<PAGE>
 
                                   FORM 10-K
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934 (FEE REQUIRED)

                                      OR
[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the year ended December 31, 1998
Commission file number:  1-9953

                            JONES INTERCABLE, INC.
                            ----------------------
            (Exact name of registrant as specified in its charter)

        Colorado                                                 84-0613514
        --------                                                 ----------
(State of Organization)                                      (IRS Employer
                                                             Identification No.)

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

          Securities registered pursuant to Section 12(g) of the Act:
          ---------------------------------------------------------- 
                         Common Stock, $.01 par value
                     Class A Common Stock, $.01 par value

Indicate by check mark whether the registrant, (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
 
             Yes   x                                    No ____
                  --- 
 
Aggregate market value as of February 3, 1999 of the voting stock held by
 non-affiliates:
Common Stock    $83,491,335             Class A Common Stock   $828,862,117
 
Shares outstanding of each of the registrant's classes of common stock as of
 February 3, 1999:
Common Stock:    5,113,021              Class A Common Stock:    36,226,476


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

<PAGE>
 
                            JONES INTERCABLE, INC.

                          ANNUAL REPORT ON FORM 10-K
                     FOR THE YEAR ENDED DECEMBER 31, 1998


                               TABLE OF CONTENTS
                                        

<TABLE>
<CAPTION>
                                                                                            Page No.
                                                                                            --------   
<S>                                                                                         <C>
PART I                                                                                          1
ITEM 1.  BUSINESS                                                                               1
      The Company                                                                               1
      Current Principal Shareholders of the Company                                             1
      Comcast Corporation's Planned Acquisition of the Control Shares of the                    2
       Company
      The Cable Television Industry                                                             3
      System Operations                                                                         4
      Programming                                                                               4
      System Revenues                                                                           5
      The Company's Cable Television Business                                                   5
      The Company's Other Businesses and Investments                                            8
      Acquisitions of Cable Television Systems in 1998 and 1999                                 8
      Proposed Acquisitions of Cable Television Systems in 1999                                 9
      Sale of Contract Manufacturing Business                                                  10
      Sale of Interest in Jones Customer Service Management, LLC                               10
      Distribution Agreement with @Home Corporation                                            10
      Sale of 7 5/8% Senior Notes                                                              10
      The Company's Credit Facilities                                                          10
      Cable Television Franchises                                                              11
      Competition                                                                              12
         Broadcast Television                                                                  12
         Overbuilds                                                                            12
         DBS                                                                                   13
         Private Cable                                                                         13
         MMDS                                                                                  13
      Regulation and Legislation                                                               14
         Cable Rate Regulation                                                                 14
         Cable Entry Into Telecommunications                                                   15
         Telephone Company Entry Into Cable Television                                         16
         Electric Utility Entry Into Telecommunications/Cable Television                       16
         Additional Ownership Restrictions                                                     16
         Must Carry/Retransmission Consent                                                     17
         Access Channels                                                                       17
         Access to Programming                                                                 17
</TABLE> 

                                       i
<PAGE>
 
<TABLE> 
<S>                                                                                            <C> 
         Inside Wiring                                                                         18
         Other FCC Regulations                                                                 18
         Internet Access                                                                       18
         Copyright                                                                             19
         State and Local Regulation                                                            19
      Risk Factors                                                                             20
 
ITEM 2.  PROPERTIES                                                                            20
 
ITEM 3.  LEGAL PROCEEDINGS                                                                     25
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY                                           28
         HOLDERS
 
PART II                                                                                        29
ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND                                             29
         RELATED STOCKHOLDER MATTERS
 
ITEM 6.  SELECTED FINANCIAL DATA                                                               32
 
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF                                               33
         FINANCIAL CONDITION AND RESULTS OF
         OPERATIONS
 
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY                                                42
         DATA
 
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH                                                     73
         ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
         DISCLOSURE
 
PART III                                                                                       73
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE                                               73
         REGISTRANT
 
ITEM 11. EXECUTIVE COMPENSATION                                                                79
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL                                              82
         OWNERS, DIRECTORS AND MANAGEMENT
 
ITEM 13. CERTAIN TRANSACTIONS                                                                  86
 
PART IV                                                                                        90
 
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K                                                      90
</TABLE>

                                      ii
<PAGE>
 
Certain information contained in this Form 10-K Report contains "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995.  All statements, other than statements of historical facts, included in
this Form 10-K Report that address activities, events or developments that Jones
Intercable, Inc. (the "Company") expects, believes or anticipates will or may
occur in the future, including such matters as changes in the cable television
industry, the Company's acquisition and clustering strategies, capital
expenditures, the Company's operating strategies, the liquidation of the
Company's managed partnerships, the development of new services and
technologies, particularly those in the telecommunications area, the effects of
competition, governmental regulation policies, the Company's expansion plans and
other such matters, are forward-looking statements.  These forward-looking
statements are based upon certain assumptions and are subject to a number of
risks and uncertainties.  Actual events or results may differ materially from
those discussed in the forward-looking statements as a result of various
factors.  As discussed in Item 1, Comcast Corporation's Planned Acquisition of
the Control Shares of the Company, it is anticipated that Comcast Corporation
("Comcast") will acquire a controlling interest in the Company during March
1999.  As a result of this transaction, it is expected that the current
management of the Company and a majority of the Board of Directors of the
Company will be replaced by Comcast.  Because all of the forward-looking
statements in this Form 10-K Report are made by the Company's current management
and its current Board of Directors, they are qualified in their entirety by
reference to the pending change in control and by changes in the Company's
business plans and strategies that may be effected by new management and the new
Board of Directors after the change in control.

                                    PART I

                               ITEM 1.  BUSINESS
                               -----------------
                                        
THE COMPANY
-----------

     The Company is a Colorado corporation organized in 1970.  The Company is
primarily engaged in the cable television business.  The majority of the
Company's cable television systems are owned indirectly by the Company through
the Company's wholly owned subsidiaries, Jones Cable Holdings, Inc. ("JCH") and
Jones Cable Holdings II, Inc. ("JCH II").  The Company also has a subsidiary
that has been engaged in the cable television system brokerage business and a
subsidiary that manufacturers and markets data encryption products.  The Company
also has a minority equity interest in an affiliated company that provides
educational programming.  See Item 1, The Company's Other Businesses and
Investments.

     At December 31, 1998, the Company had a total of approximately 3,060
employees. The executive offices of the Company currently are located at 9697 E.
Mineral Avenue, Englewood, Colorado 80112, and its telephone number is (303)
792-3111.

CURRENT PRINCIPAL SHAREHOLDERS OF THE COMPANY
---------------------------------------------

     Jones International, Ltd. ("International") beneficially owns approximately
48% of the Common Stock of the Company and approximately 4% of the Class A
Common Stock of the

                                       1
<PAGE>
 
Company. Glenn R. Jones, the Chairman of the Board of Directors and Chief
Executive Officer of the Company, personally owns approximately 9% of the
Company's Common Stock and approximately 3% of the Company's Class A Common
Stock. Because of his 100% ownership of International, Mr. Jones is deemed to be
the beneficial owner of all shares of the Company owned by International, and
his direct and indirect stock ownership gives him voting power over
approximately 37% of votes to be cast by all shareholders of the Company on
matters not requiring a class vote. BCI Telecom Holdings Inc. ("BTH") owns
approximately 36% of the Company's Class A Common Stock and, through such
ownership, BTH has an approximate 31% economic interest in the Company. Mr.
Jones currently has the right to designate seven members of the Board of
Directors, BTH currently has the right to designate three members of the Board
of Directors and three members of the Board of Directors currently are jointly
designated by Mr. Jones and BTH. See Item 5, Market for Registrant's Common
Equity and Related Stockholder Matters, Item 10, Directors and Executive
Officers of the Registrant and Item 12, Security Ownership of Certain Beneficial
Owners, Directors and Management. In addition, BTH holds options to purchase
2,878,151 shares of Common Stock of the Company (the "Control Shares") from
International, Glenn R. Jones and certain of their affiliates which, if and when
exercised, would enable BTH to elect a majority of the members of the Board of
Directors of the Company. Pursuant to various agreements all dated August 12,
1998 among Mr. Jones, International and certain of its affiliates, BTH and
Comcast, Comcast acquired the right to purchase all of the Control Shares. As
described below, the Company anticipates that Comcast will acquire a controlling
interest in the Company before the end of March 1999.

COMCAST CORPORATION'S PLANNED ACQUISITION OF THE CONTROL SHARES OF THE COMPANY
------------------------------------------------------------------------------

     In May 1998, BTH announced its intention to sell approximately half of its
shares of the Company's Class A Common Stock to Comcast.  At that time, BTH also
announced its intention to grant to Comcast the right to acquire the Control
Shares if and when BTH exercises its option to purchase such shares and to sell
to Comcast at the time that the option is exercised BTH's remaining holdings of
the Company's Class A Common Stock.

     In August 1998, the Company, International, BTH and Comcast announced that
agreements had been entered into that will accelerate the exercise of the option
for the Control Shares by Comcast, and allowed for the early closing of the
transaction between Comcast and BTH.  In connection with the early exercise of
the option, Comcast will pay to International and certain of its affiliates
$200,000,000 for the Control Shares held by them.  In addition, the Company has
agreed to make certain payments to International and its affiliates in
connection with the termination, effective as of the closing of the option
exercise, of certain related party agreements between the Company, International
and its affiliates, including the termination of Mr. Jones' employment agreement
with the Company and the termination of certain programming rights held by
International pursuant to the Shareholders Agreement between the Company,
International, Mr. Jones and BTH entered into in 1994.  Also, in connection with
the closing of the option exercise, and conditioned upon such closing occurring,
the pending litigation between BTH, International, Mr. Jones and the Company
will be dismissed and International and certain of its affiliates will dismiss
the appeal which is pending of the order entered against them in such
litigation.

                                       2
<PAGE>
 
     To facilitate an orderly change in control to Comcast, the Company has
initiated a retention and severance program for those corporate associates who
may be terminated due to the change in control.  The program provides incentives
to corporate associates to remain with the Company until the change in control
and through the subsequent 90-day transition period.  The program provides for
cash severance payments to associates that are terminated due to the change in
control. Total costs associated with this program are approximately $30,000,000.
The Company anticipates incurring $40,600,000 in restructuring costs, which will
be recognized upon closing. Such costs include the cost of terminating Mr.
Jones' employment agreement, severance payments to corporate personnel, salaries
during the 90-day transition period following the change in control and certain
professional fees.

     The closing of the exercise of the option for the Control Shares is
expected to occur in March 1999. All necessary regulatory filings associated
with this transaction have been made. Following such closing, Comcast would own
approximately 12.8 million shares of Class A Common Stock, and approximately 2.9
million shares of Common Stock of the Company, representing approximately 37% of
the economic and 47% of the voting interest in the Company. In addition, the
Common Stock held by Comcast will allow it to elect 75% of the Board of
Directors of the Company, and Comcast is expected to replace a majority of the
current Board of Directors with nominees of its choice effective as of the
closing of the option exercise. It is also expected that current management of
the Company, including all of the senior executive officers of the Company, will
be replaced by the new Board of Directors by the end of the 90-day transition
period following the change in control.

THE CABLE TELEVISION INDUSTRY
-----------------------------

     The cable television industry, which started as a technical solution to the
problem of delivering television signals to remote areas of rural America, has
now become an entertainment staple in a majority of American homes. It is a
dynamic, evolving and ever more complex industry. Cable penetration, or the
percentage of U.S. television households that subscribe to cable television, now
stands at approximately 67%.

     A cable television system is a facility that receives satellite, broadcast
and FM radio signals by means of high antennas, a microwave relay service or
earth stations.  It then amplifies the signals and distributes them by coaxial
and/or fiber-optic cable to the premises of its subscribers, who pay a fee for
the service.  A cable television system may also originate its own programming
for distribution through its cable plant.

     The physical plant of a cable television system consists of four principal
operating components.  The first, known as the "headend" facility, receives
television and radio signals with microwave relay systems, special antennas and
satellite earth stations.  The second component, the distribution network,
originating at the headend and extending throughout the system, consists of
coaxial and/or fiber-optic cables placed on poles or buried underground, and
associated electronic equipment.  The third component of the system is a "drop
cable" that extends from the distribution network into the subscriber's home and
connects to the subscriber's television set.  The fourth component, a converter,
is the home terminal device often necessary to expand channel capacity and to
deliver pay-per-view and other premium services.

                                       3
<PAGE>
 
     The cable television industry is undergoing significant change.  The cable
television business is evolving from a traditional coaxial network delivering
only video entertainment to a more sophisticated, digital platform environment
where cable systems may deliver traditional programming as well as other
services, including data, telephone and expanded educational and entertainment
services on an interactive basis.  See Item 1, The Company's Cable Television
Business.

     System Operations.  The operation of cable television systems is generally
     -----------------                                                         
conducted pursuant to the terms of a franchise or similar license granted by the
local governing body for the area to be served or by a state agency.  Franchises
generally are granted on a non-exclusive basis for a period of 5 to 15 years.
Joint use or pole rental agreements are normally entered into with electric
and/or telephone utilities serving a cable television system's area and annual
rentals generally range from $5 to $15 for each pole used.  These rates may
increase in the future.  See Item 1, Cable Television Franchises; Item 1,
Competition; and Item 1, Regulation and Legislation.

     PROGRAMMING.  Cable television systems generally offer various types of
     -----------                                                            
programming, which include basic service, tier service, premium services, pay-
per-view programs and packages including several of these services at combined
rates.

     Basic cable television service usually consists of signals of all national
television networks broadcast by their local affiliates, various independent and
educational television stations (both VHF and UHF) and certain signals received
from satellites, and also usually includes programs originated locally by the
system, which may consist of music, news, weather reports, stock market and
financial information and live or videotaped programs of a public service or
entertainment nature.  FM radio signals are also frequently distributed to
subscribers as part of the basic service.  The Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act") contains signal
carriage requirements.  Rules promulgated under the 1992 Cable Act allow each
commercial television broadcast station to elect every three years whether to
require the cable systems in its area to carry its signal or to require the
cable systems to negotiate with the station for "retransmission consent" to
carry the station.  If a local commercial broadcast television station requires
a cable system to negotiate with the station for retransmission consent, and the
cable system is unable to obtain retransmission consent, the cable system is not
permitted to continue carriage of such station.  See Item 1, Regulation and
Legislation.  To date, no broadcast stations that elected retransmission consent
in areas served by any of the Company's cable television systems have withheld
consent to the retransmission of their signals by a Company-owned cable
television system.

     In most systems, tier services are also offered on an optional basis to
subscribers.  These channels generally include most of the cable networks such
as Entertainment and Sports Programming Network (ESPN), Cable News Network
(CNN), Turner Network Television (TNT), The Family Channel, The Discovery
Channel and others.  Systems also offer a package that includes the basic
service channels and the tier services.

     Cable television systems offer premium services to their subscribers,
which consist of feature films, sporting events and other special features that
are presented without commercial interruption.  The cable television operator
buys premium programming from suppliers such as HBO, Showtime, Cinemax, Encore
and others at a cost based on the number of subscribers served by the cable

                                       4
<PAGE>
 
operator.  The per service cost of premium service programming usually is
significantly more expensive for the system operator than the basic service or
tier service programming, and consequently the system operator prices premium
service separately when sold to subscribers.

     Cable television systems also offer to subscribers pay-per-view
programming. Pay-per-view is a service that allows subscribers to receive single
programs, frequently consisting of recently released motion pictures and major
sporting events, and to pay for such service on a program-by-program basis.

     System Revenues.  Monthly service fees for basic, tier and premium services
     ---------------                                                   
constitute the major source of revenue for cable television systems. A
subscriber to a cable television system generally pays an initial connection
charge and a fixed monthly fee for the cable programming services received. The
amount of the monthly service fee varies from one area to another, and
historically has been a function, in part, of the number of channels and
services included in the service package and the cost of such services to the
cable television system operator. In most instances, a separate monthly fee for
each premium service and certain other specific programming is charged to
subscribers, with discounts generally available to subscribers receiving
multiple premium services.

     Cable television operators have been able to generate additional revenue
through the sale of commercial spots and channel space to advertisers.  As with
other forms of advertising, the cable television operator receives a fee from
the advertisers that is based on the programming service on which the
advertisements appear, the volume of advertising and the time of the day at
which it is broadcast.  Advertising, as well as fees generated by home shopping
and pay-per-view, represent additional sources of revenue for cable television
systems.  These services are not regulated under the 1992 Cable Act.

     The 1992 Cable Act mandated a greater degree of regulation of the cable
television industry, including rate regulation.  Under the 1992 Cable Act's
definition of "effective competition," nearly all cable systems in the United
States, including almost all of those owned and managed by the Company, are
subject to rate regulation with respect to basic cable services.  In addition,
the FCC is permitted to regulate rates for non-basic service tiers other than
premium services in response to local complaints. Rate regulations adopted by
the FCC provide for a benchmark and price cap system that is used to regulate
basic and non-basic service rates, and cost-of-service showings are available to
cable operators to allow them to justify rates above benchmark levels.  The 1996
Telecommunications Act (the "1996 Telecom Act") eliminated rate regulation for
small cable operators.  The 1996 Telecom Act sunsets FCC rate regulation of
cable programming service tiers for all cable television systems regardless of
size on March 31, 1999.  See Item 1, Regulation and Legislation.

THE COMPANY'S CABLE TELEVISION BUSINESS
---------------------------------------

     The Company is engaged primarily in the cable television business,
operating cable systems for itself and for its managed partnerships. The Company
owns and manages cable television systems that served approximately 1,200,000
basic subscribers as of December 31, 1998. As of December 31, 1998, on a pro
forma basis for all pending acquisitions of cable television systems by the
Company 

                                       5
<PAGE>
 
and pending sales of cable television systems owned by managed partnerships, the
Company served approximately 1,015,000 basic subscribers.

     The following table shows the cable television systems owned or managed by
the Company as of December 31, 1998:

<TABLE>
<CAPTION>
                                                                             CABLE SYSTEMS OWNED
                                                                             -------------------             
CABLE SYSTEMS OWNED BY THE COMPANY                                           BY MANAGED PARTNERSHIPS
----------------------------------                                           -----------------------
<S>                                 <C>                                      <C>
Albuquerque NM                      Oxnard CA                                Barrington IL (1)
Alexandria VA                       Palmdale CA                              Buffalo MN (1)
Augusta GA                          Panama City Beach FL                     Calvert County MD (2)
Celebration FL                      Pima County AZ                           Littlerock CA (3)
Chesapeake Bay Group MD             Prince Georges County MD                 Myrtle Creek OR (1)
Hinesville GA                       Prince William County VA                 Naperville IL  (1)
Independence MO                     Savannah GA                              So. Suburban IL (1)
Manitowoc WI                                                                 Wheaton IL (1)
</TABLE>


(1)  Systems scheduled to be sold to unaffiliated cable operators in February or
     March 1999
(2)  Sale of system to the Company pending as of February 1999
(3)  System sold to the Company in January 1999

     As part of the Company's announced plans to simplify its corporate
structure, 19 of the 27 cable television systems owned by the Company's managed
partnerships were sold during 1998. During the first quarter of 1999, an
additional 7 cable television systems owned by the Company's managed
partnerships have been or will be sold. The sale of the Calvert County, Maryland
system, the only remaining cable television system expected to be owned by a
managed partnership beyond the first quarter of 1999, is pending, and the
Company anticipates that it will be sold to the Company in April 1999. With
respect to certain of the remaining managed partnerships, the only remaining
asset of each partnership is a cash amount deposited into an indemnity escrow as
security to the buyer regarding certain representations and warranties made
under the asset purchase agreements by the partnerships regarding the cable
television systems. Provided that there are no pending disputes, these
partnerships will be liquidated and dissolved following the expiration of the
indemnity escrow periods. With respect to 4 managed partnerships, the
partnerships will not be dissolved and liquidated until the resolution and
termination of litigation involving the partnerships.

     Over the last several years, the Company has taken significant steps to
simplify its corporate structure.  This process has included the above-
referenced sales of cable television systems owned by certain managed
partnerships either to the Company or to unaffiliated entities and the
divestiture of certain of the Company's non-strategic assets.  As a result of
this strategy, on a pro forma basis for the cable system acquisitions by the
Company and cable system sales by the managed partnerships pending as of
February 1999, 100% of total subscribers served by the Company would have been
owned by the Company as of December 31, 1998, compared to 23% in June 1995.  See
Item 1, Proposed Acquisitions of Cable Television Systems in 1999.

                                       6
<PAGE>
 
     During this process of simplifying its corporate structure, the Company has
clustered its owned subscribers in two primary groups of cable systems. The
Company's Virginia/Maryland cluster is based primarily on geography. The
Company's suburban cluster is based on similar market and operating
characteristics, rather than geography. These clusters represent approximately
95% of Company-owned subscribers. The Company believes that its clustering
strategy should allow it to obtain both economies of scale and operating
efficiencies.

     The Virginia/Maryland cluster is comprised of cable systems serving
approximately 414,600 basic subscribers in communities in Maryland and Virginia
surrounding Washington, D.C.  On a pro forma basis for the Company's pending
acquisition of the Calvert County, Maryland system, the Company's
Virginia/Maryland cluster is comprised of cable systems serving approximately
433,400 basic subscribers.  The Company's suburban cluster includes the
Savannah, Hinesville and Augusta, Georgia systems, the Pima County, Arizona
system, the Independence, Missouri system, the Albuquerque, New Mexico system,
and the Palmdale and Littlerock, California systems serving approximately
522,300 basic subscribers.  See Item 1, Acquisitions of Cable Television Systems
in 1998 and 1999 and Item 1, Proposed Acquisitions of Cable Television Systems
in 1999.

     With respect to the systems owned by the Company and its subsidiaries, the
Company earns revenues through monthly service rates and related charges to
cable television subscribers.  The Company's subscribers have the option to
choose a limited basic service consisting generally of broadcast stations and a
few cable networks ("basic" service) or a package of services consisting of
basic service and tier services ("basic plus" service).  The basic plus service
generally consists of most of the cable networks, including ESPN, USA Network,
CNN, Discovery, Lifetime and others.  See Item 1, The Cable Television Industry,
Programming.

     Monthly service rates include fees for basic service, basic plus service
and premium services.  At December 31, 1998, monthly basic service rates ranged
from $6.95 to $16.54 for residential subscribers, monthly basic plus service
rates ranged from $20.05 to $32.24 for residential subscribers, and monthly
premium services ranged from $5.99 to $11.95 per premium service.  In addition,
the Company earns revenues from pay-per-view programs and advertising fees.
Pay-per-view programs, which usually are either unique sporting events or
recently released movies, are available on many of the Company's cable
television systems.  Subscribers are permitted to choose individual movies for a
set fee ranging from $3.95 to $10.95 per movie and individual special events for
a set fee ranging from $3.95 to $129.95 per event.  Related charges may include
a nonrecurring installation fee that ranges from $4.95 to $49.95; however, from
time to time the Company has followed the common industry practice of reducing
the installation fee during promotional periods.  Commercial subscribers such as
hotels, motels and hospitals are charged a nonrecurring connection fee that
usually covers the cost of installation.  Except under the terms of certain
contracts with commercial subscribers and residential apartment and condominium
complexes, subscribers are free to discontinue the service at any time without
penalty, and most terminations occur because a subscriber moves to another home
or to another city.  For the year ended December 31, 1998, of the total
subscriber fees received by Company-owned systems, basic and basic plus service
fees accounted for approximately 69% of total revenues, premium service fees
accounted for approximately 17% of total revenues, pay-per-view fees were
approximately 2% of total revenues, advertising fees were approximately 7% of
total revenues 

                                       7
<PAGE>
 
and the remaining 5% of total revenues came primarily from equipment rentals,
installation fees, telephony services and program guide charges. The Company is
dependent upon timely receipt of service fees to provide for maintenance and
replacement of plant and equipment, current operating expenses and other costs.

     As the general partner of its managed partnerships, the Company
historically has earned management fees that are equal to 5% of the gross
revenues of the partnerships, not including revenues from the sale of cable
television systems or franchises. The Company also received reimbursement from
its managed partnerships for certain allocated overhead and administrative
expenses incurred by the Company in its management activities. These management
fees and reimbursements have been significantly reduced and will be eliminated
after the first quarter of 1999 as the Company completes the planned liquidation
of its managed partnerships.

     The Company's business consists of providing cable television services to
a large number of customers, the loss of any one or more of which would have no
material effect on the Company's business.  Each of the cable television systems
owned or operated by the Company has had some subscribers who later terminated
the service.  Terminations occur primarily because people move to another home
or to another city.  In other cases, people terminate on a seasonal basis or
because they no longer can afford or are dissatisfied with the service.  The
amount of past due accounts in systems owned or operated by the Company is not
significant.  The Company's policy with regard to these accounts is basically
one of disconnecting service before a past due account becomes material.

     The Company does not depend to any material extent on the availability of
raw materials, it carries no significant amounts of inventory and it has no
material backlog of customer orders.  The Company has engaged in research and
development activities relating to the provision of new services.  Compliance
with Federal, state and local provisions that have been enacted or adopted
regulating the discharge of materials into the environment or otherwise relating
to the protection of the environment has had no material effect upon the capital
expenditures, earnings or competitive position of the Company.

THE COMPANY'S OTHER BUSINESSES AND INVESTMENTS
----------------------------------------------

     The Intercable Group, Ltd., f/k/a The Jones Group, Ltd., a wholly owned
subsidiary of the Company, is a cable television brokerage firm that has earned
fees from certain of the Company's managed partnerships when such partnerships
have sold cable systems.  It is anticipated that this subsidiary will not
generate revenues after the partnerships' cable systems are sold.  Jones
Futurex, Inc., also a wholly owned subsidiary of the Company, manufactures and
markets data encryption products.  The Company owns an approximate 32% equity
interest in Knowledge TV, Inc, which provides educational programming.

ACQUISITIONS OF CABLE TELEVISION SYSTEMS IN 1998 AND 1999
---------------------------------------------------------

     Albuquerque System.  In June 1998, the Company purchased from Cable TV Fund
     ------------------                                                    
12-BCD Venture (the "Venture"), a venture comprised of three managed
partnerships, the cable television system serving areas in and around
Albuquerque, New Mexico (the "Albuquerque System") for 

                                       8
<PAGE>
 
$222,963,267, subject to customary closing adjustments. The purchase price
represented the average of three independent appraisals of the fair market value
of the Albuquerque System. Upon closing, the Company received, from the three
partnerships that comprise the Venture, general partner distributions totaling
approximately $8,100,000.

     Hinesville System.  In December 1998, the Company purchased the cable
     -----------------                                                    
television system serving communities in and around Hinesville, Georgia (the
"Hinesville System") from an unaffiliated party for a purchase price of
$48,000,000, subject to customary closing adjustments.  The Hinesville System is
contiguous to the Company's Savanna, Georgia cable television system.  The
Company paid Jones Financial Group, Ltd. ("Financial Group"), a subsidiary of
International, a fee of $756,000 for acting as the Company's financial advisor
in connection with this transaction.

     Palmdale System.  In December 1998, the Company purchased from the Venture
     ---------------                                                           
the cable system serving areas in and around Palmdale and Lancaster, California
(the "Palmdale System") for a purchase price of $138,205,200, subject to
customary closing adjustments.  The purchase price represented the average of
three separate independent appraisals of the fair market value of the Palmdale
System.  Upon closing, the Company received, from the three partnerships that
comprise the Venture, general partner distributions totaling approximately
$22,275,000.  See Item 3, Legal Proceedings for a description of a lawsuit
brought by a limited partner of two of the partnerships that are partners in the
Venture challenging the terms of the sale of the Palmdale System to the Company.

     Grants System and Socorro System.  In December 1998, the Company purchased
     --------------------------------                                          
from Spacelink Fund 3, Ltd., a managed partnership, the cable television systems
serving areas in and around Socorro, New Mexico (the "Socorro System") and
Grants, New Mexico (the "Grants System"), for purchase prices of $3,638,791 and
$6,420,806, respectively.  The purchase prices represented the average of three
independent appraisals of the fair market values of the Socorro System and the
Grants System, respectively.

     Littlerock System.  In January 1999, the Company purchased from Cable TV
     -----------------                                                       
Fund 14-B, Ltd., a managed partnership, the cable television system serving
areas in and around Littlerock, California for a purchase price of $10,720,400,
subject to customary closing adjustments.  The Littlerock System is contiguous
to the Palmdale System.  The purchase price represented the average of three
separate independent appraisals of the fair market value of the Littlerock
System. See Item 3, Legal Proceedings for a description of a lawsuit brought by
a limited partner of Cable TV Fund 14-B, Ltd. challenging the terms of the sale
of the Littlerock System to the Company.

PROPOSED ACQUISITIONS OF CABLE TELEVISION SYSTEMS IN 1999
---------------------------------------------------------

     Calvert County System.  In June 1998, the Company entered into an agreement
     ---------------------                                            
with Cable TV Fund 14-A, Ltd., a managed partnership, to purchase the cable
television system serving areas in and around Calvert County, Maryland (the
"Calvert County System") for a purchase price of $39,388,667, subject to
customary closing adjustments. The purchase price represents the average of
three independent appraisals of the fair market value of the Calvert County
System. The Calvert County System is contiguous to the Company's
Virginia/Maryland cluster of cable television systems. The closing of this
transaction, which is expected to occur in April 1999, is subject to a number of

                                       9
<PAGE>
 
conditions including the approval of the transaction by the holders of a
majority of the limited partnership interests of Fund 14-A, the expiration or
termination of all waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 applicable to the agreement or the transactions
contemplated thereby, and the receipt of consents of governmental authorities
and other third parties.

SALE OF CONTRACT MANUFACTURING BUSINESS
---------------------------------------

     In May 1998, the Company sold the contract manufacturing business owned by
Jones Futurex, Inc. ("Futurex") to a third party for $350,000 in cash.  In
addition, the buyer entered into a sublease arrangement for certain facilities
leased by Futurex.  Payments under the sublease agreement total approximately
$1.8 million over the next four years.  The Company continues to own and operate
Futurex's encryption business.

SALE OF INTEREST IN JONES CUSTOMER SERVICE MANAGEMENT, LLC
----------------------------------------------------------

     In August 1998, the Company sold its 75% interest in Jones Customer
Service Management, LLC to Jones Cyber Solutions, Ltd., an affiliated company,
for $3,150,000.  The purchase price was paid $2,000,000 in cash and $1,150,000
in a note receivable.  The note receivable bears interest at prime + 2%, and is
payable in 36 months or upon a change in control of the Company.

DISTRIBUTION AGREEMENT WITH @HOME CORPORATION
---------------------------------------------

     In June 1998, the Company entered into a Distribution Agreement with At
Home Corporation ("@Home"), which provides for the distribution of high speed
internet services to the Company's cable television systems.  Deployment began
in December 1998.  In conjunction with this agreement, the Company and @Home
entered into a Warrant Purchase Agreement providing for the Company's purchase
of up to a maximum of 2,046,100 shares of Series A Common Stock of @Home for
$10.50 per share. The Warrant becomes exercisable after March 31, 1999 as the
Company launches @Home services in its cable television systems in the future.

SALE OF 7 5/8% SENIOR NOTES
---------------------------

     In April 1998, the Company issued and sold $200,000,000 of its 7 5/8%
Senior Notes due April 15, 2008.  Proceeds from the sale of the Senior Notes
were used to repay a portion of the amounts outstanding under the revolving
credit facilities of the Company's subsidiaries.

THE COMPANY'S CREDIT FACILITIES
-------------------------------

     The Company's credit facilities consist of two revolving credit facilities,
one for JCH and one for JCH II. Each revolving credit facility has maximum
available borrowings of $600,000,000.

     The $600,000,000 JCH revolving credit facility is a reducing revolving
credit facility.  The entire $600,000,000 commitment is available through March
31, 1999, at which time the commitment will be reduced quarterly with a final
maturity date of December 31, 2004.  The balance outstanding 

                                       10
<PAGE>
 
on JCH's revolving credit facility at December 31, 1998 was $340,000,000. The
maximum amount available will be reduced to $555,000,000 at December 31, 1999.

     The $600,000,000 JCH II revolving credit facility consists of a
$300,000,000 reducing revolving credit facility and a $300,000,000 term loan.
The reducing revolving credit facility allows for borrowings through the final
maturity date of December 31, 2005. The maximum amount available reduces
quarterly beginning March 31, 2000 through the final maturity date of December
31, 2005. The term loan is payable in semi-annual installments commencing June
30, 2001 with a final maturity date of December 31, 2005. The balance
outstanding on the JCH II revolving credit facility at December 31, 1998 was
$370,000,000. Of this amount, $300,000,000 was borrowed under the term loan
portion of the facility and $70,000,000 was borrowed under the reducing
revolving portion of the facility.

CABLE TELEVISION FRANCHISES
---------------------------

      The cable television systems owned or managed by the Company are
constructed and operated under fixed-term franchises or other types of operating
authorities (referred to collectively herein as "franchises") that are generally
non-exclusive and are granted by state and/or local governmental authorities.
These franchises typically contain many conditions, such as time limitations on
commencement and completion of construction, conditions of service, including
the number of channels, types of programming and the provision of free service
to schools and certain other public institutions, and the maintenance of
insurance and indemnity bonds.  The provisions of local franchises are subject
to federal regulation.

      The Company holds approximately 175 franchises.  These franchises provide
for the payment of fees to the issuing authorities and range from 3% to 5% of
gross revenues.  The 1984 Cable Act prohibits franchising authorities from
imposing annual franchise fees in excess of 5% of gross revenues and also
permits the cable television system operator to seek renegotiation and
modification of franchise requirements if warranted by changed circumstances.

      The Company has never had a franchise revoked.  The Company's franchises
initially had terms of approximately 10 to 15 years.  The duration of the
Company's outstanding franchises presently varies from a period of months to an
indefinite period of time.  The Company is currently negotiating the renewal of
16 franchises that are either operating under extensions or will expire prior to
December 31, 1999, and also is negotiating the renewal of 22 franchises awarded
by communities located in Prince Georges County, Maryland that are either
operating under extensions or will expire prior to December 31, 1999.  The
Prince Georges County communities have joined together with the Prince Georges
County Cable Commission for the renewal negotiations.  The Company has
experienced lengthy negotiations with some franchising authorities for the
granting of franchise renewals.  Some of the issues involved in recent renewal
negotiations include rate regulation, customer service standards, cable plant
upgrade or replacement and shorter terms of franchise agreements.  The Company
expects that the franchises operating under extensions or expiring prior to
December 31, 1999 will be renewed in due course.

                                       11
<PAGE>
 
COMPETITION
-----------

     Cable television systems currently experience competition from several
sources.

     Broadcast Television.  Cable television systems have traditionally
     ---------------------                                             
competed with broadcast television, which consists of television signals that
the viewer is able to receive directly on his television without charge using an
"off-air" antenna.  The extent of such competition is dependent in part upon the
quality and quantity of signals available by such antenna reception as compared
to the services provided by the local cable system.  Accordingly, it has
generally been less difficult for cable operators to obtain higher penetration
rates in rural areas where signals available off-air are limited, than in
metropolitan areas where numerous, high quality off-air signals are often
available without the aid of cable television systems.

     Overbuilds.  Cable television franchises are not exclusive, so that more
     ----------                                                              
than one cable television system may be built in the same area (known as an
"overbuild"), with potential loss of revenues to the operator of the original
cable television system. The Company has experienced overbuilds in connection
with certain systems that it has owned or managed for limited partnerships, and
currently there are overbuilds in both owned and managed systems.  Constructing
and developing a cable television system is a capital intensive process, and it
is often difficult for a new cable system operator to create a marketing edge
over the existing system.  Generally, an overbuilder would be required to obtain
franchises from the local governmental authorities, although in some instances,
the overbuilder could be the local government itself.  In any case, an
overbuilder would be required to obtain programming contracts from entertainment
programmers and, in most cases, would have to build a complete cable system,
including headends, trunk lines and drops to individual subscribers homes,
throughout the franchise areas.  The Company anticipates competition in the
Augusta franchise area from an unaffiliated cable operator that has been awarded
a franchise by Augusta and has commenced service in the franchise area.  The
Company's Panama City Beach system has lost basic subscribers and commercial
units to an overbuilder.  This overbuild continues to provide significant
competition.  A portion of the Company's Chesapeake Bay Group serving Anne
Arundel County, Maryland is overbuilt by a competing cable television system.

     Federal cross-ownership restrictions historically limited entry by local
telephone companies into the cable television business.  The 1996 Telecom Act
eliminated this cross-ownership restriction, making it possible for companies
with considerable resources to overbuild existing cable operators and enter the
business.  Several telephone companies have begun seeking cable television
franchises from local governmental authorities and constructing cable television
systems.  GTE, a local exchange carrier, which provides telephone service in a
multi-state region, including California, has obtained a franchise from the City
of Oxnard, California and is providing video programming in Oxnard in
competition with the Company's Oxnard cable system.  In addition, Ameritech, one
of the regional Bell Operating Companies ("BOCs"), which provides telephone
service in a multi-state region including Illinois, has been the most active BOC
in seeking local cable franchises within its service area.  It has already begun
cable service in competition with partnership-owned cable systems in Elgin, Glen
Ellyn and Naperville, Illinois.  The Company cannot predict at this time the
extent of telephone company competition that will emerge in areas served by the
Company's cable television systems.  The entry of telephone companies as direct
competitors, however, is likely to continue over 

                                       12
<PAGE>
 
the next several years and could adversely affect the profitability and market
value of the Company's systems. The entry of electric utility companies into the
cable television business, as now authorized by the 1996 Telecom Act, could have
a similar adverse effect. Several utilities around the country have announced
multichannel video ventures, and the local electric utility in the Washington,
D.C. area is participating with RCN to provide video competition.

     DBS.  High-powered direct-to-home satellites have made possible the 
     ---                                                                     
wide-scale delivery of programming to individuals throughout the United States
using small roof-top or wall-mounted antennas. Several companies began offering
direct broadcast satellite ("DBS") service over the last few years, and recently
announced mergers should strengthen the surviving companies. Companies offering
DBS service use video compression technology to increase channel capacity of
their systems to 100 or more channels and to provide packages of movies,
satellite network and other program services which are competitive to those of
cable television systems. DBS faces technical and legal obstacles to offering
its customers local broadcast programming. At least one DBS provider, however,
is now attempting to do so, and the FCC and Congress are considering proposals
that would enhance the ability of DBS companies to provide broadcast
programming, including broadcast network programming. In addition to emerging
high-powered DBS competition, cable television systems face competition from
several low-powered providers, whose service requires use of much larger home
satellite dishes. Not all subscribers terminate cable television service upon
acquiring a DBS system. The Company has observed that there are DBS subscribers
that also elect to subscribe to cable television service in order to obtain the
greatest variety of programming on multiple television sets, including local
programming not available through DBS service. The ability of DBS service
providers to compete successfully with the cable television industry will depend
on, among other factors, the availability of equipment at reasonable prices, and
the relative attractiveness of the programming options offered by the cable
television industry and DBS competitors.

     Private Cable.  Additional competition is provided by private cable
     -------------                                                      
television systems, known as Satellite Master Antenna Television (SMATV),
serving multi-unit dwellings such as condominiums, apartment complexes, and
private residential communities.  These private cable systems may enter into
exclusive agreements with apartment owners and homeowners associations, which
may preclude operators of franchised systems from serving residents of such
private complexes.  Private cable systems that do not cross public rights of way
are free from the federal, state and local regulatory requirements imposed on
franchised cable television operators.  In some cases, the Company has been
unable to provide cable television service to buildings in which private
operators have secured exclusive contracts to provide video and telephony
services.  The Company is interested in providing these same services, but
expects that the market to install and provide these services in multi-unit
buildings will continue to be highly competitive.  In late 1995, the Company
launched a competitive telephone service in selected apartments and condominium
units in its Alexandria, Virginia System, and began providing such service in
the first half of 1997 in Maryland as well.  The Company has been granted
Competitive Local Exchange Carrier status in the states of Maryland and
Virginia.  The Company faces considerable competition in providing telephony
service from incumbent local exchange carriers and a host of alternative
carriers.

     MMDS.  Cable television systems also compete with wireless program
     ----                                                              
distribution services such as multichannel, multipoint distribution service
("MMDS") systems, commonly called wireless 

                                       13
<PAGE>
 
cable, which are licensed to serve specific areas. MMDS uses low-power microwave
frequencies to transmit television programming over-the-air to paying
subscribers. The MMDS industry is less capital intensive than the cable
television industry, and it is therefore more practical to construct MMDS
systems in areas of lower subscriber penetration. Wireless cable systems are now
in direct competition with cable television systems in several areas of the
country, including the Company's system in Pima County, Arizona. To date, the
Company has not lost a significant number of subscribers, nor a significant
amount of revenue, to MMDS operators competing with the Company's cable
television systems.

     Cable television systems are also in competition, in various degrees with
other communications and entertainment media, including motion pictures, home
video cassette recorders, internet data delivery and internet video delivery.

REGULATION AND LEGISLATION
--------------------------

     The operation of cable television systems is extensively regulated by the
FCC, some state governments and most local governments.  The Telecommunications
Act of 1996 ("1996 Telecom Act") alters the regulatory structure governing the
nation's telecommunications providers.  It removes barriers to competition in
both the cable television market and the local telephone market.  Among other
things, it also reduces the scope of cable rate regulation.

     The 1996 Telecom Act requires the FCC to undertake a host of implementing
rulemakings, the final outcome of which cannot yet be determined.  Moreover,
Congress and the FCC have frequently revisited the subject of cable regulation.
Future legislative and regulatory changes could adversely affect the Company's
operations, and there has been a recent increase in calls to maintain or even
tighten cable regulation in the absence of widespread effective competition.
This section briefly summarizes key laws and regulations affecting the operation
of the Company's cable systems and does not purport to describe all present,
proposed, or possible laws and regulations affecting the Company.

     Cable Rate Regulation.  The 1992 Cable Act imposed an extensive rate
     ---------------------                                               
regulation regime on the cable television industry.  Under that regime, all
cable systems are subject to rate regulation, unless they face "effective
competition" in their local franchise area.  Federal law now defines "effective
competition" on a community-specific basis as requiring either low penetration
(less than 30%) by the incumbent cable operator, appreciable penetration (more
than 15%) by competing multichannel video providers ("MVPs"), or the presence of
a competing MVP affiliated with a local telephone company.  The FCC has
officially recognized that the Anne Arundel System and the Panama City Beach
System face "effective competition," and a similar petition is now pending at
the FCC concerning portions of the Pima County, Arizona system.

     Although the FCC rules control, local government units (commonly referred
to as local franchising authorities or "LFAs") are primarily responsible for
administering the regulation of the lowest level of cable -- the basic service
tier ("BST"), which typically contains local broadcast stations and public,
educational, and government ("PEG") access channels.  Before an LFA begins BST
rate regulation, it must certify to the FCC that it will follow applicable
federal rules, and many LFAs have voluntarily declined to exercise this
authority.  LFAs also have primary responsibility for regulating 

                                       14
<PAGE>
 
cable equipment rates. Under federal law, charges for various types of cable
equipment must be unbundled from each other and from monthly charges for
programming services. The 1996 Telecom Act allows operators to aggregate costs
for broad categories of equipment across geographic and functional lines. This
change should facilitate the introduction of new technology.

     The FCC itself directly administers rate regulation of any cable
programming service tiers ("CPST"), which typically contain satellite-delivered
programming. Under the 1996 Telecom Act, the FCC can regulate CPST rates only if
an LFA first receives at least two rate complaints from local subscribers and
then files a formal complaint with the FCC. When new CPST rate complaints are
filed, the FCC now considers only whether the incremental increase is justified
and will not reduce the previously established CPST rate.

     Under the FCC's rate regulations, most cable systems were required to
reduce their BST and CPST rates in 1993 and 1994, and have since had their rate
increases governed by a complicated price cap scheme that allows for the
recovery of inflation and certain increased costs, as well as providing some
incentive for expanding channel carriage.  The FCC has modified its rate
adjustment regulations to allow for annual rate increases and to minimize
previous problems associated with regulatory lag. Operators also have the
opportunity of bypassing this "benchmark" regulatory scheme in favor of
traditional "cost-of-service" regulation in cases where the latter methodology
appears favorable.  Premium cable services offered on a per-channel or per-
program basis remain unregulated, as do affirmatively marketed packages
consisting entirely of new programming product.  Federal law requires that the
BST be offered to all cable subscribers, but limits the ability of operators to
require purchase of any CPST before purchasing premium services offered on a
per-channel or per-program basis.

     The 1996 Telecom Act sunsets FCC regulation of CPST rates for all systems
(regardless of size) on March 31, 1999.  Certain critics of the cable television
industry, however, have called for a delay in the regulatory sunset and some
have even urged more rigorous rate regulation, including limits on operators
passing through to their customers increased programming costs and bundling
together multiple programming services.  The 1996 Telecom Act also relaxes
existing uniform rate requirements by specifying that uniform rate requirements
do not apply where the operator faces "effective competition," and by exempting
bulk discounts to multiple dwelling units, although complaints about predatory
pricing still may be made to the FCC.

     Cable Entry Into Telecommunications.  The 1996 Telecom Act provides that
     -----------------------------------                                     
no state or local laws or regulations may prohibit or have the effect of
prohibiting any entity from providing any interstate or intrastate
telecommunications service.  States are authorized, however, to impose
"competitively neutral" requirements regarding universal service, public safety
and welfare, service quality, and consumer protection.  State and local
governments also retain their authority to manage the public rights-of-way and
may require reasonable, competitively neutral compensation for management of the
public rights-of-way when cable operators provide telecommunications service.
The favorable pole attachment rates afforded cable operators under federal law
can be gradually increased by utility companies owning the poles (beginning in
2001) if the operator provides telecommunications service, as well as cable
service, over its plant.

                                       15
<PAGE>
 
     Cable entry into telecommunications will be affected by the regulatory
landscape now being fashioned by the FCC and state regulators.  One critical
component of the 1996 Telecom Act to facilitate the entry of new
telecommunications providers (including cable operators) is the interconnection
obligation imposed on all telecommunications carriers.  In July 1997, the Eighth
Circuit Court of Appeals vacated certain aspects of the FCC's initial
interconnection order, but that decision was reversed by the U.S. Supreme Court
in January 1999.  The Company has already secured authorization to provide local
exchange service in Maryland and portions of Virginia and has begun offering
some telecommunications services to customers in both jurisdictions.

     Telephone Company Entry Into Cable Television.  The 1996 Telecom Act
     ---------------------------------------------                       
allows telephone companies to compete directly with cable operators by repealing
the historic telephone company/cable cross-ownership ban.  Local exchange
carriers ("LECs"), including the BOCs, can now compete with cable operators both
inside and outside their telephone service areas.  Because of their resources,
LECs could be formidable competitors to traditional cable operators, and certain
LECs have begun offering cable service.  As described above, the Company is now
witnessing the beginning of LEC competition in a few of its cable communities.

     Under the 1996 Telecom Act, a LEC providing video programming to
subscribers will be regulated as a traditional cable operator (subject to local
franchising and federal regulatory requirements), unless the LEC elects to
provide its programming via an "open video system" ("OVS"). To qualify for OVS
status, the LEC must reserve two-thirds of the system's activated channels for
unaffiliated entities. RCN and affiliates of local power companies recently have
been certified to provide OVS service in areas encompassing the Company's cable
systems in suburban Maryland and Virginia. This potential OVS competition is not
yet operational. The Fifth Circuit Court of Appeals recently reversed certain of
the FCC's OVS rules, including the FCC's preemption of local franchising.

     Although LECs and cable operators can now expand their offerings across
traditional service boundaries, the general prohibition remains on LEC buyouts
(i.e., any ownership interest exceeding 10 percent) of co-located cable systems,
cable operator buyouts of co-located LEC systems, and joint ventures between
cable operators and LECs in the same market.  The 1996 Telecom Act provides a
few limited exceptions to this buyout prohibition, including a carefully
circumscribed "rural exemption."  The 1996 Telecom Act also provides the FCC
with the limited authority to grant waivers of the buyout prohibition (subject
to LFA approval).

     Electric Utility Entry Into Telecommunications/Cable Television.  The 1996
     ---------------------------------------------------------------           
Telecom Act provides that registered utility holding companies and subsidiaries
may provide telecommunications services (including cable television)
notwithstanding the Public Utilities Holding Company Act.  Electric utilities
must establish separate subsidiaries, known as "exempt telecommunications
companies" and must apply to the FCC for operating authority.  Again, because of
their resources, electric utilities could be formidable competitors to
traditional cable systems.

     Additional Ownership Restrictions.  The 1996 Telecom Act eliminates
     ---------------------------------                                  
statutory restrictions on broadcast/cable cross-ownership (including broadcast
network/cable restrictions), but leaves in place existing FCC regulations
prohibiting local cross-ownership between co-located television stations and

                                       16
<PAGE>
 
cable systems.  The 1996 Telecom Act also eliminates the three year holding
period required under the 1992 Cable Act's "anti-trafficking" provision. The
1996 Telecom Act leaves in place existing restrictions on cable cross-ownership
with SMATV and MMDS facilities, but lifts those restrictions where the cable
operator is subject to effective competition.  In January 1995, however, the FCC
adopted regulations which permit cable operators to own and operate SMATV
systems within their franchise area, provided that such operation is consistent
with local cable franchise requirements.

     Pursuant to the 1992 Cable Act, the FCC adopted rules precluding a cable
system from devoting more than 40% of its activated channel capacity to the
carriage of affiliated national program services.  A companion rule establishing
a nationwide ownership cap on any cable operator equal to 30% of all domestic
cable subscribers has been stayed pending further judicial review, although the
FCC recently expressed an interest in reviewing and reimposing this limit.

     There are no federal restrictions on non-U.S. entities having an ownership
interest in cable television systems or the FCC licenses commonly employed by
such systems.  Section 310(b)(4) of the Communications Act does, however,
prohibit foreign ownership of FCC broadcast and telephone licenses, unless the
FCC concludes that such foreign ownership is consistent with the public
interest.

     Must Carry/Retransmission Consent.  The 1992 Cable Act contains broadcast
     ---------------------------------                                        
signal carriage requirements that allow local commercial television broadcast
stations to elect once every three years between requiring a cable system to
carry the station ("must carry") or negotiating for payments for granting
permission to the cable operator to carry the station ("retransmission
consent").  Less popular stations typically elect "must carry," and more popular
stations typically elect "retransmission consent."  Must carry requests can
dilute the appeal of a cable system's programming offerings, and retransmission
consent demands may require substantial payments or other concessions.  Either
option has a potentially adverse affect on the Company's business.
Additionally, cable systems are required to obtain retransmission consent for
all "distant" commercial television stations (except for satellite-delivered
independent "superstations" such as WGN).  The burden associated with "must
carry" may increase substantially if broadcasters proceed with planned
conversion to digital transmission and the FCC determines that cable systems
must carry all analog and digital broadcasts in their entirety.  A rulemaking is
now pending at the FCC regarding the imposition of dual digital and analog must
carry.

     Access Channels.  LFAs can include franchise provisions requiring cable
     ---------------                                                        
operators to set aside certain channels for public, educational and governmental
access programming.  Federal law also requires cable systems to designate a
portion of their channel capacity (up to 15% in some cases) for commercial
leased access by unaffiliated third parties.  The FCC has adopted rules
regulating the terms, conditions and maximum rates a cable operator may charge
for use of the designated channel capacity, but use of commercial leased access
channels has been relatively limited.  The FCC released revised rules in
February 1997 mandating a modest rate reduction.  The reduction sparked some
increase in part-time use, but did not make commercial leased access
substantially more attractive to third party programmers. The D.C. Court of
Appeals recently rejected a challenge to the revised rules by dissatisfied
leased access programmers.

     Access to Programming.  To spur the development of independent cable
     ---------------------                                               
programmers and competition to incumbent cable operators, the 1992 Cable Act
imposed restrictions on the dealings 

                                       17
<PAGE>
 
between cable operators and cable programmers. Of special significance from a
competitive business posture, the 1992 Cable Act precludes video programmers
affiliated with cable companies from favoring cable operators over competitors
and requires such programmers to sell their programming to other multichannel
video distributors. This provision limits the ability of vertically integrated
cable programmers to offer exclusive programming arrangements to cable
companies. There recently has been increased interest in further restricting the
marketing practices of cable programmers, including subjecting programmers who
are not affiliated with cable operators to all of the existing program access
requirements In addition, some cable critics have argued that vertically
integrated, non-satellite programming (such as certain regional sports networks)
which is now exempt from the ban on exclusive programming, should be subjected
to this prohibition.

     Inside Wiring.  The FCC determined that an incumbent cable operator can be
     -------------                                                             
required by the owner of a multiple dwelling unit ("MDU") complex to remove,
abandon or sell the "home run" wiring it initially provided.  In addition, the
FCC is reviewing the enforceability of contracts to provide exclusive video
service within a MDU complex.  The FCC has proposed abrogating all such
contracts held by incumbent cable operators, but allowing such contracts when
held by new entrants.  These changes, and others now being considered by the
FCC, would, if implemented, make it easier for an MDU complex owner to terminate
service from an incumbent cable operator in favor of a new entrant and leave the
already competitive MDU sector even more challenging for incumbent operators.
In a separate proceeding, the FCC has preempted restrictions on the deployment
of private antennas on rental property within the exclusive use a tenant (such
as balconies and patios).

     Other FCC Regulations.  In addition to the FCC regulations noted above,
     ---------------------                                                  
there are other FCC regulations covering such areas as equal employment
opportunity, subscriber privacy, programming practices (including, among other
things, syndicated program exclusivity, network program nonduplication, local
sports blackouts, indecent programming, lottery programming, political
programming, sponsorship identification, and children's programming
advertisements), registration of cable systems and facilities licensing,
maintenance of various records and public inspection files,  frequency usage,
lockbox availability, antenna structure notification, tower marking and
lighting, consumer protection and customer service standards, technical
standards and consumer electronics equipment compatibility.  New federal
requirements governing Emergency Alert Systems and Closed Captioning adopted in
1997 will impose additional costs on the operation of cable systems.  The FCC
recently stated that cable customers must be allowed to purchase cable
converters from third party vendors, and established a multi-year phase-in
during which security functions (which would remain in the operator's exclusive
control) would be unbundled from basic converter functions (which could then be
satisfied by third party vendors).  Details regarding this phase-in are still
under FCC review.  The FCC has the authority to enforce its regulations through
the imposition of substantial fines, the issuance of cease and desist orders
and/or the imposition of other administrative sanctions, such as the revocation
of FCC licenses needed to operate certain transmission facilities used in
connection with cable operations.

     Internet Access.  Many cable operators have begun offering high speed
     ---------------                                                      
internet service to their customers.  At this time, there is no significant
federal or local regulation of this service.  However, as internet services
develop, it is possible that new regulations could be imposed.  The FCC recently
declined requests to impose common-carrier type regulation on cable operators
that would have 

                                       18
<PAGE>
 
required an "unbundling" of broadband facilities. The FCC indicated,
nevertheless, that it would continue to monitor broadband deployment.

     Copyright.  Cable television systems are subject to federal copyright
     ---------                                                            
licensing covering carriage of television and radio broadcast signals.  In
exchange for filing certain reports and contributing a percentage of their
revenues to a federal copyright royalty pool (that varies depending on the size
of the system and the number of distant broadcast television signals carried),
cable operators can obtain blanket permission to retransmit copyrighted material
on broadcast signals.  The possible modification or elimination of this
compulsory copyright license is the subject of continuing legislative review and
could adversely affect the Company's ability to obtain desired broadcast
programming.  In addition, the cable industry pays music licensing fees to BMI
and is negotiating a similar arrangement with ASCAP.  Copyright clearances for
nonbroadcast programming services are arranged through private negotiations.

     State and Local Regulation.  Cable television systems generally are 
     --------------------------                                         
operated pursuant to nonexclusive franchises granted by a municipality or other
state or local government entity in order to cross public rights-of-way.
Federal law now prohibits franchise authorities from granting exclusive
franchises or from unreasonably refusing to award additional franchises.   Cable
franchises generally are granted for fixed terms and in many cases include
monetary penalties for non-compliance and may be terminable if the franchisee
fails to comply with material provisions.

     The terms and conditions of franchises vary materially from jurisdiction to
jurisdiction. Each franchise generally contains provisions governing cable
operations, service rates, franchise fees, system construction and maintenance
obligations, system channel capacity, design and technical performance, customer
service standards, and indemnification protections. A number of states subject
cable television systems to the jurisdiction of centralized state governmental
agencies, some of which impose regulation of a character similar to that of a
public utility. Although LFAs have considerable discretion in establishing
franchise terms, there are certain federal limitations. For example, LFAs cannot
insist on franchise fees exceeding 5% of the system's gross revenues, cannot
dictate the particular technology used by the system, and cannot specify video
programming other than identifying broad categories of programming.

     Federal law contains renewal procedures designed to protect incumbent
franchisees against arbitrary denials of renewal.  Even if a franchise is
renewed, the franchise authority may seek to impose new and more onerous
requirements such as significant upgrades in facilities and services or
increased franchise fees as a condition of renewal.  Similarly, if a franchise
authority's consent is required for the purchase or sale of a cable system or
franchise, such authority may attempt to impose more burdensome or onerous
franchise requirements in connection with a request for consent.  Historically,
franchises have been renewed for cable operators that have provided satisfactory
services and have complied with the terms of their franchises.

                                       19
<PAGE>
 
RISK FACTORS
------------

     Shares of the Company's Class A Common Stock and Common Stock are available
for purchase in the market. The purchase of shares of the Company's Class A
Common Stock and Common Stock involves certain risks. Prospective purchasers of
the Company's securities should consider carefully the risks related to: (i) the
Company's history of net losses, (ii) its substantial leverage, (iii) the
probability that most of the Company's remaining managed partnerships will not
make distributions to their limited partners in amounts sufficient to provide
the returns on investment originally anticipated by the limited partners and, in
some cases, will not provide the limited partners with a return of all of their
initial capital contributions, (iv) the fact that the Company engages in certain
transactions with its affiliates, (v) the significant governmental regulation of
the cable television industry, (vi) current and threatened competition from
various sources, (viii) the planned change in control of the Company from its
founder, Glenn R. Jones, to Comcast in March 1999 and (ix) other information
about the Company set forth in this Form 10-K Report.


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

     The Company leases a portion of its executive offices from Jones 
Properties, Inc., a subsidiary of International.  The offices consist of a
101,500 square foot office building located at 9697 East Mineral Avenue,
Englewood, Colorado. The lease has a 15-year term expiring in July 2000 with
three 5-year renewal options at market rates existing at the beginning of the
option period.  The annual rent is currently $24.00 per square foot, plus
operating expenses, and will not, by the terms of the lease, exceed such amount
during the remainder of the term.  The Company subleases approximately 44% of
the building to International and certain other affiliates on the same terms and
conditions as the primary lease.

     The Company, through Jones Panorama Properties, Inc., a wholly owned
subsidiary of the Company, owns a 60,000 square foot office building (the
"Panorama Falls Building") located at 9085 E. Mineral Avenue, Englewood,
Colorado.  The Company leases a portion of the Panorama Falls Building from its
subsidiary for a lease price of $12.00 per square foot.  The Panorama Falls
Building houses additional executive offices of the Company.  The Company has
subleased approximately 45% of the Panorama Falls Building to International and
others on the same terms and conditions as the primary lease.

     Given the pending change of control of the Company from Mr. Jones to 
Comcast, it is anticipated that the above-described lease arrangements will be
renegotiated and/or terminated during 1999.

CABLE TELEVISION SYSTEMS OWNED BY THE COMPANY
---------------------------------------------

     A majority of the Company's cable television systems are owned by the
Company's wholly owed subsidiaries JCH and JCH II.  JCH owns and operates cable
television systems located in Maryland and Virginia (the "Virginia/Maryland
Systems").  The Virginia/Maryland Systems are comprised of the Chesapeake Bay
Group of cable systems that serve customers in communities in and 

                                       20
<PAGE>
 
around Anne Arundel County and Charles County, Maryland, including the City of
Annapolis; the Prince Georges County, Maryland system that services all of
Prince Georges County, Maryland; the Alexandria, Virginia system; and the Prince
William County system that serves the communities of Dale City, Manassas and
Reston, Virginia. JCH II owns and operates the Company's suburban cable systems
serving areas in and around Augusta, Hinesville and Savannah, Georgia, Pima
County, Arizona, Independence, Missouri, Albuquerque, Grants and Socorro, New
Mexico, Palmdale and Littlerock, California. The Company directly owns and
operates the cable television systems serving Manitowoc, Wisconsin, Oxnard,
California and Panama City Beach and Celebration, Florida.

     The following table sets forth (i) the monthly basic plus service rates
charged to subscribers and (ii) the number of basic subscribers and pay units
for the cable television systems owned by the Company.  The monthly basic plus
service rates set forth herein represent, with respect to systems with multiple
headends, the basic plus service rate charged to the majority of the subscribers
within the system.  In cable television systems, basic subscribers can subscribe
to more than one pay TV service.  Thus, the total number of pay services
subscribed to by basic subscribers are called pay units.  As of December 31,
1998, cable television systems owned by the Company passed approximately
1,596,000 homes, representing an approximate 62% penetration rate.  The figures
in the following table are compiled from the Company's records and may be
subject to adjustments.

SYSTEMS OWNED BY JONES CABLE HOLDINGS, INC.
-------------------------------------------

<TABLE> 
<CAPTION> 
CHESAPEAKE BAY GROUP, MARYLAND *                        At 12/31       
------------------------------        ----------------------------------------
                                         1998            1997           1996  
                                         ----            ----           ----  
<S>                                   <C>              <C>             <C> 
Monthly basic plus service rate        $  27.27        $  24.96        $ 24.15
Basic subscribers                       104,506         102,209         74,252
Pay units                               108,695         108,335         80,339
</TABLE> 

*    The Chesapeake Bay Group includes the Anne Arundel County system, the
     Charles County system and the Annapolis system.  The Annapolis system was
     acquired in April 1997.

<TABLE> 
<CAPTION> 
PRINCE GEORGES COUNTY, MARYLAND *                       At 12/31
-------------------------------        ----------------------------------------
                                         1998            1997           1996
                                         ----            ----           ----
<S>                                    <C>             <C>             <C> 
Monthly basic plus service rate        $  31.57        $  29.13        $  25.89
Basic subscribers                       168,388         165,846          73,852
Pay units                               235,718         216,708         134,975
</TABLE> 

*    The Prince Georges County, Maryland system includes the South Prince
     Georges County system (acquired in February 1996) and the North Prince
     Georges County system (acquired in January 1997).

                                       21
<PAGE>
 
<TABLE> 
<CAPTION> 
ALEXANDRIA, VIRGINIA                                   At 12/31
--------------------                    ---------------------------------------
                                          1998           1997            1996
                                          ----           ----            ----
<S>                                     <C>             <C>             <C> 
Monthly basic plus service rate         $ 30.88         $ 27.93         $ 24.98
Basic subscribers                        43,097          41,137          40,525
Pay units                                34,299          31,926          33,387
</TABLE> 


<TABLE> 
<CAPTION> 
PRINCE WILLIAM COUNTY, VIRGINIA *                       At 12/31
-------------------------------         ---------------------------------------
                                           1998            1997           1996
                                           ----            ----           ----
<S>                                     <C>              <C>            <C> 
Monthly basic plus service rate         $   30.97        $ 28.17        $ 25.57
Basic subscribers                          98,651         95,725         92,951
Pay units                                 101,730         97,042         91,007
</TABLE> 

*    The Prince William County, Virginia system includes the Dale City system
     (acquired in November 1995), the Manassas system (acquired in January 1996)
     and the Reston system (acquired in February 1996).

SYSTEMS OWNED BY JONES CABLE HOLDINGS II, INC.
----------------------------------------------

<TABLE> 
<CAPTION> 
PIMA COUNTY, ARIZONA                                       At 12/31
--------------------                       -------------------------------------
                                             1998           1997          1996
                                             ----           ----          ----
<S>                                        <C>            <C>           <C> 
Monthly basic plus service rate            $  27.25       $  26.45      $ 25.80
Basic subscribers                            64,641         62,364       59,434
Pay units                                    31,919         35,532*      38,898*
</TABLE> 

*    The Pima County system had a successful promotion of pay channels in late
     1996, resulting in a significant increase in pay units in 1996.  The
     promotion was discontinued in 1997, and the system was unable to maintain
     the increase experienced in 1996.

<TABLE>
<CAPTION>
PALMDALE, CALIFORNIA*                       At 12/31
---------------------                       --------    
                                              1998
                                              ----           
<S>                                         <C>
Monthly basic plus service rate              $ 19.00
Basic subscribers                             65,465
Pay units                                     56,640
</TABLE>


*  The Palmdale System was acquired in December 1998.

                                       22
<PAGE>
 
<TABLE>
<CAPTION>
AUGUSTA, GEORGIA                                       At 12/31                 
----------------                      ----------------------------------------  
                                          1998           1997           1996    
                                          ----           ----           ----    
<S>                                   <C>               <C>            <C>    
Monthly basic plus service rate         $  29.63        $ 27.68        $ 25.73
Basic subscribers                         91,557         89,170         85,816
Pay units                                 74,867         73,307         70,619
</TABLE>

<TABLE>
<CAPTION>
HINESVILLE, GEORGIA*                       At 12/31
--------------------                       --------   
                                             1998
                                             ----      
<S>                                        <C>
Monthly basic plus service rate             $ 28.31
Basic subscribers                            22,964
Pay units                                    13,145
</TABLE>

*    The Hinesville System was acquired in December 1998.

<TABLE>
<CAPTION>
SAVANNAH, GEORGIA*                                         At 12/31
------------------                       --------------------------------------
                                             1998           1997         1996
                                             ----           ----         ----
<S>                                      <C>               <C>          <C>
Monthly basic plus service rate             $ 26.29        $ 24.17      $ 23.94
Basic subscribers                            66,999         66,184       62,780
Pay units                                    42,818         40,428       36,629
</TABLE>

*    The Savannah System was acquired in April 1996.

<TABLE>
<CAPTION>
INDEPENDENCE, MISSOURI*                           At 12/31
-----------------------                  -------------------------
                                             1998           1997
                                             ----           ----         
<S>                                      <C>               <C>
Monthly basic plus service rate            $ 26.92         $ 25.92
Basic subscribers                           90,623          87,070
Pay units                                   70,420          63,481
</TABLE>

*    The Independence System was acquired in August 1997.

<TABLE>
<CAPTION>
ALBUQUERQUE, NEW MEXICO*                    At 12/31
------------------------                    --------   
                                              1998
                                              ----     
<S>                                         <C>
Monthly basic plus service rate             $  28.98
Basic subscribers                            113,751
Pay units                                     60,885
</TABLE>

*    The Albuquerque System was acquired in June 1998.

                                       23
<PAGE>
 
<TABLE>
<CAPTION>
GRANTS, NEW MEXICO*                         At 12/31
-------------------                         --------
                                              1998
                                              ----
<S>                                         <C>
Monthly basic plus service rate               $28.02
Basic subscribers                              3,921
Pay units                                      1,376
</TABLE>

*    The Grants System was acquired in December 1998.

<TABLE>
<CAPTION>
SOCORRO, NEW MEXICO*                        At 12/31
--------------------                        --------   
                                              1998
                                              ----        
<S>                                         <C>
Monthly basic plus service rate               $22.95
Basic subscribers                              2,342
Pay units                                      1,256
</TABLE>

*    The Socorro System was acquired in December 1998.
 
SYSTEMS OWNED BY JONES INTERCABLE, INC.
-----------------------------------------

<TABLE>
<CAPTION>
OXNARD, CALIFORNIA*                                       At 12/31
-------------------                      -------------------------------------
                                             1998         1997          1996
                                             ----         ----          ----   
<S>                                      <C>             <C>           <C>
Monthly basic plus service rate             $ 25.45      $ 23.40       $ 21.15
Basic subscribers*                           32,449       35,985        40,134
Pay units*                                   18,135       24,234        28,701
</TABLE>

*    The reduction in the number of basic subscribers and pay units is due to an
     ongoing overbuild of the system.

<TABLE>
<CAPTION>
CELEBRATION, FLORIDA*                                     At 12/31
---------------------                    ------------------------------------
                                            1998         1997           1996
                                            ----         ----           ----
<S>                                      <C>            <C>            <C>
Monthly basic plus service rate            $22.44       $20.94         $20.94
Basic subscribers                             709          428            186
Pay units                                     417          281            108
</TABLE>

*    The system is being constructed concurrently with the construction of the
     community.

                                       24
<PAGE>
 
<TABLE>
<CAPTION>
PANAMA CITY BEACH, FLORIDA                                 At 12/31
--------------------------               -----------------------------------
                                             1998         1997         1996
                                             ----         ----         ----
<S>                                      <C>             <C>          <C>
Monthly basic plus service rate             $23.10       $23.10       $21.10
Basic subscribers*                           7,119        7,072        7,248
Pay units*                                   6,853        7,076        7,251
</TABLE>

*    The reduction in the number of basic subscribers and pay units is due to an
     ongoing overbuild of the system.

<TABLE>
<CAPTION>
MANITOWOC, WISCONSIN*                             At 12/31
---------------------                             --------              
                                             1998           1997
                                             ----           ----      
<S>                                         <C>            <C>
Monthly basic plus service rate             $ 24.40        $ 22.61
Basic subscribers                            12,094         11,954
Pay units                                     6,680          7,151
</TABLE>

*    The Manitowoc system was acquired in June 1997.


                          ITEM 3.  LEGAL PROCEEDINGS
                          --------------------------
Tampa Litigation
----------------

     The Company is a defendant in a now-consolidated civil action filed by
limited partners of Cable TV Fund 12-D, Ltd., one of the Company's managed
partnerships. The case, styled David Hirsch, Marty, Inc. Pension Plan (by its
                               ----------------------------------------------
trustee and beneficiary, Martin Ury) and Jonathan and Eileen Fussner, 
---------------------------------------------------------------------
derivatively on behalf of Cable TV Fund 12-B, Ltd., Cable TV Fund 12-C, Ltd. and
--------------------------------------------------------------------------------
Cable TV Fund 12-D, Ltd., plaintiffs v. Jones Intercable, Inc., defendant, and
------------------------------------------------------------------------------
Cable TV Fund 12-BCD Venture, Cable TV Fund 12-B, Ltd., Cable TV Fund 12-C, Ltd.
--------------------------------------------------------------------------------
and Cable TV Fund 12-D, Ltd., nominal defendants (District Court, Arapahoe 
------------------------------------------------
County, State of Colorado, Case No. 95-CV-1800, Division 3), is a derivative
action filed on behalf of 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"). The
consolidated complaint generally alleges that the Company breached its fiduciary
duty to the plaintiffs and to the other limited partners of Fund 12-B, Fund 12-C
and Fund 12-D and the Cable TV Fund 12-BCD Venture (the "Venture") in connection
with the Venture's sale of the Tampa, Florida cable television system (the
"Tampa System") to a subsidiary of the Company and the subsequent trade of the
Tampa System to Time Warner Entertainment Advance/Newhouse Partnership ("Time
Warner"), an unaffiliated cable television system operator, in exchange for
cable television systems owned by Time Warner. The consolidated complaint also
sets forth a claim for breach of contract and a claim for breach of the implied
covenant of good faith and fair dealing. Among other things, the plaintiffs
assert that the subsidiary of the Company that acquired the Tampa System paid an
inadequate price for the Tampa System. The price paid for the Tampa System was
determined by the average of three separate, independent appraisals of the Tampa
System's fair market value as required by the limited 

                                       25
<PAGE>
 
partnership agreements of Fund 12-B, Fund 12-C and Fund 12-D. The plaintiffs
have challenged the adequacy and independence of the appraisals. The
consolidated complaint seeks damages in an unspecified amount and an award of
attorneys' fees, and the complaint also seeks punitive damages and certain
equitable relief.

     The Company has filed its answer to the consolidated complaint and has
generally denied the substantive allegations in the complaint and has asserted a
number of affirmative defenses.  The Company intends to defend this lawsuit
vigorously.

     In August 1997, the Company moved for summary judgment in its favor on the
ground that plaintiffs did not make demand on the Company for the relief they
seek before commencing their lawsuits or show that such a demand would have been
futile.  In January 1998, the Court (1) held that plaintiffs did not make demand
before commencing their lawsuits or show that such demand would have been
futile, (2) stayed the consolidated case and vacated the February 1998 trial
date, (3) ordered that plaintiffs make a demand on the Company and that the
Company appoint an independent counsel to review, consider and report on that
demand, (4) ordered that the independent counsel be appointed at the March 1998
meeting of the Company's Board of Directors and (5) ordered that the independent
counsel be subject to the approval of the court.  The court set a new trial date
for October 1998 in the event that the case was not resolved through the
independent counsel process or otherwise.  In March 1998, the Company's Board of
Directors appointed an independent counsel.  The plaintiffs did not object to
the Company's choice, and the Court approved the Company's choice of independent
counsel.  During the period March through May 1998, the independent counsel met
several times with the attorneys representing the plaintiffs and the Company,
and he also reviewed a great quantity of written materials.  The independent
counsel issued his report on August 3, 1998, which concluded that the
plaintiffs' claims are not meritorious and are not supported by a preponderance
of the evidence.  The independent counsel further determined that the Company
"did not breach a fiduciary duty" owed to the plaintiffs or to the partnerships
and the Venture and that the Company "did not commit any impropriety in
connection with" the Venture's sale of the Tampa System.  The independent
counsel specifically found that the three appraisals of the Tampa System were
independent and objective and met the requirements of the partnership
agreements.  He further noted that the Company had met its fiduciary duties of
fairness and full disclosure to the partnerships and the Venture.  On August 5,
1998, the Company moved to dismiss or for summary judgment in its favor based on
the report of independent counsel, a motion the plaintiffs opposed.  On
September 11, 1998, the Court denied the Company's motion to dismiss or for
summary judgment based on the report of independent counsel.  The Court then set
a new trial date for May 3, 1999.  The Company subsequently submitted a motion
for reconsideration of the Court's denial of the Company's motion to dismiss or
for summary judgment based on the report of the independent counsel.  The Court
has denied such motion.  The Company then filed an interlocutory appeal of the
Court's rulings to the Colorado Supreme Court.  On February 1, 1999, the
Colorado Supreme Court issued an Order requiring the plaintiffs to show cause
why the Company's request for dismissal or summary judgment should not be
granted, and staying all proceedings in the trial court until the Company's
appeal is resolved.

                                       26
<PAGE>
 
Palmdale Litigation
-------------------

     In December 1998, City Partnership Co. ("Plaintiff"), a limited partner of
Fund 12-C and Fund 12-D, filed a class action complaint in the District Court,
Arapahoe County, State of Colorado (Case No. 98-CV-4493) naming the Company as
defendant.  Plaintiff, on its behalf and on behalf of all other persons who are
limited partners of Fund 12-B, Fund 12-C and Fund 12-D, is challenging the terms
of sale of the cable television system serving the communities in and around
Palmdale and Lancaster, California (the "Palmdale System") to an affiliate of
the Company.  This case is in a very preliminary stage, but the Company believes
that the terms of the sale were in accordance with the requirements of relevant
limited partnership agreement provisions.  The Company intends to defend this
lawsuit vigorously.

Littlerock Litigation
---------------------

     In January 1999, City Partnership Co. ("Plaintiff"), a limited partner of
Cable TV Fund 14-B, Ltd., filed a class action complaint in the District Court,
Arapahoe County, State of Colorado (Case No. 99-CV-0150) naming the Company as
defendant.  Plaintiff, on its behalf and on behalf of all other persons who are
limited partners of Cable TV Fund 14-B, Ltd., is challenging the terms of sale
of the cable television system serving Littlerock, California (the "Littlerock
System") to an affiliate of the Company.  This case is in a very preliminary
stage, but the Company believes that the terms of the sale were in accordance
with the requirements of relevant limited partnership agreement provisions.  The
Company intends to defend this lawsuit vigorously.

Shareholder Litigation
----------------------

     In February 1998, BTH, the Company's largest shareholder, filed a lawsuit
in the United States District Court for the District of Colorado against the
Company, Jones International, Ltd. ("International"), Jones Internet Channel,
Inc. ("JICI") and Glenn R. Jones. BCI Telecom Holding, Inc., plaintiff v. Jones
                                  ---------------------------------------------
Intercable, Inc., Jones International, Ltd., Jones Internet Channel, Inc. and
-----------------------------------------------------------------------------
Glenn R. Jones, defendants (U.S. District Court for the District of Colorado,
--------------------------                                                   
Civil Action No. 98-M-224).  Mr. Jones is the Company's Chairman and Chief
Executive Officer.  International is owned by Mr. Jones, and it also is one of
the Company's largest shareholders.  JICI is a wholly owned subsidiary of
International.  BTH, the Company, International and Mr. Jones are parties to a
Shareholders Agreement dated as of December 20, 1994 (the "Shareholders
Agreement").

     In its complaint, BTH alleged that the defendants violated the Shareholders
Agreement and certain duties allegedly owed to BTH, and conspired with each
other to do so.  More specifically, BTH claimed that under the Shareholders
Agreement, the offering of the service known as the "Internet Channel" to the
Company's subscribers, and any affiliation agreement between the Company and
JICI for the provision of the Internet Channel service, could not proceed
without approval of a specific group of directors of the Company, including the
three directors designated by BTH.  BTH also maintained, in connection with the
relationship and proposed affiliate agreement between the Company and JICI, that
the defendants breached a provision of the Shareholders Agreement defining the
"core business" of the Company.  In addition to damages, BTH sought an
injunction prohibiting the Company from making the Internet Channel available to
additional subscribers and from entering 

                                       27
<PAGE>
 
into an affiliate agreement with JICI for the Internet Channel, as well as other
equitable relief. On May 5, 1998, the Court permanently enjoined the Company and
the other defendants in this civil action from proceeding further with any
expansion of the Internet Channel, or any similar internet service provider
business, without the approval of the unrelated directors of the Company. All
defendants except the Company appealed the decision to the U.S. Tenth Circuit
Court of Appeals.

     In connection with the agreements entered into among the Company,
International, BTH and Comcast relating to the acquisition and exercise by
Comcast of BTH's option to acquire 2.9 million shares of the Company's Common
Stock, the parties have agreed to dismiss the pending litigation between BTH,
International, Mr. Jones and the Company, and International and certain of its
affiliates have agreed to dismiss the appeal which is pending of the Order
entered against them in such litigation.

     In March 1998, Leslie Susser, a minority shareholder of the Company, filed
a shareholder derivative action in the United States District Court for the
District of Colorado against Glenn R. Jones and seven other directors of the
Company. Leslie Susser, plaintiff v. Glenn R. Jones, James J. Krejci, James B.
         --------------------------------------------------------------------
O'Brien, Howard O. Thrall, Raphael M. Solot, Robert E. Cole, Sanford Zisman and
-------------------------------------------------------------------------------
Donald L. Jacobs, defendants and Jones Intercable, Inc., nominal defendant (U.S.
--------------------------------------------------------------------------      
District Court for the District of Colorado, Civil Action No. 98-M-616).  In its
complaint, the plaintiff alleges that the defendants have violated certain
fiduciary and other duties allegedly owed to the Company and its shareholders in
connection with the Company's offering of the Internet Channel service.  The
allegations raised in this complaint are similar to those raised by BTH in its
complaint.  The plaintiff seeks certain equitable relief and damages.

     In connection with this litigation, the Company has determined, based on
the opinion of outside legal counsel, that all of the statutory requirements for
the advancement of reasonable legal fees and expenses to the defendants have
been met. Notice of such determination was previously given to all shareholders.


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

     The annual meeting of the shareholders of the Company was held on October
20, 1998. Proxies for the meeting were solicited pursuant to Regulation 14A
under the Exchange Act. As of the close of business on September 15, 1998, the
record date for the determination of stockholders to vote at the meeting, the
total number of shares of the Company's Common Stock issued and outstanding and
entitled to vote at the meeting was 5,113,021, and the total number of shares of
the Company's Class A Common Stock issued and outstanding and entitled to vote
at the meeting was 35,985,642.

Proposal 1.  Election of Directors
----------------------------------

     There was no solicitation in opposition to the nominees for director listed
in the proxy statement and all of such nominees were elected at the meeting.
Each share of Common Stock and Class A Common Stock had one vote in the election
of the directors to be elected by that class. Following is a tabulation of the
vote with respect to each nominee to the office:

                                       28
<PAGE>
 
Class A Directors
-----------------
Nominee                           Votes For                    Votes Against
-------                           ---------                    ------------- 
William E. Frenzel                29,647,350                        379,963
Donald L. Jacobs                  29,647,555                        379,758
Robert Kearney                    29,647,603                        379,710
Robert B. Zoellick                29,647,455                        379,858
                                           
                                           
Common Directors                           
----------------                           
Nominee                           Votes For                    Votes Against
-------                           ---------                    ------------- 
Glenn R. Jones                    4,307,232                        146,085
Josef J. Fridman                  4,307,932                        145,385
Robert E. Cole                    4,307,632                        145,685
James J. Krejci                   4,307,632                        145,685
James B. O'Brien                  4,307,632                        145,685
Raphael M. Solot                  4,307,632                        145,685
Howard O. Thrall                  4,307,592                        145,785
Siim A. Vanaselja                 4,307,932                        145,385
Sanford Zisman                    4,307,632                        145,685


Proposal 2.  Ratification of the Selection of Auditors
------------------------------------------------------

Holders of Common Stock and holders of Class A Common Stock voted as a single
class; the holders of Common Stock had one vote for each share and the holders
of Class A Common Stock had one-tenth of a vote for each share held.  Following
is a tabulation of the vote:

Votes For                         Votes Against                Abstentions
---------                         -------------                -----------
7,350,827                         4,857                        2,236


                                    PART II

          ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
          ----------------------------------------------------------
                              STOCKHOLDER MATTERS
                              -------------------

     The Company's Common Stock and Class A Common Stock are traded in the
over-the-counter market and authorized for quotation on the National Market
System operated by the National Association of Securities Dealers, Inc. (NASDAQ)
under the following symbols:

                              Common Stock - JOIN
                         Class A Common Stock - JOINA

     The following table shows the high and low prices as quoted on the NASDAQ
National Market

                                       29
<PAGE>
 
System for each quarterly period of the years ended December 31, 1997 and 1998
for each class of the Company's stock:

<TABLE>
<CAPTION>
                                               Common Stock                Class A Common Stock
                                               ------------                --------------------     
Year Ended 12/31/97                        High            Low             High            Low
                                           ----            ---             ----            ---          
<S>                                       <C>            <C>             <C>             <C>
   First Quarter                          10 7/8           9 1/2         11               9 1/8
   Second Quarter                         13 7/8           9 1/4         13 3/8           8 1/4
   Third Quarter                          13 1/2          10 3/4         13 11/16        10 1/2
   Fourth Quarter                         17 1/2          12 1/8         18 1/8          12 3/8
</TABLE>

<TABLE>
<CAPTION>
                                               Common Stock                Class A Common Stock
                                               ------------                --------------------        
Year Ended 12/31/98                        High            Low             High            Low
                                           ----            ---             ----            ---           
<S>                                       <C>            <C>              <C>             <C>
   First Quarter                          17 3/4         13 7/8           18 1/4          14 3/8
   Second Quarter                         26 3/8         17 1/8           26 7/8          17 1/8
   Third Quarter                          31 1/8         22               31 1/4          21 1/8
   Fourth Quarter                         35 7/16        22 1/4           35 7/8          21 7/8
</TABLE>

     At December 31, 1998, the Common Stock and Class A Common Stock of the
Company were held of record by 590 and 1,251 shareholders, respectively.

     The Company has never paid a cash dividend with respect to its shares of
Common Stock or Class A Common Stock, and it has no present intention to pay
cash dividends in the foreseeable future.  The current policy of the Company's
Board of Directors is to retain earnings to provide funds for the operation and
expansion of its business.  Future dividends, if any, will be determined by the
Board of Directors in light of the circumstances then existing, including the
Company's earnings and financial requirements and general business conditions.
If cash dividends are paid in the future, the holders of the Class A Common
Stock will be paid $.005 per share per quarter in addition to the amount payable
per share of Common Stock.  Such additional dividends on the Class A Common
Stock are not cumulative but would be adjusted appropriately if cash dividends
are declared with respect to a period other than a quarterly period.  Certain of
the Company's debt arrangements restrict the right of the Company to declare and
pay cash dividends.

   Holders of Class A Common Stock have limited voting rights compared to the
holders of Common Stock.  In all circumstances where the shareholders vote
together as a single class, the holders of Class A Common Stock are entitled to
one-tenth of a vote per share and the holders of Common Stock are entitled to
one vote per share.  In addition, the Company's Articles of Incorporation
provide that the holders of Class A Common Stock, voting as a separate class,
are entitled to elect 25% of the membership of the Board of Directors, and that
the holders of Common Stock, voting as a separate class, are entitled to elect
75% of the membership of the Board of Directors.  Glenn R. Jones, the Chairman
and Chief Executive Officer of the Company, beneficially owns 57% of the voting
power of the outstanding Common Stock and 37% of the total voting power of the
outstanding Class A Common Stock and Common Stock combined.  Thus, Mr. Jones has
the power to elect the majority of the members of the Company's Board of
Directors and to otherwise effectively control all matters requiring shareholder
approval.  In addition, BTH beneficially owns 

                                       30
<PAGE>
 
36% of the voting power of the outstanding Class A Common Stock and 15% of the
voting power of the Class A Common Stock and Common Stock combined. Also, BTH
holds options to purchase the Control Shares from Mr. Jones and certain of his
affiliates, which, if and when exercised, would afford BTH effective control of
the Company. Pursuant to various agreements all dated August 12, 1998 among Mr.
Jones, International and certain of its affiliates, BTH and Comcast, Comcast
acquired the right to purchase the Control Shares. See Item 1, Comcast
Corporation's Planned Acquisition of the Control Shares of the Company.

                                       31
<PAGE>
 
Item 6.  Selected Financial Data
--------------------------------

     The following table sets forth selected financial data regarding the
Company's financial position and operating results. This data should be read in
conjunction with the Company's consolidated financial statements and the notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" appearing in Item 7.

<TABLE>
<CAPTION>
                                                 1998          1997          1996           1995         1994
                                             -----------   -----------   ------------   -----------   -----------
                                                             (in thousands except per share data)
<S>                                          <C>           <C>           <C>            <C>           <C>   
REVENUES:
 Cable Television Revenue
   Subscriber service fees                   $   401,371   $   333,826   $    248,626   $   135,350   $   103,335
   Management fees                                12,284        17,253         19,104        21,462        17,952
   Distributions and Brokerage Fees               41,780         2,768         15,483            -             -
 Non-cable Revenue                                 5,294         8,741         28,497        32,026        10,602
                                             -----------   -----------   ------------   -----------   -----------

TOTAL REVENUES                                   460,729       362,588        311,710       188,838       131,889
                                             -----------   -----------   ------------   -----------   -----------
 
COSTS AND EXPENSES:
 Cable Television Expenses
   Operating expenses                            200,739       174,967        131,529        77,638        55,196
   General and administrative                     25,843        19,642         16,586         8,284         8,120
 Non-cable operating, general and
   administrative                                  6,009         9,297         28,410        32,382        11,810
Depreciation and amortization                    204,746       175,839        131,186        55,805        45,585
                                             -----------   -----------   ------------   -----------   -----------

OPERATING INCOME (LOSS)                      $    23,392   $   (17,157)  $      3,999   $    14,729   $    11,178
                                             ===========   ===========   ============   ===========   ===========
LOSS BEFORE INCOME TAXES
 AND EXTRAORDINARY ITEMS                     $   (80,418)  $   (41,764)  $    (62,660)  $   (21,024)  $    (8,691)
INCOME TAX BENEFIT                                    -          3,275             -             -             -
                                             -----------   -----------   ------------   -----------   -----------
LOSS BEFORE
 EXTRAORDINARY ITEMS                             (80,418)      (38,489)       (62,660)      (21,024)       (8,691)
  
Extraordinary items- Loss on early
 extinguishment of debt, net of tax                   -        (13,459)            -           (692)           -
                                             -----------   -----------   ------------   -----------   -----------

NET LOSS                                     $   (80,418)  $   (51,948)  $    (62,660)  $   (21,716)  $    (8,691)
                                             ===========   ===========   ============   ===========   ===========
 
LOSS PER SHARE:
  Loss before extraordinary items            $     (1.96)  $     (1.11)  $      (2.00)  $      (.67)  $      (.45)
  Extraordinary items                                 -           (.39)            -           (.02)           -
                                             -----------   -----------   ------------   -----------   -----------

                                             $     (1.96)  $     (1.50)  $      (2.00)  $      (.69)  $      (.45)
                                             ===========   ===========   ============   ===========   ===========
LOSS PER SHARE - assuming dilution
  Loss before extraordinary items            $     (1.96)  $     (1.11)  $      (2.00)  $      (.67)  $      (.45)
  Extraordinary items                                 -           (.39)            -           (.02)           -
                                             -----------   -----------   ------------   -----------   -----------

                                             $     (1.96)  $     (1.50)  $      (2.00)  $      (.69)  $      (.45)
                                             ===========   ===========   ============   ===========   ===========
WEIGHTED AVERAGE SHARES OUTSTANDING               40,933        34,610         31,372        31,270        19,517
                                             ===========   ===========   ============   ===========   ===========
TOTAL ASSETS                                 $ 1,731,093   $ 1,371,371   $  1,134,129   $   860,499   $   608,289
                                             ===========   ===========   ============   ===========   ===========
TOTAL DEBT                                   $ 1,462,707   $ 1,024,732   $    806,147   $   492,714   $   281,578
                                             ===========   ===========   ============   ===========   ===========
SHAREHOLDERS' INVESTMENT                     $   155,605   $   228,518   $    235,307   $   292,795   $   271,284
                                             ===========   ===========   ============   ===========   ===========
</TABLE>

                                       32
<PAGE>
 
Item 7.  Management's Discussion and Analysis of Financial Condition and Results
--------------------------------------------------------------------------------
of Operations
-------------
 
     FINANCIAL CONDITION

     The Company is engaged primarily in the cable television business,
operating cable systems for itself and for its managed partnerships.  The
Company owns and manages cable television systems totaling approximately
1,200,000 basic subscribers.  As of December 31, 1998, on a pro forma basis for
all pending acquisitions of cable television systems by the Company and pending
sales of cable television systems owned by managed partnerships, the Company
served approximately 1,015,000 basic subscribers.  The pending sales and
acquisitions are expected to be completed by April 1999.  Key elements of the
Company's operating strategy include increasing the number of owned subscribers
clustered in attractive demographic areas and increasing penetration and
revenues per subscriber by targeted marketing, superior customer service and the
maintenance of high technical standards.

     Over the last several years, the Company has taken significant steps to
simplify its corporate structure.  This process has included the sale of cable
television systems owned by certain managed partnerships to either the Company
or to third parties and the divestiture of certain of the Company's non-
strategic assets.  As a result of this strategy, on a pro forma basis for all
pending cable television system acquisitions and sales, 100% of total
subscribers would have been owned by the Company as of December 31, 1998,
compared to 23% in June 1995.  During this process, the Company has also made
significant progress in clustering its owned subscribers in two primary groups
of cable systems.  The Company's Virginia/Maryland cluster, owned by JCH, is
based primarily on geography.  The Company's suburban cluster, owned by JCH II,
is based on similar market and operating characteristics, rather than geography.
These clusters represent approximately 95% of Company-owned subscribers.  The
Company believes that its clustering strategy should allow it to obtain both
economies of scale and operating efficiencies, for example in areas such as
marketing, administrative and capital expenditures.

     The Company is in the final stages of liquidating its managed partnerships
as such partnerships have achieved their investment objectives and as
opportunities for sales of partnership cable television systems have arisen in
the marketplace.  In accordance with this strategy, nineteen partnership-owned
cable television systems serving approximately 494,000 subscribers were sold
during 1998 (including the Albuquerque System, the Palmdale System, the Socorro
System and the Grants System, which in total serve approximately 185,000
subscribers, that were purchased by the Company).  In addition, all remaining
partnership-owned cable television systems serving approximately 206,000
subscribers (including the Littlerock System which was purchased by the Company
in January 1999 and the Calvert County System which is to be purchased by the
Company in April 1999) are currently under contract to be sold.  The Company
expects to complete its transformation from a management company to an operating
company in April 1999.

     The Company also intends to maintain and enhance the value of its current
cable television systems through capital expenditures.  Such expenditures will
include, among others, cable television plant extensions and the upgrade and
rebuild of certain systems.  The Company also intends to institute new services
as they are developed and become economically viable.

     In implementing the Company's acquisition strategy, the Company acquired
the Albuquerque System in June 1998 for $214,863,267, which was funded from
borrowings under JCH II's credit facility.  The Albuquerque System's operating
characteristics are similar to the other systems owned by JCH II.  The Company
acquired the Palmdale System in December 1998 for $115,929,950, which was funded
by borrowings under JCH II's credit facility.  The Palmdale System's operating
characteristics are similar to the other systems owned by JCH II.  The Company
acquired the Hinesville System in December 1998 for $48,000,000, which was
funded by borrowings under JCH II's credit facility, because it is contiguous to
the Company's Savannah System.  Also in December 1998, the Company acquired the
Grants System and the Socorro System for a total of $8,344,097, because they are
in relatively close proximity to the Albuquerque System.  The purchase of the
Grants System 

                                       33
<PAGE>
 
and the Socorro System was funded by borrowings under JCH II's credit facility.
In January 1999, the Company acquired the Littlerock System for $10,720,400
because it is contiguous to the Palmdale System. The purchase of the Littlerock
System was funded by borrowings under JCH II's credit facility. In addition, the
Company has entered into an agreement to purchase the Calvert County System for
$39,388,667 because it is contiguous to the Company's Virginia/Maryland Cluster.
This transaction is expected to close in April 1999. Funding for this
acquisition is expected to be provided by borrowings under the JCH's credit
facility. These acquisitions are described in detail in Note 2 of the Notes to
Consolidated Financial Statements.

     The Company purchased property, plant and equipment totaling approximately
$174,099,000 during 1998.  Of the capital expenditures, $160,577,000 is
principally for the upgrade and rebuild of the cable plant in the Company's
cable television systems in Virginia/Maryland; Savannah, Georgia; Independence,
Missouri and Oxnard, California and new extension projects, drop materials,
converters and various maintenance projects in all of the Company's cable
television systems.  Approximately $13,522,000 of the expenditures was for the
deployment of telephone service in the Virginia/Maryland Cluster.  Funding for
these capital expenditures was provided by cash generated from operations and
borrowings available under the Company's credit facilities.  Estimated capital
expenditures for 1999 are approximately $200,000,000.  Funding for such
expenditures is expected to be provided by cash generated from operations and
borrowings available under the Company's credit facilities, as discussed below.

     Sources of Funds
     ----------------

     The Company's main sources of capital consist of cash generated from
operations and borrowings available under two revolving credit facilities, one
for JCH and one for JCH II.   Each revolving credit facility has maximum
available borrowings of $600 million.  In addition, the Company has an effective
registration statement which allows the Company to access the public debt and 
equity markets at its discretion.
 
     The $600 million JCH revolving credit facility is a reducing revolving
credit facility.  The entire $600 million commitment is available through March
31, 1999, at which time the commitment will be reduced quarterly with a final
maturity date of December 31, 2004.  The maximum amount available will be
reduced to $555,000,000 at December 31, 1999.  The balance outstanding on JCH's
revolving credit facility at December 31, 1998 was $340,000,000.

     The $600 million JCH II Revolving Credit Facility consists of a $300
million reducing revolving credit facility and a $300 million term loan.  The
reducing revolving credit facility allows for borrowings through the final
maturity date of December 31, 2005.  The maximum amount available reduces
quarterly beginning March 31, 2000 through the final maturity date of December
31, 2005.  The term loan is payable in semi-annual installments commencing June
30, 2001 with a final maturity date of December 31, 2005.  The balance
outstanding on the JCH II Revolving Credit Facility at December 31, 1998 was
$370,000,000.  Of this amount $300,000,000 was borrowed under the term loan
portion of the facility and $70,000,000 was borrowed under the reducing
revolving portion of the facility.

     In April 1998, the Company issued and sold $200,000,000 of its 7 5/8%
Senior Notes due April 15, 2008.  Proceeds from the sale of the Senior Notes
were used to repay amounts then outstanding under the revolving credit
facilities of the Company's subsidiaries.

     The Company, in its capacity as the general partner of its managed
partnerships, may from time to time receive general partner distributions upon
the sale of cable television systems owned by such partnerships.  The Company
received general partner distributions totaling $8,100,000 from Cable TV Funds
12-B, 12-C and 12-D related to the sale of the Cable TV Fund 12-BCD Venture's
Albuquerque System in June 1998.  In July 1998, the Company received a general
partner distribution of $13,713,600 from Cable TV Fund 12-A related to the sale
of the Fort Myers System by Cable TV Fund 12-A.  In September 1998, the Company
received a general partner distribution of $1,976,400 from Jones Cable Income
Fund 1-A related to the sale of the Owatonna, Minnesota  

                                       34
<PAGE>
 
system by Jones Cable Income Fund 1-A. In December 1998, the Company received
general partner distributions of $22,275,250 from Cable TV Funds 12-B, 12-C and
12-D related to the sale of the Cable TV Fund 12-BCD Venture's Palmdale System,
$15,931,000 from Cable TV Fund 12-A relating to the sale of the Orland Park and
Park Forest, Illinois cable television systems, $1,005,000 for IDS/Jones Growth
Partners 87-A relating to the sale of the Roseville, California cable television
system and $1,715,500 from Spacelink Fund 3 relating to the sale of the Socorro
and Grants, New Mexico cable television systems. In addition, the Company,
through The Intercable Group, Ltd., f/k/a The Jones Group, Ltd., a wholly owned
subsidiary, has earned brokerage fees upon the sale of the managed partnerships'
cable television systems to third parties. During 1998, the Company earned
brokerage fees, net of expenses, of $9,154,000.

     The Company has sufficient sources of capital available, consisting of cash
generated from operations and available borrowings from its credit facilities,
to fund its committed acquisition requirements and to meet its operational
needs.

     Anticipated Change In Control
     -----------------------------

     On August 12, 1998, the Company, International, BTH and Comcast announced
that agreements have been entered into that will accelerate the exercise of the
option to purchase controlling interest in the Company by Comcast.  Details of
these agreements and costs associated with the change in control are described
in Note 1 of the Notes to Consolidated Financial Statements.  The closing of the
exercise of the option is expected to occur in March 1999.

     Impact of the Year 2000 Issue
     -----------------------------

     The Year 2000 issue is the result of many computer programs being written
such that they will malfunction when reading a year of "00". This problem could
cause system failure or miscalculations causing disruptions of business
processes.

     The Company is undertaking an assessment of its computer applications to
determine the extent of the problem. Based on this assessment, the Company has
determined that the majority of its computer applications supporting business
processes, including accounting and billing, are designed to handle the Year
2000 appropriately.

     The Company is currently focusing its efforts on the impact of the Year
2000 issue on service delivery. The Company has established an internal team to
address this issue. The Company is identifying and testing all date-sensitive
equipment involved in delivering service to its customers. In addition, the
Company will assess its options regarding repair or replacement of affected
equipment during this testing. The Company believes that the financial impact
from the Year 2000 issue will be less than $3,000,000.

                                       35
<PAGE>
 
     RESULTS OF OPERATIONS

     Year Ended December 31, 1998 Compared to Year Ended December 31, 1997
     ---------------------------------------------------------------------

     Revenues

     The Company derives its revenues from four sources: subscriber service fees
from Company-owned cable television systems, management fees from managed
partnerships, fees and distributions paid upon the sale of certain cable
television properties owned by managed partnerships and revenues from non-cable
television subsidiaries.

     Total revenues for the year ended December 31, 1998 totaled $460,729,000,
an increase of $98,141,000, or 27%, over the total of $362,588,000 for the year
ended December 31, 1997. This increase reflects the Company's acquisition of the
following cable television systems: the North Prince Georges County System on
January 31, 1997; the Annapolis System on April 15, 1997; the Manitowoc System
on June 30, 1997; the Independence System on August 31, 1997 and the Albuquerque
System on June 30, 1998 (the "Acquired Systems") as well as an increase in
general partner distributions and brokerage fees relating to the sale of
partnership-owned cable television systems. The increase in revenues would have
been greater but for the following: (i) the reduction in 1998 non-cable revenue
due to the sale of a non-cable subsidiary in 1998; (ii) a decrease in management
fees due to the sales of certain cable television systems owned by managed
partnerships; and (iii) the sale of the Walnut Valley System in August 1997.
Adjusting for the effect of the Acquired Systems, the general partner
distributions and brokerage fees, the sale of the non-cable subsidiary, the
decrease in management fees and the sale of the Walnut Valley System (the "Pro
Forma Adjustments"), total revenues would have increased $23,832,000, or 6%.

     The Company's subscriber service fees for the year ended December 31, 1998
totaled $401,371,000, an increase of $67,545,000, or 20%, over the total of
$333,826,000 for the year ended December 31, 1997. The acquisition of the
Acquired Systems accounted for $44,286,000, or 66%, of the increase in
subscriber service fees. With the Pro Forma Adjustments, subscriber service fees
would have increased $23,259,000, or 6%. This increase was due primarily to an
increase in the number of basic subscribers and basic service rate adjustments
in the cable television systems owned by the Company. Disregarding the effect of
acquisitions made by the Company during 1998, basic subscribers increased
14,500, an increase of 1.9%.

     The Company receives management fees generally equal to 5% of the gross
operating revenues of its managed limited partnerships. Management fees totaled
$12,284,000 in 1998, a decrease of $4,969,000, or 29%, over the total of
$17,253,000 reported in 1997. The sale of certain systems owned by managed
partnerships during 1998 and 1997 caused this decrease. When the Company
completes the liquidation of its managed partnerships in April 1999, management
fees will no longer be a source of revenue for the Company. On a pro forma
basis, management fees would have increased $520,000, or 4%. This increase was
due to the revenue growth from basic rate adjustments and increases in the
subscriber base of the remaining systems owned by managed partnerships.  This 
source of revenue will be eliminated after the sale of all systems owned by 
managed partnerships.

     In its capacity as the general partner of its managed partnerships, the
Company may receive general partner distributions upon the sale of certain cable
television properties owned by such partnerships. The Company received general
partner distributions totaling $32,626,000 upon the sales of cable television
systems by Cable TV Fund 12-A, Jones Cable Income Fund 1-A and IDS/Jones Growth
Partners 87-A. In addition, the Company received general partner distributions
totaling $32,090,000 in 1998 relating to systems purchased by the Company from
Cable TV Fund 12-BCD Venture and Spacelink Fund 3 which reduced the Company's
basis in the assets acquired. No such revenue was received in 1997. In addition,
The Intercable Group, Ltd., has earned brokerage fees upon the sale of certain
managed cable television systems to third parties. The Company earned brokerage
fees, net of expenses, of $9,154,000 during 1998. Brokerage fees, net of
expenses, of

                                       36
<PAGE>
 
$2,768,000 were earned in 1997. Both of these sources of revenue will be
eliminated after the liquidation of the managed partnerships is complete.

     The Company also operates Jones Futurex, Inc. ("Futurex"), a manufacturer
of various electronic components. Futurex revenues totaled $5,294,000 in 1998, a
decrease of $3,447,000, or 39%, over the $8,741,000 recognized in 1997. This
decrease was primarily due to the sale of the contract manufacturing division of
Futurex in May 1998.

     Costs and Expenses

     Operating, general and administrative expenses consist primarily of costs
associated with the operation and administration of Company-owned cable
television systems, the administration of managed partnerships and the operation
and administration of Futurex. The Company is reimbursed by its managed
partnerships for costs associated with the administration of the partnerships.
The principal administrative cost components are salaries paid to corporate and
system personnel, programming expenses, consumer marketing expenses,
professional fees, subscriber billing costs, data processing costs, rent for
leased facilities and cable system maintenance expenses.

     Cable operating expenses totaled $200,739,000 for the year ended December
31, 1998, an increase of $25,772,000, or 15%, over the total of $174,967,00 for
the year ended December 31, 1997. The acquisition of the Acquired Systems
accounted for $25,395,000, or 99%, of this increase. With the Pro Forma
Adjustments, cable operating expenses would have increased $377,000, or less
than 1%, for 1998 compared to 1997. This increase was due primarily to increases
in basic and tier programming costs which was offset, in part, by reductions in
expenses due to operating efficiencies.

     Cable general and administrative expenses totaled $25,843,000 for the year
ended December 31, 1998, an increase of $6,201,000, or 32%, over the total of
$19,642,000 for the year ended December 31, 1997. This increase was due to the
effect of the Acquired Systems. With the Pro Forma Adjustments, cable general
and administrative expenses would have increased $3,587,000, or 16%, for 1998.
As the Company has acquired cable television systems for its own account and has
sold cable television systems owned by managed partnerships, and thereby has
transitioned from a management company to an operating company, the Company's
proportionate percentage of total general and administrative expenses has
increased.

     Non-cable operating, general and administrative expenses totaled $6,009,000
for the year ended December 31, 1998, a decrease of $3,288,000, or 35%, over the
total of $9,297,000 for the year ended December 31, 1997. This decrease was
primarily due to the sale of Futurex's contract manufacturing business.

     Depreciation and amortization expense totaled $204,746,000 for the year
ended December 31, 1998, an increase of $28,907,000, or 16%, over the total of
$175,839,000 for the year ended December 31, 1997.  Depreciation and
amortization relating to the Acquired Systems was primarily responsible for this
increase.

     Operating Income

     The Company recognized operating income of $23,392,000 for the year ended
December 31, 1998 compared to an operating loss of $17,157,000 for the year
ended December 31, 1997.  This change was due primarily to the increase in
general partner distributions in 1998 as compared to 1997.

     The cable television industry generally measures the performance of a cable
television company in terms of cash flow or operating income before depreciation
and amortization.  The value of a cable television company is often expressed
using multiples of cable television system cash flow.  This measure is not
intended to be a substitute or improvement upon the items disclosed on the
financial statements, rather it is included because it is 

                                       37
<PAGE>
 
an industry standard. Operating income before depreciation and amortization
totaled $228,138,000 for the year ended December 31, 1998, an increase of
$69,456,000, or 44%, over the total of $158,682,000 for the year ended December
31, 1997. The effect of the Acquired Systems as well as the general partner
distributions were primarily responsible for this increase.

     Other Income (Expense)

     Interest expense totaled $94,865,000 for the year ended December 31, 1998,
an increase of $8,101,000, or 9%, over the total of $86,764,000 for the year
ended December 31, 1997.  This increase was due to higher outstanding balances
on the Company's interest bearing obligations.  Borrowings were used to fund the
acquisition of the Acquired Systems.

     Interest income totaled $2,424,000 for the year ended December 31, 1998, an
increase of $973,000, or 67%, over the total of $1,451,000 for the year ended
December 31, 1997.  This increase was due to interest received on a note from
one of the Company's managed partnerships.

     Equity in income of affiliated entities totaled $1,372,000 for the year
ended December 31, 1998. Equity in losses of affiliated entities totaled
$3,804,000 for the year ended December 31, 1997.  This change was due primarily
to the recognition of income of the managed partnerships, due to the sale of
certain managed systems.

     The Company recognized losses on the sale of assets totaling $3,616,000 for
the year ended December 31, 1998 related to the sale of the contract
manufacturing division of Futurex.  The Company recognized gains totaling
$70,232,000 in 1997, including the $44,563,000 gain on the sale of its Cable &
Wireless Communications plc ("CWC") shares, the $2,979,000 gain on the
redemption of Jones Global Group shares, the $1,854,000 gain from insurance and
sale proceeds relating to the Company's aircraft and the $20,836,000 gain from
the sale of the Walnut Valley System.

     The Company recognized a loss on the early extinguishment of debt totaling
$13,459,000 in 1997 related to the redemption of its 11.5% Debentures.  No
similar losses were recorded in 1998.

     Net loss totaled $80,418,000 for the year ended December 31, 1998, an
increase of $28,470,000, or 55%, over the total loss of $51,948,000 for the year
ended December 31, 1997.  This increase was due to the gains on the sale of
assets recognized in 1997.

     The Company anticipates the continued recognition of operating income prior
to depreciation and amortization charges, but net losses resulting from
depreciation, amortization and interest expenses are expected to occur in the
future.

                                       38
<PAGE>
 
     Year Ended December 31, 1997 Compared to Year Ended December 31, 1996
     ---------------------------------------------------------------------

     Revenues

     Total revenues for the year ended December 31, 1997 totaled $362,588,000,
an increase of $50,878,000, or 16%, over the total of $311,710,000 for the year
ended December 31, 1996.  This increase reflects the Company's acquisition of
the following cable television systems:  the Manassas System on January 10,
1996; the South Prince Georges County System on February 29, 1996; the Reston
System on February 29, 1996; the Savannah System on April 12, 1996; the North
Prince Georges County System, on January 31, 1997; the Annapolis System on April
15, 1997; the Manitowoc System on June 30, 1997 and the Independence System on
August 31, 1997 (the "Acquired Systems").  The increase in revenues would have
been greater but for the following:  (i) the receipt of a general partner
distribution and brokerage fee totaling $15,483,000 in 1996 compared to
brokerage fees of $2,768,000 in 1997; (ii) the reduction in 1997 non-cable
revenue due to the sale of two non-cable subsidiaries in 1996; (iii) a decrease
in management fees due to the sale of certain cable television systems owned by
managed partnerships; and (iv) the sale of the Walnut Valley System in August,
1997.   Adjusting for the effect of the Acquired Systems, the second quarter
1996 general partner distribution and brokerage fee, the sale of the non-cable
subsidiaries, the decrease in management fees and the sale of the Walnut Valley
System (the "Pro Forma Adjustments"), total revenues would have increased
$25,185,000, or 8%.

     The Company's subscriber service fees for the year ended December 31, 1997
totaled $333,826,000, an increase of $85,200,000 or 34%, over the total of
$248,626,000 for the year ended December 31, 1996.  The acquisition of the
Acquired Systems accounted for $61,397,000, or 72%, of the increase in
subscriber service fees.  With the Pro Forma Adjustments, subscriber service
fees would have increased $23,803,000, or 8%.  This increase was due primarily
to an increase in the number of basic subscribers and basic service rate
adjustments in the cable television systems owned by the Company.  Disregarding
the effect of acquisitions during 1997, basic subscribers increased 15,116, an
increase of 3.1%.

     The Company receives management fees generally equal to 5% of the gross
operating revenues of its managed limited partnerships.  Management fees totaled
$17,253,000 in 1997, a decrease of $1,851,000, or 10%, over the total of
$19,104,000 reported in 1996.  The sale of certain systems owned by managed
partnerships during 1997 and 1996 caused this decrease.  As the Company
liquidates its managed partnerships, management fees will continue to decrease.
On a pro forma basis, management fees would have increased $1,076,000, or 7%.
This increase was due to the revenue growth from basic rate adjustments and
increases in the subscriber base of the remaining systems owned by managed
partnerships.

     In its capacity as the general partner of its managed partnerships, the
Company may receive general partner distributions upon the sale of certain cable
television properties owned by such partnerships.  The Company received a
distribution of $14,000,000 upon the sale of Cable TV Fund 11-B, Ltd.'s
Lancaster, New York System in April 1996.  No such revenue was received in 1997.
In addition, The Jones Group, Ltd., a wholly owned subsidiary of the Company,
may earn brokerage fees upon the sale of certain managed cable television
systems to third parties.  The Company earned brokerage fees of $3,695,000 less
expenses of $927,000 during 1997.    A brokerage fee of $2,100,000, less
expenses of $617,000, was earned in 1996.

     The Company operates Jones Futurex, Inc. ("Futurex"), a manufacturer of
various electronic components.  In addition, the Company owned and operated
Jones Galactic Radio, Inc. ("Galactic Radio"), until its sale on June 14, 1996
and Jones Satellite Programming, Inc. ("JSP"), a distributor of satellite
programming to satellite dish owners, until the sale of its assets on July 31,
1996.  Non-cable revenues totaled $8,741,000 in 1997, a decrease of $19,756,000,
or 69%, over the $28,497,000 recognized in 1996.  This decrease was primarily
due to the sales of Galactic Radio and JSP.

                                       39
<PAGE>
 
     Costs and Expenses

     Cable operating expenses totaled $174,967,00 for the year ended December
31, 1997, an increase of $43,438,000, or 33%, over the total of $131,529,000 for
the year ended December 31, 1996.  The acquisition of the Acquired Systems
accounted for $33,024,000, or 76%, of this increase.  With the Pro Forma
Adjustments, cable operating expenses would have increased $10,414,000, or 6%,
for 1997 compared to 1996.  This increase was due primarily to increases in
basic and tier programming costs.

     Cable general and administrative expenses totaled $19,642,000 for the year
ended December 31, 1997, an increase of $3,056,000, or 18%, over the total of
$16,586,000 for the year ended December 31,  1996.  This increase was due to the
effect of the Acquired Systems.  As the Company acquires cable television
systems for its own account and sells cable television systems owned by managed
partnerships, and thereby transitions from a management company to an operating
company, the Company's proportionate percentage of total general and
administrative expenses will increase. With the Pro Forma Adjustments, cable
general and administrative expenses would have decreased $1,491,000, or 7%, for
1997.  This decrease was due to effective cost controls relating to general and
administrative expenses.

     Non-cable operating, general and administrative expenses totaled $9,297,000
for the year ended December 31, 1997, a decrease of $19,113,000, or 67%, over
the total of $28,410,000 for the year ended December 31, 1996.  This decrease
was primarily due to the sales of Galactic Radio and JSP during 1996.

     Depreciation and amortization expense totaled $175,839,000 for the year
ended December 31, 1997, an increase of $44,653,000, or 34%, over the total of
$131,186,000 for the year ended December 31, 1996.  Depreciation and
amortization relating to the Acquired Systems and the $14,228,000 write-off of
costs associated with the development of a billing system by an affiliate were
primarily responsible for this increase.

     Operating Income

     The Company recognized an operating loss of $17,157,000 for the year ended
December 31, 1997 compared to operating income of $3,999,000 for the year ended
December 31, 1996.  This change was due to the increase in depreciation and
amortization expense.

     The cable television industry generally measures the performance of a cable
television company in terms of cash flow or operating income before depreciation
and amortization.  The value of a cable television company is often expressed
using multiples of cable television system cash flow.  This measure is not
intended to be a substitute or improvement upon the items disclosed on the
financial statements, rather it is included because it is an industry standard.
Operating income before depreciation and amortization totaled $158,682,000 for
the year ended December 31, 1997, an increase of $23,497,000, or 17%, over the
total of $135,185,000 for the year ended December 31, 1996.  The effect of the
Acquired Systems, which was offset, in part, by the general partner distribution
received in 1996, was primarily responsible for this increase.

     Other Income (Expense)

     Interest expense totaled $86,764,000 for the year ended December 31, 1997,
an increase of $18,982,000, or 28%, over the total of $67,782,000 for the year
ended December 31, 1996.  This increase was due to higher outstanding balances
on the Company's interest bearing obligations.  Borrowings were used to fund the
acquisition of the Acquired Systems.

     Interest income totaled $1,451,000 for the year ended December 31, 1997, a
decrease of $2,307,000, or 61%, over the total of $3,758,000 for the year ended
December 31, 1996.  This decrease was due to lower average balances of
receivables from managed partnerships and lower effective interest rates.

                                       40
<PAGE>
 
     Equity in losses of affiliated entities totaled $3,804,000 for the year
ended December 31, 1997 an increase of $331,000, or 10%, over the total of
$3,473,000 for the year ended December 31, 1996.  This increase was due
primarily to an increase in the recognition of losses of the managed
partnerships.

     The Company recognized gains on the sale of assets in 1997 totaling
$70,232,000, including the $44,563,000 gain on the sale of its CWC shares, the
$2,979,000 gain on the redemption of Global Group Shares, the $1,854,000 gain
from insurance and sale proceeds from the Company aircraft and the $20,836,000
gain from the sale of the Walnut Valley System.  The Company recognized gains on
the sales of assets of $5,262,000 during 1996 from the sale of JSP's assets and
the Company's sale of certain marketable securities of an unaffiliated company.

     Net loss totaled $51,948,000 for the year ended December 31, 1997, a
decrease of $10,712,000, or 17%, over the total loss of $62,660,000 for the year
ended December 31, 1996.  This decrease was due primarily to the gains on the
sale of assets recognized in 1997.

Item 7a. Quantitative and Qualitative Disclosures About Market Risk
-------------------------------------------------------------------

Interest Rate Risk

      The Company uses fixed and variable rate long term debt to partially 
finance capital expenditures. These debt arrangements expose the Company to 
market risk related to changes in interest rates. The Company manages this risk 
by issuing fixed rate debt when business conditions and market conditions are 
favorable. In addition, the Company enters into interest rate swap agreements 
in order to fix the interest rate for the duration of the contract as a hedge 
against interest rate volatility. As of December 31, 1998, the Company had 
interest rate swap agreements covering notional principal of $400,000,000 that 
expire between January 2000 and March 2008 that fix the interest rate between 
5.3% and 7.64%. The Company believes that such swap agreements have no 
significant fair value at December 31, 1998. The table below provides 
information on the Company's long term debt.

<TABLE> 
<CAPTION> 

                                           Expected Maturity
                                     ------------------------------------------------------------------------------------------
                                      1999      2000       2001        2002        2003    Thereafter    Total      Fair Value
                                     ------    ------    -------    --------    --------   ----------   --------    ----------
                                              (stated in thousands)
<S>                                  <C>       <C>       <C>        <C>         <C>        <C>          <C>         <C> 
Fixed rate                           $2,237    $2,217    $ 2,217    $200,739    $      -    $545,297    $752,707     $807,548
Weighted average interest rate          8.9%      8.9%       8.9%        9.6%                    8.7%        8.9%

Variable Rate                        $    -    $    -     30,000     160,000     180,000     340,000    $710,000     $710,000
Weighted average interest rate                               6.1%        6.1%        6.1%        6.1%        6.1%
</TABLE> 
                                       41
<PAGE>
 
     Item 8.  Financial Statements and Supplementary Data
              -------------------------------------------


                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                            Page
                                                            ----
<S>                                                         <C>
Report of Independent Public Accountants                     43
                                                              
Consolidated Balance Sheets                                  44
                                                              
Consolidated Statements of Operations                        46
                                                              
Consolidated Statements of Shareholders' Investment          47
                                                              
Consolidated Statements of Cash Flows                        48
                                                              
Notes to Consolidated Financial Statements                   49 
</TABLE>

                                       42
<PAGE>
 
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


TO JONES INTERCABLE, INC.:


     We have audited the accompanying consolidated balance sheets of JONES
INTERCABLE, INC. (a Colorado corporation) and subsidiaries as of December 31,
1998 and 1997, and the related consolidated statements of operations,
shareholders' investment and cash flows for each of the three years in the
period ended December 31, 1998.  These financial statements are the
responsibility of the Company'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, Inc. and
subsidiaries as of December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.



Denver, Colorado
February 17, 1999                          ARTHUR ANDERSEN LLP

                                       43
<PAGE>
 
<TABLE>
<CAPTION>
CONSOLIDATED
BALANCE SHEETS                                                               Jones Intercable, Inc.
As of December 31, 1998 and 1997                                                   and Subsidiaries
---------------------------------------------------------------------------------------------------
 
ASSETS                                                          1998                   1997
                                                                   (Stated in Thousands)
---------------------------------------------------------------------------------------------------
<S>                                                          <C>                    <C>          
CASH AND CASH EQUIVALENTS                                    $    2,586             $   3,595    
                                                                                                 
RECEIVABLES:                                                                                     
 Trade receivables, net of allowance for                                                         
  doubtful accounts of $2,822,000 in 1998                                                        
  and $1,692,000 in 1997                                         26,884                28,686    
 Affiliated entities                                              5,568                 7,783    
                                                                                                 
INVESTMENT IN CABLE TELEVISION PROPERTIES:                                                       
 Property, plant and equipment, at cost                       1,005,080               745,115    
  Less - Accumulated depreciation                              (311,655)             (224,893)    
                                                             ----------             ---------    
                                                                693,425               520,222    
 Franchise costs and other intangible assets,                                                    
  net of accumulated amortization of $376,339,000 in 1998                                        
  and $285,212,000 in 1997                                      913,853               721,336    
                                                                                                 
 Investments in affiliates and domestic cable                                                    
  television partnerships                                        19,724                24,568    
                                                             ----------             ---------    
TOTAL INVESTMENT IN CABLE TELEVISION PROPERTIES               1,627,002             1,266,126    
                                                             ----------             ---------    
                                                                                                 
DEFERRED TAX ASSET, net of valuation                                                             
 allowance of $88,436,000 in 1998 and                                                           
 $84,473,000 in 1997                                              7,137                 7,137    

DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS                      61,916                58,044    
                                                             ----------             ---------    
                                                                                                 
TOTAL ASSETS                                                 $1,731,093             $1,371,371   
                                                             ==========             ==========    
</TABLE>

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

                                       44
<PAGE>
 
<TABLE> 
<CAPTION> 
CONSOLIDATED
BALANCE SHEETS                                                           Jones Intercable, Inc.
As of December 31, 1998 and 1997                                               and Subsidiaries
-----------------------------------------------------------------------------------------------  

LIABILITIES AND SHAREHOLDERS' INVESTMENT                              1998          1997
                                                                     (Stated in Thousands)
-----------------------------------------------------------------------------------------------    
<S>                                                              <C>            <C>    
LIABILITIES:
  Accounts payable and accrued liabilities                       $    109,599   $    115,189
  Subscriber prepayments and deposits                                   3,182          2,932
  Subordinated debentures and other debt                              752,707        553,732
  Credit facilities                                                   710,000        471,000
                                                                    ---------      ---------
 
TOTAL LIABILITIES                                                   1,575,488      1,142,853
                                                                    ---------      ---------
COMMITMENTS AND CONTINGENCIES (Notes 2, 4 and 11)
 
SHAREHOLDERS' INVESTMENT:
  Class A Common Stock, $.01 par value, 60,000,000
    shares authorized; 36,143,054 and 35,554,223
    shares issued at December 31, 1998 and 1997, respectively             361            356
  Common Stock, $.01 par value, 5,550,000 shares
    Authorized; 5,113,021 shares issued at December 31,
    1998 and 1997                                                          51             51
  Additional paid-in capital                                          495,116        487,616
  Accumulated deficit                                                (339,923)      (259,505)
                                                                    ---------      ---------
 
TOTAL SHAREHOLDERS' INVESTMENT                                        155,605        228,518
                                                                    ---------      ---------

TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT                   $  1,731,093   $  1,371,371
                                                                    =========      =========
</TABLE>

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

                                       45
<PAGE>
 
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS                                           Jones Intercable, Inc.
For the years ended December 31, 1998, 1997 and 1996                                  and Subsidiaries
------------------------------------------------------------------------------------------------------
 
                                                                 1998          1997         1996
                                                             (In Thousands Except Per Share Data)
------------------------------------------------------------------------------------------------------ 
<S>                                                        <C>            <C>          <C>    
REVENUES FROM OPERATIONS:
Cable Television Revenue
  Subscriber service fees                                  $    401,371   $  333,826   $  248,626
  Management fees                                                12,284       17,253       19,104
  Distributions and Brokerage Fees                               41,780        2,768       15,483
Non-cable Revenue                                                 5,294        8,741       28,497
                                                                -------      -------      -------
TOTAL REVENUES                                                  460,729      362,588      311,710
COSTS AND EXPENSES:
Cable Television Expenses
  Operating expenses                                            200,739      174,967      131,529
  General and administrative expenses (including
    approximately $6,646,000, $4,925,000 and $4,309,000
    of related party expenses during the years ended
    December 31, 1998, 1997 and 1996, respectively)              25,843       19,642       16,586
Non-cable operating, general and administrative                   6,009        9,297       28,410
Depreciation and amortization                                   204,746      175,839      131,186
                                                                -------      -------      -------
OPERATING INCOME (LOSS)                                          23,392      (17,157)       3,999
OTHER INCOME (EXPENSE):
Interest expense                                                (94,865)     (86,764)     (67,782)
Interest income                                                   2,424        1,451        3,758
Equity in income (loss) of affiliated entities                    1,372       (3,804)      (3,473)
Gain (Loss) on sale of assets                                    (3,616)      70,232        5,262
Other, net                                                       (9,125)      (5,722)      (4,424)
                                                                -------      -------      -------
 
LOSS BEFORE INCOME TAXES AND
   EXTRAORDINARY ITEM                                           (80,418)     (41,764)     (62,660)
Income tax benefit                                                    -        3,275            -
                                                                -------      -------      -------
LOSS BEFORE EXTRAORDINARY ITEM                                  (80,418)     (38,489)     (62,660)
EXTRAORDINARY ITEM:
Loss on early extinguishment of debt,
  net of related income taxes                                         -      (13,459)           -
                                                                -------      -------      -------
NET LOSS                                                   $    (80,418)  $  (51,948)  $  (62,660)
                                                                =======      =======      =======
 
Changes to arrive at Comprehensive Loss                               -      (47,272)       4,768
                                                                -------      -------      -------
COMPREHENSIVE LOSS                                         $    (80,418)  $  (99,220)  $  (57,892)
                                                                =======      =======      =======
 
LOSS PER SHARE:
LOSS BEFORE EXTRAORDINARY ITEM                             $      (1.96)  $    (1.11)  $    (2.00)
EXTRAORDINARY ITEM                                                    -         (.39)           -
                                                                -------      -------      -------
NET LOSS                                                   $      (1.96)  $    (1.50)  $    (2.00)
                                                                =======      =======      =======
 
LOSS PER SHARE-ASSUMING DILUTION
LOSS BEFORE EXTRAORDINARY ITEM                             $      (1.96)  $    (1.11)  $    (2.00)
EXTRAORDINARY ITEM                                                    -         (.39)           -
                                                                -------      -------      -------
NET LOSS                                                   $      (1.96)  $    (1.50)  $    (2.00)
                                                                =======      =======      =======
 
WEIGHTED AVERAGE NUMBER OF CLASS A COMMON
  AND COMMON SHARES OUTSTANDING                                  40,933       34,610       31,372
                                                                =======      =======      =======
</TABLE>

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

                                       46
<PAGE>
 
<TABLE> 
<CAPTION> 
CONSOLIDATED STATEMENTS OF
SHAREHOLDERS' INVESTMENT                                                                                      Jones Intercable, Inc.
For the years ended December 31, 1998, 1997 and 1996                                                               and Subsidiaries
------------------------------------------------------------------------------------------------------------------------------------

                                                                                        Unrealized  
                                                                                         Holding    
                             Class A  Common Stock      Common Stock     Additional      Gain on                      
                             --------------------  --------------------  Paid-In       Marketable   Accumulated  
                               Shares  Amount        Shares   Amount     Capital       Securities      Deficit     
                                                      (Stated in Thousands)
------------------------------------------------------------------------------------------------------------------------------------

<S>                            <C>     <C>           <C>       <C>       <C>           <C>          <C>
BALANCES, December 31, 1995    26,212   $    262         5,113  $   51  $  394,875      $ 42,504      $   (144,897)
 
Proceeds from stock options
  exercised                        52          1             -       -         142             -                 -
 
Class A Common Stock Grants         -          -             -       -         261             -                 -
 
Unrealized holding gain on
  marketable securities             -          -             -       -           -         4,768                 -
 
Net loss                            -          -             -       -           -             -           (62,660)
                              -------    -------       -------  ------  ----------      --------      ------------
 
 
BALANCES, December 31, 1996    26,264        263         5,113      51     395,278        47,272          (207,557)
 
Proceeds from stock options
  exercised                        90          1             -       -         567             -                 -
                                                                                 
Proceeds from Class A stock                                                      
  offering                      9,200         92             -       -      91,510             -                 -
                                                                                 
Class A Common Stock Grants         -          -             -       -         261             -                 -
                                                                                 
Gain realized on marketable 
  securities                        -          -             -       -           -       (47,272)                -

Net loss                            -          -             -       -           -             -           (51,948)
                              -------    -------       -------  ------  ----------      --------      ------------   


BALANCES, December 31, 1997    35,554        356         5,113      51     487,616             -          (259,505)
 
Proceeds from stock options
  exercised                       589          5             -       -       7,283             -                 -
 
Class A Stock Option Grants         -          -             -       -         217             -                 -
 
Net loss                            -          -             -       -           -             -           (80,418)
                              -------    -------       -------  ------  ----------      --------      ------------
 
BALANCES, December 31, 1998    36,143   $    361         5,113  $   51  $  495,116      $      -      $   (339,923)
                              =======    =======       =======  ======  ==========      ========      ============
</TABLE> 


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

                                       47
<PAGE>
 
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF
CASH FLOWS                                                                                                    Jones Intercable, Inc.
For the years ended December 31, 1998, 1997 and 1996                                                               and Subsidiaries
------------------------------------------------------------------------------------------------------------------------------------

                                                                            1998          1997          1996
                                                                                (Stated in Thousands)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>           <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                               $   (80,418)  $   (51,948)  $   (62,660)
Adjustments to reconcile net loss
  to net cash provided by operating activities:
    Extraordinary loss on early extinguishment
      of debentures, net of related income taxes                                 -        13,459             -
    Class A Common Stock option expense                                        218           261           261
    Loss (Gain) on sale of assets                                            3,616       (70,232)       (5,262)
    Deferred income tax benefit                                                  -        (3,275)            -
    Depreciation and amortization                                          204,746       175,839       131,186
    Equity in (income) losses of affiliated entities                        (1,372)        3,804         3,473
    Decrease (Increase) in restricted cash                                       -         1,016         5,341
    Decrease (Increase) in trade receivables                                 1,802       (10,941)        1,418
    Increase in receivables, deposits, prepaid expenses 
      and other assets                                                     (13,832)       (4,107)      (18,529)
    Increase (Decrease) in accounts payable, accrued
      liabilities and subscriber prepayments and deposits                   (6,340)       25,446        17,672
                                                                          --------      --------      --------
Net cash provided by operating activities                                  108,420        79,322        72,900
                                                                          --------      --------      --------
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of cable television systems                                      (387,646)     (379,393)     (298,929)
Deposit on cable television systems                                              -             -       (12,000)
Proceeds from sale of assets                                                   350       142,991         5,262
Purchase of property and equipment                                        (174,099)     (133,598)      (95,900)
Other, net                                                                   4,489           932         4,133
                                                                          --------      --------      --------
Net cash used in investing activities                                     (556,906)     (369,068)     (397,434)
                                                                          --------      --------      --------
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings                                                   793,000       570,500       506,000
Repayment of debt                                                         (554,000)     (442,500)     (193,000)
Proceeds from issuance of Class A Common Stock                                   -        91,602             -
Proceeds from Senior Note Offering, net                                    196,346       244,102             -
Proceeds from Class A Common Stock options                                   7,287           568           143
Decrease (increase) in accounts receivable from affiliated entities          2,215        (3,787)       10,315
Redemption of debentures                                                         -      (170,800)            -
Other, net                                                                   2,629         1,985           433
                                                                          --------      --------      --------
Net cash provided by financing activities                                  447,477       291,670       323,891
                                                                          --------      --------      --------
 
Increase (decrease) In Cash and Cash Equivalents                            (1,009)        1,924          (643)
 
Cash and Cash Equivalents, beginning of year                                 3,595         1,671         2,314
                                                                          --------      --------      --------
 
Cash and Cash Equivalents, end of year                                 $     2,586   $     3,595   $     1,671
                                                                          ========      ========      ========
 
</TABLE>



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

                                       48
<PAGE>
 
1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Organization

     Jones Intercable, Inc. was formed in 1970 to own, operate and manage cable
television systems.  Jones Intercable, Inc. and its subsidiaries are referred to
herein as the "Company."  As of December 31, 1998, through a total of 23 owned
and managed cable television systems, the Company served approximately 1.2
million subscribers in the United States.  A majority of the Company's cable
television systems are owned by the Company's wholly owned subsidiaries Jones
Cable Holdings, Inc. ("JCH") and Jones Cable Holdings II, Inc. ("JCH II").  JCH
owns and operates the cable television systems that comprise the Company's
Virginia/Maryland cluster.  The Virginia/Maryland cluster is comprised of:  the
Chesapeake Bay Group of cable systems that serve customers in communities in and
around Anne Arundel County and Charles County, Maryland, including the City of
Annapolis; the Prince Georges County, Maryland system that services all of
Prince Georges County, Maryland; the Alexandria, Virginia system; and the Prince
William County system that serves the communities of Dale City, Manassas and
Reston, Virginia.  JCH II owns and operates the Company's suburban cluster of
cable systems serving areas in and around Augusta, Savannah and Hinesville,
Georgia, Pima County, Arizona, Independence, Missouri, Albuquerque, New Mexico
and Palmdale and Littlerock, California.  The Company directly owns and operates
the cable television systems serving Manitowoc, Wisconsin, Oxnard, California
and Panama City Beach and Celebration, Florida.

     Glenn R. Jones, the Chairman of the Board of Directors and Chief Executive
Officer of the Company, beneficially owns approximately 57% of the Common Stock
of the Company.  Through this ownership of the Company's supervoting Common
Stock, Mr. Jones is entitled to elect a majority of the members of the Company's
Board of Directors and he otherwise controls the Company.  The Company's current
other major shareholder is BCI Telecom Holding Inc. ("BTH"). BTH owns an
approximate 31% economic interest in the Company through its ownership of
approximately 36% of the Class A Common Stock of the Company.  Through rights
granted to it under a shareholders agreement among Mr. Jones and his affiliates,
BTH and the Company, BTH has the ability to nominate several persons to the
Company's Board of Directors.  In addition, BTH holds an option to purchase Mr.
Jones' Common Stock of the Company.

     In May 1998, BTH announced its intention to sell approximately half of its
shares of the Company's Class A Common Stock to Comcast Corporation ("Comcast").
Comcast ranks among the top five multiple system cable television operators in
the United States serving approximately 4 million basic subscribers.  BTH also
announced its intention to grant to Comcast the right to acquire all of the
Common Stock held by Jones International, Ltd. and its affiliates
("International") from BTH if and when BTH exercises its option to purchase such
shares.  BTH also announced its intention to sell to Comcast at the time that
the option is exercised its remaining holdings of the Company's Class A Common
Stock.

     On August 12, 1998, the Company, International, BTH and Comcast announced
that agreements had been entered into that will accelerate the exercise of the
option by Comcast, and allow for the early closing of the transaction between
Comcast and BTH.  In connection with the early exercise of the option, Comcast
will pay to International and certain of its affiliates $200,000,000 for the
approximately 2.9 million shares of Common Stock of the Company held by them.
In addition, the Company has agreed to make certain payments to International
and its affiliates in connection with the termination, effective as of the
closing of the option exercise, of certain related party agreements between the
Company, International, and its affiliates, including the termination of Mr.
Jones' employment agreement with the Company and the termination of certain
programming rights held by International pursuant to the Shareholders Agreement
between the Company, International, Mr. Jones and BTH entered into in 1994.
Also, in connection with the closing of the option exercise, and conditioned
upon such closing occurring, the pending litigation between BTH, International,
Mr. Jones and the Company will be

                                       49
<PAGE>
 
dismissed and International and certain of its affiliates will dismiss the
appeal which is pending of the order entered against them in such litigation.

     To facilitate an orderly change in control to Comcast, the Company has
initiated a retention and severance program for its corporate associates who may
be terminated due to change in control.  The program provides incentives to
corporate associates to remain with the Company until the change in control and
through the subsequent 90-day transition period.  The program provides for cash
severance payments to associates that are terminated due to the change in
control.  Total costs associated with this program are expected to be
approximately $30,000,000.

     The Company anticipates incurring $40,600,000 in restructuring costs, which
will be recognized upon closing.  Such costs include the cost of terminating Mr.
Jones' employment contract, severance payments to corporate personnel, salaries
during the 90-day transition period following the change in control and certain
professional fees.

     The closing of the exercise of the option is expected to occur in March
1999.  All necessary regulatory filings associated with this transaction have
been made.  Following such closing, Comcast would own approximately 12.8 million
shares of Class A Common Stock, and approximately 2.9 million shares of Common
Stock of the Company, representing approximately 37% of the economic and 47% of
the voting interest in the Company.  In addition, the Common Stock held by
Comcast will allow it to elect 75% of the Board of Directors of the Company, and
Comcast is expected to replace a majority of the existing Board of Directors
with nominees of its choice effective as of the closing of the option exercise.

     Effective Registration Statement

     The Company has an effective registration statement relating to the sale of
$500 million of senior debt securities, senior subordinated debt securities,
subordinated debt securities and Class A Common Stock.  The Company, from time
to time, may issue securities not to exceed $500 million pursuant to this
registration statement.  In April 1998 the Company issued and sold $200,000,000
of its 7 5/8% Senior Notes due April 15, 2008 pursuant to this registration
statement.

     Summary of Significant Accounting Policies

     Basis of Presentation

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

     Principles of Consolidation

     The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries.  The Company's investments in affiliates and
domestic cable television partnerships (Note 4) are carried at cost plus equity
in profits and losses.  All significant intercompany transactions have been
eliminated in consolidation.

                                       50
<PAGE>
 
     Statements of Cash Flows

     The Company considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents.  Income taxes and
interest paid during the periods presented are as follows:

<TABLE>
<CAPTION>
                                               December 31,
                              ----------------------------------------------
                                        1998            1997            1996
                              ----------------------------------------------
<S>                                    <C>             <C>           <C>
     (Stated in Thousands)
     Income taxes                      $  -             $  -          $  -
                                       ========         ========      ========
     Interest                          $ 90,820         $ 86,584      $ 67,441
                                       ========         ========      ========
 
</TABLE>

     Non-cash transactions:

      As described in Note 4, on April 25, 1997, the Company tendered its Bell
Cablemedia plc ("Bell Cablemedia") shares in exchange for shares of Cable &
Wireless Communications plc ("CWC").  As described in Note 4, on December 23,
1996, the Company redeemed 225 shares of Jones Global Group, Inc. ("Global
Group") in exchange for a $8,950,188 note receivable.  As described in Note 2,
on June 14, 1996, the Company sold Jones Galactic Radio, Inc. ("Galactic Radio")
to Global Group.  The sales price of $17.2 million was paid in the form of
984,968 American Depositary Shares ("ADSs") of Bell Cablemedia.  During 1998,
1997 and 1996, the Company recorded $217,000, $261,000 and $261,000,
respectively, of Additional Paid-in Capital related to Class A Common Stock
option grants as discussed in Note 9.

     Property, Plant and Equipment

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

     Distribution systems including capitalized
      interest and operating expenses                  5-15 years
     Buildings                                         10-30 years
     Equipment and tools                               3-5 years
     Premium service equipment                         5 years
     Earth receive stations                            5-15 years
     Vehicles                                          3-4 years
     Other property, plant and equipment               3-5 years

     Franchise Costs

     Costs incurred in obtaining cable television franchises and other operating
authorities are initially deferred and amortized over the lives of the
franchises.  Franchise rights acquired through purchase of cable television
systems are stated at estimated fair value at the date of acquisition and
amortized over the remaining terms of the franchises.  Amortization is
determined using the straight-line method over lives of one to 15 years.

     Cost in Excess of Interests in Net Assets Purchased

     The cost of acquisitions in excess of the fair values of net assets
acquired is being amortized using the straight-line method over a 40-year life.
The Company assesses the realizability of these assets through periodic
independent appraisals.  Any impairments are recognized as an expense in the
Company's Consolidated Statements of Operations.

                                       51
<PAGE>
 
     Deferred Financing Costs

     Costs incurred in connection with the issuance of notes and debentures and
the execution of revolving credit agreements are deferred and amortized using
the effective interest method over the life of such issues and agreements.

     Distributions from Managed Partnerships

     Distributions earned by the Company as general partner of its managed
partnerships from cable television properties sold by such partnerships to
unaffiliated parties are recorded as revenues when received.  Distributions
earned by the Company as general partner of its managed partnerships from cable
television properties sold by such partnerships to the Company are treated as a
reduction of the purchase price of the cable television systems.  Distributions
earned by the Company as general partner of its managed partnerships from cable
television properties sold by such partnerships to entities in which the Company
has a continuing equity interest are treated as a reduction in the basis of the
investment in the cable television system.

     Comprehensive Income

     The Company has adopted Statement of Financial Accounting Standards No. 130
("SFAS 130") "Reporting Comprehensive Income" in 1998.  SFAS 130 establishes
standards for the reporting and display of comprehensive income and its
components.  An unaudited reconciliation of the Company's net loss and
comprehensive loss follows:

<TABLE>
<CAPTION>
                                              For the year ended December 31,
                                           -------------------------------------
                                                   (stated in thousands)
                                                1998         1997         1996
                                                ----         ----         ----  
<S>                                        <C>          <C>          <C>   
Net loss, as reported                      $  (80,418)  $  (51,948)  $  (62,660)
Adjustments to arrive at comprehensive
  net loss 
Change in unrealized holding gain on 
  marketable securities                             -            -        4,768
Reclassification of comprehensive loss              -      (47,272)           -
                                              -------      -------      -------
Comprehensive loss                         $  (80,418)  $  (99,220)  $  (57,892)
                                              =======      =======      =======
</TABLE>

     Earnings Per Share of Class A Common Stock and Common Stock

     Net loss per share of Class A Common Stock and Common Stock is based on
the weighted average number of shares outstanding during the periods presented.
Approximately 400,000, 71,000 and 95,000 common stock equivalents, respectively,
were not included in the computation of loss per share - assuming dilution for
the years ended December 31, 1998, 1997 and 1996, because the effect of such
common stock equivalents was antidilutive.

     Treasury Stock

     Shares held in treasury have been retired and classified as authorized but
unissued shares in accordance with the Colorado Business Corporation Act.

     SFAS 133

     In June 1998, the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments 
and Hedging Activities" ("SFAS 133"). SFAS 133 established accounting and 
reporting standards that require derivative instruments to be recorded as assets
or liabilities in the balance sheet. SFAS 133 is effective for fiscal years 
beginning after June 15, 1999. The Company has not yet quantified the impacts of
adopting SFAS 133 and has not yet determined the timing or method of adopting 
SFAS 133.

                                       52
<PAGE>
 
2.   ACQUISITIONS, EXCHANGES AND SALES

     Acquisitions by the Company
     ---------------------------

     In January 1999, the Company, through JCH II, purchased from Cable TV Fund
14-B, Ltd. ("Fund 14-B"), a managed partnership, the cable television system
serving areas in and around Littlerock, California (the "Littlerock System") for
a purchase price of $10,720,400.  The Littlerock System is contiguous to the
Palmdale System.  The purchase price represented the average of three separate
independent appraisals of the fair market value of the Littlerock System.
Funding for this transaction was provided by borrowings under JCH II's credit
facility.  See Note 11 for a  description of pending litigation related to this
transaction.

     In December 1998, the Company, through JCH II, purchased from Cable TV Fund
12BCD Venture (the "Venture"), a venture comprised of three managed
partnerships, the cable television systems serving areas in and around Palmdale
and Lancaster, California (the "Palmdale System") for a purchase price of
$138,205,200.  The purchase price represented the average of three separate
independent appraisals of the fair market value of the Palmdale System. The
Company received, from the three partnerships that comprise the Venture, general
partner distributions totaling $22,275,250, which reduced the Company's basis in
the assets of the Palmdale System.  Funding of the net purchase price of
$115,929,950 was provided by borrowings under JCH II's credit facility.  See
Note 11 for a description of pending litigation relating to this transaction.

     In December 1998, the Company, through JCH II, purchased from an
unaffiliated party the cable television system serving areas in and around
Hinesville, Georgia (the "Hinesville System") for $48,000,000.  The Hinesville
System is contiguous to the Company's Savannah, Georgia system.  The Company
paid Jones Financial Group, Ltd. ("Financial Group"), a subsidiary of Jones
International, Ltd., a fee of $756,000 upon closing of this transaction for
acting as the Company's financial advisor in connection with this transaction.
All fees paid to Financial Group by the Company are based upon 90% of the
estimated commercial rate charged by unaffiliated financial advisors.  Funding
for this transaction was provided by borrowings available under JCH II's credit
facility.

     In December 1998, the Company, through JCH II, purchased from Spacelink
Fund 3, Ltd., a managed partnership, the cable television systems serving areas
in and around Socorro, New Mexico (the "Socorro System") and Grants, New Mexico
(the "Grants System"), for purchase prices of $3,638,791 and $6,420,806,
respectively.  The purchase prices represented the average of three separate
independent appraisals of the fair market values of the Socorro System and the
Grants System, respectively.  The Company received general partner distributions
totaling approximately $1,715,500 related to this transaction, which reduced the
Company's basis in the assets of the Socorro System and the Grants System.  The
Socorro System and the Grants System are in relatively close proximity to the
Company's Albuquerque System.  Funding for the net purchase price of $8,344,054
was provided by borrowings under JCH II's credit facility.

     In June 1998, the Company, through JCH II, purchased from the Venture the
cable television system serving areas in and around Albuquerque, New Mexico (the
"Albuquerque System") for $222,963,267.  The purchase price represented the
average of three separate independent appraisals of the fair market value of the
Albuquerque System.  Upon closing, the Company received, from the three
partnerships that comprise the Venture, general partner distributions totaling
approximately $8,100,000, which reduced the Company's basis in the assets of the
Albuquerque System.  Funding for the net purchase price of $214,863,267 was
provided by borrowings from JCH II's credit facility.

     In August 1997, the Company, through JCH II, purchased from Jones
Intercable Investors, L.P. (the "Partnership"), a managed partnership, the cable
television system serving communities in and around Independence, Missouri (the
"Independence System") for a purchase price of $171,213,667, which represented
the average of three independent appraisals of the fair market value of the
Independence System.  The Company received a limited partner distribution
totaling $25,721,000 from the sale by the Partnership of the Independence 

                                       53
<PAGE>
 
System because of the Company's equity interest in the Partnership, which
reduced the Company's basis in the assets of the Independence System. The
Partnership paid The Intercable Group, Ltd., a wholly owned subsidiary of the
Company, a $4,280,000 brokerage fee in connection with this transaction, which
reduced the Company's basis in the assets of the Independence System. Funding of
the net purchase price of approximately $141,200,000 for the Independence System
was provided by all of the net proceeds from the Company's August 1997 Class A
Common Stock offering and borrowings from JCH II's credit facility.

     In June 1997, the Company purchased from Cable TV Joint Fund 11 ("Joint
Fund 11"), a venture comprised of four managed partnerships, the cable
television system serving the City of Manitowoc, Wisconsin (the "Manitowoc
System").  The purchase price for the Manitowoc System was $16,122,333.  The
purchase price represented the average of three separate independent appraisals
of the fair market value of the Manitowoc System.  The Company received, from
the four managed partnerships that comprised Joint Fund 11, general partner
distributions totaling approximately $4,556,000 upon the closing of the sale of
the Manitowoc System.  Funding of the net purchase price of approximately
$11,566,000 was provided by borrowings under the Company's credit facilities.

     In January 1997, the Company, through JCH, purchased from Maryland Cable
Partners, L.P., an unaffiliated party, the cable television system serving the
communities of Berwyn Heights, Bladensburg, Bowie, Brentwood, Cheverly, College
Park, Colmar Manor, Cottage City, Edmonston, Glenarden, Greenbelt, Hyattsville,
Landover Hills, Laurel, Mt. Rainer, New Carrollton, North Brentwood, Riverdale,
Takoma Park, University Park and unincorporated portions of northern Prince
Georges County, all in the State of Maryland (the "North Prince Georges County
System").  The purchase price was $231,367,000 and was funded by borrowings
under JCH's revolving credit facility.  The Company paid Financial Group a fee
of $2,082,000 upon closing of this transaction for acting as the Company's
financial advisor in connection with this transaction.  All fees paid to
Financial Group by the Company are based upon 90% of the estimated commercial
rate charged by unaffiliated financial advisors. The North Prince Georges County
System was contiguous to the South Prince Georges County System which was
already owned by the Company.  The Company has combined the North Prince Georges
County System and the South Prince Georges County System and thus the Company
now serves all of Prince Georges County, Maryland in the northern suburbs of
Washington, D.C.  The Prince Georges County System is operated as part of the
Virginia/Maryland Cluster.
 
     In April 1996, the Company purchased from Jones Spacelink Income/Growth
Fund 1-A, Ltd., a Colorado limited partnership managed by the Company,  the
cable television system serving the areas in and around Lake Geneva, Wisconsin
(the "Lake Geneva System").  The purchase price was $6,345,667, which was the
average of three separate independent appraisals of the fair market value of the
Lake Geneva System.  The purchase of the Lake Geneva System was funded by
borrowings available under JCH's revolving credit facility.

     In April 1996, the Company purchased from Jones Spacelink Income/Growth
Fund 1-A, Ltd., a Colorado limited partnership managed by the Company, the cable
television system serving the areas in and around Ripon, Wisconsin (the "Ripon
System").  The purchase price was $3,712,667, which was the average of three
separate independent appraisals of the fair market value of the Ripon System.
The purchase of the Ripon System was funded by borrowings available under JCH's
revolving credit facility.

     In April 1996, the Company purchased from Jones Spacelink Income Partners
87-1, L.P., a Colorado limited partnership managed by the Company, the cable
television systems serving the communities of Lodi, Burbank, Lafayette Township,
New London, Bailey Lakes, Savannah, Shreve, Jeromesville, West Lafayette,
Loudonville, Perrysville, Creston, Gloria Glens, Sterling, Seville, Westfield
Center, Chippewa, Lake Area, Rittman, West Salem, Bloomville, Spencer, Polk and
Congress, all in the State of Ohio (the "Lodi System").  The purchase price was
$25,706,000, which was the average of three separate independent appraisals of
the fair market value of the Lodi System.  The purchase of the Lodi System was
funded by borrowings available under JCH's revolving credit facility.

                                       54
<PAGE>
 
     In February 1996, the Company purchased from IDS/Jones Growth Partners 87-
A, Ltd., a Colorado limited partnership managed by the Company, the cable
television system serving areas in and around Carmel, Indiana (the "Carmel
System").  The purchase price was $44,235,333, which was the average of three
separate independent appraisals of the fair market value of the Carmel System.
The purchase of the Carmel System was funded by borrowings available under JCH's
revolving credit facility.

     In February 1996, the Company purchased from Jones Cable Income Fund 1-B,
Ltd., a Colorado limited partnership managed by the Company, the cable
television system serving areas in and around Orangeburg, South Carolina (the
"Orangeburg System").  The purchase price was $18,347,667, which was the average
of three separate independent appraisals of the fair market value of the
Orangeburg System.  The purchase of the Orangeburg System was funded by
borrowings available under JCH's revolving credit facility.

     In February 1996, the Company purchased from Cable TV Fund 12-BCD Venture
(the "Venture"), a joint venture of three of the Company's managed limited
partnerships, the cable television system serving areas in and around Tampa,
Florida (the "Tampa System").  The purchase price was $110,395,667, which was
the average of three separate independent appraisals of the fair market value of
the Tampa System.  The purchase of the Tampa System was funded by borrowings
available under JCH's revolving credit facility.  See Note 11 for a description
of pending litigation relating to this transaction.

     In January 1996, the Company purchased the cable television systems serving
Manassas, Manassas Park, Haymarket and portions of unincorporated Prince William
County, all in the State of Virginia (the "Manassas System") from an
unaffiliated party.  The purchase price of the Manassas System was $71,100,000.
The purchase was funded by borrowings available under JCH's revolving credit
facility.  The Company paid Financial Group a fee of $896,000 upon closing of
this transaction for acting as the Company's financial advisor in connection
with this transaction.  All fees paid to Financial Group by the Company are
based upon 90% of the estimated commercial rate charged by unaffiliated
financial advisors.  The Manassas System is now operated as part of the Prince
William County System in the Virginia/Maryland Cluster.

     Exchanges
     ---------

     In April 1997, the Company, through JCH, conveyed to an affiliate of Tele-
Communications, Inc. the cable television systems serving areas in and around
Evergreen, Idaho Springs and portions of Jefferson County, Colorado in exchange
for the cable television system serving areas in and around Annapolis, Maryland
(the "Annapolis System") and cash in the amount of $2,500,000.  The Company paid
Financial Group a $695,250 fee upon completion of this exchange as compensation
to it 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 Annapolis System is now operated as part of the Company's Chesapeake Bay
Group in the Virginia/Maryland cluster.

     In April 1996, the Company, pursuant to an asset exchange agreement (the
"Time Warner Exchange Agreement") with Time Warner Entertainment Company, L.P.
("Time Warner"), an unaffiliated cable television operator, conveyed to Time
Warner the cable television systems serving Hilo, Hawaii (the "Hilo System") and
Kenosha, Wisconsin (the "Kenosha System") as well as the Lodi System, the Ripon
System, the Lake Geneva System and cash in the amount of $11,735,667.  In
return, the Company received from Time Warner the cable television systems
serving the communities in and around Savannah, Georgia (the "Savannah System").
This transaction was considered a non-monetary exchange of similar productive
assets for accounting purposes and the Savannah System was recorded at the
historical cost of the assets given up plus the $11,735,667 cash consideration,
which was funded by borrowings available under JCH's revolving credit facility.
The Company paid Financial Group a $1,286,000 fee upon the completion of this
transaction as compensation to it for acting as 

                                       55
<PAGE>
 
the Company's financial advisor. All fees paid to Financial Group by the Company
are based upon 90% of the estimated commercial rate charged by unaffiliated
financial advisors.

     In February 1996, the Company, pursuant to an asset exchange agreement (the
"TWEAN Exchange Agreement") with Time Warner Entertainment-Advance/Newhouse
Partnership ("TWEAN"), an unaffiliated cable television system operator,
conveyed to TWEAN the Carmel System, the Orangeburg System and the Tampa System
and cash in the amount of $3,500,000.  In return, the Company received from
TWEAN the cable television systems serving Andrews Air Force Base, Capitol
Heights, Cheltenham, District Heights, Fairmount Heights, Forest Heights,
Morningside, Seat Pleasant, Upper Marlboro, and portions of Prince Georges
County, all in Maryland (the "South Prince Georges County System"), and portions
of Fairfax County, Virginia (the "Reston System").  See Note 11 for a
description of pending litigation relating to this transaction.  This
transaction was considered a non-monetary exchange of similar productive assets
for accounting purposes and the South Prince Georges County System and the
Reston System were recorded at the historical cost of the assets given up plus
the $3,500,000 cash consideration, which was funded by borrowings available
under JCH's revolving credit facility.  The Company paid Financial Group a
$1,668,000 fee upon the completion of this transaction as compensation to it for
acting as the Company's financial advisor.  All fees paid to Financial Group by
the Company are based upon 90% of the estimated commercial rate charged by
unaffiliated financial advisors.  The South Prince Georges County System is now
operated as part of the Prince Georges County System in the Virginia/Maryland
Cluster.  The Reston System is now operated as part of the Chesapeake Bay Group
in the Virginia /Maryland Cluster.

     Sales
     -----

     In May 1998, the Company sold the contract manufacturing business owned by
Jones Futurex, Inc. ("Futurex") to a third party for $350,000 in cash.  In
addition, the buyer entered into a sublease arrangement for certain facilities
leased by Futurex.  Payments under the sublease agreement total approximately
$1.8 million over the next 4 years.  In connection with this transaction, the
Company recognized a loss of approximately $3,616,000.  The Company continues to
own and operate Futurex's encryption business.

     In August 1998, the Company sold its 75% interest in Jones Customer Service
Management, LLC to Jones Cyber Solutions, Ltd., an affiliated company, for
$3,150,000.  The purchase price was paid $2,000,000 in cash and $1,150,000 in a
note receivable.  The note receivable bears interest at prime +2%, and is
payable in 36 months or upon a change in control of the Company.  The proceeds
from this transaction were used to offset the remaining assets related to the
Company's customer billing venture.

     In October 1997, the Company sold the cable television system serving areas
in and around Walnut Valley, California (the "Walnut Valley System") for
$32,493,000 to Century Communications Corp., an unaffiliated party.  The sales
price represented the contract price of $33,493,000, less a purchase price
adjustment of $1,000,000.  The Company recognized a pre-tax gain of
approximately $20,836,000 related to this sale in the fourth quarter of 1997.
Proceeds from the sale were used to reduce outstanding indebtedness under the
Company's credit facilities.  The Company paid Financial Group a fee of $678,000
upon completion of the 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.

     In April 1997, the Company tendered all of its shares of Bell Cablemedia
plc to Cable & Wireless Communications plc ("CWC") in exchange for 25,017,385
shares of CWC.  During April and May 1997, the Company sold all of its shares of
CWC for an aggregate sales price of $109,276,000.  The Company recognized a pre-
tax gain on this transaction of $44,563,000.  Proceeds from the sale were used
to reduce outstanding indebtedness under the Company's credit facilities.

                                       56
<PAGE>
 
     In July 1996, the Company sold the assets of Jones Satellite Programming,
Inc. ("JSP"), a wholly owned subsidiary, to an unaffiliated party for
$2,873,871.  The Company recorded a gain of approximately $2,873,000 upon the
closing of this sale.  JSP provided satellite programming to satellite dish
owners.

     In June 1996, the Company completed the sale of Galactic Radio to Global
Group for $17.2 million.  Global Group subsequently sold Galactic Radio to
another affiliate of International.  The Company's Board of Directors requested
and received a fairness opinion related to this sale from an unaffiliated
investment banking firm.  The sales price was paid in the form of 984,968 ADSs
of Bell Cablemedia.  The number of ADSs represented the purchase price of $17.2
million divided by the 30-day average closing price of an ADS for the 30-day
period immediately preceding the closing date. Due to the related party nature
of this transaction, no gain was reflected in the accompanying financial
statements.

     The pro forma effect of the above-described acquisitions, exchanges and
sales of cable television properties and the sales of non-strategic subsidiaries
on the Company's results of operations for the years ended December 31, 1998 and
1997 as if the transactions occurred on January 1 of the years presented in the
following unaudited tabulation:

<TABLE>
<CAPTION>
                                 For the year ended December 31, 1998:
                             ---------------------------------------------- 
                                              (In Thousands)

                                As Reported    Acquisitions      Pro Forma
                                -----------    ------------      ---------
<S>                          <C>               <C>              <C>        
Revenues                      $    460,729      $    67,726     $   528,455   
                                   =======          =======        ========   
                                                                              
Operating Income (Loss)       $     23,392      $    (3,181)    $    20,211   
                                   =======          =======        ========   
                                                                              
Net Loss                      $    (80,418)     $   (22,028)    $  (102,446)  
                                   =======          =======        ========   
                                                                              
Loss Per Share                $      (1.96)                     $     (2.50)  
                                   =======                         ========   
</TABLE> 
 
<TABLE> 
<CAPTION> 
                                    For the year ended December 31, 1997:
                             --------------------------------------------------
                                                   (In Thousands)
 
                                         Acquisitions/
                           As Reported     Exchanges         Sales        Pro Forma
                           -----------   -------------       -----        ---------
<S>                        <C>           <C>              <C>           <C> 
Revenues                   $  362,588     $   113,000     $   (7,408)   $    468,180          
                              =======         =======        =======       =========           
                                                                                              
Operating Income (Loss)    $  (17,157)    $    (8,126)    $   (1,416)   $    (26,699)          
                              =======         =======        =======       =========           
                                                                                              
Net Loss                   $  (51,948)    $   (41,544)    $  (64,865)   $   (158,357)          
                              =======         =======        =======       =========           
                                                                                              
Loss Per Share             $    (1.50)                                  $      (4.58)        
                              =======                                      =========          
</TABLE>

     In June 1998, the Company entered into an agreement with Cable TV Fund 14-
A, Ltd. ("Fund 14-A"), a managed partnership, to purchase the cable television
system serving areas in and around Calvert County, Maryland (the "Calvert County
System") for a purchase price of $39,388,667, subject to customary closing
adjustments.  The purchase price represents the average of three independent
appraisals of the fair market value of the Calvert County System.  The Calvert
County System is contiguous to the Company's Virginia/Maryland 

                                       57
<PAGE>
 
cluster of cable television systems. Funding for this transaction is expected to
be provided by borrowings available under JCH's credit facility. The closing of
this transaction, which is expected to occur in April 1999, is subject to a
number of conditions including the approval of the transaction by the holders of
a majority of the limited partnership interests of Fund 14-A; the expiration or
termination of all waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 applicable to the agreement or the transactions
contemplated thereby; and the receipt of consents of governmental authorities
and other third parties.

3.   TRANSACTIONS WITH RELATED PARTIES

     The Company and the managed partnerships for which the Company is general
partner (see Note 5) have had, and will continue to have, certain transactions
with International and its other subsidiaries.  The Company may continue to have
certain transactions with International and its other subsidiaries in the
future.  Principal recurring transactions are as follows:

     Costs Shared by the Company and Managed Partnerships

     Jones Interactive, Inc. ("Jones Interactive"), a wholly owned subsidiary of
International, provides information management and data processing services for
operating companies affiliated with International.  Charges to the various
operating companies are based on usage of computer time by each entity.  Amounts
charged to the Company and its managed partnerships for the years ended December
31, 1998, 1997 and 1996 totaled $6,089,000, $5,454,000, and $5,784,000,
respectively.

     The Company is party to a lease with Jones Properties, Inc., a wholly owned
subsidiary of International, under which the Company has leased a 101,500 square
foot office building in Englewood, Colorado.  The lease agreement, as amended,
has a 15-year term, expiring July 2000, with three 5-year renewal options.  The
annual rent is not to exceed $24.00 per square foot plus operating expenses.
The Company has subleased approximately 44% of the building to International and
certain affiliates of International on the same terms and conditions as the
above described lease.  Rent payments to Jones Properties, Inc., net of
subleasing reimbursements, for the three years ended December 31, 1998, 1997 and
1996 were $1,390,000, $1,345,000 and  $1,467,000, respectively.

     Upon the closing of BTH's investment in the Company in December 1994, the
Company entered into a Secondment Agreement with BTH.  Pursuant to the
Secondment Agreement, BTH provided a total of 8 secondees during 1998.  These
secondees worked for the Company and its managed partnerships.  The Company
reimbursed BTH for the full employment costs of such individuals.  The Company
reimbursed BTH $719,000, $1,180,000 and $1,138,000 during the years ended
December 31, 1998, 1997 and 1996, respectively.

     The Company paid approximately 63%, 47% and 40% of the above-described data
processing, rental and secondment expenses during the years ended December 31,
1998, 1997 and 1996, respectively.  The remainder of the expenses were allocated
to and paid by the managed partnerships.

     Costs Borne and Payments Received by the Company

     The Company receives satellite programming from Knowledge TV, an affiliate
of International in which the Company also has a significant ownership interest.
See Note 4.  Payments made to Knowledge TV for programming provided to the
Company's owned cable television systems for the years ended December 31, 1998,
1997 and 1996 totaled approximately $622,800, $411,200 and $302,600,
respectively.

     The Company received satellite programming from Jones Computer Network,
Ltd., an affiliate of International, through April 1997.  See Note 4.  Payments
made to Jones Computer Network, Ltd. for programming provided to the Company's
owned cable television systems for the years ended December 31, 1998, 1997 and
1996 totaled approximately $-0-, $222,800 and  $515,400, respectively.

                                       58
<PAGE>
 
     The Company receives satellite programming from Great American Country,
Inc., an affiliate of International.  Payments made to Great American Country,
Inc. for programming provided to the Company's owned cable television systems
for the years ended December 31, 1998, 1997 and 1996 totaled approximately
$517,000, $313,000 and $281,000, respectively.

     The Company also receives satellite programming from Superaudio, an
affiliate of Galactic Radio.  The Company sold Galactic Radio to an affiliate of
International on June 14, 1996.  See Note 2.  Payments made to Galactic Radio
for programming provided to the Company's owned cable television systems for the
year ended December 31, 1998, 1997 and for the period from June 15, 1996 to
December 31, 1996 totaled approximately $348,000, $244,000 and $119,000,
respectively.

     The Product Information Network Venture ("PIN") is an affiliate of
International that provides a satellite programming service.  PIN airs product
infomercials 24 hours a day, seven days a week.  A portion of the revenues
generated by PIN are paid to the cable television systems that carry PIN's
programming.  Most of the Company's owned cable television systems carry PIN for
all or part of each day.  Aggregate payments received by the Company from PIN
relating to the Company's owned cable television systems totaled approximately
$1,008,000, $705,000 and  $466,000 for the years ended December 31, 1998, 1997
and 1996, respectively.

     Effective upon the closing of BTH's investment in the Company in December
1994, the Company entered into a Supply and Services Agreement with BTH.
Pursuant to the Supply and Services Agreement, BTH provides the Company with
access to the expert advice of personnel from BTH and its affiliates for the
equivalent of three man-years on an annual basis.  The Company pays an annual
fee of $2,000,000 to BTH during the term of the agreement.  Payments to BTH
under the Supply and Services Agreement during the years ended December 31,
1998, 1997 and 1996 totaled $2,000,000, $2,000,000 and $2,000,000, respectively.

     Financial Group performs services for the Company as its agent in
connection with negotiations regarding various financial arrangements of the
Company.  In December 1994, the Company entered into a Financial Services
Agreement for eight years with Financial Group pursuant to which Financial Group
has agreed to render financial advisory and related services to the Company for
a fee equal to 90% of the fees that would be charged to the Company by
unaffiliated third parties for the same or comparable services.  The Company
will pay Financial Group an annual $1,000,000 retainer as an advance against
payments due pursuant to this agreement and will reimburse Financial Group for
its reasonable out-of-pocket expenses.  The Company paid fees totaling $756,000
in 1998 relating to the purchase of the Hinesville System.   The Company paid
fees totaling $3,456,000 in 1997 related to the acquisition of the North Prince
Georges County System, the acquisition of the Annapolis System and the sale of
the Walnut Valley System.  The Company paid fees totaling $3,850,000 in 1996
related to the acquisition of the Manassas System, the South Prince Georges
County System, the Reston System and the Savannah System.

4.   INVESTMENTS

     @Home Corporation

     In June 1998, the Company entered into a Distribution Agreement with At
Home Corporation ("@Home"), which provides for the distribution of high speed
internet services to the Company's cable television systems.  Deployment began
in December 1998.  In conjunction with this agreement, the Company and @Home
entered into a Warrant Purchase Agreement providing for the Company's purchase
of up to a maximum of 2,046,100 shares of Series A Common Stock of @Home at
$10.50 per share. The Warrant becomes exercisable after March 31 each year,
beginning in 1999, as the Company launches @Home services in its cable
television systems.

                                       59
<PAGE>
 
     Jones Global Group, Inc.

     On December 23, 1996, the Company redeemed 225 of its 380 shares of Global
Group in exchange for a $8,950,188 note receivable from Global Group.  The note
was repaid in the first quarter of 1997.  As a result of this transaction, the
Company recognized a gain of $2,979,000 and now owns a 20% interest in Global
Group.  The Company accounts for its investment in Global Group using the equity
method.

     Knowledge TV, Inc.

     During 1992, the Company invested $10,000,000 in Knowledge TV, an affiliate
of International that provides educational programming, for 25% of the stock of
Knowledge TV, which also received certain advertising avails and administrative
and marketing considerations from the Company.  The number of shares of Class A
Common Stock of Knowledge TV issued to the Company was based on the average of
two separate independent appraisals of Knowledge TV.  Through its acquisition of
the assets of Jones Spacelink, Ltd., the Company obtained an additional 13%
interest in Knowledge TV in December 1994.  Spacelink had acquired such interest
for $3,135,000.  In 1996, additional issuances of Knowledge TV's Class A Common
Stock reduced the Company's investment in Knowledge TV to 26%.  The Company
accounts for this investment using the equity method and, as of December 31,
1998, had recognized equity losses equal to its investment of $13,135,000.  As
described below, in January 1999 the Company acquired an additional 6% interest
in Knowledge TV.

     Jones Education Company

     On April 11, 1995, the Company converted $20,000,000 in advances to
Knowledge TV into shares of Class A Common Stock of Jones Education Company
("JEC"), the parent company of Knowledge TV, for an approximate 17% equity
interest in JEC.  In 1996, subsequent issuances of JEC's Class A Common Stock
reduced the Company's investment in JEC to 16%.  The Company has accounted for
this investment using the equity method.  The net investment as of December 31,
1998 was $12,789,000.  In January 1999, the Board of Directors of the Company
approved the exchange of the Company's shares of JEC for additional shares of
Knowledge TV.  Such exchange increases the Company's ownership percentage in
Knowledge TV to approximately 32%.  The Company's Board of Directors obtained an
independent opinion regarding the fairness of this transaction.

     Bell Cablemedia plc

     On April 25, 1997, the Company tendered all of its shares of Bell
Cablemedia to CWC in exchange for 25,017,385 shares of CWC.  During April and
May 1997, the Company sold all of its shares of CWC for an aggregate sales price
of $109,276,000.  The Company recognized a pre-tax gain on this transaction of
$44,563,000.  Proceeds from the sale were used to reduce outstanding
indebtedness under the Company's credit facilities.  The Company now owns no
shares of Bell Cablemedia or CWC.

     Jones Intercable Investors, L.P.

     The Company was the General Partner and a 19% limited partner of Jones
Intercable Investors, L.P., a managed partnership.  Jones Intercable Investors,
L.P. owned the Independence System until it was purchased by the Company on
August 31, 1997.  See Note 2.  The Company received a limited partner
distribution of $25,721,000 as a result of the sale of the Independence System,
which reduced the Company's basis in the Independence System.  Subsequent to the
sale of the Independence System and the distribution of the net sales proceeds,
Jones Intercable Investors, L.P. was liquidated and dissolved.

                                       60
<PAGE>
 
     Jones Customer Service Management, L.L.C.

     In 1995, the Company and Jones Cyber Solutions, Ltd. ("JCS"), an indirect
subsidiary of International, formed a venture known as Jones Customer Service
Management, LLC for the purpose of developing a subscriber billing and
management system.  As of December 31, 1998, the Company had invested $5,200,000
in the venture.    The Company accounts for this investment using the equity
method and, as of December 31, 1998, had recognized equity losses equal to its
investment of $5,200,000.  In August 1998, the Company sold its 75% interest in
Jones Customer Service Management, LLC to JCS for $3,150,000.  The purchase
price was paid $2,000,000 in cash and $1,150,000 in a note receivable.  The note
receivable bears interest at prime +2%, and is payable in 36 months or upon a
change in control of the Company.  The proceeds from this transaction were used
to offset the remaining assets related to the Company's customer billing
venture.

     JCS performed the basic system development work for the venture and was
paid periodically beginning in 1995 on a time and materials basis, plus 10% of
the amount charged, for its own service.  The venture's subscriber billing and
management system was trialed in one of the Company's cable systems during 1997.
The Company determined, in late 1997, not to pursue the implementation of the
subscriber billing and management system.  As a result of this decision, the
Company incurred a write-off of $14,228,000 in the fourth quarter of 1997
related to the write-off of costs associated with the planned implementation of
the billing system in Company-owned cable systems.  Such write-off was included
in 1997 depreciation and amortization expense.

5.   MANAGED PARTNERSHIPS

     Organization

     The Company is general partner for 17 Colorado limited partnerships formed
to acquire, construct, develop and operate cable television systems.
Partnership capital was raised principally through a series of public offerings
of limited partnership interests.  The Company generally made a capital
contribution of $1,000 to each partnership and is allocated 1% of all
partnership profits and losses.  The Company also purchased limited partner
interests in certain of the partnerships and generally participates with respect
to such interests on the same basis as other limited partners.

     Management Fees

     As general partner, the Company manages the managed partnerships and
receives a fee for its services generally equal to 5% of the gross revenues of
the managed partnerships, excluding revenues from the sale of cable television
systems or franchises.

     Distributions

     For the managed partnerships formed by the Company, any partnership
distributions made from cash flow, as defined, are generally allocated 99% to
the limited partners and 1% to the general partner.  The general partner is also
entitled to partnership distributions other than from cash flow, such as from
the sale or refinancing of cable television systems or upon dissolution of the
partnership, generally equal to 25% of the net remaining assets of the
partnership after payment of the partnership's debts and after investors have
received an amount equal to their original capital contributions plus, in many
cases, a preferential return on their investments.

     The Company received distributions from managed partnerships totaling
$64,716,000, $4,556,000 and $14,000,000 for the years ended December 31, 1998,
1997 and 1996, respectively.  Distributions totaling $32,090,000 received during
1998 were recorded as reductions in the Company's cost basis of cable systems

                                       61
<PAGE>
 
acquired from managed partnerships.  The $4,556,000 distribution received during
1997 was recorded as a reduction in the Company's cost basis in the assets of
the Manitowoc System.

     Allocations

     The Company's managed limited partnerships reimburse the Company for
certain allocated overhead and administrative expenses.  These expenses
generally consist of salaries and related benefits paid to corporate personnel
(including secondees of BTH), rent, data processing services and other corporate
facilities costs.  The Company provides engineering, marketing, administrative,
accounting, information management, legal, investor relations and other services
to the partnerships.  Allocations of personnel costs have been based primarily
on actual time spent by Company employees with respect to each partnership
managed.  Remaining overhead costs 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 Company.  Company-owned systems are also allocated a
proportionate share of these expenses under the allocation formulas described
above.  The Company believes that such allocation methods are reasonable.
Amounts charged to managed partnerships and other affiliated companies have
directly offset the Company's general and administrative expenses by
approximately $15,226,000, $21,091,000 and $25,322,000 for the years ended
December 31, 1998, 1997 and 1996, respectively.

     Advances

     The Company has made advances to certain of the managed partnerships
primarily to accommodate expansion and other financing needs of the
partnerships.  Such advances bear interest at rates equal to the Company's
weighted average cost of borrowing which, for the year ended December 31, 1998
was 7.19%.  Interest charged to the limited partnerships for the years ended
December 31, 1998, 1997 and 1996 was $212,000, $363,000 and $1,713,000
respectively.

     Certain condensed financial information regarding managed partnerships, on
a combined basis, is as follows:

<TABLE>
<CAPTION>
                                           December 31,
                                  -------------------------------
                                    1998      1997         1996
                                  --------  --------     --------
                                       (Stated in Thousands)
<S>                               <C>       <C>       <C>
Total assets                      $250,211  $521,554  $  651,053
Debt                               172,126   476,849     591,564
Amounts due general partner          5,568     7,783       3,996
Partners' capital
  (Net of accumulated deficit)      72,426    19,649      24,172
Revenues                           244,357   343,655     380,865
Depreciation and amortization       70,532   106,130     128,095
Operating income (loss)              4,447     7,261     (11,896)
Net income (loss)                  666,897   190,227     123,263
</TABLE>

     The fair market values of the partnerships' assets, as determined by
independent appraisals, exceed the combined amounts due the Company and other
outstanding indebtedness for each individual partnership.

     The amount reported as combined net income (loss) for all managed limited
partnerships for the years ended December 31, 1998, 1997 and 1996 included gains
on sales and liquidations recognized by certain partnerships which totaled
approximately $689,466,000, $228,918,000 and $181,632,000, respectively.

                                       62
<PAGE>
 
6.   NOTES RECEIVABLE FROM AFFILIATES

     In August 1998, the Company received a promissory note from JCS in
conjunction with the sale of the Company's interest in Jones Customer Service
Management, LLC to JCS.  The principal sum is $1,150,000.  Interest on the
principal is at the prime rate +2.  The note matures in 36 months or upon a
change in control of the Company.

     Pursuant to a tax sharing agreement with International, Spacelink was
allocated tax benefits based on its pro rata share of taxable loss generated as
part of the consolidated group.  The tax sharing agreement was terminated
effective June 1, 1993.  The allocated benefits are to be paid no later than
five years from the date they were created.  The benefits accrue interest at the
prime rate in effect at the time they were created.  The Company, through its
acquisition of Spacelink's assets, acquired a receivable from International
relating to this tax sharing agreement.  The balance of this receivable at
December 31, 1998 was $380,000.

     On December 19, 1994, Spacelink received a promissory note from Jones Earth
Segment, Inc. ("Earth Segment"), then an affiliate of Spacelink, in conjunction
with the transfer of Earth Segment to International.  The Company acquired this
note as part of the acquisition of Spacelink's assets.  The principal sum was
$6,554,500.  Interest on the principal was at the prime rate plus one percent.
The note was repaid in March 1998.

7.   DEBT

<TABLE>
<CAPTION>
     Debt consists of the following:                                         December 31,
                                                                     ---------------------------
                                                                         1998            1997
                                                                     ------------    -----------
                                                                        (Stated in Thousands)
<S>                                                                  <C>             <C>       
LENDING INSTITUTIONS:
   JCH Revolving Credit Facility                                     $    340,000    $   343,000
   JCH II Credit Facility                                                 370,000        128,000
 
SENIOR NOTES:
   Senior Notes due April 15, 2008, interest payable
      semi-annually at 7 5/8%                                             196,533           -
   Senior Notes due April 1, 2007, interest payable
      at 8 7/8%, net of unamortized discount of $1,333,000                248,766        248,667
   Senior Notes due March 15, 2002, interest payable
      semi-annually at 9 5/8%                                             200,000        200,000
 
SUBORDINATED DEBENTURES:
   Debentures due March 1, 2008, interest payable
      semi-annually at 10.5%, redeemable at the Company's
      option on or after March 1, 2000 at 105.25% of
      par, declining to par by March 1, 2005                              100,000        100,000
 
OTHER:
   Capitalized equipment lease
      obligations due in installments through 2002 and other debt           7,408          5,065
                                                                        ---------      ---------
 
                   Total debt                                        $  1,462,707    $ 1,024,732
                                                                        =========      =========   
</TABLE>

                                       63
<PAGE>
 
     On October 31, 1995, the Company, through JCH, a wholly owned subsidiary,
entered into a $500 million reducing revolving credit facility with a group of
commercial banks (the "JCH Credit Facility").  On September 17, 1996, JCH
amended this revolving credit facility to allow for borrowings up to $600
million and to reduce by 1/8% the rates of interest charged on any amounts
outstanding.  This credit facility required the transfer of certain of the
Company's cable television properties to JCH.  The entire $600 million
commitment is available through March 31, 1999, at which time the commitment
will be reduced quarterly with a final maturity of December 31, 2004.  As of
December 31, 1998, $340,000,000 was outstanding under this agreement.  Interest
on outstanding obligations ranges from Base Rate (which generally approximates
the prime rate) to Base Rate plus 1/8% or LIBOR plus 1/2% to LIBOR plus 1% based
on certain leverage covenants.  In addition, a commitment fee of 3/16% to 3/8%
on the unused commitment is also required.  The effective interest rate on
amounts outstanding at December 31, 1998 was 6.4%.

     On October 29, 1996, the Company, through JCH II, a wholly owned
subsidiary, entered into an additional $600 million credit facility.  The credit
facility consists of a $300 million reducing revolving credit facility and a
$300 million 364 day term loan (the "JCH II Credit Facility").  The reducing
revolving credit facility allows for borrowing through the final maturity date
of December 31, 2005.  The maximum amount available reduces quarterly beginning
March 31, 2000 through the final maturity date of December 31, 2005.  The term
loan facility allowed for borrowings through October 1998, at which time any
outstanding borrowings automatically converted to a term loan payable in semi-
annual installments commencing June 30, 2001 with final maturity date of
December 31, 2005.  As of December 31, 1998, $370,000,000 was outstanding under
this agreement, of which $300,000,000 was borrowed under the term loan portion
and $70,000,000 was borrowed under the reducing revolving credit facility.
Interest on amounts outstanding varies from the Base Rate (which generally
approximates the prime rate) to Base Rate plus 1/4% or LIBOR plus 1/2% to 1
1/4%, depending on certain financial covenants.  A commitment fee of 1/8% to
3/8% per year on available, but unborrowed, amounts is also required.  The
effective interest rate on amounts outstanding at December 31, 1998 was 5.9%.

     The Company has entered into various interest rate swap agreements in order
to manage interest costs on its outstanding debt.  The Company has entered into
such agreements in order to fix the interest rate for the duration of the
contract as a hedge against volatility in interest rates.  Any amounts paid or
received due to the swap arrangements are recorded as an adjustment to interest
expense. As of December 31, 1998, the Company had entered into interest rate
swap agreements with notional principal totaling $300,000,000 that fixed the
interest rate in a range of 5.3% to 6.5% and mature between July 2000 and
January 2003. The Company believes there is no significant fair value associated
with these swap agreements.

     In addition to the swap agreements described above, the Company has entered
into a series of interest rate swaps that effectively fixes the rate on the
Company's $100,000,000 of 10.5% Debentures at 7.64% through their maturity in
March 2008. The swap agreements are accounted for consistent with the Company's
policy described above. The Company believes there is no significant fair value
associated with these swap agreements.

     On April 1, 1998, the Company issued and sold $200,000,000 of its 7 5/8%
Senior Notes due April 15, 2008 at 98.173% of par value.  The Senior Notes bear
interest at 7 5/8% per annum payable at April 15 and October 15 of each year.
The Notes mature on April 15, 2008 and are not redeemable prior to maturity.
The discount to par will be amortized over the live of the votes.  The Company
paid fees of approximately $87,000 related to this transaction.  Such fees will
be amortized over the lives of the loan.  Proceeds from the sale of the Senior
Notes were used to repay amounts then outstanding under the revolving credit
facilities of the Company's subsidiaries.

     On March 18, 1997, the Company issued and sold $250,000,000 of its 8 7/8%
Senior Notes due April 1, 2007 at 99.44% of par value.  The Senior Notes bear
interest at 8 7/8% per annum payable at April 1 and October 1 of each year.  The
notes are redeemable on or after April 1, 2004 at the option of the Company at
101% of par declining to par on April 1, 2005.  The discount to par will be
amortized over the life of the notes.  The Company paid fees of $4,498,000
relating to this transaction.  Such fees will be amortized over the life of the
notes.

                                       64
<PAGE>
 
     On March 23, 1995, the Company sold $200 million of 9 5/8% Senior Notes due
March 15, 2002.  The Senior Notes bear interest from the date of issuance at the
rate of 9 5/8% per annum, payable semi-annually on March 15 and September 15 of
each year.  The Senior Notes are not redeemable prior to maturity and are not
subject to any sinking fund.  The Company paid fees of $3,500,000 relating to
this transaction.  Such fees will be amortized over the life of the notes.

     There are no sinking fund requirements related to the 10.5% Senior
Subordinated Debentures due March 1, 2008.

     On July 15, 1997, the Company redeemed its $160 million 11.5% Subordinated
Debentures (the "11.5% Debentures") due 2004 at 106.75% of par value, plus
accrued interest.  The Company recognized an extraordinary loss of $13,459,000
related to this redemption.  The 11.5% Debentures were redeemed using proceeds
from the $250,000,000 Senior Notes issued and sold on March 18, 1997.

     The Company has never paid a cash dividend with respect to its shares of
Common Stock or Class A Common Stock, and it has no present intention to pay
cash dividends in the foreseeable future.  The current policy of the Company's
Board of Directors is to retain earnings to provide funds for the operation and
expansion of its business.  Certain of the Company's debt arrangements restrict
the right of the Company to declare and pay cash dividends without the consent
of the holders of the debt.

     At December 31, 1998, the carrying amount of the Company's debt was
$1,462,707,000 and the estimated fair value was $1,517,548,000. The fair value
of the Company's debt is estimated based on the quoted market prices for the
same issues.

     Installments due on debt principal for each of the five years in the period
ending December 31, 2003 and thereafter are:  $2,237,000, $2,217,000,
$32,217,000, $360,739,000, $180,000,000 and $885,297,000, respectively.

8.   INCOME TAXES

     Deferred tax assets and liabilities are recognized for the estimated future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases.  Deferred tax assets and liabilities are measured using enacted tax rates
in effect for the year in which those temporary differences are expected to be
recovered or settled.  Deferred tax expense or benefit is the result of changes
in the liability or asset recorded for deferred tax purposes.

     During 1998, 1997, and 1996, changes in the Company's temporary differences
and losses from operations, which result primarily from depreciation and
amortization, resulted in deferred tax benefits which were offset, in part, by a
valuation allowance.  A deferred income tax benefit of $3,275,000 was recognized
for the year ended December 31, 1997.  No current or deferred federal income tax
expense or benefit was recorded from continuing operations during the years
ended December 31, 1998 and 1996.

                                       65
<PAGE>
 
     Income tax expense attributable to income or loss from continuing
operations differs from the amounts computed by applying the Federal income tax
rate of 35% in 1998, 1997, and 1996 as a result of the following:

<TABLE>
<CAPTION>
                                                         Year Ended December 31,
                                                -----------------------------------------
                                                     1998        1997        1996
                                                -----------------------------------------
                                                          (Stated in Thousands)
<S>                                             <C>          <C>          <C>   
Computed "expected" tax benefit                 $  (28,146)  $  (13,471)  $  (21,931)  
State and local taxes, net of federal income                                               
  tax benefit                                       (2,614)      (1,688)      (2,036)      
Dividends excluded for income tax purposes            (138)        (102)         (89)      
Amortization not deductible for tax purposes           942          876          752       
Adjustment to book/tax difference
  of intangible assets                              25,836            -            -
Other                                                  157          116         (449)      
                                                   -------      -------      -------       
Total income tax benefit from operations            (3,963)     (14,269)     (23,753)      
Tax effect of extraordinary operations                   -       (4,711)           -       
Valuation allowance                                  3,963       15,705       23,753       
                                                   -------      -------      -------       
Total income tax benefit                        $        -   $    3,275   $        -       
                                                   =======      =======      =======        
</TABLE>

     The tax effect of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1998, and 1997 are presented below:

<TABLE>
<CAPTION>
                                                              December 31,
                                                       --------------------------
                                                           1998           1997
                                                       ------------     ---------
                                                         (Stated in Thousands)
<S>                                                    <C>              <C>   
Deferred Tax Assets
  Net operating loss carryforwards                     $    96,522      $ 76,543
  Investment tax credit carryforwards                        1,013         1,024
  Alternative minimum tax credit carryforwards               1,116         1,116
  Investment in affiliates and domestic television
    partnerships                                            11,464         9,597
Future deductible amounts associated with other
  assets and liabilities                                     5,027         4,331
                                                          --------      --------

Total gross deferred tax assets                            115,142        92,611

Valuation allowance on deferred tax assets                 (88,436)      (84,473)
 
Deferred Tax Liabilities
  Property and equipment, due to differences
    in depreciation methods for financial statement
    and tax purposes                                       (19,569)       (1,001)
                                                          --------      --------

Net Deferred Tax Asset                                 $     7,137   $     7,137
                                                          ========      ========
</TABLE>

     At December 31, 1998, the Company had net operating loss carryforwards for
income tax purposes aggregating approximately $106,388,000 for alternative
minimum tax ("AMT") and $252,344,000 for regular tax which expire $43,126,000 in
2005, $26,203,000 in 2007, $40,809,000 in 2008, $30,216,000 in 2009, $14,732,000
in 2010, $12,689,000 in 2011, $26,859,000 in 2012 and $57,710,000 in 2013.  The
Company also had investment tax credit carryforwards of $1,013,000 expiring in
1999 through 2005.

                                       66
<PAGE>
 
     The Company entered into transactions during 1994 which resulted in a
change in greater than 50% of the ownership interests of the Company shares.
Tax statutes limit the utilization of existing tax NOLs when this occurs to a
specified amount each year plus the amount of existing built-in gain in
corporate assets at the ownership change.  Management believes that the
application of the limitation will not likely cause taxable income to occur in a
future period due to unavailability of limited NOLs.

     Management has established a valuation allowance for all net operating
losses and for all investment tax credits and alternative minimum tax credit
carryforwards.  

9.   STOCK OPTIONS

     The Company has a stock option plan, the 1992 stock option plan (the "1992
Plan").  The Company accounts for this plan under APB Opinion No. 25, under
which no compensation cost has been recognized for option grants that equal
market price at time of grant.  The Company has adopted Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS
123) for disclosure purposes.  In accordance with SFAS 123, the fair value of
each option grant has been estimated as of the date of grant using the Black-
Scholes option pricing model using the following weighted-average assumptions
for the years ended December 31, 1997 and 1996:  risk-free interest rates of
5.68% to 7.58%; expected dividend yield of 0%; expected lives of 7 years; and
expected volatility of 45.06%. There were no stock-options granted during the
year end December 31, 1998.  Had compensation cost for this plan been determined
consistent with SFAS 123, the Company's net loss and net loss per share would
have been increased to the following pro forma amounts:

<TABLE>
<CAPTION>
                                  For the Year Ended December 31,
                                  -------------------------------
                                    1998          1997         1996
                                 -----------   ---------     --------
                                          (Stated in Thousands)
<S>                <C>          <C>            <C>          <C>      
Net loss:          As Reported     $(80,418)   $(51,948)    $ (62,660)
                     Pro Forma     $(83,908)   $(53,820)    $ (64,092)
 
Loss Per Share:    As Reported     $  (1.96)   $  (1.50)    $   (2.00)
                     Pro Forma     $  (2.05)   $  (1.57)    $   (2.06)
</TABLE>

     Because the method of accounting required by SFAS 123 has not been applied
to options granted prior to January 1, 1995, the resulting pro forma
compensation cost may not be representative of that to be expected in future
years.

     The 1992 Plan was approved by the Company's shareholders in August 1992.
Under the terms of the 1992 Plan, as amended in 1997, a maximum of 2,583,455
shares of Class A Common Stock and 200,000 shares of Common Stock are available
for grant. All employees of the Company, its parent or any participating
subsidiary, including directors of the Company who are also employees, are
eligible to participate in the 1992 Plan. Options generally become exercisable
in equal installments over a four-year period commencing on the first
anniversary of the date of grant. In August 1998, the Board of Directors, in
conjunction with the anticipated change in control from Mr. Jones to Comcast and
consistent with the terms of the 1992 Plan, voted to accelerate the vesting of
all options granted under the 1992 Plan to September 1998. The average life of
the outstanding options is 6.8 years, however the average life could be shorter
given the anticipated change in control to Comcast. The options expire, to the
extent not exercised, on the tenth anniversary of the date of grant, or upon the
recipient's earlier termination of employment with the Company. Options can be
incentive stock options or non-statutory stock options. The exercise price may
not be less than 100% of the fair market value for incentive stock options, but
may be less than fair market value for non-statutory options. Stock appreciation
rights may be granted in tandem with the grant of stock options. The Board of
Directors may, in its discretion, establish provisions for the exercise of
options different from those described above. In 1998, 1997, and 1996, the
Company recognized approximately $217,000, $261,000 and $261,000, respectively,
of non-cash compensation expense related to stock options granted on November 9,
1993 under the 1992 Plan. As of
                                       67
<PAGE>
 
December 31, 1998, options to purchase 1,839,980 shares of Class A Common Stock
had been granted, of which options to purchase 679,916 shares had been exercised
and 358,523 shares had been terminated or forfeited upon resignation of the
holders. As of December 31, 1998, all 200,000 of the Common Stock options
authorized by the 1992 Plan had been granted and exercised.

     Information concerning Class A Common Stock options is as follows:

<TABLE>
<CAPTION>
                                                                 Year Ended December 31,
                             -----------------------------------------------------------------------------------------------
                                          1998                            1997                             1996
                             ----------------------------     ----------------------------     -----------------------------
                                                 Weighted                         Weighted                          Weighted 
                                                  Average                          Average                           Average   
                                  Shares   Exercise Price          Shares   Exercise Price           Shares   Exercise Price   
                                  ------   --------------          ------   --------------           ------   --------------   
<S>                          <C>           <C>                <C>           <C>                <C>            <C>              
Outstanding at                                                                                                                 
  beginning of year            1,449,848           $12.08       1,329,162           $12.19        1,508,362           $11.93   
Granted                                -                -         365,433             9.27            3,540            13.25   
Exercised                       (602,881)           12.30         (89,700)            6.34          (52,468)            2.85   
Canceled                         (45,426)           10.79        (155,047)           11.88         (130,272)           12.98   
                             -----------                      -----------                      ------------                    
                                                                                                                               
Outstanding at end of year       801,541           $11.99       1,449,848           $12.08        1,329,162           $12.19    
                             ===========                      ===========                      ============
 
Exercisable at end of year       801,541                          820,290                           676,414
 
Range of exercise prices     $9.00-13.81                      $9.25-13.81                      $5.625-13.81
 
Weighted-average fair
 value of options granted
 during the year             $         -                      $      5.26                      $       7.56
 </TABLE>

10.  CLASS A COMMON STOCK

     The Class A Common Stock has certain preferential rights with respect to
cash dividends and upon liquidation of the Company.  In the case of cash
dividends, the holders of the Class A Common Stock will be paid one-half cent
per share per quarter in addition to any amount payable per share for each share
of Common Stock.  In the event of liquidation, holders of the Class A Common
Stock are entitled to a preference of $1 per share.  After such amount is paid,
holders of the Common Stock are entitled to receive $1 per share for each share
of Common Stock outstanding.  Any remaining amount would be distributed to the
holders of the Class A Common Stock and the Common Stock on a pro rata basis.

     In general, with respect to the election of directors, the holders of Class
A Common Stock, voting as a separate class, are entitled to elect that number of
directors which constitutes 25% of the total membership of the Board of
Directors.  Holders of common stock, voting as a separate class, are entitled to
elect the remaining directors.  Pursuant to the terms of the Shareholders
Agreement dated as of December 20, 1994 among Glenn R. Jones, International, BTH
and the Company (the "Shareholders Agreement"), the Company's Board of Directors
consists of 13 Directors.  The parties to the Shareholders Agreement have agreed
that of the four Class A Directors, BTH will be entitled, but not required, to
designate one Director and the remaining three directors, which shall be
Independent Directors (as such term is defined in the Shareholders Agreement),
will be jointly designated by Glenn R. Jones and BTH.  The parties to the
Shareholders Agreement also have agreed that Mr. Jones will be entitled, but not
required, to designate seven of the nine Common Directors and that BTH will be
entitled, but not required, to designate two of the Common Directors.   In all
other matters not requiring a class vote, the holders of the Common Stock and
the holders of Class A Common Stock vote as a single class provided that holders
of Class A Common Stock have one-tenth of a vote for each share held and the
holders of the Common Stock have one vote for each share held.

                                       68
<PAGE>
 
11.  COMMITMENTS AND CONTINGENCIES

     The Company rents office facilities and equipment under various long-term
lease arrangements.  Minimum commitments under noncancelable operating leases
for the five years ending December 31, 2003 and thereafter are as follows:

<TABLE>
<CAPTION>
                      Building  Facilities  Equipment
                       Lease      Leases     Leases     Total
                       -----      ------     ------     -----
                                (Stated in Thousands)
 <S>                  <C>       <C>         <C>         <C> 
 1999                    1,365       4,718        654      6,737
 2000                      797       3,710        365      4,872
 2001                        -       3,044        185      3,229
 2002                        -       2,252         55      2,307
 2003                        -       1,578         11      1,589
 Thereafter                  -       6,267          -      6,267
                         -----      ------     ------     ------
 Total commitments    $  2,162  $   21,569  $   1,270   $ 25,001
                         =====      ======     ======     ======
</TABLE>

     Rent, net of sublease reimbursements, paid during the years ended December
31, 1998, 1997 and 1996, totaled $5,623,000, $4,452,000 and $4,195,000,
respectively.

     Certain amounts included in lease commitments will be allocated to managed
limited partnerships using the method discussed in Note 5.

     Litigation
 
Tampa Litigation
----------------

     The Company is a defendant in a now-consolidated civil action filed by
limited partners of Cable TV Fund 12-D, Ltd., one of the Company's managed
partnerships.  The case, styled David Hirsch, Marty, Inc. Pension Plan (by its
                                ----------------------------------------------
trustee and beneficiary, Martin Ury) and Jonathan and Eileen Fussner,
---------------------------------------------------------------------
derivatively on behalf of Cable TV Fund 12-B, Ltd., Cable TV Fund 12-C, Ltd. and
--------------------------------------------------------------------------------
Cable TV Fund 12-D, Ltd., plaintiffs v. Jones Intercable, Inc., defendant, and
------------------------------------------------------------------------------
Cable TV Fund 12-BCD Venture, Cable TV Fund 12-B, Ltd., Cable TV Fund 12-C, Ltd.
--------------------------------------------------------------------------------
and Cable TV Fund 12-D, Ltd., nominal defendants (District Court, Arapahoe
------------------------------------------------                          
County, State of Colorado, Case No. 95-CV-1800, Division 3), is a derivative
action filed on behalf of 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").  The
consolidated complaint generally alleges that the Company breached its fiduciary
duty to the plaintiffs and to the other limited partners of Fund 12-B, Fund 12-C
and Fund 12-D and the Cable TV Fund 12-BCD Venture (the "Venture") in connection
with the Venture's sale of the Tampa, Florida cable television system (the
"Tampa System") to a subsidiary of the Company and the subsequent trade of the
Tampa System to Time Warner Entertainment Advance/Newhouse Partnership ("Time
Warner"), an unaffiliated cable television system operator, in exchange for
cable television systems owned by Time Warner.  The consolidated complaint also
sets forth a claim for breach of contract and a claim for breach of the implied
covenant of good faith and fair dealing.  Among other things, the plaintiffs
assert that the subsidiary of the Company that acquired the Tampa System paid an
inadequate price for the Tampa System.  The price paid for the Tampa System was
determined by the average of three separate, independent appraisals of the Tampa
System's fair market value as required by the limited partnership agreements of
Fund 12-B, Fund 12-C and Fund 12-D.  The plaintiffs have challenged the adequacy
and independence of the appraisals.  The consolidated complaint seeks damages in
an unspecified amount and an award of attorneys' fees, and the complaint also
seeks punitive damages and certain equitable relief.

                                       69
<PAGE>
 
     The Company has filed its answer to the consolidated complaint and has
generally denied the substantive allegations in the complaint and has asserted a
number of affirmative defenses.  The Company intends to defend this lawsuit
vigorously.

     In August 1997, the Company moved for summary judgment in its favor on the
ground that plaintiffs did not make demand on the Company for the relief they
seek before commencing their lawsuits or show that such a demand would have been
futile.  In January 1998, the Court (1) held that plaintiffs did not make demand
before commencing their lawsuits or show that such demand would have been
futile, (2) stayed the consolidated case and vacated the February 1998 trial
date, (3) ordered that plaintiffs make a demand on the Company and that the
Company appoint an independent counsel to review, consider and report on that
demand, (4) ordered that the independent counsel be appointed at the March 1998
meeting of the Company's Board of Directors and (5) ordered that the independent
counsel be subject to the approval of the court.  The court set a new trial date
for October 1998 in the event that the case was not resolved through the
independent counsel process or otherwise.  In March 1998, the Company's Board of
Directors appointed an independent counsel.  The plaintiffs did not object to
the Company's choice, and the Court approved the Company's choice of independent
counsel.  During the period March through May 1998, the independent counsel met
several times with the attorneys representing the plaintiffs and the Company,
and he also reviewed a great quantity of written materials.  The independent
counsel issued his report on August 3, 1998, which concluded that the
plaintiffs' claims are not meritorious and are not supported by a preponderance
of the evidence.  The independent counsel further determined that the Company
"did not breach a fiduciary duty" owed to the plaintiffs or to the partnerships
and the Venture and that the Company "did not commit any impropriety in
connection with" the Venture's sale of the Tampa System.  The independent
counsel specifically found that the three appraisals of the Tampa System were
independent and objective and met the requirements of the partnership
agreements.  He further noted that the Company had met its fiduciary duties of
fairness and full disclosure to the partnerships and the Venture.  On August 5,
1998, the Company moved to dismiss or for summary judgment in its favor based on
the report of independent counsel, a motion the plaintiffs opposed.  On
September 11, 1998, the Court denied the Company's motion to dismiss or for
summary judgment based on the report of independent counsel.  The Court then set
a new trial date for May 3, 1999.  The Company subsequently submitted a motion
for reconsideration of the Court's denial of the Company's motion to dismiss or
for summary judgment based on the report of the independent counsel.  The Court
denied such motion.  The Company then filed an interlocutory appeal of the
Court's rulings to the Colorado Supreme Court.  On February 1, 1999, the
Colorado Supreme Court issued an order requiring the plaintiffs to show cause
why the Company's request for dismissal or summary judgment should not be
granted, and staying all proceedings in the trial court until the Company's
appeal is resolved.

Palmdale Litigation
-------------------

     In December 1998, City Partnership Co. ("Plaintiff"), a limited partner of
Fund 12-C and Fund 12-D, filed a class action complaint in the District Court,
Arapahoe County, State of Colorado (Case No. 98-CV-4493) naming the Company as
defendant.  Plaintiff, on its behalf and on behalf of all other persons who are
limited partners of Fund 12-B, Fund 12-C and Fund 12-D, is challenging the terms
of sale of the cable television system serving the communities in and around
Palmdale and Lancaster, California (the "Palmdale System") to an affiliate of
the Company.  This case is in a very preliminary stage, but the Company believes
that the terms of the sale were in accordance with the requirements of relevant
limited partnership agreement provisions.  The Company intends to defend this
lawsuit vigorously.

                                       70
<PAGE>
 
Littlerock Litigation
---------------------

     In January 1999, City Partnership Co. ("Plaintiff"), a limited partner of
Cable TV Fund 14-B, Ltd., filed a class action complaint in the District Court,
Arapahoe County, State of Colorado (Case No. 99-CV-0150) naming the Company as
defendant.  Plaintiff, on its behalf and on behalf of all other persons who are
limited partners of Cable TV Fund 14-B, Ltd., is challenging the terms of sale
of the cable television system serving Littlerock, California (the "Littlerock
System") to an affiliate of the Company.  This case is in a very preliminary
stage, but the Company believes that the terms of the sale were in accordance
with the requirements of relevant limited partnership agreement provisions.  The
Company intends to defend this lawsuit vigorously.

Shareholder Litigation
----------------------

     In February 1998, BTH, the Company's largest shareholder, filed a lawsuit
in the United States District Court for the District of Colorado against the
Company, Jones International, Ltd. ("International"), Jones Internet Channel,
Inc. ("JICI") and Glenn R. Jones.  BCI Telecom Holding, Inc., plaintiff v. Jones
                                   ---------------------------------------------
Intercable, Inc., Jones International, Ltd., Jones Internet Channel, Inc. and
-----------------------------------------------------------------------------
Glenn R. Jones, defendants (U.S. District Court for the District of Colorado,
--------------------------                                                   
Civil Action No. 98-M-224).  Mr. Jones is the Company's Chairman and Chief
Executive Officer.  International is owned by Mr. Jones, and it also is one of
the Company's largest shareholders.  JICI is a wholly owned subsidiary of
International.  BTH, the Company, International and Mr. Jones are parties to a
Shareholders Agreement dated as of December 20, 1994 (the "Shareholders
Agreement").

     In its complaint, BTH alleged that the defendants violated the Shareholders
Agreement and certain duties allegedly owed to BTH, and conspired with each
other to do so.  More specifically, BTH claimed that under the Shareholders
Agreement, the offering of the service known as the "Internet Channel" to the
Company's subscribers, and any affiliation agreement between the Company and
JICI for the provision of the Internet Channel service, could not proceed
without approval of a specific group of directors of the Company, including the
three directors designated by BTH.  BTH also maintained, in connection with the
relationship and proposed affiliate agreement between the Company and JICI, that
the defendants breached a provision of the Shareholders Agreement defining the
"core business" of the Company.  In addition to damages, BTH sought an
injunction prohibiting the Company from making the Internet Channel available to
additional subscribers and from entering into an affiliate agreement with JICI
for the Internet Channel, as well as other equitable relief.  On May 5, 1998,
the Court permanently enjoined the Company and the other defendants in this
civil action from proceeding further with any expansion of the Internet Channel,
or any similar internet service provider business, without the approval of the
unrelated directors of the Company. All the defendants except the Company
appealed the decision to the U.S. Tenth Circuit Court of Appeals.

     In connection with the agreements entered into among the Company,
International, BTH and Comcast relating to the acquisition and exercise by
Comcast of BTH's option to acquire 2.9 million shares of the Company's Common
Stock, the parties have agreed to dismiss the pending litigation between BTH,
International, Mr. Jones and the Company, and International and certain of its
affiliates have agreed to dismiss the appeal which is pending of the Order
entered against them in such litigation.

     In March 1998, Leslie Susser, a minority shareholder of the Company, filed
a shareholder derivative action in the United States District Court for the
District of Colorado against Glenn R. Jones and seven other directors of the
Company.  Leslie Susser, plaintiff v. Glenn R. Jones, James J. Krejci, James B.
          ---------------------------------------------------------------------
O'Brien, Howard O. Thrall, Raphael M. Solot, Robert E. Cole, Sanford Zisman and
-------------------------------------------------------------------------------
Donald L. Jacobs, defendants and Jones Intercable, Inc., nominal defendant (U.S.
--------------------------------------------------------------------------     
District Court for the District of Colorado, Civil Action No. 98-M-616).  In its
complaint, the plaintiff alleges that the defendants have violated certain
fiduciary and other duties allegedly owed to the Company and its shareholders in
connection with the Company's offering of the Internet Channel service.  The
allegations raised in this complaint are similar to those raised by BTH in its
complaint.  The plaintiff seeks certain equitable relief and damages.

                                       71
<PAGE>
 
     In connection with this litigation, the Company has determined, based on
the opinion of outside legal counsel, that all of the statutory requirements for
the advancement of reasonable legal fees and expenses to the defendants have
been met.  Notice of such determination was previously given to all
shareholders.

12.  PROPERTY, PLANT AND EQUIPMENT

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

<TABLE>
<CAPTION>
                                                             December 31,
                                                         --------------------  
                                                          1998          1997
                                                          ----          ----   
     <S>                                            <C>            <C>   
     Distribution systems                           $    800,130   $   579,544
     Buildings                                            19,768        18,331
     Land                                                  5,521         4,762
     Equipment and tools                                  12,922        12,322
     Premium service equipment                            69,831        54,790
     Earth receive stations                                3,820         3,701
     Vehicles                                              6,113         4,160
     Leasehold improvements and office furniture          26,634        21,466
     Other                                                60,341        46,039
                                                       ---------      --------
                                                       1,005,080       745,115
 
     Accumulated depreciation                           (311,655)     (224,893)
                                                       ---------      --------
 
                                                    $    693,425   $   520,222
                                                       =========      ========
</TABLE>

13.  QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
                                                              1998
                                    -----------------------------------------------------------
                                                        Three Months Ended
                                    -----------------------------------------------------------
                                     March 31       June 30     September 30       December 31
                                    ---------       -------     ------------       ----------- 
                                               (In Thousands Except Per Share Data)
     <S>                            <C>           <C>           <C>              <C>   
     Revenues                       $  101,330    $   98,848    $    129,573     $    130,978
     Depreciation and
      amortization                      44,755        47,085          52,310           60,596
     Operating income (loss)             1,405        (3,009)         16,074            8,922
     Net income (loss)                 (20,747)      (32,644)        (14,404)         (12,623)
     Net income (loss) per share    $     (.51)   $     (.80)   $       (.35)    $       (.31)
</TABLE> 
 
<TABLE> 
<CAPTION> 
                                                               1997
                                    -----------------------------------------------------------
                                                    Three Months Ended
                                    -----------------------------------------------------------
                                    March 31        June 30      September 30       December 31
                                    --------        -------      ------------       -----------
                                          (In Thousands Except Per Share Data)
     <S>                            <C>           <C>            <C>               <C> 
     Revenues                       $   83,502    $  90,934      $     91,945      $    96,207
     Depreciation and
      amortization                      35,532       34,901            36,147           69,259
     Operating income (loss)             2,384        4,096             4,110          (27,747)
     Net income (loss)                 (15,481)      22,554           (30,755)         (27,906)
     Net income (loss) per share    $     (.50)   $     .72      $       (.88)     $      (.69)
</TABLE>

                                       72
<PAGE>
 
            ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
            ------------------------------------------------------
                    ON ACCOUNTING AND FINANCIAL DISCLOSURE
                    --------------------------------------
                                        
         None.

                                   PART III

         ITEM 10.  DIRECTORS AND Executive Officers of the Registrant
         ------------------------------------------------------------
                                        
     The Company's Articles of Incorporation provide that, with respect to the
election of Directors, the holders of Class A Common Stock, voting as a separate
class, are entitled to elect that number of Directors constituting 25% of the
total membership of the Board of Directors.  If such 25% is not a whole number,
holders of Class A Common Stock are entitled to elect the nearest higher whole
number of Directors constituting 25% of the membership of the Board of
Directors.  Holders of Common Stock, voting as a separate class, are entitled to
elect the remaining Directors.  Directors of the Company serve until the next
annual meeting of the Company and until their successors shall be elected and
qualified.

     Pursuant to the terms of the Shareholders Agreement dated as of December
20, 1994 among Glenn R. Jones, Jones International, Ltd., BCI Telecom Holding
Inc. and the Company (the "Shareholders Agreement"), the Company's Board of
Directors consists of thirteen members. Four members of the Board of Directors
are to be elected by holders of Class A Common Stock, and nine members of the
Board of Directors are to be elected by holders of Common Stock. The parties to
the Shareholders Agreement have agreed that, of the four Class A Directors, BTH
will be entitled, but not required, to designate one Director and the remaining
three Directors, which shall be Independent Directors (as such term is defined
in the Shareholders Agreement), will be jointly designated by Glenn R. Jones and
BTH. The parties to the Shareholders Agreement also have agreed that Mr. Jones
will be entitled, but not required, to designate seven of the nine Common
Directors and that BTH will be entitled, but not required, to designate two of
the nine Common Directors.

     Of the thirteen persons serving as members of the Company's Board of
Directors, William E. Frenzel, Donald L. Jacobs, Robert Kearney and Robert B.
Zoellick are serving as the Class A Directors.  Mr. Kearney was designated by
BTH.  Messrs. Frenzel, Jacobs and Zoellick were jointly designated by Glenn R.
Jones and BTH, and they serve as Independent Directors.  Glenn R. Jones, Robert
E. Cole, Josef J. Fridman, James J. Krejci, James B. O'Brien, Raphael M. Solot,
Howard O. Thrall, Siim A. Vanaselja and Sanford Zisman are serving as the Common
Directors.  Messrs. Jones, Cole, Krejci, O'Brien, Solot, Thrall and Zisman have
been designated by Mr. Jones.  Messrs. Fridman and Vanaselja have been
designated by BTH.

     As a result of Comcast's agreement in August 1998 to acquire all of the
shares of the Company's Class A Common Stock owned by BTH and to purchase the
Control Shares, the Company anticipates that Comcast will acquire a controlling
interest in the Company before the end of March 1999.  See Item 1, Current
Principal Shareholders of the Company and Comcast Corporation's 

                                       73
<PAGE>
 
Planned Acquisition of the Control Shares of the Company. Following Comcast's
acquisition of BTH's Class A Common Stock and the Control Shares, Comcast will
own approximately 38% of the economic interest and approximately 48% of the
voting interest in the Company. In addition, the Common Stock to be held by
Comcast would allow it to elect approximately 75% of the Board of Directors of
the Company. Pursuant to the terms of related agreements executed in August
1998, upon the closing of the sale of the Control Shares to Comcast, the
Directors of the Company, other than the three Independent Directors jointly
designed by Mr. Jones and BTH (Messrs. Frenzel, Jacobs and Zoellick), will
resign seriatim from the Board of Directors of the Company and will be replaced
by individuals designated by Comcast.

     Certain information concerning the directors and executive officers of the
Company is set forth below.

Glenn R. Jones         68     Chairman of the Board and Chief Executive Officer
James B. O'Brien       49     President and Director                           
Ruth E. Warren         49     Group Vice President/Operations                  
Kevin P. Coyle         47     Group Vice President/Finance                     
Cynthia A. Winning     47     Group Vice President/Marketing                   
Elizabeth M. Steele    47     Vice President/General Counsel/Secretary         
Wayne H. Davis         45     Vice President/Engineering                       
Larry W. Kaschinske    38     Vice President/Controller                        
Robert E. Cole         66     Director                                         
William E. Frenzel     70     Director                                         
Josef J. Fridman       53     Director                                         
Donald L. Jacobs       60     Director                                         
Robert Kearney         62     Director                                         
James J. Krejci        57     Director                                         
Raphael M. Solot       65     Director                                         
Howard O. Thrall       51     Director                                         
Siim A. Vanaselja      42     Director                                         
Sanford Zisman         59     Director                                         
Robert B. Zoellick     45     Director                                         

     Mr. Glenn R. Jones has served as Chairman of the Board of Directors and
Chief Executive Officer of the Company since its formation in 1970, and he was
President from June 1984 until April 1988. Mr. Jones is the sole shareholder,
President and Chairman of the Board of Directors of Jones International, Ltd. He
is also Chairman of the Board of Directors of the subsidiaries of the Company
and of certain other affiliates of the Company. Mr. Jones has been involved in
the cable television business in various capacities since 1961, and he is a
member of the Board of Directors and of the Executive Committee of the National
Cable Television Association. In addition, Mr. Jones is a member of the Board
and Education Council of the National Alliance of Business. Mr. Jones is also a
founding member of the James Madison Council of the Library of Congress. Mr.
Jones has been the recipient of several awards including: the Grand Tam Award in
1989, the highest award from the Cable Television Administration and Marketing
Society; the President's Award from the Cable

                                       74
<PAGE>
 
Television Public Affairs Association in recognition of Jones International's
educational efforts through Mind Extension University (now Knowledge TV); the
Donald G. McGannon Award for the advancement of minorities and women in cable
from the United Church of Christ Office of Communications; the STAR Award from
American Women in Radio and Television, Inc. for exhibition of a commitment to
the issues and concerns of women in television and radio; the Cableforce 2000
Accolade awarded by Women in Cable in recognition of the Company's innovative
employee programs; the Most Outstanding Corporate Individual Achievement Award
from the International Distance Learning Conference for his contributions to
distance education; the Golden Plate Award from the American Academy of
Achievement for his advances in distance education; the Man of the Year named by
the Denver chapter of the Achievement Rewards for College Scientists; and in
1994 Mr. Jones was inducted into Broadcasting and Cable's Hall of Fame.

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

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

     Mr. Kevin P. Coyle joined The Jones Group, Ltd. in July 1981 as Vice
President/Financial Services. In September 1985, he was appointed Senior Vice
President/Financial Services. He was elected Treasurer of the Company in August
1987, Vice President/Treasurer in April 1988 and Group Vice President/Finance
and Chief Financial Officer in October 1990. From 1978 to 1981 Mr. Coyle 

                                       75
<PAGE>
 
was employed by American Television and Communications (now Time Warner Cable),
and from 1974 to 1978 he was an associate at Haskins & Sells (now Deloitte &
Touche LLP).

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

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

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

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

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

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

                                       76
<PAGE>
 
     Mr. Josef J. Fridman was appointed a director of the Company in February
1998.  Mr. Fridman is currently Chief Legal Officer of Bell Canada and of BCE
Inc., Canada's largest telecommunications company.  Mr. Fridman joined Bell
Canada, a wholly owned subsidiary of BCE Inc., in 1969, and has held
increasingly senior positions with Bell Canada and BCE Inc. since such time.
Mr. Fridman has held his current position since March 1998.  Mr. Fridman's
directorships include Alouette Telecommunications Inc., Telesat Canada, TMI
Communications, Inc., Telebec Itee, BCI Telecom Holding Inc. and BCE Corporate
Services Inc.  He is a member of the Quebec Bar Association, the Canadian,
American and International Bar Associations and the Lord Reading Law Society.
Mr. Fridman is a governor of the Quebec Bar Foundation.

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

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

     Mr. James J. Krejci is President and CEO of Comtect International, Inc., a
company in the specialized mobile radio services business, headquartered in
Denver, Colorado.  Prior to joining Comtec International, Inc. in February 1998,
Mr. Krejci was President and CEO of Imagelink Technologies, Inc., headquartered
in Boulder, Colorado, from June 1996 to February 1998, and prior to that, he was
President of the International Division of International Gaming Technology, the
world's largest gaming equipment manufacturer, with headquarters in Reno, Nevada
from May 1994 to February 1995.  Prior to joining IGT, Mr. Krejci was Group Vice
President of Jones International, Ltd. and was Group Vice President of the
Company.  He also served as an officer of subsidiaries of Jones International,
Ltd. until leaving the Company in May 1994.  Mr. Krejci has been a director of
the Company since August 1987.

     Mr. Raphael M. Solot was appointed a director of the Company in March 1996
and he was elected Vice Chairman of the Board of Directors in November 1997.
Mr. Solot is an attorney and has 

                                       77
<PAGE>
 
practiced law for 34 years with an emphasis on franchise, corporate and
partnership law and complex litigation.

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

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

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

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

                                       78
<PAGE>
 
ITEM 11.  EXECUTIVE COMPENSATION
--------------------------------

                          SUMMARY COMPENSATION TABLE
                                        
     The following table sets forth certain information relating to the
compensation paid by the Company during the Company's fiscal years ended
December 31, 1998, 1997 and 1996, to those persons who were, at December 31,
1998, the Chief Executive Officer and the other four most highly compensated
executive officers of the Company.

<TABLE>
<CAPTION>
                                                                      LONG TERM
                                                                      ---------
                                                                     COMPENSATION 
                                                                     ------------
                                          ANNUAL COMPENSATION           AWARDS
                                          -------------------           ------
 
         NAME AND                                                                         ALL OTHER
         --------                                                                        
    PRINCIPAL POSITION          YEAR        SALARY       BONUS          OPTIONS        COMPENSATION(1)
    ------------------          ----        ------       -----          -------        ---------------
<S>                          <C>          <C>           <C>          <C>               <C>
Glenn R. Jones               YE 12/31/98   $2,806,714   $      0               0           $168,403
Chairman of the Board        YE 12/31/97    2,714,425          0         110,937  (2)       162,865
and Chief Executive Officer  YE 12/31/96    2,620,102          0               0            157,380

James B. O'Brien(3)          YE 12/31/98   $  275,028   $213,011               0           $ 38,407
President and Director       YE 12/31/97      252,045    175,000          17,000  (2)        28,661
                             YE 12/31/96      240,961    163,366               0             25,978

Kevin P. Coyle  (3)          YE 12/31/98   $  200,021   $127,005               0           $ 24,621
Group Vice President/        YE 12/31/97      191,552    100,000          10,000  (2)        17,493
Finance                      YE 12/31/96      184,185     72,750               0             15,558

Ruth E. Warren  (3)          YE 12/31/98   $  195,007   $130,567               0           $ 22,082
Group Vice                   YE 12/31/97      177,273     70,906          10,000  (2)        12,764
President/Operations         YE 12/31/96      170,454     77,327               0             12,558
 
Cynthia A. Winning           YE 12/31/98   $  180,010   $ 87,001               0           $ 16,035
Group Vice                   YE 12/31/97      167,101     76,838          10,000  (2)        12,469
President/Marketing          YE 12/31/96      160,674     63,464               0             11,334
</TABLE>
_________________

(1)  The Company's employees are entitled to participate in a 401(k) profit
     sharing plan.  Certain senior employees of the Company are also eligible to
     participate in a deferred compensation plan.  The amounts shown in the
     column reflect the Company's contributions pursuant to these plans for the
     benefit of the named person's account.

(2)  Represents the number of shares of the Company's Class A Common Stock
     underlying the options granted.

(3)  During the first quarter of 1999, Mr. O'Brien, Mr. Coyle, Ms. Warren and
     Ms. Winning will receive payments from the Company which will in no event
     exceed $4,000,000, $3,250,000, 

                                       79
<PAGE>
 
     $2,500,000 and $493,682, respectively. Such amounts will be paid in
     recognition of the contributions of such persons over a number of years of
     past service and in connection with services rendered and to be rendered
     during the transition period leading to the anticipated acquisition of
     control of the Company by Comcast. Other officers and employees of the
     Company will also receive payments in recognition of such contributions and
     services.


                             OPTION GRANTS IN 1998
                                        
     No stock options were granted during 1998 to the Executive Officers named
in the Summary Compensation Table.

    AGGREGATED OPTION EXERCISES IN 1998 AND OPTION VALUES AT DECEMBER 31, 1998
                                        
     The following table sets forth information with respect to stock option
exercises during 1998 by the Executive Officers named in the Summary
Compensation Table.  Note that because of action taken by the Company's Board of
Directors in September 1998, all unexercised options have fully vested, and
therefore all unexercised options were exercisable at December 31, 1998.  All of
the unexercised options held by the persons named in the table will expire if
not exercised by such persons within ten days following the termination of their
employment with the Company.  It is currently anticipated that each of the
persons named in the table will terminate their employment with the Company
during the first half of 1999 in connection with Comcast's acquisition of a
controlling interest in the Company in March 1999.

<TABLE>
<CAPTION>
                                                                          NUMBER OF
                             NUMBER OF                                   SECURITIES 
                              CLASS A                                    UNDERLYING
                            COMMON STOCK                                 UNEXERCISED              VALUE OF UNEXERCISED
                          SHARES ACQUIRED              VALUE              OPTIONS AT            IN-THE-MONEY OPTIONS AT
        NAME                ON EXERCISE               REALIZED             12/31/98                     12/31/98
       -----                -----------               --------             --------                     --------
<S>                       <C>                       <C>                  <C>                    <C>
Glenn R. Jones                300,000               $3,275,418             477,851                     $11,200,780
James B. O'Brien                    0                   --                  60,694                     $ 1,435,438
Kevin P. Coyle                      0                   --                  30,855                     $   735,964
Ruth E. Warren                  8,000               $  149,520              25,278                     $   613,551
Cynthia A. Winning                  0                   --                  19,500                     $   480,663
</TABLE>

Compensation of Directors
-------------------------

     In November 1998, the Board of Directors, pursuant to the recommendations
of an ad hoc committee of non-employee directors of the Company, and a report
from an independent

                                       80
<PAGE>
 
compensation consultant, adopted new policies relating to the compensation of
non-employee directors of the Company effective as of January 1, 1998. In 1998,
non-employee directors of the Company were compensated as follows: (i) $10,000
for services rendered during 1998, (ii) $5,000 per quarter for services rendered
as a director of the Company, (iii) $1,250 for each meeting of the Board of
Directors attended in person and $750 for each meeting of the Board of Directors
attended via teleconference, (iv) for each director who serves on a standing
committee of the Board, $750 for each standing committee meeting of the Board of
Directors (currently being the Audit Committee, the Compensation Committee and
the Executive Committee) attended in person and $500 for each standing committee
meeting attended via teleconference; and (v) $1,000 for any meeting of a special
committee established by the Board of Directors, whether attended in person or
via teleconference. No compensation for director service is paid to directors
who are full-time employees of the Company or any of its affiliates.
Compensation for director service by employees of BTH is paid to BTH rather than
to the BTH-employee directors themselves.

Section 16(a) Beneficial Ownership Reporting Compliance
-------------------------------------------------------

     Section 16(a) of the Exchange Act requires certain persons, including
directors and officers of the Company, to file reports of ownership and changes
in ownership of the Company's securities with the Securities and Exchange
Commission.  The Company is required to disclose in this Form 10-K Report any
late or missed filings of those reports during 1998 by its officers (as such
term is defined in the rules promulgated under Section 16 of the Exchange Act),
directors and 10% shareholders.  Based upon the Company's review of the
reporting forms received by it and representations from certain persons that no
Form 5 reports were required to be filed by those persons, the Company believes
that all filing requirements applicable to its officers, directors and 10%
shareholders were complied with during 1998 except that: (i) Christine J.
Marocco filed a report on Form 5 in February 1999 that reflected her sale of
20,000 shares of the Company's Class A Common Stock in January 1998; a Form 4
was not filed in February 1998 reflecting this sale; and (ii) Cynthia A. Winning
filed a report on Form 5 in February 1999 reflecting the acquisition of
beneficial ownership of 4 shares of the Company's Class A Common Stock in
January 1997; a Form 4 was not filed in February 1997 reflecting this
acquisition.

Employment Agreement
--------------------

     On December 20, 1994, the Company entered into an Employment Agreement with
Glenn R. Jones (the "Employment Agreement") pursuant to which the Company agreed
to employ Mr. Jones as Chief Executive Officer of the Company for a period of up
to eight years from December 20, 1994.  Under the terms of the Employment
Agreement, Mr. Jones received a base salary of $2,500,000 in fiscal year 1995
(which approximated his fiscal year 1994 combined compensation from the Company
and Jones Spacelink, Ltd.), and in the years thereafter he has received an
annual cost of living index based salary adjustments.  In addition, Mr. Jones is
entitled to participate in the Company's employee benefit plans at a level
generally commensurate with his participation prior to December 1994.  No other
employee of the Company has an employment agreement with the Company.

     On August 12, 1998, the Company and Mr. Jones agreed to terminate the
Employment Agreement effective on the closing of Comcast's acquisition of the
Control Shares of the Company.  

                                       81
<PAGE>
 
In connection with the termination of the Employment Agreement, the Company has
agreed to pay Mr. Jones an amount equal generally to the discounted value of the
payments that would be due him for the remaining term of the Employment
Agreement as of the date of the closing of Comcast's acquisition of the Control
Shares. If the closing of Comcast's acquisition of the Control Shares occurs on
March 31, 1999, Mr. Jones would receive a payment of approximately $8,300,000
pursuant to his agreement to terminate the Employment Agreement.

Compensation Committee Interlocks and Insider Participation
-----------------------------------------------------------

     In January 1995, the Board of Directors established a Compensation
Committee to provide oversight review of all compensation plans and, in
accordance with those plans, provided guidance on certain executive compensation
matters. The members of the Compensation Committee during the first half of 1998
were Mr. Jones, Robert Kearney and Donald L. Jacobs. Robert E. Cole replaced Mr.
Jones as a member of the Compensation Committee effective June 16, 1998.

     Robert E. Cole, Robert Kearney and Donald L. Jacobs, the current members of
the Compensation Committee, are non-employee directors of the Company.  Glenn R.
Jones, James B. O'Brien and Elizabeth M. Steele, executive officers of the
Company, serve as officers and directors of certain of the Company's affiliates.
As individuals, these executive officers had no transactions with the Company
other than as disclosed herein with respect to executive compensation.
Companies that Mr. Jones controls have engaged in transactions with the Company.
See Item 13, Certain Transactions.


                    ITEM 12.  SECURITY OWNERSHIP OF CERTAIN
                    ---------------------------------------
                  BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT
                  -------------------------------------------
                                        
     The following table sets forth certain information as of February 3, 1999,
regarding ownership of the Company's Common Stock or Class A Common Stock by
persons (including any group) known to the Company to be beneficial owners of
more than 5% of either class of stock, the individual directors of the Company,
each of the executive officers named in the Summary Compensation Table and the
executive officers and directors of the Company as a group.  Under the rules of
the Securities and Exchange Commission, a person (or group of persons) is deemed
to be a "beneficial owner" of a security if he or she, directly or indirectly,
has or shares the power to vote or to direct the voting of such security, or the
power to dispose of or to direct the disposition of such security.  Accordingly,

                                       82
<PAGE>
 
more than one person may be deemed to be a beneficial owner of the same
security.  A person is also deemed to be a beneficial owner of any security
which that person has the right to acquire within 60 days.

<TABLE>
<CAPTION>
                                                                         AMOUNT AND NATURE
         NAME AND ADDRESS OF                                               OF BENEFICIAL
        BENEFICIAL OWNER (1)              TITLE OF CLASS                   OWNERSHIP (2)                   PERCENT OF CLASS
        --------------------              --------------                   -------------                   ----------------    
<S>                                       <C>                            <C>                            <C>
Jones International, Ltd.                  Common Stock                  2,441,751  (3)(4)                      47.76
9697 East Mineral Avenue
Englewood, CO  80112                          Class A                    1,497,373  (3)                          4.13
                                           Common Stock
 
Glenn R. Jones                             Common Stock                  2,916,151  (3)(5)                      57.03
9697 East Mineral Avenue
Englewood, CO  80112                          Class A                    2,502,117  (3)(6)                       6.82
                                           Common Stock
 
Kevin P. Coyle                             Common Stock                        345  (7)                           .01
9697 East Mineral Avenue
Englewood, CO  80112                          Class A                       30,924  (8)                           .09
                                           Common Stock
William E. Frenzel                            Class A                        1,000  (9)                 less than .01
1775 Massachusetts Ave., N.W.              Common Stock
Washington, D.C.  20036
 
James B. O'Brien                              Class A                       70,694  (10)                          .19
9697 East Mineral Avenue                   Common Stock
Englewood, CO  80112
 
Raphael M. Solot                           Common Stock                        300                                .01
501 South Cherry Street
Denver, CO  80222
 
Ruth E. Warren                             Common Stock                        208                      less than .01
9697 East Mineral Avenue
Englewood, CO  80112                          Class A                       32,042                                .09
                                           Common Stock

Cynthia W. Winning                            Class A                       19,500  (11)                          .05
9697 East Mineral Avenue                   Common Stock
Englewood, CO  80112

Sanford Zisman                             Common Stock                        500  (12)                          .01
3773 Cherry Creek North Drive
Denver, CO  80209
 
Robert B. Zoellick                            Class A                          300                      less than .01
627 Chain Bridge Road                      Common Stock
McLean, VA  22101
</TABLE> 

                                       83
<PAGE>
 
<TABLE> 
<S>                                        <C>                          <C>                                     <C> 
All executive officers and directors       Common Stock                  2,917,514                              57.06
 as a group
(19 persons)                                  Class A                    2,656,581  (13)                         7.22
                                           Common Stock
 
 
Christine Jones Marocco                    Common Stock                  2,726,543  (14)                        53.33
25 East End Avenue, #14F
New York NY  10288                            Class A                       55,083  (15)                          .15
                                           Common Stock
 
BTH (Intercable) Limited                   Common Stock                  2,878,151  (16)(17)(21)                56.29
(f/k/a Bell Canada International
BVI VI Limited)
Arawak Chamber
Road Town
Tortola, BVI
 
BTH (U.S. Cable) Limited                      Class A                   12,782,500  (18)(19)(21)                35.28
(f/k/a Bell Canada International           Common Stock
BVI III Limited)
Arawak Chamber
Road Town
Tortola, BVI
 
Capital Research and Management               Class A                    3,230,000  (20)(21)                     8.92
 Company                                   Common Stock
333 South Hope Street
Los Angeles, CA  90071
</TABLE>

(1)  Directors who are not listed in the table do not beneficially own any of
     the Company's shares.  Shares shown as subject to options means that such
     options are exercisable within 60 days.

(2)  Unless otherwise noted, all persons indicated in the table have full voting
     and investment power with respect to the share ownership described.

(3)  Glenn R. Jones, Chairman of the Board of Directors and Chief Executive
     Officer of the Company, owns all of the outstanding shares of Jones
     International, Ltd. ("International") and is deemed to be the beneficial
     owner of all shares of the Company owned by International.  By virtue of
     this ownership, Mr. Jones controls approximately 36% of the total votes to
     be cast by all shareholders of the Company's shares on matters not
     requiring a class vote, because, with regard to such matters, a share of
     Common Stock has one vote and a share of Class A Common Stock has 1/10th of
     a vote.  The holders of Class A Common Stock, as a class, are able to elect
     the greater of 25% or the next highest whole number of the Company's Board
     of Directors.  Thus, holders of the Class A Common Stock, as a class, are
     presently entitled to elect four directors, and the holders of the Common
     Stock, as a class, are presently entitled to elect nine directors.  Due to
     his beneficial ownership of 57% of the Common Stock of the Company, Mr.
     Jones controls the election of the nine directors to be elected by the
     holders of the Common Stock.

(4)  Includes 38,000 shares held by International; 2,239,416 shares held by the
     Jones International Grantor Business Trust; 100,400 shares held by Jones
     Entertainment Group, Ltd.; 35,707 shares held by Jones Space Segment, Inc.;
     27,585 shares held by Jones Global Group, Inc.; and 643 shares held by
     Jones Interdigital, Inc.  International may be deemed to be the beneficial
     owner of all shares of Common Stock owned by Jones Entertainment Group,
     Ltd., Jones Space Segment, Inc., Jones Global Group, Inc. and Jones
     Interdigital, Inc.

                                       84
<PAGE>
 
(5)  Includes 474,400 shares held by the Glenn Jones Grantor Business Trust;
     38,000 shares held by International; 2,239,416 shares held by the Jones
     International Grantor Business Trust; 100,400 shares held by Jones
     Entertainment Group, Ltd.; 35,707 shares held by Jones Space Segment, Inc.;
     27,585 shares held by Jones Global Group, Inc.; and 643 shares held by
     Jones Interdigital, Inc.

(6)  Includes 526,893 shares owned by Mr. Jones; 477,851 shares deemed to be
     held by Mr. Jones pursuant to exercisable stock options; and 1,497,373
     shares held by International.

(7)  Includes 320 shares held by Mr. Coyle's wife.

(8)  Includes 30,855 shares deemed to be held by Mr. Coyle pursuant to
     exercisable stock options.

(9)  Represents shares held by the William E. Frenzel Revocable Trust.

(10) Includes 60,694 shares deemed to be held by Mr. O'Brien pursuant to
     exercisable stock options.

(11) Represents shares deemed to be held by Ms. Winning pursuant to exercisable
     stock options.

(12) Represents shares held by the Sanford Zisman PC Profit Sharing Trust.

(13) Includes 588,900 shares deemed to be held by various executive officers and
     directors pursuant to exercisable stock options.

(14) Includes 12,370 shares held by Mrs. Marocco; 357 shares held by the Joseph
     Michael Marocco Irrevocable Trust; 2,239,416 shares held by the Jones
     International Grantor Business Trust in which Mrs. Marocco has shared
     voting power; and 474,400 shares held by the Glenn Jones Grantor Business
     Trust in which Mrs. Marocco has shared voting power.

(15) Includes 44,113 shares held by Mrs. Marocco; 970 shares held by the Joseph
     Michael Marocco Irrevocable Trust; and 10,000 shares held by Mrs. Marocco's
     husband.  Mrs. Marocco disclaims beneficial ownership of the shares held by
     her husband.  Mrs. Marocco's husband is a principal in a firm that may from
     time to time invest in the Company's securities.  Mrs. Marocco disclaims
     beneficial ownership of any securities of the Company that said firm
     purchases or in which Mr. Marocco may therefor have an interest.

(16) BCI Telecom Holding Inc. ("BTH"), the sole shareholder of BTH (Intercable)
     Limited (f/k/a Bell Canada International BVI VI Limited), is deemed to have
     beneficial ownership of the 2,878,151 shares of Common Stock covered by
     Option Agreements dated December 20, 1994 among The Bank of New York,
     acting as agent for BTH, and the Glenn Jones Grantor Business Trust, the
     Jones International Grantor Business Trust, Jones Entertainment Group,
     Ltd., Jones Space Segment, Inc., Jones Global Group, Inc. and Jones
     Interdigital, Inc.

(17) Pursuant to various agreements all dated August 12, 1998 among Mr. Jones,
     International and certain of its affiliates, BTH and Comcast Corporation
     ("Comcast"), Comcast has the right to purchase all of the shares of Common
     Stock covered by the Option Agreements referred to in Note 16 above.
     Comcast's address is 1500 Market Street, Philadelphia, PA 19102-2148.

(18) BTH is deemed to be the beneficial owner of the 12,782,500 shares of Class
     A Common Stock owned by its wholly owned subsidiary, BTH (U.S. Cable)
     Limited (f/k/a Bell Canada International BVI III Limited).

(19) Pursuant to various agreements all dated August 12, 1998 among Mr. Jones,
     International and certain of its affiliates, BTH and Comcast, Comcast has
     the right to purchase all of BTH's shares of Class A Common Stock referred
     to in Note 18 above.

                                       85
<PAGE>
 
(20) Capital Research and Management Company has no sole or shared voting power
     and has sole dispositive power over 3,230,000 shares.

(21) This information is based upon filings made by the shareholders with the
     Securities and Exchange Commission, copies of which were provided to the
     Company.


                        ITEM 13.  CERTAIN TRANSACTIONS
                        ------------------------------

     The Company has engaged in certain transactions with its affiliates. These
transactions have involved affiliation agreements for the distribution of
programming owned by affiliated companies on cable television systems owned or
managed by the Company, lease agreements related to real estate, and lease
agreements and service agreements related to certain technical, computer,
financial and administrative services provided to the Company by affiliates. For
the year ended December 31, 1998, approximately $1,008,000, or less than 1%, of
the Company's total revenue and approximately $6,646,000, or 3.3%, of its total
operating, general and administrative expenses were a result of related party
transactions. Because certain officers and directors of the Company are also
officers and directors of affiliated companies, the terms of any agreements
between the Company and such affiliates generally are not the result of arm's
length negotiations. There can be no assurance that the terms of any
transactions between the Company and its affiliates have been or will be as
favorable as the Company could obtain from unrelated parties.

     Set forth below is a description of the Company's transactions with Jones
International, Ltd. ("International"), certain of its subsidiaries and certain
other affiliates of the Company, including BTH, during the year ended December
31, 1998.  In some instances the dollar amounts of transactions have been
rounded to the nearest thousand.  Most of the transactions described below are
expected to continue during the current fiscal year.

JONES INTERNATIONAL, LTD.

     Jones International, Ltd. and certain of its subsidiaries provide various
services to the Company and its managed limited partnerships, including
information and data processing services, office space and programming services,
as described below.  The costs of these services are charged to the Company, and
the Company reimburses International accordingly.  In some cases, a portion of
certain of these expenses are reallocated to the Company's managed partnerships
pursuant to the terms of the limited partnership agreements of such limited
partnerships.

JONES GALACTIC RADIO, INC.

     Jones Galactic Radio, Inc. is a subsidiary of Jones International Networks,
Ltd., an affiliate of International. The Company's cable systems receive audio
programming from Superaudio, a joint venture between Jones Galactic Radio, Inc.
and an unaffiliated entity. Payments made by the Company to Jones Galactic
Radio, Inc. for programming provided to Company-owned cable systems for the year
ended December 31, 1998 totaled $348,800.

                                       86
<PAGE>
 
KNOWLEDGE TV, INC.

     Knowledge TV, Inc., a company jointly owned by Mr. Jones, affiliates of
International, BTH and the Company, operates the television network Knowledge
TV.  Knowledge TV provides programming related to computers and technology;
business, careers and finance; health and wellness; and global culture and
languages.  Knowledge TV, Inc. sells its programming to certain cable television
systems owned by the Company.  Payments made by the Company to Knowledge TV,
Inc. with respect to programming provided to cable television systems owned by
the Company for the year ended December 31, 1998 totaled $622,800.

JONES FINANCIAL GROUP, LTD.

     Jones Financial Group, Ltd. ("Financial Group") performs services for the
Company as its agent in connection with negotiations regarding various financial
arrangements of the Company.  Financial Group is owned 81% by International and
19% by Glenn R. Jones.  In December 1994, the Company entered into a Financial
Services Agreement with Financial Group pursuant to which Financial Group has
agreed to render financial advisory and related services to the Company for a
fee equal to 90% of the fees that would be charged to the Company by
unaffiliated third parties for the same or comparable purposes.  The Company
pays Financial Group an annual $1,000,000 retainer as an advance against
payments due pursuant to this agreement and reimburses Financial Group for its
reasonable out-of-pocket expenses.  The term of the Financial Services Agreement
is for eight years from December 1994.  Financial Group and BTH have entered
into a separate agreement pursuant to which BTH is entitled to receive one-half
of the net fees earned (gross fees less reasonable and customary operating
expenses) by Financial Group under the Financial Services Agreement.  During the
year ended December 31, 1998, the Company paid Financial Group fees totaling
$756,000 for acting as the Company's financial advisor in connection with the
Company's acquisition of the Hinesville System in 1998.

JONES INTERACTIVE, INC.

     Jones Interactive, Inc. ("Interactive"), a wholly owned subsidiary of
International, provides information management and data processing services for
operating companies affiliated with International.  Charges to the various
operating companies are based on usage of computer time by each entity.  The
amount charged to the Company and its managed partnerships by Interactive for
the year ended December 31, 1998 totaled $6,089,000.  Approximately 63% of this
amount was paid by the Company, and the remainder was allocated to and paid by
the Company's managed partnerships.

JONES PROPERTIES, INC.

     Jones Properties, Inc. is a wholly owned subsidiary of International. The
Company is a party to a lease with Jones Properties, Inc. under which the
Company has leased a 101,500 square foot office building in Englewood, Colorado.
The lease agreement, as amended, has a 15-year term expiring July 2000, with
three 5-year renewal options. The annual rent is not to exceed $24.00 per square
foot, plus operating expenses. The Company has subleased approximately 44% of
the building to International and certain other affiliates on the same terms and
conditions of the above-mentioned 

                                       87
<PAGE>
 
lease. Rent payments to Jones Properties, Inc. by the Company, net of subleasing
reimbursements, for the year ended December 31, 1998 totaled $1,390,000.
Approximately 63% of this amount was paid by the Company, and the remainder was
allocated to and paid by the Company's managed partnerships.

PRODUCT INFORMATION NETWORK

     The Product Information Network Venture (the "PIN Venture") is a venture
among a subsidiary of Jones International Networks, Ltd., an affiliate of
International, and two unaffiliated cable system operators.  The PIN Venture
operates the Product Information Network ("PIN"), which is a 24-hour network
that airs long-form advertising generally known as "infomercials." PIN has an
affiliation agreement with the Company that expires on February 1, 2005.  The
PIN Venture generally makes incentive payments equal to a percentage of its net
advertising revenue to the cable systems that carry its programming.  Most of
the Company's owned cable television systems carry PIN for all or part of each
day.  Aggregate payments received by the Company from the PIN Venture relating
to the Company's owned cable television systems totaled $1,008,000 for the year
ended December 31, 1998.

GREAT AMERICAN COUNTRY, INC.

     The Great American Country network provides country music video programming
to certain of the Company's owned systems. This network is owned and operated by
Great American Country, Inc., a subsidiary of Jones International Networks,
Ltd., an affiliate of International. During the year ended December 31, 1998,
the Company paid Great American Country, Inc. a total of $517,000 for
programming provided by Great American Country to Company-owned cable television
systems.

SUPPLY AND SERVICES AGREEMENT WITH BTH

     The Company entered into a Supply and Services Agreement with BTH in
December 1994. Pursuant to the Supply and Services Agreement, BTH provides the
Company with access to the expert advice of personnel from BTH and its
affiliates on an annual basis. The Company has agreed to pay an annual fee of
$2,000,000 to BTH during the term of the agreement. Payments made by the Company
under the Supply and Services Agreement during the year ended December 31, 1998
totaled $2,000,000.

SECONDMENT AGREEMENT WITH BTH

     The Company entered into a Secondment Agreement with BTH in December 1994.
Pursuant to the Secondment Agreement, BTH provided a total of 8 secondees during
1998. These secondees worked for the Company and its managed partnerships. The
Company reimbursed BTH for the full employment costs of such individuals. The
Company reimbursed BTH $719,000 during the year ended December 31, 1998.
Approximately 63% of this amount was paid by the Company, and the remainder was
allocated to and paid by the Company's managed partnerships.

                                       88
<PAGE>
 
SALE OF INVESTMENT IN JONES CUSTOMER SERVICE MANAGEMENT, L.L.C.

     In 1995, the Company and Jones Cyber Solutions, Ltd. ("JCS"), an indirect
subsidiary of International, formed a venture, known as Jones Customer Service
Management, L.L.C., for the purpose of developing a subscriber billing and
management system.  As of December 31, 1998, the Company had invested $5,200,000
in the venture.  The Company accounts for this investment using the equity
method and, as of December 31, 1998, had recognized equity losses equal to its
investment of $5,200,000.  In August 1998, the Company sold its 75% interest in
Jones Customer Service Management, L.L.C. to JCS for $3,150,000.  The purchase
price was paid $2,000,000 in cash and $1,150,000 in a note receivable.  This
note receivable bears interest at prime +2%, and is payable in 36 months or upon
a change in control of the Company.  The proceeds from this transaction were
used to offset the remaining assets related to the Company's customer billing
venture.

     JCS performed the basic system development work for the venture and was
paid periodically on a time and materials basis, plus 10% of the amount charged,
for its own service.  The venture's subscriber billing and management system was
trialed in one of the Company's cable systems during 1997.  The Company
determined, in late 1997, not to pursue the implementation of the subscriber
billing and management system.  As a result of this decision, the Company
incurred a write-off of $14,228,000 in the fourth quarter of 1997 related to the
write-off of costs associated with the planned implementation of the billing
system in Company-owned cable systems.

                                       89
<PAGE>
 
                                    PART IV

                  ITEM 14.  EXHIBITS AND REPORTS ON FROM 8-K
                  -------------------------------------------

 
        (A)(1)  FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT PUBLIC
        ACCOUNTANTS.
 
        (A)(2)  SCHEDULES.
 
        (A)(3)  EXHIBITS.
 

        The following exhibits, which are numbered in accordance with Item 601
        of Regulation S-K, are filed herewith or, as noted, incorporated by
        reference herein:
 
2.1     Stock Purchase Agreement dated as of May 31, 1994, between Bell Canada
        International Inc. and the Company. (1)
 
2.2     Transaction Agreement dated as of May 31, 1994, among Glenn R. Jones,
        Jones International, Ltd., Bell Canada International Inc. and Jones
        Spacelink, Ltd. (1)
     
2.3     Purchase and Sale Agreement (Albuquerque) dated as of July 28, 1997
        between the Company and Cable TV Fund 12-BCD Venture. (17)
 
2.3     Purchase and Sale Agreement (Palmdale) dated as of February 25, 1998,
        between the Company and Cable TV Fund 12-BCD Venture. (18)
 
2.4     Purchase and Sale Agreement (Littlerock) dated as of February 25, 1998,
        between the Company and Cable TV Fund 14-B, Ltd.  (18)
 
2.5     Asset Purchase Agreement (Hinesville) dated August 24, 1998 between
        Jones Communications of Georgia/South Carolina, Inc. and Bresnan
        Communications Company, L.P.
 
2.6     Purchase and Sale Agreement (Grants) dated June 16, 1998 between
        Spacelink Fund 3, Ltd. and Jones Communications of New Mexico, Inc.
        
2.7     Purchase and Sale Agreement (Socorro) dated June 16, 1998 between
        Spacelink Fund 3, Ltd. and Jones Communications of New Mexico, Inc.
 
3.1     Articles of Incorporation and amendments thereto of the Company. (4)
 

                                       90
<PAGE>
 
3.2     Amendment to Articles of Incorporation of Company filed July 24, 1995.
        (2)
 
3.3     Amendment to Articles of Incorporation of Company filed September 18,
        1996. (15)

3.4     Bylaws of the Company. (2)
 
4.1     Indenture, dated as of July 15, 1992, between the Company and First
        Trust National Association. (5)
 
4.2     Second Supplemental Indenture, dated as of March 1, 1993, between the
        Company and First Trust National Association. (6)
 
4.3     Indenture dated March 23, 1995 with respect to the Senior Notes, between
        the Company and U.S. Trust Company of California, N.A. (7)
 
4.4     First Supplemental Indenture dated as of March 23, 1995 with respect to
        $200,000,000 aggregate principal amount of the Company's 9 5/8% Senior
        Notes due 2002, between the Company and U.S. Trust Company of
        California, N.A. (7)
        
4.5     Second Supplemental Indenture dated as of March 21, 1997 with respect to
        $250,000,000 aggregate principal amount of the Company's 8 7/8% Senior
        Notes due 2007, between the Company and U.S. Trust Company of
        California, N.A. (16)
        
4.6     Third Supplemental Indenture dated as of April 6, 1998 with respect to
        $200,000,000 aggregate principal amount of the Company's 7 5/8% Senior
        Notes due 2008, between the Company and U.S. Trust Company of
        California, N.A. (19)
        
4.6     Form of Shareholders Agreement among Glenn R. Jones, Jones
        International, Ltd., Bell Canada International Inc. and the Company. (1)
 
4.7     Agreement and Amendment No. 1 to Shareholders Agreement dated as of
        August 12, 1998, amending the Shareholders Agreement. (20)
        
10.1.1  Form of Financial Services Agreement between Jones Financial Group, Ltd.
        and the Company. (1)
 
10.1.2  Form of Employment Agreement between Glenn R. Jones and the Company. (1)

                                       91
<PAGE>
 
10.1.3   Termination Agreement dated as of August 12, 1998, between the Company
         and Mr. Jones. (20)
 
10.1.4   Form of Supply and Services Agreement between Bell Canada International
         Inc. and the Company. (1)
         
10.1.5   Form of Secondment Agreement between Bell Canada International Inc. and
         the Company. (1)
 
10.1.6   Form of Option Agreement for Glenn R. Jones and Jones International,
         Ltd. between Bell Canada International Inc. and Newco. (1)
 
10.1.7   Amendment to Option Agreements dated as of August 12, 1998, between The
         Bank of New York, as successor agent to Morgan Guaranty Trust Company
         of New York (as agent for BTH and Comcast) and the Jones Entities. (20)
         
10.1.8   Agreement dated as of August 12, 1998, among the Jones Entities and
         Comcast. (20)
         
10.1.6   Affiliate Agreement dated August 1, 1994 between the Company and Jones
         Infomercial Networks, Inc. (2)
 
10.2.1   1992 Stock Option Plan. (8)
 
10.2.2   Form of Basic Incentive Stock Option Agreement. (8)
 
10.2.3   Form of Basic Non-Qualified Stock Option Agreement. (8)
 
10.3.1   Office Lease, dated June 8, 1984, between the Company and Jones
         Properties, Inc., regarding office space at 9697 East Mineral Avenue,
         Englewood, Colorado. (9)
 
10.3.2   Office Building Lease dated December 9, 1994 between Jones Panorama
         Properties, Inc. and the Company regarding Lot 4, Panorama Office Park.
         (2)
         
10.4.1   Partnership Agreement for Cable TV Fund 12. (9)
 
10.4.2   Partnership Agreement for Cable TV Fund 14. (10)
 
10.4.3   Partnership Agreement for Jones Cable Income Fund 1. (11)
 
10.4.4   Partnership Agreement for IDS/Jones Growth Partners. (12)
 
10.4.5   Partnership Agreement for Cable TV Fund 15. (13)
 

                                       92
<PAGE>
 
10.4.6   Partnership Agreement for IDS/Jones Growth Partners II, L.P.  (14)
 
10.5.1   Credit Agreement dated October 31, 1995 among Jones Cable Holdings,
         Inc. and NationsBank of Texas, N.A. and The Bank of Nova Scotia, as
         lenders and as managing agents and various other lenders. (3)
         
10.5.2   First Amendment dated as of September 17, 1996 to Credit Agreement
         dated October 31, 1995 among Jones Cable Holdings, Inc. and NationsBank
         of Texas, N.A., individually and as agent for various other lenders.
         (15)

10.5.3   Credit Agreement dated as of October 29, 1996 among Jones Cable
         Holdings II, Inc. and The Bank of Nova Scotia, NationsBank of Texas,
         N.A. and Societe Generale, as managing agents for various lenders. (15)
 
21       List of Subsidiaries of the Company.
 
23       Consent of Arthur Andersen & LLP, independent public accountants, to
         the incorporation by reference of its report into the Company's Form 
         S-8 and Form S-3 Registration Statements.
         
27       Financial Data Schedule
 
___________ 

(1)      Incorporated by reference from the Company's Current Report on Form 
         8-K, filed on June 6, 1994.
 
(2)      Incorporated by reference from the Company's Annual Report on Form 10-K
         for the fiscal year ended May 31, 1995.
 
(3)      Incorporated by reference from the Company's Annual Report on Form 10-K
         for the year ended December 31, 1995.
 
(4)      Incorporated by reference from the Company's Annual Report on Form 10-K
         for the fiscal year ended May 31, 1988.
 
(5)      Incorporated by reference from the Company's Registration Statement No.
         33-47030 on Form S-3, filed on April 8, 1992, and Amendment Nos. 1 and
         2 thereof, filed on April 24, 1992 and June 4, 1992, respectively, and
         Post-Effective Amendment No. 1 thereof, filed on July 15, 1992.
 
(6)      Incorporated by reference from the Company's Current Report on Form 
         8-K, filed on March 1, 1993.

                                       93
<PAGE>
 
(7)      Incorporated by reference from the Company's Current Report on form 8-K
         dated March 23, 1995.
         
(8)      Incorporated by reference from the Company's Registration No. 33-54596
         on Form S-8, filed on November 16, 1992.
 
(9)      Incorporated by reference from the Company's Registration Statement No.
         2-94127.
 
(10)     Incorporated by reference from the Company's Registration Statement No.
         33-6976, filed on July 3, 1986, and Amendment No. 1 thereto, filed on
         November 17, 1986.
 
(11)     Incorporated by reference from the Company's Registration Statement No.
         33-00968 on Form S-1, filed on October 18, 1985.
 
(12)     Incorporated by reference from the Company's Registration Statement No.
         33-12473.
 
(13)     Incorporated by reference from the Company's Registration Statement No.
         33-24358.
 
(14)     Incorporated by reference from the Company's Registration Statement on
         Form 8-A No. 0-18133, dated November 16, 1989.
 
(15)     Incorporated by reference from the Company's Annual Report on Form 10-K
         for year ended December 31, 1996.
 
(16)     Incorporated by reference from the Company's Current Report on Form 8-K
         dated March 21, 1997
 
(17)     Incorporated by reference from the Company's Current Report on Form 8-K
         dated August 1, 1997.
         
(18)     Incorporated by reference from the Company's Annual Report on Form 10-K
         for year ended December 31, 1997.
 
(19)     Incorporated by reference from the Company's Current Report on Form 8-K
         dated April 6, 1998.

                                       94
<PAGE>
 
(20)     Incorporated by reference from Mr. Jones' and International's Amendment
         No. 2 to Schedule 13D, electronically filed on August 14, 1998, and
         identified as Exhibits 3 through 6, respectively, to said Schedule 13D.
 
(b)      Reports on Form 8-K
 
         None.

                                       95
<PAGE>
 
                                  SIGNATURES

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


                                        JONES INTERCABLE, INC.          
                                                                        
                                                                        
                                                                        
                                        By:  /s/ Glenn R. Jones         
                                             --------------------------------
                                             Glenn R. Jones             
                                             Chairman of the Board and  
Dated: February 17, 1999                     Chief Executive Officer     


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


                                        By:  /s/ Glenn R. Jones           
                                             --------------------------------
                                             Glenn R. Jones               
                                             Chairman of the Board and    
                                             Chief Executive Officer      
Dated: February 17, 1999                     (Principal Executive Officer) 


                                        By:  /s/ Kevin P. Coyle               
                                             --------------------------------
                                             Kevin P. Coyle                   
                                             Group Vice President/Finance     
Dated: February 17, 1999                     Principal Financial Officer)     
                                                                              
                                                                              
                                        By:  /s/ Larry W. Kaschinske          
                                             --------------------------------
                                             Larry W. Kaschinske              
                                             Controller                       
Dated: February 17, 1999                     (Principal Accounting Officer)   
                                                                              
                                                                              
                                        By:  /s/ James B. O'Brien             
                                             --------------------------------
                                             James B. O'Brien                 
Dated: February 17, 1999                     President and Director           

                                       96
<PAGE>
 
                                        By:  /s/ Robert E. Cole               
                                             --------------------------------
                                             Robert E. Cole                   
Dated: February 17, 1999                     Director                         
                                                                              
                                                                              
                                        By:  /s/ William E. Frenzel           
                                             --------------------------------
                                             William E. Frenzel               
Dated: February 17, 1999                     Director                         
                                                                              
                                                                              
                                        By:  ________________________________
                                             Josef J. Fridman                 
Dated:                                       Director                         
                                                                              
                                                                              
                                        By:  ________________________________ 
                                             Donald L. Jacobs                 
Dated:                                       Director                         
                                                                              
                                                                              
                                        By:  /s/ Robert Kearney               
                                             --------------------------------
                                             Robert Kearney                   
Dated: February 17, 1999                     Director                         
                                                                              
                                                                              
                                        By:  /s/ James J. Krejci              
                                             --------------------------------
                                             James J. Krejci                  
Dated: February 17, 1999                     Director                         
                                                                              
                                                                              
                                        By:  /s/ Raphael M. Solot             
                                             --------------------------------
                                             Raphael M. Solot                 
Dated: February 17, 1999                     Director                         
                                                                              
                                                                              
                                        By:  /s/ Howard O. Thrall             
                                             --------------------------------
                                             Howard O. Thrall                 
Dated: February 17, 1999                     Director                         
                                                                              
                                                                              
                                        By:  ________________________________
                                             Siim A. Vanaselja                
Dated:                                       Director                         
                                                                              

                                       97
<PAGE>
 
                                        By:  /s/ Sanford Zisman               
                                             --------------------------------
                                             Sanford Zisman                   
Dated: February 17, 1999                     Director                         
                                                                              
                                                                              
                                        By:  /s/ Robert B. Zoellick           
                                             --------------------------------
                                             Robert B. Zoellick               
Dated: February 17, 1999                     Director                         

                                       98