-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KbHzn65737/xy7iN9Hcxnwx7PjutOOr66pDeuTI5zpsudzdUWLrFsffTf5Yu4BhI LT5ZeheIXP0lp1+eAT4JPw== 0000927356-97-000848.txt : 19970804 0000927356-97-000848.hdr.sgml : 19970804 ACCESSION NUMBER: 0000927356-97-000848 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970801 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970801 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: JONES INTERCABLE INC CENTRAL INDEX KEY: 0000275605 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 840613514 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09953 FILM NUMBER: 97650030 BUSINESS ADDRESS: STREET 1: PO BOX 3309 CITY: ENGLEWOOD STATE: CO ZIP: 80155 BUSINESS PHONE: 3037923111 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): August 1, 1997 JONES INTERCABLE, INC. ---------------------- (Exact name of registrant as specified in its charter) Colorado 1-9953 84-0613514 -------- ------ ---------- (State of Organization) (Commission File No.) (IRS Employer Identification No.) P.O. Box 3309, Englewood, Colorado 80155-3309 (303) 792-3111 - ---------------------------------------------------- -------------- (Address of principal executive office and Zip Code) (Registrant's telephone no. including area code) Item 5. Other Events ------------ Jones Intercable, Inc. (the "Company") has previously reported that (ii) its subsidiary, Jones Communications of Missouri, Inc., has agreed to acquire the cable television system serving areas in and around Independence, Missouri (the "Independence System") from Jones Intercable Investors, L.P., one of the Company's managed limited partnerships, (ii) the Company has agreed to acquire the cable television system serving areas in and around Albuquerque, New Mexico (the "Albuquerque System") from Cable TV Fund 12-BCD Venture, a venture comprised of three Colorado limited partnerships that are managed by the Company, and (iii) the Company has agreed to sell the cable television system serving areas in and around Walnut Valley, California ("the "Walnut Valley System") to Century Communications Corp, an unaffiliated party. Historical financial statements of the Independence System and historical financial statements of the Albuquerque System, and pro forma financial statements of the Company reflecting, among other things, the proposed acquisitions of the Independence System and the Albuquerque System and the disposition of the Walnut Valley System are being filed as Exhibits herewith. 2 Item 7. Financial Statements and Exhibits --------------------------------- a. Historical Financial Statements of the Albuquerque System. Historical Financial Statements of the Independence System. b. Pro Forma Financial Statements of Jones Intercable, Inc. reflecting (i)(a) the purchase of the North Prince Georges County System on January 31, 1997 for $231,367,000, (b) the exchange of the Company's Colorado systems for the Annapolis System on April 15, 1997, (c) the purchase of the Manitowoc System on June 30, 1997 for a net purchase price of $11,556,000, (d) the sale of 25,017,385 ordinary shares of CWC in April and May 1997, and (e) the redemption of the 11.5% Debentures on July 15, 1997, (ii) the proposed sale of the Walnut Valley System for $33,493,000, (iii) the proposed purchase of the Independence System for $171,213,667, net of a $25,700,000 limited partnership distribution and a $4,280,000 brokerage fee and (iv) the proposed purchase of the Albuquerque System for $222,963,267, net of a general partner distribution of $8,100,000. c. Exhibits. 2.1 Purchase and Sale Agreement (Independence) dated as of February 28, 1997 between Jones Intercable Investors, L.P. and Jones Intercable, Inc. 2.2 Assignment and Assumption Agreement (Independence) dated as of April 15, 1997 between Jones Intercable, Inc. and Jones Communications of Missouri, Inc. 2.3 Purchase and Sale Agreement (Albuquerque) dated as of July 28, 1997 between Jones Intercable, Inc. and Cable TV Fund 12-BCD Venture. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. JONES INTERCABLE, INC., a Colorado corporation Dated: August 1, 1997 By: /s/ Elizabeth M. Steele ----------------------- Elizabeth M. Steele Vice President, General Counsel and Secretary 4 UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS On February 28, 1997, Jones Intercable, Inc. (the "Company"), through a wholly owned subsidiary, Jones Cable Holdings II. Inc, ("JCH II") entered into an asset purchase agreement to acquire from Jones Intercable Investors, L.P. (the "Partnership"), a Colorado limited partnership managed by the Company, the cable television systems serving communities in and around Independence, Missouri (the "Independence System") for a purchase price of $171,213,667, which represents the average of three independent appraisals of the fair market value of the Independence System. The Company anticipates that it will receive a limited partner distribution totaling approximately $25,700,000 from the sale by the Partnership of the Independence System because of the Company's equity interest in the Partnership. The closing of the purchase of the Independence System is expected to occur in the third quarter of 1997. The Partnership will pay The Jones Group, Ltd., a wholly owned subsidiary of the Company, a $4,280,000 brokerage fee in connection with this transaction. On July 28, 1997, the Company entered into an agreement with Cable TV Fund 12-BCD Venture (the "Venture"), a managed partnership, to purchase the cable television system serving areas in and around Albuquerque, New Mexico (the "Albuquerque System") for $222,963,267. Upon closing, subject to amending the Venture's current credit arrangements, the Company anticipates it will receive, from the three partnerships that comprise the Venture, general partner distributions totaling approximately $8,100,000. The closing of this transaction, which is expected in the first quarter of 1998, is subject to a number of conditions including the approval of the holders of a majority of the limited partnership interests of each of the managed partnerships that comprise the Venture and the consents of governmental authorities and other third parties. On August 16, 1996, the Company entered into an agreement with Century Communications Corp., an unaffiliated party, to sell the Company's cable television system serving areas in and around Walnut Valley, California ("the "Walnut Valley System") for $33,493,000, subject to closing adjustments. The agreement required that the sale of the system occur on or before June 30, 1997. However, this condition, among others, was not satisfied and therefore the agreement to sell the Walnut Valley System was amended to extend the closing date and the sale of the Walnut Valley System is now expected to occur on or before September 30, 1997. The Company will pay Jones Financial Group, Ltd. ("Financial Group"), a fee upon completion of any sale for acting as the Company's financial advisor in connection with this transaction. All fees paid to Financial Group by the Company are based upon 90% of the estimated commercial rate charged by unaffiliated financial advisors. The Unaudited Pro Forma Consolidated Balance Sheet reflects the purchase of the Independence System, the purchase of the Albuquerque System and the sale of the Walnut Valley System as if the transactions had occurred as of June 30, 1997. In addition, the Unaudited Pro Forma Consolidated Balance Sheet reflects the redemption of the Company's $160 million 11.5% Debentures as if it were completed on June 30, 1997. The Consolidated Statements of Operations for the year ended December 31, 1996 and the six months ended June 30, 1997 reflect (i) (a) the purchase of the North Prince Georges County System on January 31, 1997, (b) the exchange of the Company's Colorado systems for the Annapolis System on April 15, 1997, (c) the purchase of the Manitowoc System on June 30, 1997, (d) the sale of 25,017,385 ordinary shares of CWC in April and May 1997, and (e) the redemption of the 11.5% Debentures on July 15, 1997, (ii) the proposed sale of the Walnut Valley Systems, (iii) the proposed purchase of the Independence System and (iv) the proposed purchase of the Albuquerque System as if the transactions had occurred on the first day of the respective period presented. The capital required to complete the acquisitions of the Independence System and the Albuquerque System are expected to be provided by the Company's Credit Facilities. Proceeds from the sale of the Walnut Valley System are expected to be used to reduce amounts outstanding on the Company's Credit Facilities. The Unaudited Pro Forma Financial Statements should be read in conjunction with the Notes to Unaudited Pro Forma Financial Statements. The Unaudited Pro Forma Statement of Operations is based on historical data and may not be indicative of actual results obtained due to these transactions. 2 JONES INTERCABLE, INC. UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET June 30, 1997
As Redemption Purchase of Purchase of Sale of Pro Reported 0f 11.5% Independence Albuquerque Walnut Valley Forma 6/30/97 Debentures System System System System -------- ---------- -------- --------- --------- ---------- CASH AND CASH EQUIVALENTS $ 6,174 $ - $ 748 $ (714) $ (34) $ 6,174 RESTRICTED CASH 912 - - - - 912 RECEIVABLES 20,327 - 1,124 2,107 (303) 23,255 INVESTMENT IN CABLE TELEVISION PROPERTIES Property, plant and equipment, net 469,894 - 42,800 55,700 (7,836) 560,558 Franchise Costs and Other Intangibles, net 638,702 - 101,434 159,163 (3,247) 896,052 Investments in cable television partnerships and affiliates 28,424 - (3,000) - - 25,424 ---------- -------- -------- -------- -------- ---------- Total investment 1,137,020 - 141,234 214,863 (11,083) 1,482,034 DEFERRED TAX ASSET, NET 3,862 - - - - 3,862 DEPOSITS, PREPAIDS AND OTHER 85,390 (2,700) 422 1,881 (181) 84,812 ---------- -------- -------- -------- -------- ---------- TOTAL ASSETS $1,253,685 $ (2,700) $143,528 $218,137 $(11,601) $1,601,049 ========== ======== ======== ======== ======== ========== LIABILITIES AND SHAREHOLDERS' INVESTMENT LIABILITIES Accounts payable and accrued liabilities $ 113,205 $ - $ 2,179 $ 3,048 $ (266) $ 118,166 Subscriber prepayments and deposits 2,928 - 115 226 (252) 3,017 Subordinated debentures and other debt 712,178 (160,000) - - - 552,178 Credit Facilities 230,500 170,800 141,234 214,863 (33,493) 723,904 ---------- ---------- ------- -------- -------- ---------- Total liabilities 1,058,811 10,800 143,528 218,137 (34,011) 1,397,265 ---------- ---------- ------- -------- -------- ---------- SHAREHOLDERS' INVESTMENT Class A Common Stock 263 - - - - 263 Common Stock 51 - - - - 51 Additional Paid-in Capital 395,404 - - - - 395,404 Accumulated Deficit (200,844) (13,500) - - 22,410 (191,934) ---------- ---------- ------- -------- -------- ---------- Total shareholders' investment 194,874 (13,500) - - 22,410 203,784 ---------- ---------- ------- -------- -------- ---------- Total Liabilities and Shareholders' Investment $1,253,685 $ (2,700) $143,528 $218,137 $(11,601) $1,601,049 ========== ========== ======== ======== ======== ==========
The accompanying Notes to Unaudited Pro Forma Consolidated Financial Statements are an integral part of this balance sheet. 3 JONES INTERCABLE, INC. UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS For the six months ended June 30, 1997
As Sale of Purchase of Purchase of Pro Reported Other Walnut Valley Independence Albuquerque Forma 6/30/97 Adjustments System System System 6/30/97 ------- ----------- ------------ ----------- ------------- -------- REVENUES FROM CABLE TELEVISION OPERATIONS: Cable Television Revenue Subscriber service fees $ 158,312 $ 6,093 $ (3,864) $ 16,449 $ 24,191 $201,181 Management fees 9,035 - - (855) (1,313) 6,867 Distributions and brokerage fees 2,768 - - - - 2,768 Non-cable Revenue 4,321 - - - - 4,321 ---------- ---------- ---------- --------- --------- -------- TOTAL REVENUES 174,436 6,093 (3,864) 15,594 22,878 215,137 COSTS AND EXPENSES: Cable Television Expenses Operating expenses 82,746 3,414 (2,270) 8,410 12,529 104,829 General and administrative expenses 10,083 392 (93) 999 1,459 12,840 Non-cable operating, general and administrative 4,694 - - - - 4,694 Depreciation and amortization 70,433 2,528 (720) 7,061 10,743 90,045 ---------- ---------- ---------- --------- --------- -------- OPERATING INCOME 6,480 (241) (781) (876) (1,853) 2,729 OTHER INCOME (EXPENSE): Interest expense (43,703) (1,499) 1,088 (1,503) (6,983) (52,600) Equity in income (losses) of affiliated entities (2,753) - - - - (2,753) Interest income 803 - - - - 803 Gain on sale of assets 47,542 (44,563) - - - 2,979 Other, net (1,656) - - - - (1,656) ---------- ---------- ---------- --------- --------- -------- INCOME (LOSS) BEFORE INCOME TAXES AND EXTRAORDINARY ITEM 6,713 (46,303) 307 (2,379) (8,836) (50,498) Income tax provision - - - - - - ---------- ---------- ---------- --------- --------- -------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEM 6,713 (46,303) 307 (2,379) (8,836) (50,498) EXTRAORDINARY ITEM Loss on early extinguishment of debt, net of related income taxes - (13,500) - - - (13,500) ---------- ---------- ---------- --------- --------- -------- NET INCOME (LOSS) $ 6,713 $ (59,803) $ 307 $ (2,379) $ (8,836) $(63,998) ========== ========== ========== ========== ========= ========= Earnings (Loss) Per Share $ .21 $ (2.04) ========== =========
The accompanying Notes to Unaudited Pro Forma Consolidated Financial Statements are an integral part of this statement. 4 JONES INTERCABLE, INC. UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS For the year ended December 31, 1996
As Sale of Purchase of Purchase of Pro Reported Other Walnut Valley Independence Albuquerque Forma 12/31/96 Adjustments System System System 12/31/96 -------- ----------- ------ ------ ------ -------- REVENUES FROM CABLE TELEVISION OPERATIONS: Cable Television Revenue Subscriber service fees $ 248,626 $ 66,389 $ (7,230) $ 31,103 $ 45,592 $ 384,480 Distributions and brokerage fees 15,483 - - - - 15,483 Management fees 19,104 (457) - (1,614) (2,474) 14,559 Non-cable Revenue 28,497 (8,962) - - - 19,535 ---------- --------- --------- --------- ---------- --------- TOTAL REVENUES 311,710 56,970 (7,230) 29,489 43,118 434,057 COSTS AND EXPENSES: Cable Television Expenses Operating expenses 131,529 35,942 (4,313) 14,697 24,714 202,569 General and administrative expenses 16,586 3,033 (501) 2,152 3,268 24,538 Non-cable operating, general and administrative 28,410 (9,417) - - - 18,993 Depreciation and amortization 131,186 28,987 (1,399) 14,124 21,486 194,384 ---------- --------- --------- --------- ---------- --------- OPERATING INCOME 3,999 (1,575) (1,017) (1,484) (6,350) (6,427) OTHER INCOME (EXPENSE): Interest expense (67,782) (19,377) 2,177 (9,180) (13,966) (108,128) Equity in income (losses) of affiliated entities (3,473) - - - - (3,473) Interest income 3,758 - - - - 3,758 Gain on sale of assets - - - - - - Other, net 838 - - - - 838 ---------- --------- --------- --------- ---------- --------- INCOME (LOSS) BEFORE INCOME TAXES AND EXTRAORDINARY ITEM (62,660) (20,952) 1,160 (10,664) (20,316) (113,432) Income tax provision - - - - - - ---------- --------- --------- -------- --------- --------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (62,660) (20,952) 1,160 (10,664) (20,316) (113,432) ---------- --------- --------- -------- --------- -------- EXTRAORDINARY ITEM Loss on early extinguishment of debt, net of related income taxes - (13,500) - - - (13,500) ---------- --------- --------- -------- --------- -------- NET INCOME (LOSS) $ (62,660) $ (34,452) $ 1,160 $ (10,664) $ (20,316) $(126,932) ========== ========= ========= ========= ========= ======== Earnings (Loss) Per Share $ (2.00) $ (4.05) ========== ========
The accompanying Notes to Unaudited Pro Forma Consolidated Financial Statements are an integral part of this statement. 5 NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS (1) The Unaudited Pro Forma Consolidated Balance Sheet reflects the purchase of the Independence System, the purchase of the Albuquerque System and the sale of the Walnut Valley System as if the transactions had occurred as of June 30, 1997. In addition, the Unaudited Pro Forma Consolidated Balance Sheet reflects the redemption of the Company's 11.5% Debentures as if it were completed on June 30, 1997. The Consolidated Statements of Operations for the year ended December 31, 1996 and the six months ended June 30, 1997 reflect (i) (a) the purchase of the North Prince Georges County System on January 31, 1997, (b) the exchange of the Company's Colorado systems for the Annapolis System on April 15, 1997, (c) the purchase of the Manitowoc System on June 30, 1997, (d) the sale of 25,017,385 ordinary shares of CWC in April and May 1997, and (e) the redemption of the 11.5% Debentures on July 15, 1997, (ii) the proposed sale of the Walnut Valley Systems, (iii) the proposed purchase of the Independence System and (iv) the proposed purchase of the Albuquerque System as if the transactions had occurred as of the first day of the respective periods presented. (2) The basis for the Unaudited Pro Forma Consolidated Statement of Operations is the historical financials of the Company, the Independence System, the Albuquerque System and the Walnut Valley System. The depreciation and amortization of the acquired systems has been adjusted to reflect the Company's basis in the assets. Interest expense has been adjusted as a result of changes in debt balances due to the above transactions. In addition, management fee revenue has been reduced to reflect the sale of the partnership systems. 6 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ---------------------------------------- To Jones Intercable, Inc.: We have audited the accompanying statement of net assets to be acquired of the cable television system serving certain areas in and around Albuquerque, New Mexico (the "Albuquerque System") as of December 31, 1996, and the related statements of operations of net assets to be acquired and cash flows of net assets to be acquired for the year then ended. These financial statements are the responsibility of Jones Intercable, Inc.'s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit 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 audit provides a reasonable basis for our opinion. These statements have been prepared pursuant to the purchase and sale agreement described in Note 9 between Cable TV Fund 12-BCD Venture and Jones Intercable, Inc., dated July 28, 1997, and are not intended to be a complete presentation of the Albuquerque System's financial position and operations. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets to be acquired of the Albuquerque System as of December 31, 1996, and the results of its operations of net assets to be acquired and its cash flows of nets assets to be acquired for the year then ended, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Denver, Colorado July 28, 1997 THE CABLE TELEVISION SYSTEM SERVING ----------------------------------- ALBUQUERQUE, NEW MEXICO ----------------------- STATEMENT OF NET ASSETS TO BE ACQUIRED -------------------------------------- As of December 31, 1996 -----------------------
ASSETS - ------ CASH AND CASH EQUIVALENTS $ 228,652 RECEIVABLES: Trade receivables, less allowance for doubtful receivables of $231,149 at December 31, 1996 2,053,489 INVESTMENT IN CABLE TELEVISION PROPERTIES: Property, plant and equipment, at cost 131,410,347 Less - accumulated depreciation (64,590,244) ------------ 66,820,103 Franchise costs and other intangible assets, net of accumulated amortization of $42,878,338 at December 31, 1996 9,345,162 ------------ Total investment in cable television properties 76,165,265 DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 1,426,337 ------------ Total assets $ 79,873,743 ------------ LIABILITIES AND NET ASSETS TO BE ACQUIRED - ----------------------------------------- LIABILITIES: Debt $ 659,043 Trade accounts payable and accrued liabilities 2,522,545 Subscriber prepayments 225,813 ------------ Total liabilities 3,407,401 ------------ COMMITMENTS AND CONTINGENCIES (Note 7) NET ASSETS TO BE ACQUIRED $ 76,466,342 ============
The accompanying notes to financial statements are an integral part of this statement. THE CABLE TELEVISION SYSTEM SERVING ------------------------------------ ALBUQUERQUE, NEW MEXICO ----------------------- STATEMENT OF OPERATIONS OF NET ASSETS TO BE ACQUIRED ---------------------------------------------------- For the Year Ended December 31, 1996 ------------------------------------
REVENUES: $49,487,923 COSTS AND EXPENSES: Operating expenses 28,610,416 Management fees and allocated overhead from Jones Intercable, Inc. 5,742,479 Depreciation and amortization 12,571,577 ----------- OPERATING INCOME 2,563,451 ----------- OTHER INCOME (EXPENSE): Interest expense (69,046) Loss on sale of assets (58,389) Other, net (469,797) ----------- Total other income (expense), net (597,232) ----------- NET INCOME $ 1,966,219 ===========
The accompanying notes to financial statements are an integral part of this statement. THE CABLE TELEVISION SYSTEM SERVING ----------------------------------- ALBUQUERQUE, NEW MEXICO ----------------------- STATEMENT OF CASH FLOWS OF NET ASSETS TO BE ACQUIRED ---------------------------------------------------- For the Year Ended December 31, 1996 ------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,966,219 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 12,571,577 Decrease in trade receivables 198,085 Increase in deposits, prepaid expenses and deferred charges (961,075) Decrease in trade accounts payable and accrued liabilities and subscriber prepayments (19,697) ----------- Net cash provided by operating activities 13,755,109 ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment, net (12,562,807) ----------- Net cash used in investing activities (12,562,807) ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings 324,626 Repayment of debt (257,987) Decrease in advances from affiliates (1,265,900) ----------- Net cash used in financing activities (1,199,261) ----------- Decrease in cash and cash equivalents (6,959) Cash and cash equivalents, beginning of year 235,611 =========== Cash and cash equivalents, end of year $ 228,652 =========== SUPPLEMENTAL CASH FLOW DISCLOSURE: Interest paid $ 69,046 =========== The accompanying notes to financial statements are an integral part of this statement. THE CABLE TELEVISION SYSTEM SERVING ------------------------------------ ALBUQUERQUE, NEW MEXICO ----------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- (1) ORGANIZATION ------------ Formation and Business ---------------------- On March 17, 1986, Cable TV Fund 12-B, Ltd. ("Fund 12-B"), Cable TV Fund 12-C, Ltd. ("Fund 12-C") and Cable TV Fund 12-D, Ltd. ("Fund 12-D") formed Cable TV Fund 12-BCD Venture (the "Venture"). The Venture was formed for the purpose of acquiring certain cable television systems. At December 31, 1996, the Venture owned and operated the cable television systems serving certain areas in and around Albuquerque, New Mexico (the "Albuquerque System") and Palmdale, California (the "Palmdale System"). Jones Intercable, Inc. ("Intercable") manages the Albuquerque System and the Palmdale System on behalf of the Venture. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------ Basis of Presentation --------------------- These financial statements include only the activity of the Albuquerque System. All advances from affiliates and the credit facility used by the Venture to purchase and manage the assets of the Albuquerque System are recorded at the Venture level and are the liability of the Venture. Additionally, the related interest expense amounts have not been allocated to the Albuquerque System and remain on the books of the Venture. Since Intercable is only buying certain net assets (see Note 9) and is not assuming these debts, such amounts are not included herein. The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles. The preparation of financial statements in conformity with generally accepted accounting principles requires Intercable'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. Property, Plant and Equipment ----------------------------- Depreciation is provided using the straight-line method over the following estimated service lives: Cable distribution systems 5 - 15 years Equipment and tools 3 - 5 years Office furniture and equipment 5 years Buildings 20 years Vehicles 3 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. Intangible Assets ----------------- Costs assigned to franchises 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 - 4 years Costs in excess of interests in net assets purchased 29 - 30 years Revenue Recognition ------------------- Subscriber prepayments are initially deferred and recognized as revenue when earned. Cash and Cash Equivalents ------------------------- For purposes of the Statement of Cash Flows, the Albuquerque System considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. (3) TRANSACTIONS WITH INTERCABLE AND AFFILIATES ------------------------------------------- Management Fees and Reimbursements ---------------------------------- Intercable manages the Albuquerque System and receives a fee for its services equal to 5 percent of the gross revenues of the Albuquerque System, excluding revenues from the sale of cable television systems or franchises. Management fees paid to Intercable by the Albuquerque System totaled $2,474,396 in 1996. The Albuquerque System reimburses Intercable 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 Albuquerque System. Such services, and their related costs, are necessary to the operation of the Albuquerque System and would have been incurred by the Albuquerque System if it was a stand alone entity. Allocations of personnel costs are based primarily on actual time spent by employees of Intercable with respect to each entity managed. Remaining expenses are allocated based on the pro rata relationship of the Albuquerque System's revenues to the total revenues of all systems owned or managed by Intercable and certain of its subsidiaries. Systems owned by Intercable and all other systems owned by partnerships for which Intercable is the general partner are also allocated a proportionate share of these expenses. Intercable believes that the methodology used in allocating overhead and administrative expenses is reasonable. Overhead and administrative expenses allocated to the Albuquerque System by Intercable totaled $3,268,083 in 1996. Payments to/from Affiliates for Programming Services ---------------------------------------------------- The Albuquerque System receives programming from Superaudio, Jones Education Company, Great American Country, Inc. and Product Information Network, all of which are affiliates of Intercable. Payments to Superaudio totaled $70,656 in 1996. Payments to Jones Education Company totaled $76,165 in 1996. Payments to Great American Country, Inc., which initiated service in 1996, totaled $99,279. The Albuquerque System receives a commission from Product Information Network based on a percentage of advertising sales and number of subscribers. Product Information Network paid commissions to the Albuquerque System totaling $108,893 in 1996. (4) PROPERTY, PLANT AND EQUIPMENT ----------------------------- Property, plant and equipment as of December 31, 1996 consisted of the following: Cable distribution system $124,435,510 Equipment and tools 2,607,213 Office furniture and equipment 1,677,148 Buildings 695,488 Vehicles 1,543,413 Land 451,575 ------------ 131,410,347 Less-accumulated depreciation (64,590,244) ------------ $ 66,820,103 ============ (5) DEBT ---- Debt as of December 31, 1996 consists of the following: Capital lease obligations $ 659,043 ============ Estimated maturities of the capital lease obligations for the five years in the period ended December 31, 2001 and thereafter are $197,713, $197,713, $197,713, $65,904, $ -0- and $ -0-. At December 31, 1996, the carrying amount of the Albuquerque System's long- term debt did not differ significantly from the estimated fair value of the financial instruments. The fair value of the Albuquerque System'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. (6) INCOME TAXES ------------ Income taxes have not been recorded in the accompanying financial statements because they accrue directly to the partners of Fund 12-B, Fund 12-C, and Fund 12-D. The federal and state income tax returns of Fund 12-B, Fund 12- C, and Fund 12-D are prepared and filed by Intercable. (7) COMMITMENTS AND CONTINGENCIES ----------------------------- Office and other facilities are rented under various long-term lease arrangements. Rent paid under such lease arrangements totaled $364,508, for the year ended December 31, 1996. Minimum commitments under operating leases for the five years in the period ending December 31, 2001 and thereafter are as follows: 1997 $ 518,179 1998 530,724 1999 395,715 2000 345,715 2001 345,046 Thereafter 911,200 ---------- $ 3,046,579 ========== (8) SUPPLEMENTARY PROFIT AND LOSS INFORMATION ----------------------------------------- Supplementary profit and loss information for the year ended December 31, 1996 is presented below: Maintenance and repairs $ 747,264 ========== Taxes, other than income and payroll taxes $ 376,950 ========== Advertising $ 1,051,130 ========== Depreciation of property, plant and equipment $ 10,073,381 ========== Amortization of intangible assets $ 2,498,196 ========== (9) SUBSEQUENT EVENT ---------------- On July 28, 1997, the Venture entered into purchase and sale agreement to sell the Albuquerque System to Intercable for a sales price of $222,963,267, subject to customary closing adjustments. CABLE TELEVISION SYSTEM SERVING ------------------------------- ALBUQUERQUE, NEW MEXICO ----------------------- UNAUDITED STATEMENT OF NET ASSETS TO BE ACQUIRED ------------------------------------------------ As of June 30, 1997 -------------------
ASSETS - ------ CASH AND CASH EQUIVALENTS $ 217,486 RECEIVABLES: Trade receivables, less allowance for doubtful receivables of $311,865 at June 30, 1997 2,107,358 INVESTMENT IN CABLE TELEVISION PROPERTIES: Property, plant and equipment, at cost 136,992,831 Less - accumulated depreciation (70,009,608) ------------ 66,983,223 Franchise costs and other intangible assets, net of accumulated amortization of $44,127,435 at June 30, 1997 8,096,065 ------------ Total investment in cable television properties 75,079,288 DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 1,881,434 ------------ Total assets $ 79,285,566 ------------ LIABILITIES AND NET ASSETS TO BE ACQUIRED - ----------------------------------------- LIABILITIES: Debt $ 702,176 Trade accounts payable and accrued liabilities 2,346,470 Subscriber prepayments 226,168 ------------ Total liabilities 3,274,814 ------------ NET ASSETS TO BE ACQUIRED $ 76,010,752 ============
The accompanying unaudited notes to financial statements are an integral part of this unaudited statement. THE CABLE TELEVISION SYSTEM SERVING ------------------------------------ ALBUQUERQUE, NEW MEXICO ----------------------- UNAUDITED STATEMENT OF OPERATIONS OF NET ASSETS TO BE ACQUIRED -------------------------------------------------------------- For the Six Months Ended June 30, 1997 -------------------------------------- REVENUES: $26,253,572 COSTS AND EXPENSES: Operating expenses 14,688,611 Management fees and allocated overhead from Jones Intercable, Inc. 2,772,113 Depreciation and amortization 6,784,799 ----------- OPERATING INCOME 2,008,049 ----------- OTHER INCOME (EXPENSE): Interest expense (48,171) Other, net 13,523 ----------- Total other income (expense), net (34,648) ----------- NET INCOME $ 1,973,401 =========== The accompanying notes to unaudited financial statements are an integral part of this unaudited statement. THE CABLE TELEVISION SYSTEM SERVING ----------------------------------- ALBUQUERQUE, NEW MEXICO ----------------------- UNAUDITED STATEMENT OF CASH FLOW OF NET ASSETS TO BE ACQUIRED ------------------------------------------------------------- For the Six Months Ended June 30, 1997 -------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,973,401 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,784,799 Increase in trade receivables (53,869) Increase in deposits, prepaid expenses and deferred charges (9,105) Decrease in trade accounts payable and accrued liabilities and subscriber prepayments (175,720) ----------- Net cash provided by operating activities 8,519,506 ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment, net (5,582,484) ----------- Net cash used in investing activities (5,582,484) ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings 186,527 Repayment of debt (143,394) Decrease in advances from affiliates (2,991,321) ----------- Net cash used in financing activities (2,948,188) ----------- Decrease in cash and cash equivalents (11,166) Cash and cash equivalents, beginning of period 228,652 ----------- Cash and cash equivalents, end of period $ 217,486 =========== SUPPLEMENTAL CASH FLOW DISCLOSURE: Interest paid $ 48,171 =========== The accompanying notes to unaudited financial statements are an integral part of this unaudited statement. ALBUQUERQUE, NEW MEXICO ----------------------- UNAUDITED NOTES TO FINANCIAL STATEMENTS --------------------------------------- (1) ORGANIZATION ------------ Formation and Business ---------------------- On March 17, 1986, Cable TV Fund 12-B, Ltd. ("Fund 12-B"), Cable TV Fund 12-C, Ltd. ("Fund 12-C") and Cable TV Fund 12-D, Ltd. ("Fund 12-D") formed Cable TV Fund 12-BCD Venture (the "Venture"). The Venture was formed for the purpose of acquiring certain cable television systems. At June 30, 1997, the Venture owned and operated the cable television systems serving certain areas in and around Albuquerque, New Mexico (the "Albuquerque System") and Palmdale, California (the "Palmdale System"). Jones Intercable, Inc. ("Intercable") manages the Albuquerque System and Palmdale System on behalf of the Venture. On July 28, 1997, the Venture entered into an asset purchase agreement to sell the Albuquerque System to Intercable for a sales price of $222,963,267, subject to customary closing adjustments. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------ Basis of Presentation --------------------- These financial statements include only the activity of the Albuquerque System. All advances from affiliates and the credit facility used by the Venture to purchase and manage the assets of the Albuquerque System are recorded at the Venture level and are the liability of the Venture. Additionally, the related interest expense amounts have not been allocated to the Albuquerque System and remain on the books of the Venture. Since Intercable is only buying certain net assets and is not assuming these debts, such amounts are not included herein. The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles. The preparation of financial statements in conformity with generally accepted accounting principles requires Intercable'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. Property, Plant and Equipment ----------------------------- Depreciation is provided using the straight-line method over the following estimated service lives: Cable distribution systems 5 - 15 years Equipment and tools 3 - 5 years Office furniture and equipment 5 years Buildings 20 years Vehicles 3 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. Intangible Assets ----------------- Costs assigned to franchises 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 - 4 years Costs in excess of interests in net assets purchased 29 - 30 years Revenue Recognition ------------------- Subscriber prepayments are initially deferred and recognized as revenue when earned. Cash and Cash Equivalents ------------------------- For purposes of the Statement of Cash Flows, the Albuquerque System considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. (3) TRANSACTIONS WITH INTERCABLE AND AFFILIATES ------------------------------------------- Management Fees and Reimbursements ---------------------------------- Intercable manages the Albuquerque System and receives a fee for its services equal to 5 percent of the gross revenues of the Albuquerque System, excluding revenues from the sale of cable television systems or franchises. Management fees paid to Intercable by the Albuquerque System totaled $1,312,679 for the six months ended June 30, 1997. The Albuquerque System reimburses Intercable 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 Albuquerque System. Such services, and their related costs, are necessary to the operation of the Albuquerque System and would have been incurred by the Albuquerque System if it was a stand alone entity. Allocations of personnel costs are based primarily on actual time spent by employees of Intercable with respect to each entity managed. Remaining expenses are allocated based on the pro rata relationship of the Albuquerque System's revenues to the total revenues of all systems owned or managed by Intercable and certain of its subsidiaries. Systems owned by Intercable and all other systems owned by partnerships for which Intercable is the general partner are also allocated a proportionate share of these expenses. Intercable believes that the methodology used in allocating overhead and administrative expenses is reasonable. Overhead and administrative expenses allocated to the Albuquerque System by Intercable totaled $1,459,434 for the six months ended June 30, 1997. Payments to/from Affiliates for Programming Services ---------------------------------------------------- The Albuquerque System receives programming from Superaudio, Jones Education Company, Great American Country, Inc. and Product Information Network, all of which are affiliates of Intercable. Payments to Superaudio, Jones Education Company and Great American Country, Inc., totaled $40,111, $40,231 and $51,916, respectively, for the six month period ended June 30, 1997. The Albuquerque System receives a commission from Product Information Network based on a percentage of advertising sales and number of subscribers. Product Information Network commission paid to the Albuquerque System totaled $56,789 for the six month period ended June 30, 1997. (4) PROPERTY, PLANT AND EQUIPMENT ----------------------------- Property, plant and equipment as of June 30, 1997 consisted of the following: Cable distribution system $ 129,492,724 Equipment and tools 2,700,984 Office furniture and equipment 1,791,455 Buildings 695,488 Vehicles 1,860,605 Land 451,575 ----------- 136,992,831 Less-accumulated depreciation (70,009,677) ----------- $ 66,983,223 =========== (5) DEBT ---- Debt as of June 30, 1997 consists of the following: Capital lease obligations $ 702,176 =========== At June 30, 1997, the carrying amount of the Albuquerque System's long-term debt did not differ significantly from the estimated fair value of the financial instruments. The fair value of the Albuquerque System'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. (6) INCOME TAXES ------------ Income taxes have not been recorded in the accompanying financial statements because they accrue directly to the partners of Fund 12-B, Fund 12-C, and Fund 12-D. The federal and state income tax returns of Fund 12-B, Fund 12- C, and Fund 12-D are prepared and filed by Intercable. JONES INTERCABLE INVESTORS, L.P. -------------------------------- (A Limited Partnership) UNAUDITED BALANCE SHEETS ------------------------
June 30, December 31, ASSETS 1997 1996 ------ ------------- ------------ CASH $ 451,992 $ 616,013 TRADE RECEIVABLES, less allowance for doubtful receivables of $49,782 and $116,097 at June 30, 1997 and December 31, 1996, respectively 1,123,814 1,309,354 INVESTMENT IN CABLE TELEVISION PROPERTIES: Property, plant and equipment, at cost 83,357,843 76,071,150 Less- accumulated depreciation (37,259,292) (34,144,942) ------------ ------------ 46,098,551 41,926,208 Franchise costs and other intangible assets, net of accumulated amortization of $44,428,718 and $42,711,158 at June 30, 1997 and December 31, 1996, respectively 3,672,592 5,390,152 ------------ ------------ Total investment in cable television properties 49,771,143 47,316,360 DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 487,450 308,253 ------------ ------------ Total assets $ 51,834,399 $ 49,549,980 ============ ============
The accompanying notes to unaudited financial statements are an integral part of these unaudited balance sheets. JONES INTERCABLE INVESTORS, L.P. -------------------------------- (A Limited Partnership) UNAUDITED BALANCE SHEETS ------------------------
June 30, December 31, LIABILITIES AND PARTNERS' CAPITAL 1997 1996 --------------------------------- ------------- ------------- LIABILITIES: Credit facility $ 35,000,000 $ 30,700,000 Capital lease obligations 299,794 296,647 Accrued distributions to Class A Unitholders 1,248,395 1,248,395 Accounts payable and accrued liabilities 1,878,800 2,637,438 Subscriber prepayments 114,809 114,398 ------------- ------------- Total liabilities 38,541,798 34,996,878 ------------- ------------- PARTNERS' CAPITAL: General Partner- Contributed capital 1,000 1,000 Accumulated earnings 20,083 7,720 ------------- ------------- 21,083 8,720 ------------- ------------- Class A Unitholders- Net contributed capital (8,322,632 units outstanding at June 30, 1997 and December 31, 1996) 116,433,492 116,433,492 Accumulated earnings 1,988,178 764,252 Distributions to Unitholders (105,150,152) (102,653,362) ------------- ------------- 13,271,518 14,544,382 ------------- ------------- Total liabilities and partners' capital $ 51,834,399 $ 49,549,980 ============= =============
The accompanying notes to unaudited financial statements are an integral part of these unaudited balance sheets. JONES INTERCABLE INVESTORS, L. P. --------------------------------- (A Limited Partnership) UNAUDITED STATEMENTS OF OPERATIONS ----------------------------------
For the Three Months Ended For the Six Months Ended June 30, June 30, ------------------------- ------------------------- 1997 1996 1997 1996 ---------- ---------- ----------- ----------- REVENUES $8,869,548 $8,038,701 $17,108,914 $15,816,318 COSTS AND EXPENSES: Operating expenses 4,363,463 3,867,859 8,410,150 7,821,206 Management fees and allocated overhead from General Partner 909,435 951,561 1,884,383 1,867,130 Depreciation and amortization 2,512,231 2,107,401 4,921,784 4,214,832 ---------- ---------- ----------- ----------- OPERATING INCOME 1,084,419 1,111,880 1,892,597 1,913,150 ---------- ---------- ----------- ----------- OTHER INCOME (EXPENSE): Interest expense (613,878) (494,686) (1,173,596) (1,023,954) Other, net (89,077) 109,626 517,288 5,511 ---------- ---------- ----------- ----------- Total other income (expense), net (702,955) (385,060) (656,308) (1,018,443) ---------- ---------- ----------- ----------- NET INCOME $ 381,464 $ 726,820 $ 1,236,289 $ 894,707 ========== ========== =========== =========== ALLOCATION OF NET INCOME: General Partner $ 3,815 $ 7,268 $ 12,363 $ 8,947 ========== ========== =========== =========== Class A Unitholders $ 377,649 $ 719,552 $ 1,223,926 $ 885,760 ========== ========== =========== =========== NET INCOME PER CLASS A UNIT $.05 $.09 $.15 $.11 ========== ========== =========== =========== WEIGHTED AVERAGE NUMBER OF CLASS A UNITS OUTSTANDING 8,322,632 8,322,632 8,322,632 8,322,632 ========== ========== =========== ===========
The accompanying notes to unaudited financial statements are an integral part of these unaudited statements. JONES INTERCABLE INVESTORS, L. P. --------------------------------- (A Limited Partnership) UNAUDITED STATEMENTS OF CASH FLOWS ----------------------------------
For the Six Months Ended June 30, -------------------------- 1997 1996 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,236,289 $ 894,707 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,921,784 4,214,832 Decrease in trade receivables 185,540 419,039 Increase in deposits, prepaid expenses and deferred charges (269,071) (104,980) Decrease in accounts payable, accrued liabilities and subscriber prepayments (758,227) (953,259) ----------- ----------- Net cash provided by operating activities 5,316,315 4,470,339 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (7,286,693) (3,121,053) ----------- ----------- Net cash used in investing activities (7,286,693) (3,121,053) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings 4,393,012 1,800,000 Repayment of debt (89,865) (133,171) Distributions to unitholders (2,496,790) (2,496,790) ----------- ----------- Net cash provided by (used in) financing activities 1,806,357 (829,961) ----------- ----------- Increase (decrease) in cash (164,021) 519,325 Cash, beginning of period 616,013 91,518 ----------- ----------- Cash, end of period $ 451,992 $ 610,843 =========== =========== SUPPLEMENTAL CASH FLOW DISCLOSURE: Interest paid $ 1,104,216 $ 948,728 =========== ===========
The accompanying notes to unaudited financial statements are an integral part of these unaudited statements. JONES INTERCABLE INVESTORS, L.P. -------------------------------- (A Limited Partnership) NOTES TO UNAUDITED FINANCIAL STATEMENTS --------------------------------------- (1) This Form 10-Q is being filed in conformity with the SEC requirements for unaudited financial statements and does not contain all of the necessary footnote disclosures required for a fair presentation of the Balance Sheets and Statements of Operations and Cash Flows in conformity with generally accepted accounting principles. However, in the opinion of management, this data includes all adjustments, consisting only of normal recurring accruals, necessary to present fairly the financial position of Jones Intercable Investors, L.P. (the "Partnership") at June 30, 1997 and December 31, 1996, its Statements of Operations for the three and six month periods ended June 30, 1997 and 1996 and its Statements of Cash Flows for the six month periods ended June 30, 1997 and 1996. Results of operations for these periods are not necessarily indicative of results to be expected for the full year. The Partnership owns and operates the cable television system serving areas in and around Independence, Missouri (the "Independence System"). Jones Intercable, Inc. ("Intercable"), a publicly held Colorado corporation, is the "General Partner." (2) On February 28, 1997, the Partnership entered into an asset purchase agreement to sell the Independence System to Jones Cable Holdings II, Inc., a wholly owned subsidiary of the General Partner, for a sales price of $171,213,667, which represents the average of three independent appraisals of the fair market value of the Independence System. Upon the closing of the sale of the Independence System, the Partnership will repay the then-outstanding balance on its credit facility, pay a brokerage fee of $4,280,342 to The Jones Group, Ltd., a subsidiary of the General Partner, and then the Partnership will distribute the net proceeds to the Class A Unitholders. Such distribution is expected to be approximately $16.12 for each Class A Unit held. Because this distribution plus previous distributions made to Class A Unitholders will not equal the preferred return to the limited partners set forth in the Partnership Agreement, there will be no general partner distribution related to this transaction; however, the General Partner will receive a distribution as a Class A Unitholder. The Independence System is the Partnership's only remaining asset. Upon the successful completion of the sale of the Independence System, the Partnership will be liquidated and dissolved. The closing of this sale is expected to occur in the second half of 1997. (3) Intercable manages the Partnership and receives a fee for its services equal to 5 percent of the gross revenues of the Partnership, excluding revenues from the sale of cable television systems or franchises. Management fees for the three and six month periods ended June 30, 1997 were $443,477 and $855,446, respectively, compared to $401,935 and $790,816, respectively, for the similar 1996 periods. The Partnership 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 facilities costs. Such personnel provide engineering, marketing, administrative, accounting, legal and investor relations services to the Partnership. Such services, and their related costs, are necessary to the operation of the Partnership and would have been incurred by the Partnership, 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 partnership managed. Remaining expenses are allocated based on the pro rata relationship of the Partnership'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 used in allocating overhead and administrative expenses is reasonable. Amounts charged the Partnership by the General Partner for allocated overhead and administrative expenses for the three and six month periods ended June 30, 1997 were $465,958 and $1,028,937, respectively, compared to $549,626 and $1,076,314, respectively, for the similar 1996 periods. (4) Certain prior year amounts have been reclassified to conform to the 1997 presentation. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ---------------------------------------- To the Partners of Jones Intercable Investors, L.P.: We have audited the accompanying balance sheets of JONES INTERCABLE INVESTORS, L.P. (a Colorado limited partnership) as of December 31, 1996 and 1995, and the related statements of operations, partners' capital (deficit) and cash flows for each of the three years in the period ended December 31, 1996. 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 Intercable Investors, L.P. as of December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Denver, Colorado, March 7, 1997. JONES INTERCABLE INVESTORS, L.P. -------------------------------- (A Limited Partnership) BALANCE SHEETS --------------
December 31, --------------------------- ASSETS (Note 1) 1996 1995 ------ ------------ ------------ CASH $ 616,013 $ 91,518 TRADE RECEIVABLES, less allowance for doubtful receivables of $116,097 and $82,938 at December 31, 1996 and 1995, respectively 1,309,354 1,378,312 INVESTMENT IN CABLE TELEVISION PROPERTIES: Property, plant and equipment, at cost 76,071,150 67,139,530 Less- accumulated depreciation (34,144,942) (29,510,807) ------------ ------------ 41,926,208 37,628,723 Franchise costs and other intangible assets, net of accumulated amortization of $42,711,158 and $39,276,038 at December 31, 1996 and 1995, respectively 5,390,152 8,825,272 ------------ ------------ Total investment in cable television properties 47,316,360 46,453,995 DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 308,253 151,688 ------------ ------------ Total assets $ 49,549,980 $ 48,075,513 ============ ============
The accompanying notes to financial statements are an integral part of these balance sheets. JONES INTERCABLE INVESTORS, L.P. -------------------------------- (A Limited Partnership) BALANCE SHEETS --------------
December 31, ---------------------------- LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1996 1995 ------------------------------------------- ------------- ------------ LIABILITIES: Credit facility $ 30,700,000 $ 26,450,000 Capital lease obligations 296,647 311,696 Accrued distributions to Class A Unitholders 1,248,395 1,248,395 Accounts payable and accrued liabilities 2,637,438 2,146,992 Subscriber prepayments 114,398 118,157 ------------- ------------ Total liabilities 34,996,878 30,275,240 ------------- ------------ COMMITMENTS AND CONTINGENCIES (Note 8) PARTNERS' CAPITAL (DEFICIT): General Partner- Contributed capital 1,000 1,000 Accumulated earnings (deficit) 7,720 (9,744) ------------- ------------ 8,720 (8,744) ------------- ------------ Class A Unitholders- Net contributed capital (8,322,632 units outstanding at December 31, 1996 and 1995) 116,433,492 116,433,492 Accumulated earnings (deficit) 764,252 (964,692) Distributions to Unitholders (102,653,362) (97,659,783) ------------- ------------ 14,544,382 17,809,017 ------------- ------------ Total liabilities and partners' capital (deficit) $ 49,549,980 $ 48,075,513 ============= ============
The accompanying notes to financial statements are an integral part of these balance sheets. JONES INTERCABLE INVESTORS, L.P. -------------------------------- (A Limited Partnership) STATEMENTS OF OPERATIONS ------------------------
For the Year Ended December 31, ---------------------------------------- 1996 1995 1994 ------------ ------------ ------------ REVENUES $32,281,131 $29,865,310 $27,522,625 COSTS AND EXPENSES: Operating expenses 15,875,256 15,044,764 13,757,025 Management fees and allocated overhead from General Partner 3,766,038 3,631,737 3,450,694 Depreciation and amortization 8,668,624 7,881,118 8,351,439 ----------- ----------- ----------- OPERATING INCOME 3,971,213 3,307,691 1,963,467 ----------- ----------- ----------- OTHER INCOME (EXPENSE): Interest expense (2,075,840) (1,926,459) (1,289,491) Interest income 6,175 6,274 7,899 Other, net (155,140) (593,075) (103,819) ----------- ----------- ----------- Total other income (expense), net (2,224,805) (2,513,260) (1,385,411) ----------- ----------- ----------- NET INCOME $ 1,746,408 $ 794,431 $ 578,056 =========== =========== =========== ALLOCATION OF NET INCOME: General Partner $ 17,464 $ 7,944 $ 5,781 =========== =========== =========== Class A Unitholders $ 1,728,944 $ 786,487 $ 572,275 =========== =========== =========== NET INCOME PER CLASS A UNIT $ .21 $ .09 $ .07 =========== =========== =========== WEIGHTED AVERAGE NUMBER OF CLASS A UNITS OUTSTANDING 8,322,632 8,322,632 8,322,632 =========== =========== ===========
The accompanying notes to financial statements are an integral part of these statements. JONES INTERCABLE INVESTORS, L.P. -------------------------------- (A Limited Partnership) STATEMENTS OF PARTNERS' CAPITAL (DEFICIT) -----------------------------------------
For the Year Ended December 31, ---------------------------------------- 1996 1995 1994 ------------ ------------ ------------ General Partner: Balance, beginning of year $ (8,744) $ (16,688) $ (22,469) Net income for year 17,464 7,944 5,781 ----------- ----------- ----------- Balance, end of year $ 8,720 $ (8,744) $ (16,688) =========== =========== =========== Class A Unitholders: Balance, beginning of year $17,809,017 $22,016,109 $26,437,414 Net income for year 1,728,944 786,487 572,275 Distributions to Unitholders (4,993,579) (4,993,579) (4,993,580) ----------- ----------- ----------- Balance, end of year $14,544,382 $17,809,017 $22,016,109 =========== =========== ===========
The accompanying notes to financial statements are an integral part of these statements. JONES INTERCABLE INVESTORS, L.P. -------------------------------- (A Limited Partnership) STATEMENTS OF CASH FLOWS ------------------------
For the Year Ended December 31, ---------------------------------------- 1996 1995 1994 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,746,408 $ 794,431 $ 578,056 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 8,668,624 7,881,118 8,351,439 Decrease (increase) in trade receivables 68,958 (636,997) 13,003 Increase in deposits, prepaid expenses and deferred charges (242,293) (153,990) (66,526) Increase in accounts payable and accrued liabilities and subscriber prepayments 486,687 448,988 345,542 ----------- ----------- ----------- Net cash provided by operating activities 10,728,384 8,333,550 9,221,514 ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment, net (9,445,261) (7,123,730) (8,451,389) ----------- ----------- ----------- Net cash used in investing activities (9,445,261) (7,123,730) (8,451,389) ----------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings 5,015,615 4,878,614 7,064,889 Repayment of debt (780,664) (1,610,759) (2,600,520) Distributions to unitholders (4,993,579) (4,993,579) (4,993,580) ----------- ----------- ----------- Net cash used in financing activities (758,628) (1,725,724) (529,211) ----------- ----------- ----------- Increase (decrease) in cash 524,495 (515,904) 240,914 Cash, beginning of year 91,518 607,422 366,508 ----------- ----------- ----------- Cash, end of year $ 616,013 $ 91,518 $ 607,422 =========== =========== =========== SUPPLEMENTAL CASH FLOW DISCLOSURE: Interest paid $ 2,104,973 $ 1,977,214 $ 1,072,838 =========== =========== ===========
The accompanying notes to financial statements are an integral part of these statements. JONES INTERCABLE INVESTORS, L.P. -------------------------------- (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS ----------------------------- (1) ORGANIZATION OF PARTNERSHIP --------------------------- Formation and Business ---------------------- Jones Intercable Investors, L.P. (the "Partnership"), a Colorado limited partnership, was formed on September 18, 1986, to acquire, own and operate cable television systems in the United States. On November 28, 1986, the Partnership completed the sale of 3,230,000 Class A Units, representing beneficial ownership of Class A Limited Partnership Interests, to the public at a price of $16.00 per Class A Unit. On May 23, 1987, the Partnership completed the sale of an additional 4,300,000 Class A Units, representing beneficial ownership of Class A Limited Partnership Interests to Jones Intercable, Inc. ("Intercable") (800,000 Units) and to the public at a price of $15.00 per Class A Unit. In addition to its 800,000 Class A Units, Intercable purchased, through a series of transactions, 792,632 Class B Units. These purchases by Intercable represent a 19 percent ownership interest in the Partnership. At December 31, 1989, all Class B Units were converted to Class A Units. Intercable is the general partner of the Partnership (the "General Partner"). 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 affiliated entities. At December 31, 1996, the Partnership owned the cable television system serving certain communities in and around Independence, Missouri. Cable Television System Sale and Partnership Liquidation -------------------------------------------------------- On February 28, 1997, the Partnership entered into an asset purchase agreement to sell the Independence System to Jones Cable Holdings II, Inc., a wholly owned subsidiary of the General Partner, for a sales price of $171,213,667, which represents the average of three independent appraisals of the fair market value of the Independence System. Upon the closing of the sale of the Independence System, the Partnership will repay the then-outstanding balance on its credit facility, pay a brokerage fee of $4,280,342 to The Jones Group, Ltd., a subsidiary of the General Partner, and then the Partnership will distribute the net proceeds to the Class A Unitholders. Such distribution is expected to be approximately $16.12 for each Class A Unit held. Because this distribution plus previous distributions made to Class A Unitholders will not exceed the preferred return set forth in the Partnership Agreement, there will be no general partner distribution related to this transaction; however, the General Partner will receive a distribution as a Class A Unitholder. The Independence System is the Partnership's only remaining asset. Upon the successful completion of the sale of the Independence System, the Partnership will be liquidated and dissolved. Contributed Capital of the Partnership -------------------------------------- The capitalization of the Partnership is set forth in the accompanying statements of partners' capital (deficit). All profits and losses of the Partnership are allocated 99 percent to the Unitholders and 1 percent to the General Partner. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------ Accounting Records ------------------ The accompanying 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. Partnership Acquisitions ------------------------ The Partnership's acquisitions were accounted for using the "purchase method" of accounting. The allocation of the purchase price (determined by independent appraisal) was as follows: first, to the fair value of net tangible assets acquired; second, to the value of subscriber lists; third, to franchise costs; and fourth, to costs in excess of interests in net assets purchased. 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 years Office furniture and equipment 5 years Buildings 10 - 20 years Vehicles 3 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. Intangible Assets ----------------- Costs assigned to franchises and costs in excess of interests in net assets purchased are being amortized using the straight-line method over the following remaining estimated useful lives: Franchise costs 1 - 2 years Costs in excess of interests in net assets purchased 30 years Revenue Recognition ------------------- Subscriber prepayments are initially deferred and recognized as revenue when earned. (3) TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES ---------------------------------------------------- Management Fees, Reimbursements of Allocated Expenses and Distribution ---------------------------------------------------------------------- Ratios ------ The General Partner manages the Partnership and receives a fee for its services equal to 5 percent of the gross revenues of the Partnership, excluding revenues from the sale of cable television systems or franchises. Management fees for the years ended December 31, 1996, 1995 and 1994 were $1,614,057, $1,493,266 and $1,376,131, respectively. The Partnership 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 facilities costs. Such personnel provide engineering, marketing, administrative, accounting, legal and investor relations services to the Partnership. Such services, and their related costs, are necessary to the operation of the Partnership and would have been incurred by the Partnership, 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 partnership managed. Remaining expenses are allocated based on the pro rata relationship of the Partnership'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 used in allocating overhead and administrative expenses is reasonable. Amounts charged the Partnership by the General Partner for allocated overhead and administrative expenses for the years ended December 31, 1996, 1995 and 1994 were $2,151,981, $2,138,471 and $2,074,563, respectively. Distributions made upon the sale or refinancing of a Partnership cable television system or upon dissolution of the Partnership shall be made as follows: first, to the Class A Unitholders an amount equal to the Preferred Return. The "Preferred Return" is defined as a return equal to 10 percent per annum, cumulative and non-compounded on an amount equal to the capital contribution made with respect to a Class A Unit, less any portion of such amount which has been returned to Class A Units from prior sale or refinancing proceeds; provided that such return will be reduced by all prior distributions of cash flow from operations on the Class A Units, and certain prior distributions of proceeds from sales or refinancing of Partnership cable television properties; second, to the Class A Unitholders an amount equal to the capital originally contributed; third, 60 percent to Class A Unitholders and 40 percent to the General Partner. The Partnership is charged interest on accounts payable to the General Partner at a rate which approximates the General Partner's weighted average cost of borrowing. There was no interest charged to the Partnership by the General Partner during 1996, 1995 and 1994. Payments to/from Affiliates for Programming Services ---------------------------------------------------- The Partnership receives programming from Superaudio, Jones Education Company and Product Information Network, all of which are affiliates of the General Partner. Payments to Superaudio totaled approximately $51,871, $45,956 and $46,113 in 1996, 1995 and 1994, respectively. Payments to Jones Education Company totaled approximately $55,913, $49,159 and $41,783 in 1996, 1995 and 1994, respectively. The Partnership receives a commission from Product Information Network based on a percentage of advertising revenue and number of subscribers. Product Information Network paid commissions to the Partnership totaling $30,104, $11,148 and $4,073 in 1996, 1995 and 1994, respectively. (4) DISTRIBUTIONS TO UNITHOLDERS ---------------------------- The Partnership declared a $.15 per unit distribution for each of the four quarters of 1996. All declared distributions were paid at December 31, 1996, except for the fourth quarter distribution, which was paid in February 1997. The Partnership expects that cash distributions will continue to be paid quarterly until the sale of the Independence System is closed; however, the level of such distributions will be determined on a quarter-by-quarter basis. (5) PROPERTY, PLANT AND EQUIPMENT ----------------------------- Property, plant and equipment as of December 31, 1996 and 1995, consists of the following: December 31, ---------------------------- 1996 1995 ------------ ------------ Cable distribution systems $ 70,640,008 $ 61,887,816 Equipment and tools 1,795,869 1,714,326 Office furniture and equipment 825,535 642,237 Buildings 1,209,479 1,178,013 Vehicles 1,549,259 1,666,138 Land 51,000 51,000 ------------ ------------ 76,071,150 67,139,530 Less - accumulated depreciation (34,144,942) (29,510,807) ------------ ------------ $ 41,926,208 $ 37,628,723 ============ ============ (6) DEBT ---- Debt consists of the following: December 31, --------------------------- 1996 1995 ------------ ------------ Lending institutions- Revolving credit facility $ 30,700,000 $ 26,450,000 Capital lease obligations 296,647 311,696 ------------ ------------ $ 30,996,647 $ 26,761,696 ============ ============ The maximum amount available under the Partnership's revolving credit facility is $35,000,000. As of December 31, 1996, $30,700,000 was outstanding, leaving $4,300,000 of available borrowings for future needs. Under the terms of the credit agreement as amended, the revolving credit facility expires on December 31, 1998. Interest on outstanding principal balances is at the Partnership's option of the Prime Rate plus .25 percent, the Certificate of Deposit Rate plus 1.25 percent or the Euro-rate plus 1.25 percent. The effective interest rates on amounts outstanding as of December 31, 1996 and 1995 were 6.84 percent and 7.25 percent, respectively. Installments due on debt principal and capital lease obligations for each of the five years in the period ending December 31, 2001 and thereafter, respectively, are $88,994, $30,788,994, $88,994, $29,665, $-0- and $-0-. All indebtedness is expected to be repaid upon the completion of the sale of the Independence System. At December 31, 1996, substantially all of the Partnership's property, plant and equipment secured the above indebtedness. At December 31, 1996, the carrying amount of the Partnership's long-term debt did not differ significantly from the estimated fair value of the financial instruments. The fair value of the Partnership'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 financial statements because the Partnership will pay no federal or state income taxes as an entity. Instead, all of the income, gains, losses, deductions and credits of the Partnership will pass through to the General Partner and the Unitholders. 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 Partner and Unitholders would likely be changed. Taxable income to the General Partner and Unitholders is different from that reported in the statements of operations largely 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. Since the Partnership has previously made an IRC Section 754 election, the cost basis of the Partnership assets has been increased or decreased to reflect the difference between the new unitholders' purchase price and their proportionate share of the adjusted tax basis of the Partnership properties. The portion of this adjustment which relates to depreciable or amortizable assets results in difference between book and tax depreciation or amortization. Under IRC Section 197, certain intangibles placed in service after August 10, 1993, including goodwill, are allowed to be amortized over a 15 year period for tax purposes, creating additional book and tax amortization differences. There are no other significant differences between taxable loss and the net loss reported in the statements of operations. The Partnership will be taxed as a corporation beginning January 1, 1998, if it operates its current business at such time. The Partnership intends to sell its assets and liquidate prior to such date. Current tax law impacts the Unitholders due to limitations on the utilization of passive losses generated by the Partnership. Investors in Publicly Traded Partnerships ("PTP's"), such as Jones Intercable Investors, L.P., are subject to additional limitations under the passive-activity loss rules as amended by the Revenue Act of 1987. Passive losses reported on Schedule K-1, Form 1065, by a PTP can only be used to offset passive income from the same partnership. Passive losses of a PTP which are limited by this rule may be carried forward. (8) COMMITMENTS AND CONTINGENCIES ----------------------------- The Partnership rents office and other facilities under various long-term operating lease arrangements. Rent paid under such lease arrangements totaled $163,164, $166,127 and $147,185, respectively, for the years ended December 31, 1996, 1995 and 1994. Minimum commitments for each of the five years in the period ending December 31, 2001, and thereafter are as follows: 1997 $148,551 1998 131,196 1999 43,199 2000 7,200 2001 7,200 Thereafter 34,800 -------- $372,146 ======== (9) SUPPLEMENTARY PROFIT AND LOSS INFORMATION ----------------------------------------- Supplementary profit and loss information for the respective years is presented below:
For the Year Ended December 31, ------------------------------------ 1996 1995 1994 ---------- ---------- ---------- Maintenance and repairs $ 351,832 $ 356,537 $ 303,262 ========== ========== ========== Taxes, other than income and payroll taxes $ 327,288 $ 252,921 $ 199,752 ========== ========== ========== Advertising $ 303,881 $ 297,727 $ 319,442 ========== ========== ========== Depreciation of property, plant and equipment $5,233,504 $4,429,581 $3,639,053 ========== ========== ========== Amortization of intangible assets $3,435,120 $3,451,537 $4,712,386 ========== ========== ==========
EX-2.1 2 PURCHASE AND SALE AGREEMENT DATED 2/28/97 EXHIBIT 2.1 PURCHASE AND SALE AGREEMENT --------------------------- THIS PURCHASE AND SALE AGREEMENT is made as of the 28th day of February, 1997, by and between JONES INTERCABLE INVESTORS, L.P., a Colorado limited partnership ("Seller"), and JONES INTERCABLE, INC., a Colorado corporation ("Buyer"). RECITALS -------- A. Seller owns and operates a cable television system in and around the municipalities of Independence, Missouri and Olathe, Kansas (the "System"). B. Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, the System upon the terms and conditions set forth in this Agreement. AGREEMENT --------- In consideration of the mutual promises contained in this Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Purchase and Sale. Subject to the terms and conditions set forth ----------------- in this Agreement, Seller hereby agrees to sell, convey, assign, transfer and deliver to Buyer, and Buyer hereby agrees to purchase from Seller, on the Closing Date (as defined in Paragraph 9 hereof), all of Seller's right, title and interest in and to the System and the Assets (as defined in Paragraph 2 hereof) then being transferred and sold pursuant hereto, free and clear of all security interests, liens, pledges, charges and encumbrances. 2. Assets. (a) The assets to be conveyed to Buyer hereunder shall ------ consist of all of the assets and properties of Seller, whether real, personal, tangible or intangible, of whatever description and wherever located, now owned or used by Seller solely in connection with Seller's ownership or operation of the System, except those items excluded pursuant to subparagraph 2(b) hereof, but including all additions made to the Closing Date, to the end that all of Seller's assets owned on the Closing Date which are used or owned solely in connection with Seller's ownership or operation of the System shall pass to Buyer. Such assets (collectively, the "Assets") shall include, without limitation: (i) all of Seller's towers, tower equipment, antennas, aboveground and underground cable, distribution systems, headend amplifiers, line amplifiers, earth satellite receive stations and related equipment, microwave equipment, testing equipment, motor vehicles, office equipment, furniture and fixtures, supplies, inventory and other physical assets owned or used by Seller solely in connection with Seller's ownership or operation of the System; (ii) the franchises, leases, agreements, permits, consents, licenses and other contracts, pole line or joint pole agreements, underground conduit agreements, agreements for the reception or transmission of signals by microwave, easements, rights-of-way and construction permits, if any, and any other obligations and agreements between Seller and suppliers and customers, which are owned or used by Seller solely in connection with Seller's ownership and operation of the System; (iii) the real property owned and used solely in connection with the System; (iv) all accounts receivable of Seller arising in connection with the System; (v) all engineering records, files, data, drawings, blueprints, schematics, maps, reports, lists and plans and processes owned or developed by or for Seller and intended for use in connection with the System; (vi) all promotional graphics, original art work, mats, plates, negatives and other advertising, or related materials developed by or for Seller and intended for use in connection with the System; (vii) all of Seller's correspondence files, lists, records and reports concerning customers and prospective customers of the Systems, concerning television stations whose transmissions are or may be carried as part of the Systems and concerning all dealings with federal, state, and local regulatory agencies, including all reports filed by or on behalf of Seller with the Federal Communications Commission (the "FCC") in connection with the System and any Statements of Account of the System filed by or on behalf of Seller with the united States Copyright Office in connection with the System (b) The following properties and assets relating to the System and its business operations shall be retained by Seller and shall not be sold, assigned or transferred to Buyer; (i) cash or cash equivalents on hand or in banks; (ii) insurance policies and rights and claims thereunder; (iii) all claims, rights and interest in and to any refunds for Federal, state or local income or other taxes or fees of any nature whatsoever for 2 periods prior to the Closing Date, including without limitation, fees paid to the United States Copyright Office; and (iv) assets disposed of in the normal course of business or with the written consent of Buyer between the date hereof and the Closing Date. 3. Purchase Price. Subject to the adjustments to be made in -------------- accordance with Paragraph 4 hereof, the total purchase price for the Assets shall be One Hundred Seventy-One Million Two Hundred Thirteen Thousand Six Hundred Sixty Seven Dollars ($171,213,667.00) (the "Purchase Price"), which Purchase Price represents the average of three separate independent appraisals of the System. The Purchase Price shall by payable to Seller at Closing in cash, by cashier's check or by wire transfer of Federal funds to a bank or banks designated by Seller. 4. Adjustments. All adjustments provided for herein with respect to ----------- this transaction shall increase or decrease the Purchase Price, as appropriate, and shall be made as of the close of business (5:01 p.m., local time) on the Closing Date. (a) Rent, pole rents, franchise fees, taxes, power and utility fees and deposits, insurance premiums, licenses, customer prepayments and deposits, and other prepayments and amounts due shall be prorated and debited or credited to Seller or Buyer, as applicable. For purposes of adjustments made under this Paragraph 4(a), the subscriber accounts receivable which are due and payable for and with respect to the month in which the Closing takes place shall be prorated as of the Closing Date. (b) The Purchase Price shall be reduced by any accounts payable, accrued expenses and vehicle lease obligations for which Seller would otherwise be liable hereunder, but for which the obligation for payment is assumed by Buyer. (c) Seller and Buyer shall jointly determine the adjustments required by this Paragraph 4 at the Closing. The net amount to which Buyer or Seller, as the case may be, is entitled pursuant hereto shall be thereupon paid by Buyer or Seller, as the case may be, by an adjustment to the Purchase Price. All adjustments made at Closing shall be tentative and shall be subject to final adjustment within 90 days after Closing. 5. Assumption of Liabilities. Buyer shall agree to assume and ------------------------- discharge all debts, liabilities and obligations of Seller arising with respect to periods subsequent to the Closing Date under any franchise, license, permit, lease, instrument or agreement transferred to Buyer hereunder and, with respect to periods prior to and including the Closing Date, to assume and discharge all obligations of Seller to the extent that the Purchase Price is reduced pursuant to Paragraph 4(b) hereof. Buyer hereby agrees to indemnify and to hold harmless from and against any and all damages, costs, claims and expenses arising by reason of the ownership, operation or control of 3 the System after Closing Date. Anything herein to the contrary notwithstanding, there is hereby excluded from the assumed obligations, and Seller hereby agrees to retain and discharge, and to indemnify and hold Buyer harmless from and against, any and all damages, costs, claims and expenses to the extent they arise out of any debt, liability or obligation arising with respect to periods prior to the Closing Date for which no reduction of the Purchase Price has been made pursuant to Paragraph 4(b) hereof, and any debt, liability or obligation of Seller not expressly assumed hereunder, whenever arising. 6. Seller's Representations. Seller hereby represents, warrants, covenants and agrees, that: (a) Seller is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Colorado. Seller has all requisite partnership power and authority to own and operate its properties and to carry on its business as now and where being conducted. (b) All necessary consents and approvals have been obtained by Seller for the execution and delivery of this Agreement. The execution and delivery of this Agreement by Seller has been duly and validly authorized and approved by all necessary action of Seller. This Agreement is a valid and binding obligation of Seller, enforceable against it in accordance with its terms. (c) Subject to the receipt of any required consents, Seller has full legal power, right and authority to sell and convey to Buyer legal and beneficial title to the Assets and Seller's sale to Buyer shall transfer good and marketable title thereto, free and clear of all security interests, liens, pledges, charges and encumbrances of every kind. (d) The execution, delivery and performance of this Agreement by Seller will not violate any provisions of law and will not, with or without the giving of notice or the passage of time, conflict with or result in any breach of any of the terms or conditions of, or constitute a default under, any mortgage, agreement or other instrument to which Seller is a party or by which Seller, the Assets or the System are bound. The execution, delivery and performance of this Agreement will not result in the creation of any security interest, lien, pledge, charge or encumbrance upon the Assets or the Systems. 7. Conditions Precedent to Buyer's Obligations. The obligations of ------------------------------------------- Buyer under this Agreement with respect to the purchase and sale of the Assets shall be subject to the fulfillment on or prior to the Closing Date of each of the following conditions: (a) All of the representations and warranties by Seller contained in this Agreement shall be true and correct in all material respects at and as 4 of the Closing Date. Seller shall have complied with and performed all of the agreements, covenants and conditions required by this Agreement to be performed or complied with by it on or prior to the Closing Date. (b) Seller shall have delivered to Buyer such instruments, consents and approvals of third parties as are necessary to transfer the Assets to Buyer pursuant to this Agreement. (c) The statutory waiting period applicable to this Agreement and the transactions contemplated hereby under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), shall have been terminated or shall have expired. 8. Conditions Precedent to Seller's Obligation. The obligations of ------------------------------------------- Seller under this Agreement with respect to the purchase and sale of the Assets shall be subject to the fulfillment on or prior to the Closing Date of each of the following conditions: (a) The statutory waiting period applicable to this Agreement and the transactions contemplated hereby under the HSR Act, shall have been terminated or shall have expired. (b) Buyer shall have delivered the Purchase Price to Seller in accordance with Paragraph 3 hereof. 9. Closing. The closing hereunder (the "Closing") shall be held in ------- the offices of Seller, 9697 East Mineral Avenue, Englewood, Colorado, 80112, on such date or dates as the parties hereto shall mutually agree. At the Closing, all cash, checks, notes, deeds, bills of sale, certificates of title, assignments and other instruments and documents referred to or contemplated by this Agreement shall be exchanged by the parties hereto. 10. Brokerage. Seller represents and warrants to Buyer that Seller --------- will be solely responsible for, and pay in full, any and all brokerage or finder's fees or agent's commissions or other like payment owing in connection with Seller's use of any broker, finder or agent in connection with this Agreement or the transactions contemplated hereby. Buyer represents and warrants to Seller that Buyer will be solely responsible for, and pay in full, any and all brokerage or finder's fees or agent's commission or other like payment owing in connection with Buyer's use of any broker, finder or agent in connection with this Agreement or the transaction contemplated hereby. Each party hereto agrees to indemnify and hold the other party hereto harmless against and in respect of any breach by it of the provision of this Paragraph 10. 5 11. Miscellaneous. ------------- (a) Buyer shall have the right, upon notice to Seller, to assign prior to the Closing Date, in whole or in part, its rights and obligations hereunder to any affiliate of Buyer, including any public limited partnership or partnerships of which Buyer or any affiliate of Buyer is a general partner or any joint venture or general partnership of which Buyer, or any affiliate of Buyer, or any of such public limited partnership or partnerships is a constituent partner, or to any subsidiary of Buyer or other entity controlled by, controlling or under common control with Buyer, or, subject to Seller's consent, to any other entity. (b) From time to time after the Closing Date, Seller shall, if requested by Buyer, make, execute and deliver to Buyer such additional assignments, bills of sale, deeds and other instruments of transfer, as may be necessary or proper to transfer to Buyer all of Seller's right, title and interest in and to the assets covered by this Agreement. Such efforts and assistance shall be without cost to Buyer. (c) This Agreement embodies the entire understanding and agreement among the parties concerning the subject matter hereof and supersedes any and all prior negotiations, understandings or agreements in regard thereto. This Agreement shall be interpreted, governed and construed in accordance with the laws of the State of Colorado. This Agreement may not be modified or amended except by an agreement in writing executed by both Buyer and Seller. (d) Any sales, use, transfer or documentary taxes imposed in connection with the sale and deliver of the Assets and the rights acquired by Buyer under this Agreement shall be paid by Buyer. IN WITNESS WHEREOF the parties have executed this Agreement as of the day and year first above written. SELLER: ------- JONES INTERCABLE INVESTORS, L.P., a Colorado limited partnership By: Jones Intercable, Inc., a Colorado corporation, as its general partner By: /s/ Elizabeth M. Steele ----------------------- Title: Vice President ----------------------- 6 BUYER: ------ JONES INTERCABLE, INC., a Colorado corporation By: /s/ Kevin P. Coyle ---------------------------- Title: Group Vice President/Finance ---------------------------- 7 EX-2.2 3 ASSIGNMENT & ASSUMPTION AGREEMENT DATED 4/15/97 EXHIBIT 2.2 ASSIGNMENT AND ASSUMPTION AGREEMENT ----------------------------------- THIS ASSIGNMENT AND ASSUMPTION AGREEMENT ("Agreement"), dated as of April 15, 1997, is made and entered into by and between Jones Intercable, Inc., a Colorado corporation ("JIC") and Jones Communications of Missouri, Inc., a Colorado corporation ("JCM"). Recitals -------- A. Jones is party to that certain Asset Purchase Agreement dated as of February 28, 1997 (the "Purchase Agreement") with Jones Intercable Investors, L.P. (the "MLP"), pursuant to which JIC has agreed to buy, and the MLP has agreed to sell, substantially all of the assets relating to the cable television system owned by the MLP serving the communities in and around Independence, Missouri and Olathe, Kansas. B. In March 1997, JIC orally agreed to assign its rights and duties under the Purchase Agreement to JCM, and JCM orally agreed to accept such assignment. C. JIC and JCM desire to formalize the aforementioned assignment and assumption by a written agreement. D. All capitalized terms used in this Agreement and not otherwise defined shall have the meanings given to them in the Purchase Agreement. Agreements ---------- In consideration of the mutual promises and covenants hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, JIC and JCM hereby agree as follows: 1. Assignment and Assumption. Subject to the terms and conditions of ------------------------- this Agreement: (a) JIC hereby assigns, conveys and transfers to JCM all of its right, title and interest as Buyer under the Purchase Agreement, including but not limited to, the right to purchase the Assets of the System and (b) JCM hereby assumes and shall pay, discharge and perform all of the obligations and duties of Buyer under the Purchase Agreement. 2. Further Assurances. JIC and JCM shall execute and deliver such ------------------ further instruments as may be reasonably necessary to carry out the terms of this Agreement. 3. Governing Law. The validity, performance and enforcement of this ------------- Agreement shall be governed by the internal laws of the State of Colorado, without giving effect to the principles of conflicts of law of such State. The parties have executed this Agreement as of the date first written above. JONES INTERCABLE, INC. By /s/ Elizabeth M. Steele ----------------------- Title Vice President ----------------------- JONES COMMUNICATIONS OF MISSOURI, INC. By /s/ Elizabeth M. Steele ----------------------- Title Vice President ----------------------- 2 EX-2.3 4 PURCHASE & SALE AGREEMENT DATED 7/28/97 EXHIBIT 2.3 PURCHASE AND SALE AGREEMENT --------------------------- THIS PURCHASE AND SALE AGREEMENT is made as of the 28th day of July, 1997, by and between CABLE TV FUND 12-BCD VENTURE, a Colorado joint venture ("Seller") and JONES INTERCABLE, INC., a Colorado corporation ("Buyer"). RECITALS - -------- A. Seller owns and operates a cable television system in and around the City of Albuquerque, the Town of Bernalillo, the Villages of Bosque Farms, Corrales, and Los Ranchos de Albuquerque, Kirtland Air Force Base and the Counties of Bernalillo, Sandoval and Valencia, all located in the State of New Mexico (the "System"). B. Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, the System upon the terms and conditions set forth in this Agreement. AGREEMENT - --------- In consideration of the mutual promises contained in this Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Purchase and Sale. Subject to the terms and conditions set forth in ----------------- this Agreement, Seller hereby agrees to sell, convey, assign, transfer and deliver to Buyer, and Buyer hereby agrees to purchase from Seller, on the Closing Date (as defined in Paragraph 9 hereof), all of Seller's right, title and interest in and to the System and the Assets (as defined in Paragraph 2 hereof) then being transferred and sold pursuant hereto, free and clear of all security interests, liens, pledges, charges and encumbrances. 2. Assets. (a) The assets to be conveyed to Buyer hereunder shall consist ------ of all of the assets and properties of Seller, whether real, personal, tangible or intangible, of whatever description and wherever located, now owned or used by Seller solely in connection with Seller's ownership or operation of the System, except those items excluded pursuant to subparagraph 2(b) hereof, but including all additions made to the Closing Date, to the end that all of Seller's assets owned on the Closing Date which are used or owned solely in connection with Seller's ownership or operation of the System shall pass to Buyer. Such assets (collectively, the "Assets") shall include, without limitation: (i) all of Seller's towers, tower equipment, antennas, aboveground and underground cable, distribution systems, headend amplifiers, line amplifiers, earth satellite receive stations and related equipment, microwave equipment, testing equipment, motor vehicles, office equipment, furniture and fixtures, supplies, inventory and other physical assets owned or used by Seller solely in connection with Seller's ownership or operation of the System; (ii) the franchises, leases, agreements, permits, consents, licenses and other contracts, pole line or joint pole agreements, underground conduit agreements, agreements for the reception or transmission of signals by microwave, easements, rights-of-way and construction permits, if any, and any other obligations and agreements between Seller and suppliers and customers, which are owned or used by Seller solely in connection with Seller's ownership and operation of the System; (iii) the real property owned and used solely in connection with the System; (iv) all accounts receivable of Seller arising in connection with the System; (v) all engineering records, files, data, drawings, blueprints, schematics, maps, reports, lists and plans and processes owned or developed by or for Seller and intended for use in connection with the System; (vi) all promotional graphics, original art work, mats, plates, negatives and other advertising, or related materials developed by or for Seller and intended for use in connection with the System; (vii) all of Seller's correspondence files, lists, records and reports concerning customers and prospective customers of the Systems, concerning television stations whose transmissions are or may be carried as part of the Systems and concerning all dealings with federal, state, and local regulatory agencies, including all reports filed by or on behalf of Seller with the Federal Communications Commission (the "FCC") in connection with the System and any 2 Statements of Account of the System filed by or on behalf of Seller with the united States Copyright Office in connection with the System; provided however, ----------------- that Seller shall not transfer to Buyer the licenses and agreements for which the consent of a third party is required to transfer (the "Additional Agreements") until Seller has obtained the approval of the parties granting the Additional Agreements to such transfer, whereupon such Additional Agreements shall be deemed to be included in the assets to be transferred to Buyer pursuant to this Agreement. (b) The following properties and assets relating to the System and its business operations shall be retained by Seller and shall not be sold, assigned or transferred to Buyer; (i) cash or cash equivalents on hand or in banks; (ii) insurance policies and rights and claims thereunder; (iii) all claims, rights and interest in and to any refunds for Federal, state or local income or other taxes or fees of any nature whatsoever for periods prior to the Closing Date, including without limitation, fees paid to the United States Copyright Office; and (iv) assets disposed of in the normal course of business or with the written consent of Buyer between the date hereof and the Closing Date. 3. Purchase Price. Subject to the adjustments to be made in accordance -------------- with Paragraph 4 hereof, the total purchase price for the Assets shall be Two Hundred Twenty-Two Million Nine Hundred Sixty-Three Thousand Two Hundred Sixty Seven Dollars ($222,963,267.00) (the "Purchase Price"), which Purchase Price represents the average of three separate independent appraisals of the System. The Purchase Price shall by payable to Seller at Closing in cash, by cashier's check or by wire transfer of Federal funds to a bank or banks designated by Seller. 4. Adjustments. All adjustments provided for herein with respect to this ----------- transaction shall increase or decrease the Purchase Price, as appropriate, and shall be made as of the close of business (5:01 p.m., local time) on the Closing Date. (a) Rent, pole rents, franchise fees, taxes, power and utility fees and deposits, insurance premiums, licenses, customer prepayments 3 and deposits, and other prepayments and amounts due shall be prorated and debited or credited to Seller or Buyer, as applicable. For purposes of adjustments made under this Paragraph 4(a), the subscriber accounts receivable which are due and payable for and with respect to the month in which the Closing takes place shall be prorated as of the Closing Date. (b) The Purchase Price shall be reduced by any accounts payable, accrued expenses and vehicle lease obligations for which Seller would otherwise be liable hereunder, but for which the obligation for payment is assumed by Buyer. (c) Seller and Buyer shall jointly determine the adjustments required by this Paragraph 4 at the Closing. The net amount to which Buyer or Seller, as the case may be, is entitled pursuant hereto shall be thereupon paid by Buyer or Seller, as the case may be, by an adjustment to the Purchase Price. All adjustments made at Closing shall be tentative and shall be subject to final adjustment within 90 days after Closing. 5. Assumption of Liabilities. Buyer shall agree to assume and discharge ------------------------- all debts, liabilities and obligations of Seller arising with respect to periods subsequent to the Closing Date under any franchise, license, permit, lease, instrument or agreement transferred to Buyer hereunder and, with respect to periods prior to and including the Closing Date, to assume and discharge all obligations of Seller to the extent that the Purchase Price is reduced pursuant to Paragraph 4(b) hereof; provided, however, that Buyer shall not assume the -------- ------- Additional Agreements until Seller has obtained the approval of the parties granting the Additional Agreements to Seller's transfer of the Additional Agreements to Buyer, whereupon the Additional Agreements shall be deemed to be included in the assets to be assumed by Buyer hereunder. Buyer hereby agrees to indemnify and to hold harmless from and against any and all damages, costs, claims and expenses (the "Indemnifiable Claims") arising by reason of the ownership, operation or control of the System after Closing Date; provided, -------- however, that Buyer shall not indemnify and hold harmless Seller from any - ------- Indemnifiable Claims arising under Additional Agreements as a result of actions relating to any period before Seller has obtained the approval of the parties granting the Additional Agreements to Seller's transfer of the Additional Agreements to Buyer. Anything herein to the contrary notwithstanding, there is hereby excluded from the assumed obligations, and Seller hereby agrees to retain and discharge, and to indemnify and hold Buyer harmless from and against, any and all Indemnifiable Claims to the extent they arise (a) out of any debt, liability 4 or obligation arising with respect to periods prior to the Closing Date for which no reduction of the Purchase Price has been made pursuant to Paragraph 4(b) hereof, (b) out of any debt, liability or obligation arising under the Additional Agreements arising as a result of actions relating to any period before Seller has obtained the approval of the parties granting the Additional Agreements to Seller's transfer of the Additional Agreements to Buyer, and (c) any debt, liability or obligation of Seller not expressly assumed hereunder, whenever arising. 6. Seller's Representations. Seller hereby represents, warrants, ------------------------ covenants and agrees, that: (a) Seller is a joint venture duly organized and validly existing under the laws of the State of Colorado. Seller has all requisite partnership power and authority to own and operate its properties and to carry on its business as now and where being conducted. (b) All necessary consents and approvals have been obtained by Seller for the execution and delivery of this Agreement. The execution and delivery of this Agreement by Seller has been duly and validly authorized and approved by all necessary action of Seller. This Agreement is a valid and binding obligation of Seller, enforceable against it in accordance with its terms. (c) Subject to the receipt of any required consents, Seller has full legal power, right and authority to sell and convey to Buyer legal and beneficial title to the Assets and Seller's sale to Buyer shall transfer good and marketable title thereto, free and clear of all security interests, liens, pledges, charges and encumbrances of every kind. (d) The execution, delivery and performance of this Agreement by Seller will not violate any provisions of law and will not, with or without the giving of notice or the passage of time, conflict with or result in any breach of any of the terms or conditions of, or constitute a default under, any mortgage, agreement or other instrument to which Seller is a party or by which Seller, the Assets or the System are bound. The execution, delivery and performance of this Agreement will not result in the creation of any security interest, lien, pledge, charge or encumbrance upon the Assets or the Systems. 7. Conditions Precedent to Buyer's Obligations. The obligations of Buyer ------------------------------------------- under this Agreement with respect to the purchase and sale 5 of the Assets shall be subject to the fulfillment on or prior to the Closing Date of each of the following conditions: (a) All of the representations and warranties by Seller contained in this Agreement shall be true and correct in all material respects at and as of the Closing Date. Seller shall have complied with and performed all of the agreements, covenants and conditions required by this Agreement to be performed or complied with by it on or prior to the Closing Date. (b) Seller shall have delivered to Buyer such instruments, consents and approvals of third parties as are necessary to transfer the Assets to Buyer pursuant to this Agreement. (c) The statutory waiting period applicable to this Agreement and the transactions contemplated hereby under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), shall have been terminated or shall have expired. 8. Conditions Precedent to Seller's Obligation. The obligations of Seller ------------------------------------------- under this Agreement with respect to the purchase and sale of the Assets shall be subject to the fulfillment on or prior to the Closing Date of each of the following conditions: (a) The statutory waiting period applicable to this Agreement and the transactions contemplated hereby under the HSR Act, shall have been terminated or shall have expired. (b) The limited partners of the joint venturers of Seller shall have approved the transactions contemplated by this Agreement. (c) Buyer shall have delivered the Purchase Price to Seller in accordance with Paragraph 3 hereof. 9. Closing. The closing hereunder (the "Closing") shall be held in the ------- offices of Seller, 9697 East Mineral Avenue, Englewood, Colorado, 80112, on such date or dates as the parties hereto shall mutually agree. At the Closing, all cash, checks, notes, deeds, bills of sale, certificates of title, assignments and other instruments and documents referred to or contemplated by this Agreement shall be exchanged by the parties hereto. 6 10. Brokerage. Seller represents and warrants to Buyer that Seller will --------- be solely responsible for, and pay in full, any and all brokerage or finder's fees or agent's commissions or other like payment owing in connection with Seller's use of any broker, finder or agent in connection with this Agreement or the transactions contemplated hereby. Buyer represents and warrants to Seller that Buyer will be solely responsible for, and pay in full, any and all brokerage or finder's fees or agent's commission or other like payment owing in connection with Buyer's use of any broker, finder or agent in connection with this Agreement or the transaction contemplated hereby. Each party hereto agrees to indemnify and hold the other party hereto harmless against and in respect of any breach by it of the provision of this Paragraph 10. 11. Miscellaneous. -------------- (a) Buyer shall have the right, upon notice to Seller, to assign prior to the Closing Date, in whole or in part, its rights and obligations hereunder to any affiliate of Buyer, including any public limited partnership or partnerships of which Buyer or any affiliate of Buyer is a general partner or any joint venture or general partnership of which Buyer, or any affiliate of Buyer, or any of such public limited partnership or partnerships is a constituent partner, or to any subsidiary of Buyer or other entity controlled by, controlling or under common control with Buyer, or, subject to Seller's consent, to any other entity. (b) From time to time after the Closing Date, Seller shall, if requested by Buyer, make, execute and deliver to Buyer such additional assignments, bills of sale, deeds and other instruments of transfer, as may be necessary or proper to transfer to Buyer all of Seller's right, title and interest in and to the assets covered by this Agreement. Such efforts and assistance shall be without cost to Buyer. (c) This Agreement embodies the entire understanding and agreement among the parties concerning the subject matter hereof and supersedes any and all prior negotiations, understandings or agreements in regard thereto. This Agreement shall be interpreted, governed and construed in accordance with the laws of the State of Colorado. This Agreement may not be modified or amended except by an agreement in writing executed by both Buyer and Seller. 7 (d) Any sales, use, transfer or documentary taxes imposed in connection with the sale and deliver of the Assets and the rights acquired by Buyer under this Agreement shall be paid by Buyer. IN WITNESS WHEREOF the parties have executed this Agreement as of the day and year first above written. SELLER: ------- CABLE TV FUND 12-BCD VENTURE, a Colorado joint venture By: Cable TV Fund 12-B, Ltd., a Colorado limited partnership, as a Venturer By: Cable TV Fund 12-C, Ltd., a Colorado limited partnership, as a Venturer By: Cable TV Fund 12-D, Ltd., a Colorado limited partnership, as a Venturer By: Jones Intercable, Inc., a Colorado corporation, as their General Partner By: /s/ Elizabeth M. Steele ----------------------- Title: Vice President -------------- BUYER: ------ JONES INTERCABLE, INC., a Colorado corporation By: /s/ Kevin P. Coyle ------------------ Title: Group Vice President/Finance ---------------------------- 8 -----END PRIVACY-ENHANCED MESSAGE-----