture during the years
ended December 31, 1998, 1997 and 1996 were $427,936, $916,942 and $1,231,213,
respectively. Intercable will not receive a management fee from the Venture
after the sale of the Myrtle Creek System.

Any partnership distributions made from cash flow (defined as cash receipts
derived from routine operations, less debt principal and interest payments and
cash expenses) are allocated 99 percent to the limited partners and 1 percent to
the General Partner. Distributions resulting from the sale or refinancing of a
system or upon dissolution of the Partnership will be made as follows: first,
to the limited partners in an amount which together with all prior
distributions, other than those made regularly from cash flow, will equal their
initial capital contribution; second, payment to the limited partners of a
liquidation preference equal to a 12 percent cumulative return on their initial
capital contribution, reduced by all prior distributions from cash flow; and the
balance, 75 percent to the limited partners and 25 percent to the General
Partner.

The Venture reimburses the General Partner for certain allocated overhead
and administrative expenses. These expenses represent the salaries and related
benefits paid for corporate personnel, rent, data processing services and other
corporate facilities costs. Such personnel provide engineering, marketing,
administrative, accounting, legal and investor relations services to the
Venture. Such services, and their related costs, are necessary to the
operations of the Venture and would have been incurred by the Venture if it was
a stand alone entity. Allocations of personnel costs are based primarily on
actual time spent by employees of the General Partner with respect to each
entity managed. Remaining expenses are allocated based on the pro rata
relationship of the Venture's revenues to the total revenues of all systems
owned or managed by the General Partner and certain of its subsidiaries.
Systems owned by the General Partner and all other systems owned by partnerships
for which Intercable is the general partner are also allocated a proportionate
share of these expenses. The General Partner believes that the methodology of
allocating overhead and administrative expenses is reasonable. Overhead and
administrative expenses allocated to the Venture by the General Partner during
the years ended December 31, 1998, 1997 and 1996 were $543,889, $1,075,393 and
$1,627,524, respectively. The Venture will continue to reimburse the General
Partner for actual time spent on Venture business by employees of the General
Partner until the Venture is liquidated and dissolved, but the Venture will not
bear a revenue-based allocation of overhead and administrative expenses after
the sale of the Myrtle Creek System.

The Venture is charged interest at a rate which approximates Intercable's
weighted average cost of borrowing on any amounts due Intercable. No interest
was charged to the Venture by Intercable in 1998 and 1997. Total interest
charged to the Venture by Intercable was $25,331 during 1996.

Payments to/from Affiliates for Programming Services
----------------------------------------------------

The Venture receives or has received programming from Superaudio, Knowledge
TV, Inc., Jones Computer Network, Ltd., Great American Country, Inc. and Product
Information Network, all of which are affiliates of the General Partner.

23
<PAGE>

Payments to Superaudio totaled $16,706, $31,780 and $40,317 in 1998, 1997
and 1996, respectively. Payments to Knowledge TV, Inc. totaled $17,022, $30,775
and $41,468 in 1998, 1997 and 1996, respectively. Payments to Jones Computer
Network, Ltd., whose service was discontinued in April 1997, totaled $15,656 and
$56,465 in 1997 and 1996, respectively. Payments to Great American Country,
Inc. totaled $16,629, $23,695 and $37,518 in 1998, 1997 and 1996, respectively.

The Venture receives a commission from Product Information Network based on
a percentage of advertising revenues and number of subscribers. Product
Information Network paid commissions to the Venture totaling $28,497, $59,075
and $59,288 in 1998, 1997 and 1996, respectively.

(4) DISTRIBUTIONS FROM CASH FLOW
----------------------------

One of the primary objectives of the Venture has been to provide quarterly
cash distributions to the Venture partners, primarily from cash generated
through operating activities of the Venture. The Venture's partners in turn
have sought to provide quarterly cash distributions to their partners. The
Venture used cash generated from operations to fund capital expenditures and did
not declare quarterly cash flow distributions during 1998, although it did make
distributions of $11,000,000 to its partners from the proceeds of the sale of
the Clearlake System in February 1998, $21,200,000 to its partners from the
proceeds of the sale of the Southwestern Michigan System in August 1998 and
$7,277,700 to its partners from the proceeds of the sale of the South Sioux City
System in September 1998. The Venture anticipates making a distribution of
$6,870,000 to its partners from the proceeds of the sale of the Myrtle Creek
System in the second quarter of 1999. The Venture does not anticipate resuming
cash flow distributions.

A primary objective of the Partnership is to provide quarterly cash
distributions to its partners from distributions it receives from the Venture.
The Partnership declared no distributions in 1998, 1997 or 1996. The General
Partner has agreed to defer its portion of cash distributions until the
Partnership is liquidated.

(5) PROPERTY, PLANT AND EQUIPMENT
-----------------------------

Property, plant and equipment as of December 31, 1998 and 1997, consisted
of the following:

December 31,
---------------------------
1998 1997
------------ -------------

Cable distribution systems $ 5,017,230 $ 41,179,861
Equipment and tools 349,643 1,535,589
Office furniture and equipment 181,056 807,056
Buildings 105,764 421,023
Vehicles 109,600 1,044,028
Land - 113,850
----------- ------------
5,763,293 45,101,407

Less- accumulated depreciation (3,331,334) (24,222,527)
----------- ------------

$ 2,431,959 $ 20,878,880
=========== ============

(6) DEBT
----

Debt consists of the following: December 31,
--------------------------

1998 1997
----------- ------------
Lending institutions -
Revolving credit agreement $ 2,400,000 $ 23,300,000
Capital lease obligations 17,756 324,588
----------- ------------

$ 2,417,756 $ 23,624,588
=========== ============

24
<PAGE>

On January 9, 1998, as required by the terms of its credit facility, the
Venture used a portion of the proceeds of the sale of the Clearlake System to
repay $9,600,000 of the balance then-outstanding. On July 31, 1998, the Venture
used a portion of the proceeds of the sale of the Southwest Michigan System to
repay $9,500,000 of the balance outstanding. On September 3, 1998, the Venture
used a portion of the sale of the South Sioux City System to repay $2,000,000 of
the balance outstanding. At the same time, the commitment on the credit
facility was reduced to $8,400,000. On November 5, 1998, the commitment on the
credit facility was reduced to $3,000,000. At December 31, 1998, the Venture's
credit facility had $2,400,000 outstanding. The then-outstanding balance of the
credit facility will be repaid upon the sale of the Venture's Myrtle Creek
System. On September 30, 2000, the maximum amount available begins to reduce
quarterly until June 30, 2005 when the amount available will be zero. Interest
on outstanding principal is calculated at the Venture's option of the Base Rate
plus 1/8, or the Euro-Rate plus 1 1/8 percent. The effective interest rate on
amounts outstanding as of December 31, 1998 and 1997 was 6.12 percent and 6.89
percent, respectively.

Installments due on debt principal for each of the five years in the period
ending December 31, 2003 and thereafter, respectively, are $5,327, $5,327,
$5,327, $601,775, $600,000 and $1,200,000. As of December 31, 1998,
substantially all of the Venture's assets secured the above indebtedness.

At December 31, 1998 and 1997, the carrying amount of the Venture's long-
term debt did not differ significantly from the estimated fair value of the
financial instruments. The fair value of the Venture's long-term debt is
estimated based on the discounted amount of future debt service payments using
rates of borrowing for a liability of similar risk.

(7) INCOME TAXES
------------

Income taxes have not been recorded in the accompanying consolidated
financial statements because they accrue directly to the partners. The federal
and state income tax returns of the Partnership are prepared and filed by the
General Partner.

The Partnership's tax returns, the qualification of the Partnership as such
for tax purposes, and the amount of distributable partnership income or loss are
subject to examination by federal and state taxing authorities. If such
examinations result in changes with respect to the Partnership's qualification
as such, or in changes with respect to the Partnership's recorded income or
loss, the tax liability of the General and limited partners would likely be
changed accordingly.

Taxable loss reported to the partners is different from that reported in
the consolidated statements of operations due to the difference in depreciation
recognized under generally accepted accounting principles and the expense
allowed for tax purposes under the Modified Accelerated Cost Recovery System
(MACRS). There are no other significant differences between taxable income or
loss and the net income or loss reported in the consolidated statements of
operations.

(8) COMMITMENTS AND CONTINGENCIES
-----------------------------

The Venture rents office and other facilities under various long-term lease
arrangements. Rent paid under such lease arrangements totaled $22,900, $35,636
and $93,161, respectively, for the years ended December 31, 1998, 1997 and 1996.
Minimum commitments under operating leases for each of the five years in the
period ending December 31, 2003, and thereafter are as follows:

1999 $ 1,524
2000 1,524
2001 1,524
2002 1,524
2003 1,524
Thereafter 10,667
-------

$18,287
=======

For a period of one year following the closing date of the proposed sale of
the Myrtle Creek System, $500,000 of the sale proceeds from the Myrtle Creek
System will remain in escrow as security for the Venture's agreement to
indemnify the purchaser under the asset purchase agreement. The Venture's
primary exposure, if any, will relate to the representations and warranties made
about the Myrtle Creek System in the asset purchase agreement. Any amounts
remaining from this

25
<PAGE>

indemnity escrow account and not claimed by the buyer at the end of the one-year
escrow period plus interest earned on the escrowed funds will be returned to the
Venture and will be distributed to the Partnership and Fund 1-B.

(9) SUPPLEMENTARY PROFIT AND LOSS INFORMATION
-----------------------------------------

Supplementary profit and loss information for the respective years is
presented below:

<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------

1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Maintenance and repairs $ 60,185 $ 140,994 $ 186,433
========== ========== ==========

Taxes, other than income and payroll taxes $ 122,253 $ 459,969 $ 494,974
========== ========== ==========

Advertising $ 152,119 $ 219,240 $ 361,437
========== ========== ==========

Depreciation of property, plant and equipment $1,705,274 $3,458,105 $4,709,869
========== ========== ==========

Amortization of intangible assets $1,242,714 $1,956,326 $3,209,639
========== ========== ==========
</TABLE>

26
<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
---------------------------------------------------------
ACCOUNTING AND FINANCIAL DISCLOSURE
-----------------------------------

None.

PART III.
---------

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------------------------------

The Partnership itself has no officers or directors. Certain
information concerning the directors and executive officers of the General
Partner is set forth below. Directors of the General Partner serve until the
next annual meeting of the General Partner and until their successors shall be
elected and qualified.

<TABLE>
<S> <C> <C>
Glenn R. Jones 69 Chairman of the Board and Chief Executive Officer
James B. O'Brien 49 President and Director
Ruth E. Warren 49 Group Vice President/Operations
Kevin P. Coyle 47 Group Vice President/Finance
Cynthia A. Winning 47 Group Vice President/Marketing
Elizabeth M. Steele 47 Vice President/General Counsel/Secretary
Wayne H. Davis 45 Vice President/Engineering
Larry W. Kaschinske 39 Vice President/Controller
Robert E. Cole 66 Director
William E. Frenzel 70 Director
Josef J. Fridman 53 Director
Donald L. Jacobs 60 Director
Robert Kearney 62 Director
James J. Krejci 57 Director
Raphael M. Solot 65 Director
Howard O. Thrall 51 Director
Siim A. Vanaselja 42 Director
Sanford Zisman 59 Director
Robert B. Zoellick 45 Director
</TABLE>

Mr. Glenn R. Jones has served as Chairman of the Board of Directors and Chief
Executive Officer of the General Partner since its formation in 1970, and he was
President from June 1984 until April 1988. Mr. Jones is the sole shareholder,
President and Chairman of the Board of Directors of Jones International, Ltd.
He is also Chairman of the Board of Directors of the subsidiaries of the General
Partner and of certain other affiliates of the General Partner. Mr. Jones has
been involved in the cable television business in various capacities since 1961,
and he is a member of the Board of Directors and of the Executive Committee of
the National Cable Television Association. In addition, Mr. Jones is a member
of the Board and Education Council of the National Alliance of Business. Mr.
Jones is also a founding member of the James Madison Council of the Library of
Congress. Mr. Jones has been the recipient of several awards including: the
Grand Tam Award in 1989, the highest award from the Cable Television
Administration and Marketing Society; the President's Award from the Cable
Television Public Affairs Association in recognition of Jones International's
educational efforts through Mind Extension University (now Knowledge TV); the
Donald G. McGannon Award for the advancement of minorities and women in cable
from the United Church of Christ Office of Communications; the STAR Award from
American Women in Radio and Television, Inc. for exhibition of a commitment to
the issues and concerns of women in television and radio; the Cableforce 2000
Accolade awarded by Women in Cable in recognition of the General Partner's
innovative employee programs; the Most Outstanding Corporate Individual
Achievement Award from the International Distance Learning Conference for his
contributions to distance education; the Golden Plate Award from the American
Academy of Achievement for his advances in distance education; the Man of the
Year named

27
<PAGE>

by the Denver chapter of the Achievement Rewards for College Scientists; and in
1994 Mr. Jones was inducted into Broadcasting and Cable's Hall of Fame.

Mr. James B. O'Brien, the General Partner's President, joined the General
Partner in January 1982. Prior to being elected President and a director of the
General Partner in December 1989, Mr. O'Brien served as a division manager,
director of operations planning/assistant to the CEO, Fund Vice President and
Group Vice President/Operations. Mr. O'Brien was appointed to the General
Partner's Executive Committee in August 1993. As President, he is responsible
for the day-to-day operations of the cable television systems managed and owned
by the General Partner. Mr. O'Brien is a board member of Cable Labs, Inc., the
research arm of the U.S. cable television industry. He also serves as Chairman
of the Board of Directors of CTAM: The Marketing Society for the Cable
Telecommunications Industry and as an executive director of the Walter Kaitz
Foundation, a foundation that places people of ethnic minority groups in
positions with cable television systems, networks and vendor companies. Mr.
O'Brien's numerous industry recognitions include a CTAM Tami Award for marketing
excellence, a Women In Cable and Telecommunications Accolade Award recognizing
his leadership efforts on behalf of women in the telecommunications industry,
The President's Award for Leadership from the Illinois Cable and
Telecommunications Association and a Lifetime Achievement Award from The
National Association of Minorities in Communications. Additionally, Mr. O'Brien
is a member of The Society of UK Cable Pioneers.

Ms. Ruth E. Warren joined the General Partner in August 1980 and has served in
various operational capacities, including system marketing manager, director of
marketing, assistant division manager, regional vice president and Fund Vice
President, since then. Ms. Warren was elected Group Vice President/Operations
of the General Partner in September 1990. Ms. Warren is a past president of
Women in Cable & Telecommunications and past Chairman of the Women in Cable
Foundation. She serves as the Vice Chair of Five Points Media Center Board and
on the Corporate Advisory Board of Planned Parenthood of the Rocky Mountains and
the Advisory Board for Girls Count. In 1995, Ms. Warren received the Corporate
Business Woman of the Year Award from the Colorado Women's Chamber of Commerce,
and in 1998 Ms. Warren received the Vanguard Award for Distinguished Leadership
from the National Cable Television Association.

Mr. Kevin P. Coyle joined The Jones Group, Ltd. in July 1981 as Vice
President/Financial Services. In September 1985, he was appointed Senior Vice
President/Financial Services. He was elected Treasurer of the General Partner
in August 1987, Vice President/Treasurer in April 1988 and Group Vice
President/Finance and Chief Financial Officer in October 1990. From 1978 to
1981 Mr. Coyle was employed by American Television and Communications (now Time
Warner Cable), and from 1974 to 1978 he was an associate at Haskins & Sells (now
Deloitte & Touche LLP).

Ms. Cynthia A. Winning joined the General Partner as Group Vice
President/Marketing in December 1994. Previous to joining the General Partner,
Ms. Winning served since 1994 as the President of PRS Inc., Denver, Colorado, a
sports and event marketing company. From 1979 to 1981 and from 1986 to 1994,
Ms. Winning served as the Vice President and Director of Marketing for Citicorp
Retail Services, Inc., a provider of private-label credit cards for ten national
retail department store chains. From 1981 to 1986, Ms. Winning was the Director
of Marketing Services for Daniels & Associates cable television operations, as
well as the Western Division Marketing Director for Capital Cities Cable.

Ms. Elizabeth M. Steele joined the General Partner in August 1987 as Vice
President/General Counsel and Secretary. From August 1980 until joining the
General Partner, Ms. Steele was an associate and then a partner at the Denver
law firm of Davis, Graham & Stubbs, which serves as counsel to the General
Partner.

Mr. Wayne H. Davis joined the General Partner in August 1983 and has served in
various technical operations positions, including System Engineering Manager,
Fund Engineering Manager, Senior Director/Technical Operations, and Vice
President/Technical Operations since then. Mr. Davis was elected Vice
President/Engineering in June 1998. He is past Vice President of the Upstate
New York Chapter of the Society of Cable Telecommunications Engineers. Mr.
Davis has received certification from the Society of Cable Telecommunications
Engineers, Broadband Cable Telecommunications Engineering Program and the
National Cable Television Institute's Technology Program.

28
<PAGE>

Mr. Larry Kaschinske joined the General Partner in 1984 as a staff
accountant in the General Partner's former Wisconsin Division, was promoted to
Assistant Controller in 1990, named Controller in August 1994 and was elected
Vice President/Controller in June 1996.

Mr. Robert E. Cole was appointed a director of the General Partner in March
1996. Mr. Cole is currently self-employed as a partner of First Variable
Insurance Marketing and is responsible for marketing to National Association of
Securities Dealers, Inc. firms in northern California, Oregon, Washington and
Alaska. From 1993 to 1995, Mr. Cole was the Director of Marketing for Lamar
Life Insurance Company; from 1992 to 1993, Mr. Cole was Senior Vice President of
PMI Inc., a third party lender serving the special needs of Corporate Owned Life
Insurance (COLI) and from 1988 to 1992, Mr. Cole was the principal and co-
founder of a specialty investment banking firm that provided services to finance
the ownership and growth of emerging companies, productive assets and real
property. Mr. Cole is a Certified Financial Planner and a former United States
Naval Aviator.

Mr. William E. Frenzel was appointed a director of the General Partner in
April 1995. Mr. Frenzel has been a Guest Scholar since 1991 with the Brookings
Institution, a research organization located in Washington D.C. Until his
retirement in January 1991, Mr. Frenzel served for twenty years in the United
States House of Representatives, representing the State of Minnesota, where he
was a member of the House Ways and Means Committee and its Trade Subcommittee,
the Congressional Representative to the General Agreement on Tariffs and Trade
(GATT), the Ranking Minority Member on the House Budget Committee and a member
of the National Economic Commission. Mr. Frenzel also served in the Minnesota
Legislature for eight years. He is Vice Chairman of the Eurasia Foundation, a
Board Member of the U.S.-Japan Foundation, the Close-Up Foundation, Sit Mutual
Funds, Logistics Management Institute and Chairman of the Japan-America Society
of Washington.

Mr. Josef J. Fridman was appointed a director of the General Partner in
February 1998. Mr. Fridman is currently Chief Legal Officer of Bell Canada and
of BCE Inc., Canada's largest telecommunications company. Mr. Fridman joined
Bell Canada, a wholly owned subsidiary of BCE Inc., in 1969, and has held
increasingly senior positions with Bell Canada and BCE Inc. since such time.
Mr. Fridman has held his current position since March 1998. Mr. Fridman's
directorships include Alouette Telecommunications Inc., Telesat Canada, TMI
Communications, Inc., Telebec Itee, BCI Telecom Holding Inc. and BCE Corporate
Services Inc. He is a member of the Quebec Bar Association, the Canadian,
American and International Bar Associations and the Lord Reading Law Society.
Mr. Fridman is a governor of the Quebec Bar Foundation.

Mr. Donald L. Jacobs was appointed a director of the General Partner in
April 1995. Mr. Jacobs is a retired executive officer of TRW. Prior to his
retirement, he was Vice President and Deputy Manager of the Space and Defense
Sector; prior to that appointment, he was the Vice President and General Manager
of the Defense Systems Group and prior to his appointment as Group General
Manager, he was President of ESL, Inc., a wholly owned subsidiary of TRW.
During his career, Mr. Jacobs served on several corporate, professional and
civic boards.

Mr. Robert Kearney was appointed a director and a member of the Executive
Committee of the General Partner in July 1997. Mr. Kearney is a retired
executive officer of Bell Canada. Prior to his retirement in December 1993, Mr.
Kearney was the President and Chief Executive Officer of Bell Canada. He served
as Chairman of BCE Canadian Telecom Group in 1994 and as Deputy Chairman of BCI
Management Limited in 1995. He currently serves as a Director of MPACT, a
Canadian electronic commerce company. During his career, Mr. Kearney served in
a variety of capacities in the Canadian, American and International Standards
organizations, and he has served on several corporate, professional and civic
boards.

Mr. James J. Krejci is President and CEO of Comtect International, Inc., a
company in the specialized mobile radio services business, headquartered in
Denver, Colorado. Prior to joining Comtec International, Inc. in February 1998,
Mr. Krejci was President and CEO of Imagelink Technologies, Inc., headquartered
in Boulder, Colorado, from June 1996 to February 1998, and prior to that, he was
President of the International Division of

29
<PAGE>

International Gaming Technology, the world's largest gaming equipment
manufacturer, with headquarters in Reno, Nevada from May 1994 to February 1995.
Prior to joining IGT, Mr. Krejci was Group Vice President of Jones
International, Ltd. and was Group Vice President of the General Partner. He also
served as an officer of subsidiaries of Jones International, Ltd. until leaving
the General Partner in May 1994. Mr. Krejci has been a director of the General
Partner since August 1987.

Mr. Raphael M. Solot was appointed a director of the General Partner in
March 1996 and he was elected Vice Chairman of the Board of Directors in
November 1997. Mr. Solot is an attorney and has practiced law for 34 years with
an emphasis on franchise, corporate and partnership law and complex litigation.

Mr. Howard O. Thrall was appointed a director of the General Partner in
March 1996. Mr. Thrall had previously served as a Director of the General
Partner from December 1988 to December 1994. Mr. Thrall is a management and
international marketing consultant, having active assignments with First
National Net, Inc., LEP Technologies, Cheong Kang Associates (Korea), Aero
Investment Alliance, Inc. and Western Real Estate Partners, among others. From
September 1993 through July 1996, Mr. Thrall served as Vice President of Sales,
Asian Region, for World Airways, Inc. headquartered at the Washington Dulles
International Airport. From 1984 until August 1993, Mr. Thrall was with the
McDonnell Douglas Corporation, where he concluded as a Regional Vice President,
Commercial Marketing with the Douglas Aircraft Company subsidiary.

Mr. Siim A. Vanaselja was appointed a director of the General Partner in
August 1996. He is the Chief Financial Officer of BCI Telecom Holding Inc. Mr.
Vanaselja joined BCE Inc., Canada's largest telecommunications company, in
February 1994 as Assistant Vice-President, International Taxation. In June
1994, he was appointed Assistant Vice-President and Director of Taxation, and in
February 1995, Mr. Vanaselja was appointed Vice-President, Taxation. On August
1, 1996, Mr. Vanaselja was appointed the Executive Vice President and Chief
Financial Officer of Bell Canada International Inc., a subsidiary of BCE Inc.
Prior to joining BCE Inc. and since August 1989, Mr. Vanaselja was a partner in
the Toronto office of KPMG Peat Marwick Thorne. Mr. Vanaselja has been a member
of the Institute of Chartered Accountants of Ontario since 1982 and is a member
of the Canadian Tax Foundation, the Tax Executives Institute and the
International Fiscal Association.

Mr. Sanford Zisman was appointed a director of the General Partner in June
1996. Mr. Zisman is a principal in the law firm of Zisman & Ingraham, P.C. of
Denver, Colorado and he has practiced law for 33 years, specializing in the
areas of tax, business and estate planning and probate administration. Mr.
Zisman was a member of the Board of Directors of Saint Joseph Hospital, the
largest hospital in Colorado, from 1991 to 1997, serving at various times as
Chairman of the Board, Chairman of the Finance Committee and Chairman of the
Strategic Planning Committee. Since 1982, he has also served on the Board of
Directors of Maxim Series Fund, Inc., a subsidiary of Great-West Life Assurance
Company.

Mr. Robert B. Zoellick was appointed a director of the General Partner in
April 1995. Mr. Zoellick is the President and CEO of the Center for Strategic
and International Studies (CSIS), an independent, non-profit policy institution
with a staff of 180 people and a $17 million budget. He was the John M. Olin
Professor at the U.S. Naval Academy for the 1997-1998 term. From 1993 through
1997, he was Executive Vice President at Fannie Mae, a federally chartered and
stockholder-owned corporation that is the largest housing finance investor in
the United States. From August 1992 to January 1993, Mr. Zoellick served as
Deputy Chief of Staff of the White House and Assistant to the President. From
May 1991 to August 1992, Mr. Zoellick served concurrently as the Under Secretary
of State for Economic and Agricultural Affairs and as Counselor of the
Department of State, a post he assumed in March 1989. From 1985 to 1988, Mr.
Zoellick served at the Department of Treasury in a number of capacities,
including Counselor to the Secretary. Mr. Zoellick currently serves on the
boards of Alliance Capital and Said Holdings and the Advisory Council of Enron
Corp.

30
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION
--------------------------------

Neither the Partnership nor the Venture has any employees; however, various
personnel are required to operate the cable television systems owned by the
Venture. Such personnel are employed by the General Partner and, the cost of
such employment is charged by the General Partner to the Venture as a direct
reimbursement item. See Item 13.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGERS
----------------------------------------------------------------------

As of February 16, 1999, no person or entity owned more than 5 percent of
the limited partnership interests of the Partnership.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------

The General Partner and its affiliates have engaged in certain transactions
with the Venture. The General Partner believes that the terms of such
transactions are generally as favorable as could be obtained from unaffiliated
parties. This determination has been made by the General Partner in good faith,
but none of the terms were or will be negotiated at arm's-length and there can
be no assurance that the terms of such transactions have been or will be as
favorable as those that could have been obtained from unaffiliated parties.

Transactions with the General Partner

The General Partner manages the Venture and receives a fee for its services
equal to 5 percent of the gross revenues of the Venture, excluding revenues from
the sale of cable television systems or franchises.

The Venture reimburses the General Partner for certain allocated overhead
and administrative expenses. These expenses represent the salaries and benefits
paid to corporate personnel, rent, data processing services and other corporate
facilities costs. Such personnel provide engineering, marketing,
administrative, accounting, legal and investor relations services to the
Venture. Allocations of personnel costs are based primarily on actual time
spent by employees of the General Partner with respect to each partnership
managed. Remaining expenses are allocated based on the pro rata relationship of
the Venture's revenues to the total revenues of all systems owned or managed by
the General Partner and certain of its subsidiaries. Systems owned by the
General Partner and all other systems owned by partnerships for which Jones
Intercable, Inc. is the general partner are also allocated a proportionate share
of these expenses.

The General Partner from time to time has advanced funds to the Venture and
charged interest on the balance payable. The interest rate charged approximated
the General Partner's weighted average cost of borrowing.

Transactions with Affiliates

Jones International, Ltd. ("International"), a company owned by Glenn R.
Jones, and certain of its subsidiaries provide various services to the Venture,
including affiliation agreements for the distribution of programming owned by
affiliated companies on cable television systems owned by the Venture, as
described below.

Knowledge TV, Inc., a company jointly owned by Mr. Jones, affiliates of
International, the General Partner and BCI Telecom Holdings, Inc., a principal
shareholder of the General Operator, operates the television network Knowledge
TV. Knowledge TV provides programming related to computers and technology;
business, careers and finance; health and wellness; and global culture and
languages. Knowledge TV, Inc. sells its programming to the Myrtle Creek System.

31
<PAGE>

The Great American Country network provides country music video programming
to the cable television systems owned by the Venture. This network is owned and
operated by Great American Country, Inc., a subsidiary of Jones International
Networks, Ltd., an affiliate of the General Partner.

Jones Galactic Radio, Inc. is a subsidiary of Jones International Networks,
Ltd., an affiliate of the General Partner. Superaudio, a joint venture between
Jones Galactic Radio, Inc. and an unaffiliated entity, provides audio
programming to the Myrtle Creek System.

The Product Information Network Venture (the "PIN Venture") is a venture
among a subsidiary of Jones International Networks, Ltd., an affiliate of the
General Partner, and two unaffiliated cable system operators. The PIN Venture
operates the Product Information Network ("PIN"), which is a 24-hour network
that airs long-form advertising generally known as "infomercials." The PIN
Venture generally makes incentive payments of approximately 60 percent of its
net advertising revenue to the cable systems that carry its programming. The
Myrtle Creek System carries PIN for all or part of each day. Revenues received
by the Venture from the PIN Venture relating to the Myrtle Creek System totaled
approximately $28,497 for the year ended December 31, 1998.

The charges to the Venture for related party transactions are as follows
for the periods indicated:

<TABLE>
<CAPTION>
For the Year Ended December 31,
--------------------------------------------------------------------
1998 1997 1996
--------------------- ---------------------- ---------------------
<S> <C> <C> <C>
Management fees $427,936 $ 916,942 $1,231,213
Allocation of expenses 543,889 1,075,393 1,627,524
Interest expense 0 0 25,331
Amount of notes and advances outstanding 0 0 284,390
Highest amount of notes and advances outstanding 0 0 284,390
Programming fees:
Knowledge TV, Inc. 17,022 30,775 41,468
Great American Country 16,629 23,695 37,518
Superaudio 16,706 31,780 40,317
</TABLE>

32
<PAGE>

PART IV.
-------

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
-------------------------------------------------
AND REPORTS ON FORM 8-K
-----------------------

<TABLE>
<C> <S>
(a)1. See index to financial statements for a list of financial statements and exhibits thereto
filed as a part of this report.

3. The following exhibits are filed herewith:

4.1 Limited Partnership Agreement of Jones Cable Income Fund 1-B, Ltd. (1)

4.2 Joint Venture Agreement of Jones Cable Income Fund 1-B/C Venture. (1)

10.1.1 Copy of a franchise and related documents thereto granting a community antenna television
system franchise for the City of Canyonville, Oregon. (1)

10.1.2 Copy of resolution amending the franchise for the City of Canyonville, Oregon. (2)

10.1.3 Copy of a franchise and related documents thereto granting a community antenna television
system franchise for the City of Myrtle Creek, Oregon. (1)

10.1.4 Copy of a franchise and related documents thereto granting a community antenna television
system franchise for the City of Riddle, Oregon. (2)

10.1.5 Copy of a franchise and related documents thereto granting a community antenna television
system franchise for the City of Winston, Oregon. (1)

10.2.1 Amended and Restated Revolving Credit Agreement dated September 30, 1994 between Jones
Cable Income Fund 1-B/C Venture, Corestates Bank, N.A., First National Bank of Maryland,
Dresdner Bank AG and Continental Bank. (3)

10.2.2 Second Amended and Restated Revolving Credit Agreement dated May 7, 1997, among Corestates
Bank, N.A., for itself and as Agent, Dresdner Bank AG and PNC Bank, National Association
and Jones Cable Income Fund 1-B/C Venture. (5)

10.2.3 Revolving Credit and Term Loan Agreement dated as of January 19, 1995 between Jones Cable
Income Fund 1-B and Colorado National Bank. (3)

10.3.3 Asset Purchase Agreement dated September 17, 1997, between Jones Cable Income Fund 1-B/C
Venture and Mediacom California LLC. (4)

10.3.4 Asset Purchase Agreement dated as of January 30, 1998, between Tempo Cable, Inc. and Jones
Cable Income Fund 1-B/C Venture. (5)

10.3.5 Asset Purchase Agreement dated as of January 30, 1998, between TCI Cablevision of Texas,
Inc. and Jones Cable Income Fund 1-B/C Venture. (5)

10.3.6 Asset Purchase Agreement dated as of January 30, 1998, between Television Cable Service,
Inc. and Jones Cable Income Fund 1-B/C Venture. (5)

10.3.7 Asset Purchase Agreement dated as of June 24, 1998 between Jones Cable Income Fund 1-B/C
Venture and TelePartners L.L.C. (6)
</TABLE>
33
<PAGE>
<TABLE>
<C> <S>
10.3.8 Asset Purchase Agreement by and between Falcon Community Ventures I Limited Partnership and
Jones Cable Income Fund 1-B/C Venture dated as of September 9, 1998. (7)

27 Financial Data Schedule

(1) Incorporated by reference from Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1987 (Commission File No. 1-9953).

(2) Incorporated by reference from Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1992 (Commission File No. 1-9953).

(3) Incorporated by reference from Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1994 (Commission File No. 1-9953).

(4) Incorporated by reference from Registrant's Current Report on Form 8-K dated January 21,
1998 (Commission File No. 1-9953).

(5) Incorporated by reference from the Annual Report on Form 10-K for fiscal year ended
December 31, 1997 (Commission File No. 1-9953).

(6) Incorporated by reference from Registrant's Current Report on Form 8-K dated September 14,
1998 (Commission File No. 1-9953).

(7) Incorporated by reference from Registrant's Current Report on Form 8-K dated September 28,
1998 (Commission File No. 1-995).

(b) Reports on Form 8-K.

None.
</TABLE>

34
<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

JONES CABLE INCOME FUND 1-C, LTD.
a Colorado limited partnership
By: Jones Intercable, Inc.

By: /s/ Glenn R. Jones
------------------
Glenn R. Jones
Chairman of the Board and Chief
Dated: March 24, 1999 Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

By: /s/ Glenn R. Jones
------------------
Glenn R. Jones
Chairman of the Board and Chief
Executive Officer
Dated: March 24, 1999 (Principal Executive Officer)

By: /s/ Kevin P. Coyle
------------------
Kevin P. Coyle
Group Vice President/Finance
Dated: March 24, 1999 (Principal Financial Officer)

By: /s/ Larry Kaschinske
--------------------
Larry Kaschinske
Vice President/Controller
Dated: March 24, 1999 (Principal Accounting Officer)

By: /s/ James B. O'Brien
--------------------
James B. O'Brien
Dated: March 24, 1999 President and Director

By: /s/ Robert E. Cole
------------------
Robert E. Cole
Dated: March 24, 1999 Director

By: /s/ William E. Frenzel
----------------------
William E. Frenzel
Dated: March 24, 1999 Director

35
<PAGE>

By: /s/ Josef J. Fridman
--------------------
Josef J. Fridman
Dated: March 24, 1999 Director

By:
--------------------
Donald L. Jacobs
Dated: March 24, 1999 Director

By: /s/ Robert Kearney
------------------
Robert Kearney
Dated: March 24, 1999 Director

By: /s/ James J. Krejci
-------------------
James J. Krejci
Dated: March 24, 1999 Director

By: /s/ Raphael M. Solot
--------------------
Raphael M. Solot
Dated: March 24, 1999 Director

By: /s/ Howard O. Thrall
--------------------
Howard O. Thrall
Dated: March 24, 1999 Director

By: /s/ Siim A. Vanaselja
---------------------
Siim A. Vanaselja
Dated: March 24, 1999 Director

By: /s/ Sanford Zisman
------------------
Sanford Zisman
Dated: March 24, 1999 Director

By: /s/ Robert B. Zoellick
----------------------
Robert B. Zoellick
Dated: March 24, 1999 Director

<PAGE>

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 118,938
<SECURITIES> 0
<RECEIVABLES> 8,676
<ALLOWANCES> (2,507)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 5,763,293
<DEPRECIATION> (3,331,334)
<TOTAL-ASSETS> 3,843,550
<CURRENT-LIABILITIES> 1,319,441
<BONDS> 2,417,756
0
0
<COMMON> 0
<OTHER-SE> 106,353
<TOTAL-LIABILITY-AND-EQUITY> 3,843,550
<SALES> 0
<TOTAL-REVENUES> 8,558,726
<CGS> 0
<TOTAL-COSTS> 9,237,402
<OTHER-EXPENSES> (35,752,225)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 731,711
<INCOME-PRETAX> 20,684,089
<INCOME-TAX> 0
<INCOME-CONTINUING> 20,684,089
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,684,089
<EPS-PRIMARY> 243.10
<EPS-DILUTED> 243.10

</TABLE>