<PAGE>   1

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

(Mark One)
[ ]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934 (FEE REQUIRED)
     
                                     OR
[X]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934 (NO FEE REQUIRED) 

For the transition period from June 1,
1995 through December 31, 1995 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                  (Registrant's telephone no.
          office and Zip Code)                            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 March 1, 1996 of the voting stock held by
non-affiliates:
Common Stock       $29,799,088                Class A Common Stock  $185,738,121

Shares outstanding of each of the registrant's classes of common stock as of
March 1, 1996: 
Common Stock:        5,113,021                Class A Common Stock:   26,263,523

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 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>   2
                             JONES INTERCABLE, INC.

                         TRANSITION REPORT ON FORM 10-K
        FOR THE TRANSITION PERIOD JUNE 1, 1995 THROUGH DECEMBER 31, 1995


                               TABLE OF CONTENTS



<TABLE>
<CAPTION>
                                                                                                    Page No.
                                                                                                    --------
 <S>                                                                                                    <C>
 PART I                                                                                                  1


 ITEM 1.    BUSINESS                                                                                     1
            The Company                                                                                  1
            The Cable Television Industry                                                                1
               Industry Growth                                                                           2
               System Operations                                                                         3
               Programming                                                                               3
               System Revenues                                                                           4
            The Company's Cable Television Business                                                      5
            The Company's Other Businesses                                                               9
            Recent Acquisitions of Cable Television Systems                                             10
            Proposed Acquisitions of Cable Television Systems                                           11
            Recent and Proposed Dispositions of Cable Television Systems                                12
            Recent Exchange of Cable Television Systems                                                 12
            Proposed Exchange of Cable Television Systems                                               13
            Refinancing of the Company's Credit Facility                                                14
            Redemption by the Company of 7.5% Subordinated Convertible Debentures due 2007              14
            Execution of Letter of Intent                                                               14
            Change of the Company's Fiscal Year                                                         14
            Increase in the Company's Authorized Class A Common Stock                                   14
            Cable Television Franchises                                                                 15
            Competition                                                                                 15
            Regulation and Legislation                                                                  19
                Telecommunications Act of 1996                                                          19
                Cable Television Consumer Protection and Competition Act of 1992                        21
                Cable Communications Policy Act of 1984                                                 25
                Franchising                                                                             25
                Ownership and Market Structure                                                          25
                Foreign Ownership Restriction                                                           26
                Program Origination and Exclusivity Obligations                                         27
                Copyright Matters                                                                       27
</TABLE>




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<TABLE>
 <S>                                                                                                    <C>
                State Regulation                                                                        28
                Local Regulation                                                                        28
                Technical and Reporting Requirements                                                    28
                Regulatory Fees and Other Matters                                                       29
                Miscellaneous Provisions                                                                29

 ITEM 2.    PROPERTIES                                                                                  30
    Cable Television Systems Owned by the Company                                                       30

 ITEM 3.    LEGAL PROCEEDINGS                                                                           34
    Alexandria Litigation                                                                               34
    Tampa Litigation                                                                                    35

 ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY
            HOLDERS                                                                                     36


 EXECUTIVE OFFICERS OF THE COMPANY                                                                      36

 PART II                                                                                                38

 ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND
            RELATED STOCKHOLDER MATTERS                                                                 38

 ITEM 6.    SELECTED FINANCIAL DATA                                                                     40

 ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF
            OPERATIONS                                                                                  41


 ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY
            DATA                                                                                        49

 ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH
            ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
            DISCLOSURE                                                                                  81

 PART IV                                                                                                81

 ITEM 14.   EXHIBITS AND REPORTS ON FORM 8-K                                                            81

</TABLE>




                                      ii
<PAGE>   4
                                     PART I
                               ITEM 1.  BUSINESS

THE COMPANY

         Jones Intercable, Inc. (the "Company") is a Colorado corporation
organized in 1970.  The Company is primarily engaged in the cable television
business.  See Item 1, The Company's Cable Television Business.  The Company
also holds equity interests in a number of programming and other cable-related
subsidiaries.  See Item 1, The Company's Other Businesses.

         Jones International, Ltd. ("International") beneficially owns
approximately 48% of the Common Stock of the Company and approximately 9% of
the Class A Common Stock of the 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 2% 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
enables him to control the election of a majority of the Company's Board of
Directors and gives him voting power over approximately 41% of votes to be cast
by all shareholders of the Company on matters not requiring a class vote.  As
of December 31, 1995, Bell Canada International Inc. ("BCI") owned 9,914,300
shares, or approximately 38%, of the Company's Class A Common Stock and,
through such ownership, BCI owned an approximate 30% economic interest in the
Company.  In addition, BCI holds an option to purchase 2,878,151 shares of
Common Stock of the Company from International, Glenn R. Jones and certain of
their affiliates which, if and when exercised, would enable BCI to elect a
majority of the members of the Board of Directors of the Company.  In February
1996, BCI purchased 43,200 additional shares of the Company's Class A Common
Stock in the market, thereby raising BCI's aggregate ownership to 9,957,500
shares of the Company's Class A Common Stock, and BCI has informed the Company
that BCI intends to purchase additional shares of Class A Common Stock of the
Company in the market from time to time in the future.

         At December 31, 1995, the Company had a total of approximately 3,686
employees.  The executive offices of the Company are located at 9697 E. Mineral
Avenue, Englewood, Colorado 80112, and its telephone number is (303) 792-3111.
Unless the context otherwise requires, the term "Company" as used herein refers
to Jones Intercable, Inc. and its subsidiaries, including Jones Cable Holdings,
Inc. ("JCH"), a wholly owned subsidiary that owns a majority of the cable
television assets of the Company.

THE CABLE TELEVISION INDUSTRY

         The cable television industry developed in the late 1940s and early
1950s in response to the needs of residents in predominantly rural and
mountainous areas of the country where the quality of television reception was
inadequate because of geographic location, surrounding terrain, man-made
structures or the curvature of the earth.  During recent decades, cable
television systems have also been constructed in suburban areas and larger
cities where signal interference problems or limited





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<PAGE>   5
availability of channels created a desire for better reception and expanded
service.  Television reception is substantially improved by cable television
because of its insulation from outside interference.

         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 65%.

         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, 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
antennae 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 necessary to expand channel
capacity and to deliver pay-per-view and other premium services.

         The cable television industry is undergoing significant change.  With
recent announcements of alliances between cable television companies and
telephone, computer and software companies, the Company believes that the
nature of the cable television business is 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.

         INDUSTRY GROWTH.  Based upon information obtained by the Company from
industry sources, the Company believes that the following table demonstrates
the growth of the cable television industry in the United States for the
periods indicated:

<TABLE>
<CAPTION>
                                                                                        Approximate Percentage
                                                   Approximate Number                    of TV Households With
              End of Year                       of Basic Subscribers(1)                 Basic Cable Service(2)
              -----------                       -----------------------                 ----------------------
                  <S>                                 <C>                                        <C>
                  1985                                39,872,250                                  46%
                  1986                                42,237,140                                  48%
</TABLE>





                                       2
<PAGE>   6
<TABLE>
                  <S>                                    <C>                                      <C>
                  1987                                   44,970,880                               51%
                  1988                                   48,636,520                               54%
                  1989                                   52,564,470                               57%
                  1990                                   54,871,330                               59%
                  1991                                   55,786,390                               61%
                  1992                                   57,211,600                               62%
                  1993                                   58,834,440                               63%
                  1994                                   60,495,090                               63%
                  1995                                   62,231,730(3)                            65%(3)
</TABLE>


(1)      The number of basic subscribers is  computed by dividing the sum of
         total individual-dwelling subscribers  and total revenues from
         bulk-rate subscribers by the standard basic service rate.

(2)      The percentage is computed by dividing  the number of basic
         subscribers by the  number of TV households in the United States
         (95,360,730 estimated TV households in 1995).

(3)      As of July 1995.


         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 four
national television networks, 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





                                       3
<PAGE>   7
system is not permitted to continue carriage of such station.  See Item 1,
Regulation and Legislation.  During the initial three-year election period
which began on October 6, 1993 and continues through December 31, 1996, no
broadcast stations carried on Company-owned cable television systems that
elected retransmission consent have withheld consent to the retransmission of
their signals.  These arrangements will have to be renewed by October 6, 1996
in order to permit continued carriage of broadcast signals by Company-owned
systems.

         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), Family Channel, Discovery 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 or
others at a cost based on the number of subscribers served by the cable
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 offer to subscribers pay-per-view
programming.  Pay-per-view is a service that allows subscribers to receive
single programs, frequently consisting of 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.





                                       4
<PAGE>   8
         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 complaints filed by franchising
authorities and/or cable subscribers.  Rate regulations adopted by the FCC,
which became effective September 1, 1993, 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 Telecommunications Competition and
Deregulation Act of 1996 eliminates regulation of this service tier for small
cable operators and, in some circumstances, will reduce, and by 1999 eliminate,
rate regulation for cable programming service packages for all cable television
systems.  See Item 1, Regulation and Legislation.

         Cost-of-service showings justifying rates above benchmark levels were
filed for the following Company-owned systems:  Alexandria, Virginia; Augusta,
Georgia; Charles County, Maryland; Dale City, Virginia; Jefferson County,
Colorado; Manassas, Virginia and Pima County, Arizona.  For these systems, the
Company anticipates no further reductions in revenues or operating income
before depreciation and amortization resulting from the FCC's rate regulations.
The cost-of-service showings have not yet received final approval from
franchising authorities, however, and there can be no assurance that the
cost-of-service showings will prevent further rate reductions unless such final
approvals are received.  The Company complied with the February 22, 1994
benchmark regulations and reduced rates in the following Company-owned systems:
Hilo, Hawaii; Kenosha, Wisconsin; Oxnard and Walnut Valley, California; and
Panama City Beach, Florida.  The Company's Anne Arundel System is currently
subject to effective competition as defined by the 1992 Cable Act, and, as a
result, is not subject to rate regulation.

THE COMPANY'S CABLE TELEVISION BUSINESS

         The Company operates cable television systems for itself and for its
managed limited partnerships.    At December 31, 1995, the Company managed 54
cable television systems, 41 of which, operating in 19 states, were owned by
Company-managed partnerships and 13 of which, operating in 10 states, were
owned by the Company.  The Company's existing managed partnerships own cable
television systems located in California, Colorado, Florida, Illinois, Indiana,
Maryland, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New
Mexico, New York, Ohio, Oregon, South Carolina, Texas and Wisconsin.  The
Company-owned cable television systems are located in Arizona, California,
Colorado, Florida, Georgia, Hawaii, Maryland, South Carolina, Virginia and
Wisconsin.  In January 1996, the Company acquired another cable television
system in Virginia, and in February 1996, the Company acquired additional cable
television systems in Maryland and Virginia.  See Item 1, Recent Acquisitions 
of Cable Television Systems and Proposed Acquisitions of Cable Television 
Systems.

         At December 31, 1995, Company-owned systems served approximately
439,400 basic subscribers who subscribed to a total of approximately 367,600
pay units.  And, at such date, systems held by Company-managed partnerships
served approximately 997,200 basic subscribers who





                                       5
<PAGE>   9
subscribed to a total of approximately 716,000 pay units.  (Each premium
service subscribed to equals one pay unit.) According to industry sources, as
of December 31, 1995, the Company ranked among the top 10 multiple system cable
television operators in the United States.

         The Company historically has grown by acquiring and developing cable
television systems for both itself and its managed limited partnerships,
primarily in suburban areas with attractive demographic characteristics.  The
Company intends to liquidate its managed limited partnerships as opportunities
for sales of partnership cable television systems arise in the marketplace over
the next several years.  See Item 1, Recent and Proposed Dispositions of Cable
Television Systems.

         Key elements of the Company's operating strategy include increasing
basic penetration levels and revenue per subscriber through targeted marketing,
superior customer service and maintenance of high technical standards.  The
Company has deployed fiber optic cable wherever practical in its current
rebuild and upgrade projects, which improves system reliability and picture
quality, increases channel capacity and provides the potential for new business
opportunities.  The Company has focused on pay-per-view and advertising as
revenue growth opportunities, and expects to continue to do so in the future.

         The Company is implementing a balanced strategy of acquiring cable
television systems from Company-managed limited partnerships and from third
parties.  See Item 1, Recent Acquisitions of Cable Television Systems and
Proposed Acquisitions of Cable Television Systems.  As part of this process,
certain systems owned by the Company and its managed partnerships may be sold
to third parties and Company-owned systems may be exchanged for systems owned
by other cable system operators.  See Item 1, Recent and Proposed Dispositions
of Cable Television Systems, Recent Exchange of Cable Television Systems and 
Proposed Exchange of Cable Television Systems.  It is the Company's plan to 
cluster its cable television properties, to the extent feasible, in geographic 
areas.  Clustering systems may enable the Company to obtain operating 
efficiencies, and it should position the Company to capitalize on new revenue 
and business opportunities as the telecommunications industry evolves.  The 
Company 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.

         Acquisitions of cable television systems, the development of new
services and capital expenditures for system extensions and upgrades are
subject to the availability of cash generated from operations, debt and/or
equity financing.  The capital resources needed to accomplish these strategies
are expected to be provided by the sale of debt and/or equity securities
(subject to market conditions), borrowings under the Company's new $500 million
credit agreement and cash generated from the Company's operating activities.
In addition, the Company may explore other financing options such as private
equity capital and the disposition of non-strategic assets.  There can be no
assurance that the capital resources necessary to accomplish the Company's
acquisition and development plans will be available on terms and conditions
acceptable to the Company, or at all.  See Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations.





                                       6
<PAGE>   10
         Within the past several years, and at an increasing pace recently, the
cable television industry has seen much change.  With recent alliances between
cable television companies and telephone, computer and software companies, the
Company believes that the nature of 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 be
capable of delivering traditional programming as well as other services,
including data, telephone and expanded educational and entertainment services
on an interactive basis.  As this convergence of various technologies
progresses, cable television companies will have to reevaluate their system
architecture, upgrade their cable plants in order to take advantage of new
opportunities and consider clustering their systems in geographic areas where
they can achieve economies of scale and reasonable returns on the investments
made.  The Company is also directly affected by the entry into the marketplace
of local telephone companies that, as a result of the passage of recent
legislation, now have the ability to provide telephone and video services in
direct competition with the Company.  See Item 1, Regulation and Legislation.
This direct competition with local telephone companies is an additional
consideration in the ongoing evaluation by the Company of its position in this
changing marketplace.  The Company intends, where possible, to pursue these new
technological opportunities as they evolve.  The ability of the Company to do
so, however, will be dependent in large part on the availability of debt and
equity financing.

         The Company is involved in analyzing and testing new technologies used
in the telecommunications area, including combined telephone and video services
to multiple dwelling units.  The Company is utilizing the experience of BCI to
provide expertise in the telecommunications area.  BCI, through its parent
company and its affiliates, is engaged in many areas of the telecommunications
business.  BCE Inc., the parent of BCI, is the largest telecommunications
company in Canada.  BCE Inc. is also the parent company of Bell Canada, the
largest provider of telecommunications services in Canada.  Bell Northern
Research, an affiliate of BCI, is Canada's largest research and development
organization and is engaged in developing and analyzing new technologies used
in the telecommunications area.  Northern Telecom, a 52% subsidiary of BCE
Inc., is a leading global manufacturer of telecommunications equipment.  As
cable television systems in the United States evolve and change into more
sophisticated digital networks providing traditional television entertainment,
but also telephone and data services, and as competition between cable
television operators, telephone companies and others develops, the relationship
between BCI and the Company may provide the Company with access to expertise
and experience that it would not otherwise have available.

         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.





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<PAGE>   11
         Monthly service rates include fees for basic service, basic plus
service and premium services.  At December 31, 1995, monthly basic service
rates ranged from $4.95 to $15.50 for residential subscribers, monthly basic
plus service rates ranged from $10.00 to $26.33 for residential subscribers,
and monthly premium services ranged from $1.13 to $14.95 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 $1.99 to $6.95 per movie and
individual special events for a set fee ranging from $4.95 to $54.95 per event.
Related charges may include a nonrecurring installation fee that ranges from
$1.99 to $50.00; 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, 1995, of the total subscriber fees received by
Company-owned systems, basic and basic plus service fees accounted for
approximately 65% of total revenues, premium service fees accounted for
approximately 17% of total revenues, pay-per-view fees were approximately 3% of
total revenues, advertising fees were approximately 7% of total revenues and
the remaining 8% of total revenues came from equipment rentals, installation
fees 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 limited partnerships, the
Company earns management fees which are generally 5% of the gross revenues of
the partnership, not including revenues from the sale of cable television
systems or franchises.  The Company also receives reimbursement from the
partnerships for certain allocated overhead and administrative expenses
incurred by the Company in its management activities.  From time to time, the
Company has made advances to certain of its managed limited partnerships and
has deferred collection of management fees and expense reimbursements owed by
certain of its managed limited partnerships to allow for expansion of a cable
television system or other cash needs of such a partnership.  Upon dissolution
of a Company-managed partnership or the sale or refinancing of its cable
television systems, the Company is generally entitled to receive 25 percent of
the net remaining assets of such partnership, after payment of partnership
debts and after investors have received an amount equal to their capital
contributions plus, in most cases, a stated preferential return on their
investment.  Pursuant to the terms of the various limited partnership
agreements, the Company has full operational control of the management and
day-to-day business of the partnerships.

         The Company historically has found that the cash flow of a particular
cable television system and the long-term value of that system can be increased
as a result of (i) the addition of new subscribers through increased market
penetration, (ii) the building of extensions to reach new potential subscribers
in the franchise area, (iii) the addition of new programming services or
products, and (iv) periodic rate adjustments.  Increases in subscribers usually
result from specific marketing efforts undertaken by a cable system operator
within the community, which may include telephone





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<PAGE>   12
solicitation, particular program promotions, direct mailings, increased
advertising or other means.  A cable operator also can build extensions to
systems, which increase the number of homes passed by the cable system and the
number of potential subscribers, and thereby increase the potential revenue
from additional subscriber fees.  The building of extensions to cable
television systems usually occurs due to the development within the system's
franchise area of a new housing area adjacent to areas then served by the
system or the availability of a franchise for an area adjacent to the current
franchise area.  In addition, increased revenues may be generated from the
offering of additional services to subscribers.  New cable services have been
developed and introduced since the inception of the cable television industry,
and new cable services are expected to continue to develop.  These services
could include new services which offer movies or other entertainment on demand
or nearly on demand by a subscriber (known as "near video on demand"),
interactive services including both games and entertainment, as well as
information and consumer services.  No assurance can be given that the Company
will be able to increase the cash flow of any particular cable television
system or the value of that system by any of the methods described above, the
rate regulations promulgated by the FCC under the 1992 Cable Act may limit the
amount of any rate increases with respect to regulated services the Company
will be able to implement in the future.  See Item 7, Management's Discussion
and Analysis of Financial Condition and Results of Operations.

         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

         The Company operates a number of non-cable television businesses
through subsidiaries:  The Jones Group, Ltd., a cable television brokerage
company; Jones Futurex, Inc. which manufactures and markets data encryption
products and provides contract manufacturing services; Jones Satellite
Networks, Inc., a second-tier subsidiary of the Company that delivers radio
programming to radio stations throughout the United States via satellite; and
Superaudio, a joint venture between a subsidiary of the Company, Jones Galactic
Radio, Inc., and an unaffiliated party that offers FM stereo audio service
programming to cable television system subscribers.  The Company also has an
interest





                                       9
<PAGE>   13
in the cable/telephony business in the United Kingdom through its approximate
10% equity ownership of Bell Cablemedia plc, the United Kingdom's third largest
cable communications operator.  The Company also owns direct and indirect
minority interests in Mind Extension University and Jones Computer Network,
affiliated programming services.  See Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operation.

RECENT ACQUISITIONS OF CABLE TELEVISION SYSTEMS

         Augusta System.  In October 1995, JCH purchased from Cable TV Fund
12-B, Ltd. ("Fund 12-B"), a Company-managed limited partnership, the cable
television system serving areas in and around Augusta, Georgia (the "Augusta
System") for a purchase price of $142,618,000, subject to normal closing
adjustments.  The Company, as general partner of Fund 12-B, received a
distribution from Fund 12-B of $13,222,000 upon the closing of this
transaction.  As  result of such distribution, the net capital required to
purchase the Augusta System was $129,396,000, which was provided from cash on
hand.  The Augusta System serves approximately 68,200 basic subscribers and
passes approximately 102,000 homes.  The Augusta System is contiguous with the
cable television system already owned by the Company serving areas in and
around North Augusta, South Carolina (the "North Augusta System"), and since
closing they have been operated as one system.  Together, the Augusta System
and the North Augusta System serve approximately 84,100 basic subscribers and
pass approximately 125,700 homes.  Unless the context otherwise requires,
references hereinafter to the "Augusta System" refer to both the Augusta System
and the North Augusta System.

         Dale City System.  In November 1995, JCH, through its wholly-owned
subsidiary, Jones Communications of Virginia, Inc., purchased from an
unaffiliated company the cable television systems serving areas in and around
Dale City, Lake Ridge, Woodbridge, Fort Belvoir, Triangle, Dumfries, Quantico,
Accoquan and portions of Prince William County, all in the State of Virginia
(the "Dale City System") for $123,000,000, subject to normal closing
adjustments.  Jones Financial Group, Ltd. ("Financial Group"), an affiliate of
the Company, was paid a fee of $1,328,400 upon closing of this transaction for
acting as the Company's financial advisor in connection with this transaction.
The fee paid to Financial Group and all other fees paid or payable to Financial
Group as hereinafter described, are based upon 90% of the estimated commercial
rate charged by unaffiliated brokers.  The Dale City System serves
approximately 49,300 subscribers and passes approximately 65,100 homes.

         Manassas System.  In January 1996, JCH, through its wholly-owned
subsidiary, Jones Communications of Virginia, Inc., purchased from unaffiliated
companies the cable television systems serving areas in and around Manassas,
Manassas Park, Haymarket and portions of Prince William County, all in the
State of Virginia (the "Manassas System") for a purchase price of $71,100,000,
subject to normal closing adjustments.  Financial Group was paid a fee of
$896,000 upon closing of this transaction for acting as the Company's financial
advisor in connection with this transaction.  The Manassas System serves
approximately 26,500 basic subscribers and passes approximately 39,300 homes.





                                       10
<PAGE>   14
         Carmel System.  In February 1996, JCH purchased from IDS/Jones Growth
Partners 87-A, Ltd., a Company-managed partnership, the cable television system
serving areas in and around Carmel, Indiana (the "Carmel System") for a
purchase price of $44,235,333, subject to normal closing adjustments.  The
purchase price represented the average of three separate independent appraisals
of the fair market value of the Carmel System.  The Carmel System serves 
approximately 19,200 basic subscribers and passes approximately 24,400 homes.

         Orangeburg System.  In February 1996, JCH purchased from Jones Cable
Income Fund 1-B, Ltd., a Company-managed partnership, the cable television
system serving areas in and around Orangeburg, South Carolina (the "Orangeburg
System") for a purchase price of $18,347,667, subject to normal closing
adjustments.  The purchase price represented the average of three separate
independent appraisals of the fair market value of the Orangeburg System.  The 
Orangeburg System serves approximately 12,500 basic subscribers and passes 
approximately 16,530 homes.

         Tampa System.  In February 1996, JCH purchased from Cable TV Fund
12-BCD Venture, a venture comprised of three Company-managed partnerships, the
cable television system serving areas in and around Tampa, Florida (the "Tampa
System") for a purchase price of $110,395,667, subject to normal closing
adjustments.  The purchase price represented the average of three separate
independent appraisals of the fair market value of the Tampa System.  The 
Tampa System serves approximately 65,000 basic subscribers and passes 
approximately 128,500 homes.

         The Company's purchase of the Carmel System, the Orangeburg System and
the Tampa System was funded by borrowings available under the Company's $500
million revolving credit facility.  The Carmel System, the Orangeburg System 
and the Tampa System have been subsequently transferred to TWEAN as discussed 
below.

PROPOSED ACQUISITIONS OF CABLE TELEVISION SYSTEMS

         Manitowoc System.  JCH has agreed to purchase from Cable TV Joint Fund
11 (the "Venture"), a venture comprised of four Company-managed partnerships,
the cable television system serving the City of Manitowoc, Wisconsin (the
"Manitowoc System") for a purchase price of $15,735,667, subject to normal
closing adjustments.  The Manitowoc System serves approximately 10,800 basic
subscribers and passes approximately 16,000 homes.  JCH's acquisition of the
Manitowoc System is subject to a number of conditions that have not yet been
satisfied, including the approval of the holders of a majority of the limited
partnership interests of each of the four constituent partnerships of the
venture that owns the Manitowoc System and the approval of the City of
Manitowoc to the renewal and transfer of the franchise.  The Company will
receive from the four partnerships that comprise the Venture general partner
distributions totaling approximately $3,900,000 upon the closing of the sale of
the Manitowoc System.

         Lodi System.  JCH has agreed to purchase from Jones Spacelink Income
Partners 87-1, L.P., a Company-managed partnership, the cable television
systems serving areas in and around Lodi, Ohio (the "Lodi System") for a
purchase price of $25,706,000, subject to normal closing adjustments.  The Lodi
System serves approximately 15,100 basic subscribers and passes approximately
20,600 homes.

         Ripon System.  JCH has agreed to purchase from Jones Spacelink
Income/Growth Fund 1-A, Ltd., a Company-managed partnership, the cable
television system serving areas in and around Ripon, Wisconsin (the "Ripon
System") for a purchase price of $3,712,667, subject to normal closing
adjustments.  The Ripon System serves approximately 2,450 basic subscribers and
passes approximately 2,500 homes.





                                       11
<PAGE>   15
         Lake Geneva System.  JCH has agreed to purchase from Jones Spacelink
Income/Growth Fund 1-A, Ltd., a Company-managed partnership, the cable
television system serving areas in and around Lake Geneva, Wisconsin (the "Lake
Geneva System") for a purchase price of $6,345,667, subject to normal closing
adjustments.  The Lake Geneva System serves approximately 3,600 basic
subscribers and passes approximately 5,400 homes.

         The closings of these four acquisitions are expected to occur during
the first half of 1996, and such closings are not contingent upon the closing
of the Time Warner exchange discussed below.

RECENT AND PROPOSED DISPOSITIONS OF CABLE TELEVISION SYSTEMS

         As described above, Company-managed partnerships recently have sold or
have agreed to sell the Augusta System, the Carmel System, the Orangeburg
System, the Tampa System, the Manitowoc System, the Lodi System, the Ripon
System and the Lake Geneva System to JCH.  In addition, as described below, one
of the Company's managed partnerships has agreed to sell its cable television
system to an unaffiliated cable television system operator.  The Company is
generally entitled to a general partner distribution from its managed
partnerships upon the sale of partnership-owned cable television systems
provided that the limited partners have received an amount equal to their
capital contributions plus, in most cases, a stated preferential return on
their investment. The Company received such a distribution on the sale of the
Augusta System and the Tampa System and will receive general partner 
distributions upon the sale of the Lancaster System and the Manitowoc System.  
The Company did not or will not receive general partner distributions on the 
sales of the Carmel System, the Orangeburg System, the Lodi System, the Ripon 
System or the Lake Geneva System.

         Lancaster System.  Cable TV Fund 11-B, Ltd. ("Fund 11-B"), a
Company-managed partnership that owns the cable television system serving areas
in and around Lancaster, New York (the "Lancaster System"),  has entered into
an agreement to sell the Lancaster System to an unaffiliated party for a sales
price of approximately $84,000,000.  The Company, as general partner of the
partnership, is entitled to receive a distribution of approximately $13,950,000
upon the closing of the sale of the Lancaster System, which is expected to
occur during the first half of 1996.  In addition, The Jones Group, Ltd., a
wholly owned subsidiary of the Company, will receive a fee of $2,100,000 for
acting as the broker in this transaction.

RECENT EXCHANGE OF CABLE TELEVISION SYSTEMS

         In August 1995, the Company entered into an asset exchange agreement
(the "TWEAN Exchange Agreement") with Time Warner
Entertainment-Advance/Newhouse Partnership ("TWEAN"), an unaffiliated cable
television operator.  The Company subsequently assigned the TWEAN Exchange
Agreement to JCH.  On February 29, 1996, JCH conveyed to TWEAN the Carmel
System, the Orangeburg System and the Tampa System and cash in the amount of
$3,500,000, subject to normal closing adjustments.  In return, JCH received
substantially all of the assets of cable television systems serving Andrews Air
Force Base, Capitol Heights, Cheltenham, District Heights, Fairmont Heights,
Forest Heights, Morningside, Seat Pleasant, Upper Marlboro and portions of
Prince Georges County, Maryland (the "Prince Georges County System") and a
portion of





                                       12
<PAGE>   16
Fairfax County, Virginia (the "Reston System").  Taking into account the
aggregate purchase price paid by JCH for the Carmel System, the Orangeburg
System and the Tampa System, plus the $3,500,000 cash consideration paid by JCH
to TWEAN, the aggregate consideration paid for the Prince Georges County System
and the Reston System was approximately $176,468,000.  The Prince Georges
County System and the Reston System serve approximately 85,000 subscribers.
The Company paid Financial Group a $1,668,000 fee upon the completion of the
exchange as compensation to it for acting as the Company's financial advisor.

         The Prince Georges County System is contiguous to the Alexandria, 
Virginia, Calvert County, Maryland and Charles County, Maryland cable 
television systems, all of which are owned or managed by the Company.  The 
Reston System is approximately 12 miles from the Company's Alexandria, 
Virginia system.  The acquisition of the Prince Georges County System and the 
Reston System, together with the acquisition of the Dale City System in 
November 1995 and the Manassas System in January 1996 and the other cable 
television systems already owned or managed by the Company in the area, have 
brought the total number of basic subscribers owned or managed by the Company 
in the Baltimore/Washington, D.C. metropolitan area to approximately 300,000 
subscribers.

PROPOSED EXCHANGE OF CABLE TELEVISION SYSTEMS

         In September 1995, the Company entered into an asset exchange
agreement (the "Time Warner Exchange Agreement") with Time Warner Entertainment
Company, L.P. ("Time Warner"), an unaffiliated cable television operator.  The
Company has assigned the Time Warner Exchange Agreement to JCH.  Pursuant to
the Time Warner Exchange Agreement, JCH will convey to Time Warner the
Manitowoc System, the Lodi System, the Ripon System and the Lake Geneva System,
all of which systems are currently owned by Company-managed partnerships but
are to be transferred to JCH prior to the exchange, and JCH will also convey to
Time Warner the cable television system serving areas in and around Hilo,
Hawaii (the "Hilo System") and the cable television system serving areas in and
around Kenosha, Wisconsin (the "Kenosha System"), both of which systems are
currently owned by the Company but are to be transferred to JCH prior to the
exchange.  In return, JCH will receive from Time Warner the cable television
systems serving the communities in and around Savannah, Georgia (the "Savannah
System") and cash in the amount of $4,000,000 subject to normal closing
adjustments.  Taking into account the aggregate purchase price to be paid by
the Company for the Lodi System, the Lake Geneva System, the Ripon System and
the Manitowoc System and the estimated valuation of the Hilo System and the
Kenosha System, less the $4,000,000 cash consideration to be paid by Time
Warner to JCH, the aggregate consideration to be paid for the Savannah System
is approximately $119,195,000.  The Savannah System passes approximately
100,000 homes and serves approximately 63,000 subscribers.

         The closing of the transactions contemplated by the Time Warner
Exchange Agreement is subject to customary closing conditions, including
obtaining necessary governmental and other third party consents.  The parties
intend to complete the transactions during the first half of 1996, but there
can be no assurance that all conditions will be satisfied or waived by that
time.  Either party may terminate the exchange if it is not completed on or
before September 30, 1996.  The Company will pay Financial Group a $1,286,000
fee upon completion of the exchange as compensation to it for acting as the
Company's financial advisor.





                                       13
<PAGE>   17
REFINANCING OF THE COMPANY'S CREDIT FACILITY

         On October 31, 1995, the Company, through JCH, refinanced its bank
borrowing on terms and conditions that included, among other things, an
increase in its overall corporate (parent and subsidiary) borrowing capacity
from $300 million to $500 million, a decrease in borrowing costs and an
increase in financial flexibility.  As required by the new credit facility, the
Company restructured by transferring a majority of the Company-owned cable
television systems to JCH, which is the borrower under this new credit
facility.  The Company anticipates that the transfers required under this new
credit facility will be completed during the first quarter of 1996.

REDEMPTION BY THE COMPANY OF 7.5% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2007

         On October 12, 1995, the Company redeemed the remaining outstanding
7.5% Convertible Subordinated Debentures (the "Debentures") due 2007, at a
price equal to 101.5% of the principal amount, plus accrued interest.  The
total principal amount of Debentures was $43,100,000, $23,732,000, of which
were held by the Company and $19,368,000 of which were held by unaffiliated
investors.  The Debentures were repurchased with cash on hand.

EXECUTION OF LETTER OF INTENT

         On November 1, 1995, the Company entered into a letter of intent with
an unaffiliated party to set forth the preliminary understanding of the parties
as to their intent to enter into an asset purchase agreement whereby the
Company would agree to purchase a cable television system servicing subscribers
in portions of Anne Arundel County, Maryland for a purchase price of
$96,500,000 subject to certain closing adjustments.  Execution of a definitive
asset purchase agreement and the closing of the transaction are subject to a
number of conditions, including clearance by various governmental agencies.

CHANGE OF THE COMPANY'S FISCAL YEAR

         On September 12, 1995, the Company filed an application with the
Internal Revenue Service to change its fiscal year end from May 31 to December
31, and the Internal Revenue Service has approved the requested change in the
Company's fiscal year.

INCREASE IN THE COMPANY'S AUTHORIZED CLASS A COMMON STOCK

         On July 10, 1995, at the annual meeting of the shareholders of the
Company, the shareholders approved an amendment to the Company's Articles of
Incorporation to increase the number of authorized shares of the Company's
Class A Common Stock from 30,000,000 shares to 60,000,000 shares.





                                       14
<PAGE>   18
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 70 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 six franchises that are either operating under extensions or
will expire prior to December 31, 1996.  During the next three to five years,
the renewal process must commence for a significant number of the franchises
for cable television systems owned or managed by the Company and its
affiliates.  The Company recently 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.

COMPETITION

         Cable television systems currently experience competition from several
sources.

         High-powered direct-to-home satellites have made possible the
wide-scale delivery of programming by several companies to individuals
throughout the United States using small roof-top or wall-mounted antennas.
Companies offering direct broadcast satellite ("DBS") services use video
compression technology to increase channel capacity of their systems and to
provide packages of movies, network and other program services which are
competitive to those of cable television systems.  However, DBS cannot offer
its subscribers local video services or programming.  Two companies offering
DBS services began operations in 1994 and together offer more than 150 channels
of service using video compression technology.  Two other companies offering
DBS service recently began operations.  In addition, a joint venture comprised
of MCI Telecommunications, Inc. and the News Corporation Limited won the rights
to provide a DBS service through a FCC spectrum auction.  Other companies have
proposed providing similar DBS program packages.  A medium-powered satellite
distribution also offers 100 channels of service.  The FCC has initiated a new
interactive television service which will permit non-video transmission of
information between an individual's





                                       15
<PAGE>   19
home and entertainment and information service providers.  This service will
provide an alternative means for DBS systems and other video programming
distributors, including television stations, to initiate new interactive
television services.  This service may also be used by the cable television
industry.  Although the cable television industry does not generally provide
two-way interactive service from its subscribers' homes to cable television
offices, such services may be provided on a wider basis in the future.  Not all
subscribers terminate cable television service upon acquiring a DBS system.
The Company has observed that a number of DBS subscribers also elect to
subscribe to cable television service in order to obtain the greatest variety
of programming on multiple television sets, including local video services or
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.

         Although the Company has not yet encountered competition from a
telephone company providing video services as a cable operator or video
dialtone provider, it is anticipated that the Company's cable television
systems will face such competition in the near future.  Federal cross-ownership
restrictions have historically limited entry into the cable television business
by potentially strong competitors such as telephone companies.  Legislation
recently enacted into law will result in the elimination of such restrictions,
making it possible for companies with considerable resources, and consequently
a potentially greater willingness or ability to overbuild, to enter the
business.  Several telephone companies have begun seeking cable television
franchises from local governmental authorities as a consequence of litigation
that successfully challenged the constitutionality of the cable
television/telephone company cross-ownership restrictions.  See Item 1,
Regulation and Legislation, Ownership and Market Structure for a description of
the potential participation of the telephone industry in the delivery of cable
television services.  The Company cannot predict at this time when and to what
extent telephone companies will provide cable television services within
service areas in competition with Company owned or managed cable television
systems.

         The Company is aware of the following imminent competition from
telephone companies:  Ameritech, one of the seven regional Bell operating
companies, which provides telephone service in a multi-state region including
Illinois, has just obtained a franchise that will allow it to provide cable
television service in Naperville, Illinois, a community currently served by a
cable system owned by one of the Company's managed partnerships.  Chesapeake
and Potomac Telephone Company of Virginia and Bell Atlantic Video Service
Company, both subsidiaries of Bell Atlantic, another of the regional Bell
operating companies, have announced their intention to build a cable television
system in Alexandria, Virginia in competition with a Company-owned cable
television system.  Bell Atlantic is preparing for the construction and
operation of a cable telecommunications business in northern Virginia,
including the Alexandria metropolitan area.  The FCC has granted GTE Virginia's
application for authority to construct, operate, own and maintain video
dialtone facilities in northern Virginia, including in the Dale City System's
service area.  To date, GTE has not begun construction of a video distribution
system.  The entry of telephone companies as direct competitors could adversely
affect the profitability and market value of the Company's owned and managed
systems.

         Additional competition is present from private cable television
systems known as Master Antenna Television (MATV) and Satellite Master Antenna
Television (SMATV) serving multi-unit





                                       16
<PAGE>   20
dwellings such as condominiums, apartment complexes, and private residential
communities.  These private cable systems may enter into exclusive agreements
with apartment owners, condominium associations, and homeowners associations,
which may preclude operators of franchised systems from serving residents of
such private complexes.  In 1991, the FCC made available a microwave service to
SMATV systems which will facilitate the ability of private cable television
systems to distribute video entertainment programming among several SMATV
systems within a local area.  Private cable systems that do not cross public
rights of way or interconnect separately owned and managed buildings are free
from the federal regulatory requirements imposed on franchised cable television
operators.  The telecommunications bill which Congress recently passed exempts
any facilities that do not use public rights of way (such as SMATVs serving
multiple buildings not under common ownership) from classification as a cable
system and from franchise and other requirements applicable to cable operators.
A number of states have enacted laws to afford operators of franchised cable
television systems access to multi-unit dwellings, although some of these
statutes have been successfully challenged in the courts.

         Recently, companies that install and operate private cable television
systems have been installing telephone systems as well as providing cable
television services in some areas in which the Company's cable television
systems provide cable television service to multi-unit dwellings and similar
complexes.  In some cases, the Company has been unable to provide cable
television service in buildings in which these private operators have secured
exclusive contracts to provide video and telephony services.  The Company
expects that the market to install and provide these services in multi-unit
buildings will continue to be highly competitive.  In November 1995, the
Company launched in its Alexandria System a telephone service in selected
apartments and condominium units.

         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 several overbuilds in the Company's systems.  Constructing
and developing a cable television system is a capital intensive process and,
because most cable television systems provide essentially the same programming,
it is often difficult for a new cable system operator to create a marketing
edge over the existing system.  Generally, an overbuilder also would be
required to obtain franchises from the local governmental authorities, although
in some instances, the overbuilder could be the local government, such as a
city or town, and in some such cases, no franchise would be required.  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 Panama City Beach
System has lost basic subscribers and commercial units to an overbuilder.  This
overbuild continues to provide significant competition and has had an adverse
effect on this system's operations.

         Cable television systems also may compete with wireless program
distribution services such as multichannel, multipoint distribution service
("MMDS") systems, commonly called wireless cable which are licensed to serve
specific areas.  MMDS uses low-power microwave frequencies to transmit
television programming over-the-air to subscribers.  MMDS systems have
generally focused on





                                       17
<PAGE>   21
providing service to residents of rural areas that are not served by cable
television systems, but providers of programming via wireless cable systems
will generally have the potential to compete directly with cable television
systems in urban areas as well.  Wireless cable systems are now in direct
competition with cable television systems in several areas of the country.
Telephone companies have recently invested in wireless systems located in
California and Maryland as well as other states.  These wireless systems could
be used on an interim or permanent basis by telephone companies to provide
video services within their service areas in lieu of the video dialtone or
other wired delivery systems which have been proposed.  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, but the previous unavailability of frequency spectrum, programming
services and the regulatory delays encountered by MMDS systems in obtaining
licenses have delayed the growth of the MMDS industry.  To date, the Company
has not lost a significant number of subscribers, nor a significant amount of
revenue, to MMDS operators competing with the Company's cable television
systems.

         A series of actions taken by the FCC, including reallocating certain
frequencies to the wireless services, are intended to facilitate the
development of wireless cable television systems as an alternative means of
distributing video programming.  The FCC recently held auctions for spectrum
that will be used by wireless operators to provide additional channels of
programming over larger distances.

         An emerging technology, Local Multipoint Distribution Services
("LMDS"), could also pose a significant threat to the cable television
industry, if and when it becomes established.  LMDS, sometimes referred to as
cellular television, could have the capability of delivering approximately 50
channels, or if two systems were combined 100 channels, of video programming to
a subscriber's home, and this capacity could be increased by using video
compression technology.  The potential impact, however, of LMDS is difficult to
assess due to the newness of the technology and the absence of any current
fully operational LMDS systems.

         The FCC has established a new wireless telecommunications service
known as Personal Communications Service ("PCS").  It is envisioned that PCS
would provide portable non-vehicular mobile communications services similar to
that available from cellular telephone companies, but at a lower cost.  PCS is
delivered by placing numerous microcells in a particular area to be covered,
accessible to both residential and business customers.  Because of the need to
link the many microcells necessary to deliver this service economically, many
parties are investigating integration of PCS with cable television operations.
Several cable television multiple system operators hold or have requested
experimental licenses from the FCC to test PCS technology, and the FCC has
allocated spectrum to PCS licensees which is being awarded through an auction
process.

         In addition to competing with one another, cable television systems
compete with broadcast television, which consists of television signals that
the viewer is able to receive directly on his television using his antenna
("off- air").  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 available cable systems.  Accordingly, it has
generally been less difficult to obtain higher penetration rates in areas where
there is signal interference from surrounding mountains or





                                       18
<PAGE>   22
where signals available off-air are limited, than in metropolitan areas where
higher quality off-air signals are often available without the aid of cable
television systems.

         Cable television systems also compete with translator and low power
television stations.  Translators receive broadcast signals and rebroadcast
them on different frequencies at low power pursuant to an FCC license.  Low
power television stations increase the number of television signals in many
areas of the country, and provide off-air television programs, either pay or
advertiser-supported, to limited local areas.  Cable television systems are
also in competition, in various degrees, with other communications and
entertainment media including motion pictures and home video cassette
recorders, and are dependent upon the continued popularity of television
itself.  The construction of more powerful transmission facilities near a cable
television system or an increase in the number of television signals in such an
area also could have an adverse effect on revenues.

REGULATION AND LEGISLATION

         The cable industry is regulated under the Telecommunications
Act of 1996 (the "1996 Cable Act"), the Cable Television Consumer Protection 
and Competition Act of 1992 (the "1992 Cable Act") and the Cable 
Communications Policy Act of 1984 (the "1984 Cable Act") and the regulations 
implementing these statutes.  The Federal Communications Commission 
(the "FCC") has promulgated regulations covering such areas as the 
registration of cable television systems, cross-ownership between cable 
television and other communications businesses, carriage of television 
broadcast programming, consumer protection and customer service standards and 
lockbox enforcement, origination cablecasting and sponsorship identification,
limitations on commercial advertising in children's programming, the 
regulation of basic cable and cable programming service rates in areas where 
cable television systems are not subject to effective competition, signal 
leakage and frequency use, technical performance, maintenance of various 
records, equal employment opportunity, and antenna structure notification, 
marking and lighting.  In addition, cable operators periodically are required 
to file various informational reports with the FCC.  The FCC has the authority 
to enforce these regulations through the imposition of substantial fines, the 
issuance of cease and desist orders and/or the imposition of administrative 
sanctions, such as the revocation of FCC licenses needed to operate certain 
transmission facilities often used in connection with cable operations.  State 
or local franchising authorities, as applicable, also have the right to 
enforce various regulations, impose fines or sanctions, issue orders or seek 
revocation subject to the limitations imposed upon such franchising 
authorities by federal, state and local laws and regulations.  Several states 
have assumed regulatory jurisdiction of the cable television industry, and it 
is anticipated that other states will do so in the future.  To the extent the 
cable television industry begins providing telephone service, additional state 
and federal regulations will be applied to the cable television industry. 
Cable television operations are subject to local regulation insofar as systems
operate under franchises granted by local authorities.

         The following is a summary of federal laws and regulations materially
affecting the cable television industry, and a description of state and local
laws with which the cable industry must comply.

         TELECOMMUNICATIONS ACT OF 1996.  The 1996 Cable Act, which became law 
on February 8, 1996, substantially revised the Communications Act of 1934, as





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<PAGE>   23
amended, including the 1984 Cable Act and 1992 Cable Act, and has been
described as one of the most significant changes in communications regulation
since the original Communications Act of 1934.  The 1996 Cable Act is intended,
in part, to promote substantial competition in the telephone local exchange and
in the delivery of video and other services.  As a result of the 1996 Cable
Act, local telephone companies (also known as local exchange carriers or
"LECs") and other service providers are permitted to provide video programming,
and cable television operators are permitted entry into the telephone local
exchange market.  The FCC is required to conduct rulemaking proceedings over
the next several months to implement various provisions of the 1996 Cable Act.

         Among other provisions, the 1996 Cable Act modifies various rate
regulation provisions of the 1992 Cable Act.  Generally, under the 1996 Cable
Act, cable programming service tier rates are deregulated on March 31, 1999.
Upon enactment, the cable programming service rates charged by "small" cable 
operators are deregulated in systems serving 50,000 or fewer subscribers.  
Subscribers are no longer permitted to file programming service complaints 
with the FCC, and complaints may only be brought by a franchising authority 
if, within 90 days after a rate increase becomes effective, it receives 
subscriber complaints.  The FCC is required to act on such complaints within 
90 days.  In addition to the existing definition of "effective competition," a 
new effective competition test permits deregulation of both the basic and 
programming service tier rates where a telephone company offers cable service 
by any means other than direct-to-home satellite services, provided that such 
service is comparable to the services provided by the unaffiliated cable 
operator.  The uniform rate provision of the 1992 Cable Act was amended to 
exempt bulk discounts to multiple dwelling units so long as a cable operator 
that is not subject to effective competition does not charge predatory prices 
to a multiple dwelling unit.

         The most far-reaching changes in the communications business will
result from the telephony provisions of the 1996 Cable Act.  The statute
expressly preempts any legal barriers to competition in the local telephone
business that previously existed in state and local laws and regulations.  Many
of these barriers had been lifted by state actions over the last few years, but
the 1996 Cable Act completed the task.  The 1996 Cable Act also establishes new
requirements for maintaining and enhancing universal telephone service and new
obligations for telecommunications providers to maintain privacy of customer
information.  The 1996 Cable Act establishes uniform requirements and standards
for entry, competitive carrier interconnection and unbundling of LEC monopoly
services.  Depending on the degree and form of regulatory flexibility afforded
the LECs, the Company's ability to competitively offer telephone services may
be adversely affected.  In addition, the Company's ability to effectively
compete and provide telephone services will depend upon the outcome of various
FCC rulemakings, including the proceeding dealing with interconnection
obligations of telecommunications carriers.

         The 1996 Cable Act repealed the cable television/telephone
cross-ownership ban adopted in the 1984 Cable Act.  The federal cross-ownership
ban was particularly important to the cable industry because telephone
companies already own certain facilities such as poles, ducts and associated
rights of way.  While this ban had been overturned by several courts, formal
removal of the ban ended the last legal constraints on telephone company plans
to enter the cable market.  Under the 1996 Cable Act, telephone companies in
their capacity as common carriers now may lease capacity to others to provide
cable television service.  Telephone companies have the option of providing
video service as cable operators or through "open video systems" ("OVS"), a
regulatory regime that may provide





                                       20
<PAGE>   24
more flexibility than traditional cable service.  The 1996 Cable Act exempts
OVS operators from many of the regulatory obligations that currently apply to
cable operators, such as rate regulation and franchise fees, although other
requirements are still applicable.  OVS operators, although not subject to
franchise fees as defined by the 1992 Cable Act, are subject to fees charged by
local franchising authorities or other governmental entities in lieu of
franchise fees.  (Under certain circumstances, cable operators also will be
able to offer service through open video systems.)  In addition, the 1996 Cable
Act eliminated the requirement that telephone companies file Section 214
applications with the FCC before providing video service.  This limits the
opportunity of cable operators to mount challenges at the FCC regarding
telephone company entry into the video market.  The 1996 Cable Act also
contains restrictions on buying out incumbent cable operators in a telephone
company's service area, especially in suburban and urban markets.

         Other parts of the 1996 Cable Act also will affect cable operators.
Under the 1996 Cable Act, the FCC is required to revise the current pole
attachment rate formula.  This revision will result in an increase in the rates
paid by entities, including cable operators, that provide telecommunication
services.  The rates will be phased in after a five-year period.  (Cable
operators that provide only cable services are unaffected.)  Under the V-chip
provisions of the 1996 Cable Act, cable operators and other video providers are
required to pass along any program rating information that programmers include
in video signals.  Cable operators also are subject to new scrambling
requirements for sexually explicit programming, and cable operators that 
provide Internet access or other online services are subject to the new 
indecency limitations for computer services.  These provisions already have 
been challenged, and the courts have preliminarily enjoined the enforcement of
these content-based provisions.

         Under the 1996 Cable Act, a franchising authority may not require a
cable operator to provide telecommunications services or facilities, other than
an institutional network, as a condition to a grant, renewal or transfer of a
cable franchise, and franchising authorities are preempted from regulating
telecommunications services provided by cable operators and from requiring
cable operators to obtain a franchise to provide such services.  The 1996 Cable
Act also repealed the 1992 Cable Act's anti-trafficking provision, which
generally required the holding of cable television systems for three years.

         It is premature to predict the specific effects of the 1996 Cable Act
on the cable industry in general or the Company in particular.  The FCC shortly
will be undertaking numerous rulemaking proceedings to interpret and implement
the 1996 Cable Act.  It is not possible at this time to predict the outcome of
those proceedings or their effect on the Company.

         CABLE TELEVISION CONSUMER PROTECTION AND COMPETITION ACT OF 1992.  The
1992 Cable Act effected significant changes to the legislative and regulatory
environment in which the cable television industry operated.  The 1992 Cable
Act generally mandated a greater degree of regulation of the cable television 
industry.  Pursuant to the FCC's definition of "effective competition" adopted 
following enactment of the 1984 Cable Act, and under the FCC's rules and 
regulations, substantially all of the Company's systems were rate deregulated 
in the mid-1980s.  Under the 1992 Cable Act's definition of "effective 
competition," nearly all cable systems in the United States, including those 
owned and managed by the Company, were again subjected to rate regulation of 
basic cable services.





                                       21
<PAGE>   25
The 1992 Cable Act also allowed the FCC to regulate rates for non-basic service
tiers (other than premium services) in response to complaints filed by
franchising authorities and/or cable subscribers.  As discussed above, the 1996
Cable Act will over time again allow for rate deregulation of cable service
programming.

         In 1993, the FCC adopted a benchmark regulatory scheme for the
regulation of basic and cable programming service rates.  Rather than relying
on the benchmark scheme, however, operators may submit cost-of-service showings
to justify rates above the applicable benchmarks.  A cable operator that can
demonstrate through a cost-of-service showing that rates for basic and
non-basic services are justified will not be required to reduce rates or be
regulated under the benchmark and price cap system.  Franchising authorities
may not elect cost-of-service as their primary form of rate regulation but must
apply the FCC benchmark system.  Except for those operators that filed
cost-of-service showings, cable operators whose rates are subject to regulation
and that were above the benchmark levels generally reduced those rates to the
benchmark level, or by 10%, whichever was less, adjusted forward for inflation.
Operators who did not adjust rates pursuant to the FCC's regulations, or whose
cost-of-service showings fail to justify current rates, could be subject to
refund liability and interest.

         In 1994, the FCC revised its benchmark regulations.  Effective May
1994, cable television systems not seeking to justify rates with a
cost-of-service showing were required to reduce rates up to 17% of the rates in
effect on September 30, 1992, adjusted for inflation, channel modifications,
equipment costs and certain increases in programming costs.  Under certain
conditions, systems were permitted to defer these rate adjustments until July
1994.  Further rate reductions for cable systems whose rates are below the
revised benchmark levels, as well as reductions that would require operators to
reduce rates below benchmark levels in order to achieve a 17% rate reduction,
were held in abeyance pending completion of cable system cost studies.  The FCC
recently requested some of these "low price" systems to complete cost study
questionnaires.  After review of these questionnaires, the FCC could decide to
permanently defer any further rate reductions, or require the additional 7%
rate roll back for some or all of these systems.  The FCC has instituted a
streamlined upgrade methodology by which operators may recover the costs of
upgrading their plant.

         The FCC also regulates the manner in which cable operators may charge
subscribers for new channels added to cable programming services tiers.  The
FCC instituted a three-year flat fee mark-up plan.  Commencing on January 1,
1995, operators may charge subscribers up to $.20 per channel for any channels
added after May 14, 1994, but may not make adjustments to monthly rates
totaling more than $1.20 plus an additional $.30 to cover programming license
fees for those channels over the first two years of the three-year period.  In
year three, an additional channel may be added with another $.20 increase in
rates.  Rates may also increase in the third year to cover any additional costs
for the programming for any of the channels added during the entire three-year
period.  Cable operators electing to use the $.20 per channel adjustment may
not also take a 7.5% mark-up on programming cost increases, which is otherwise
permitted under the FCC's regulations.  The FCC has requested further comment
on whether cable operators should continue to receive the 7.5% mark-up on
increases in license fees on existing programming services.

         The FCC will permit cable operators to exercise their discretion in
setting rates for new product tiers so long as, among other conditions, the
channels that are subject to rate regulation are





                                       22
<PAGE>   26
priced in conformity with applicable regulations and cable operators do not
remove programming services from existing rate-regulated service tiers and
offer them on the new product tiers.

         In September 1995, the FCC authorized a new, alternative method of
implementing rate adjustments which will allow cable operators to increase
rates for programming annually on the basis of projected increases in external
costs (inflation, costs for programming, franchise-related obligations and
changes in the number of regulated channels) rather than on the basis of cost
increases incurred in a preceding quarter.  Operators that elect not to recover
all of their accrued external costs and inflation pass-throughs each year may
recover them (with interest) in subsequent years.

         In December 1995, the FCC adopted final cost-of-service rate
regulations requiring, among other things, cable operators to exclude 34% of
system acquisition costs related to intangible and tangible assets used to
provide regulated services.  The FCC also reaffirmed the industry-wide 11.25%
after-tax rate of return on an operator's allowable rate base, but initiated a
further rulemaking in which it proposes to use an operator's actual debt, cost
and capital structure to determine an operator's cost of capital or rate of
return.  After a rate has been set pursuant to a cost-of-service showing, rate
increases for regulated services are indexed for inflation, and operators are
permitted to increase rates in response to increases in costs beyond their
control, such as taxes and increased programming costs.

         New a la carte services that are offered by cable operators in a
package will be subject to rate regulation by the FCC, although only if the FCC
deems it necessary to do so.  The FCC has indicated that it could not envision
circumstances in which any price for a collective offering of premium channels
that had traditionally been offered on a per-channel basis would be found to be
unreasonable.

         The United States Court of Appeals for the District of Columbia
recently upheld the FCC's rate regulations implemented pursuant to the 1992
Cable Act, but ruled that the FCC impermissibly failed to permit cable
operators to adjust rates for certain cost increases incurred during the period
between the 1992 Cable Act's passage and the initial date of rate regulation.
The FCC has not yet implemented the court's ruling.

         The 1992 Cable Act encouraged competition by allowing municipalities,
which are otherwise legally qualified, to own and operate their own cable
systems without having to obtain a franchise by preventing franchising
authorities from granting exclusive franchises or unreasonably refusing to
award additional franchises covering an existing cable system's service area.
The 1992 Cable Act also made several procedural changes to the process under
which a cable operator may seek to enforce renewal rights, which could make it
easier in some cases for a franchising authority to deny renewal.  The 1992
Cable Act also precluded video programmers affiliated with cable companies from
favoring cable operators over competitors and required such programmers to sell
their programs to other multichannel video distributors.  This provision may
limit the ability of cable program suppliers to offer exclusive programming
arrangements with cable companies and could affect the volume discounts that
program suppliers currently offer to the Company as a multiple system operator.
The 1992 Cable Act prohibits the common ownership of cable systems and
co-located MMDS or SMATV systems; however, the 1996 Cable Act repealed the ban
on cable MMDS cross-ownership where a cable system is subject to effective
competition.





                                       23
<PAGE>   27
         The 1992 Cable Act contained new signal carriage requirements.  The 
FCC adopted rules implementing the must-carry provisions for non-commercial 
and commercial stations and retransmission consent for commercial stations in 
March 1993.  These rules allow commercial television broadcast stations that 
are "local" to a cable system, i.e., the system is located in the station's 
Area of Dominant Influence ("ADI"), to elect every three years whether to 
require the cable system to carry the station, subject to certain exceptions, 
or whether to require the cable system to negotiate for "retransmission 
consent" to carry the station.  The first such election was made in June 1993 
and thus the Company will go through the process again in 1996.  Cable systems 
must obtain retransmission consent for the carriage of all "distant" 
commercial broadcast stations, except for certain "superstations" (i.e., 
commercial satellite-delivered independent stations such as WTBS).  All 
commercial stations entitled to carriage were to have been carried by June 
1993, and any non-must-carry stations (other than superstations) for which 
retransmission consent had not been obtained could no longer be carried after 
October 5, 1993.  Local non-commercial television stations are also given 
mandatory carriage rights, subject to certain exceptions, within the larger 
of:  (i) a 50-mile radius from the station's city of license; or (ii) the 
station's Grade B contour (a measure of signal strength).  Unlike commercial 
stations, non-commercial stations are not given the option to negotiate 
retransmission consent for the carriage of their signal.  The must-carry 
provisions for non-commercial stations became effective in December 1992.

         In 1993, a federal district court upheld the constitutional validity
of the must-carry signal carriage requirements.  This decision was vacated by
the United States Supreme Court in 1994 and remanded for further development of
a factual record.  The Supreme Court's majority determined that the must-carry
rules were content neutral, but that it was not yet proven that the rules were
needed to preserve the economic health of the broadcasting industry.  In 1995,
the federal district court again upheld the must-carry rules' validity.  The
United States Supreme Court is currently reviewing this decision.

         In 1993, a federal district court upheld provisions of the 1992 Cable
Act concerning rate regulation, retransmission consent, restrictions on
vertically integrated cable television operators and programmers, mandatory
carriage of programming on commercial leased channels and public, educational
and governmental access channels and the exemption for municipalities from
civil damage liability arising out of local regulation of cable services.  The
1992 Cable Act's provisions providing for multiple ownership limits for cable
operators and advance notice of free previews for certain programming services
have been found unconstitutional, and these decisions have been appealed.  The
FCC's regulations relating to the carriage of indecent programming, which were
recently upheld by the United States Court of Appeals for the District of
Columbia,  have been appealed to the United States Supreme Court.

         The 1992 Cable Act required the FCC to establish national customer
service standards and the FCC adopted regulations governing office hours,
telephone availability, installations, outages, service calls, and billing and
refund policies.  State or municipal authorities may enact laws or regulations
which impose stricter or different customer service standards than those set by
the FCC.





                                       24
<PAGE>   28
         CABLE COMMUNICATIONS POLICY ACT OF 1984.  The 1984 Cable Act was the
first federal legislation to impose comprehensive and uniform national
regulations on cable television systems and franchising authorities.  Among
other things, the legislation regulated the provision of cable television
service pursuant to a franchise, specified those circumstances under which a
cable television operator may obtain modification of its franchise, established
criteria under which a franchise shall be renewed and established maximum fees
payable by cable television operators to franchising authorities.  The law
prescribes a standard of privacy protection for cable subscribers, and imposes
equal employment opportunity requirements on the cable television industry.  It
restricts the amount of fees paid by a cable television operator to a
franchising authority to a maximum of 5% of gross revenues during the term of
the franchise.  Franchising authorities are granted authority to establish
requirements in new franchises and renewal of existing franchises for the
designation and use of public educational and governmental access channels.
Franchising authorities are empowered to establish requirements for
cable-related facilities and equipment, which may include requirements that
relate to channel capacity, system configuration and other facility or
equipment requirements related to the establishment and operation of a cable
television system.  Many of the other provisions of the 1984 Cable Act have
been superseded by the 1992 Cable Act and the 1996 Cable Act.

         FRANCHISING. The responsibility for franchising or other authorization
of cable television systems is left to state and local authorities.  There are,
however, several provisions in the 1984 Cable Act that govern the terms and
conditions under which cable television systems provide service.  These include
uniform standards and policies that are applicable to cable television
operators seeking renewal of a cable television franchise.  The procedures
established provide for a formal renewal process should the franchising
authority and the cable television operator decline to use an informal
procedure.  A franchising authority unable to make a preliminary determination
to renew a franchise is required to hold a hearing in which the operator has
the right to participate.  In the event a determination is made not to renew
the franchise at the conclusion of the hearing, the franchising authority must
provide the operator with a written decision stating the specific reasons for
non-renewal.  Generally, the franchising authority can finally decide not to
renew a franchise only if it finds that the cable operator has not
substantially complied with the material terms of the present franchise, has
not provided reasonable service in light of the community's needs, does not
have the financial, legal or technical ability to provide the services being
proposed for the future, or has not presented a reasonable proposal for future
service.  A final decision of non-renewal by the franchising authority is
appealable in court.

         The 1996 Cable Act preempts franchising authorities from regulating
telecommunications services provided by cable operators and from requiring
cable operators to obtain a franchise to provide such services.  A franchising
authority may not require a cable operator to provide telecommunications
services or facilities, other than an institutional network, as a condition to
a grant, renewal or transfer of a cable franchise.

         OWNERSHIP AND MARKET STRUCTURE.  FCC rules generally prohibit the
direct or indirect common ownership, operation, control or interest in a cable
television system, on the one hand, and a local television broadcast station
whose television signal (predicted grade B contour as defined under FCC
regulations) reaches any portion of the community served by the cable
television system, on the





                                       25
<PAGE>   29
other hand.  For purposes of the cross-ownership rules, "control" of licensee
companies is attributed to all 5% or greater stockholders, except for mutual
funds, banks and insurance companies which may own less than 10% without
attribution of control.  The FCC has requested comment as to whether to raise
the attribution criteria from 5% to 10% and for passive investors from 10% to
20%, and whether it should exempt from attribution certain widely held limited
partnership interests where each individual interest represents an
insignificant percentage of total partnership equity.  The 1996 Cable Act
eliminated the statutory ban on the cross-ownership of a cable system and a
television station, and permits the FCC to amend or revise its own regulations
regarding the cross-ownership ban.  The FCC recently lifted its ban on the
cross-ownership of cable television systems by broadcast networks and revised
its regulations to permit broadcast networks to acquire cable television
systems serving up to 10% of the homes passed in the nation, and up to 50% of
the homes passed in a local  market.  The local limit would not apply in cases
where the network-owned cable system competes with another cable operator.

         The 1996 Cable Act generally restricts common carriers from holding
greater than a 10% financial interest or any management interest in cable
operators that provide cable service within the carrier's telephone exchange
service area or from entering joint ventures or partnerships with cable
operators in the same market subject to four general exceptions, which include
population density and competitive market tests.  The FCC may waive the buyout
restrictions if it determines that, because of the nature of the market served
by the cable system or the telephone exchange facilities, the cable operator or
LEC would be subject to undue economic distress by enforcement of the
restrictions; the system or LEC facilities would not be economically viable if
the provisions were enforced; the anticompetitive effects of the proposed
transaction clearly would be outweighed by the public interest in serving the
community; and the local franchising authority approves the waiver.

         The FCC has imposed limits on the number of cable systems that a
single cable operator may own.  In general, no cable operator may hold an
attributable interest in cable systems that pass more than 30% of all homes
nationwide.  Attributable interests for these purposes include voting interests
of 5% or more (unless there is another single holder of more than 50% of the
voting stock), officerships, directorships and general partnership interests.
The FCC has stayed the effectiveness of these rules pending the outcome of the
appeal of the United States District Court decision holding the multiple
ownership limit restrictions of the 1992 Cable Act unconstitutional.

         FOREIGN OWNERSHIP RESTRICTION. The Communications Act restricts the
extent to which non-U.S. citizens may have ownership or control rights in
certain categories of licenses issued by the FCC.  Licenses subject to these
restrictions (the "Restricted Licenses") include broadcast licenses, common
carrier radio licenses (such as common carrier point-to-point microwave
licenses), and commercial mobile radio service ("CMRS") licenses (such as
cellular telephone, paging and personal communications service ("PCS")
licenses).  Section 310(b)(4) of the Communications Act provides that, absent a
specific public interest determination by the FCC, a corporation may not
control the licensee of any of these restricted licenses if non-U.S. citizens
hold more than 25% of the ownership or voting rights of the corporation.
(Different and more restrictive standards apply if non-U.S. entities hold
interests directly in the licensee of a Restrictive License.)





                                       26
<PAGE>   30
         Section 310(b)(4) precludes the Company from controlling any
Restricted Licenses unless the Company obtains a public interest determination
by the FCC that it may hold restricted licenses even though non-U.S.
participation in the Company, including levels of non-U.S. ownership and voting
rights, exceed the benchmarks under Section 310(b)(4).  The FCC licenses
commonly employed in cable television operations do not fall within the
category of Restricted Licenses subject to the foreign ownership restrictions
in Section 310(b) of the Communications Act.  The category of Restricted
Licenses, however, includes licenses commonly used in the provision of
conventional and mobile telephone service, such as common carrier
point-to-point microwave licenses, common carrier transmit satellite earth
station licenses, cellular telephone licenses and PCS licenses.  Although
Section 310(b) restricts the control of Restricted Licenses by the Company due
to BCI's investment in the Company, the Company may acquire carriage services
from existing U.S. carriers holding these licenses to the extent that it finds
a need for these communications links in the conduct of its business.

         In November 1995, the FCC issued its Report and Order in IB Docket No.
95-22, in which, among other things, the FCC adopted a new policy of
considering the competitive opportunities provided to U.S. carriers in foreign
markets as a basis for permitting corporations with foreign participation above
the benchmarks of Section 310(b)(4) to control Restricted Licenses other than
broadcast licenses.  This policy may expand the opportunities for corporations
with foreign participation above the Section 310(b)(4) benchmarks to obtain FCC
approval allowing them to hold non-broadcast Restricted Licenses, provided that
the home country of the non-U.S. participants provides effective competitive
opportunities for U.S. carriers.

         PROGRAM ORIGINATION AND EXCLUSIVITY OBLIGATIONS.  Cable television
systems may originate programs and may present advertising subject to
compliance with the FCC's regulations governing political broadcasts, political
advertisements and sponsorship identification, and prohibitions on lotteries
and obscene programming.  FCC regulations currently require cable television
systems located within 35 miles of a television market to delete syndicated
programs on distant broadcast signals upon request of the copyright owner or
the local station holding the exclusive rights to broadcast the same program
within its television market.  Similar blackout regulations also are applicable
to network programming in which local network affiliates hold exclusive rights.

         COPYRIGHT MATTERS.  The Copyright Act of 1976 grants cable television
systems a "compulsory license" to carry distant television signals authorized
by the FCC.  In consideration for the compulsory license, cable television
systems are required to pay royalties to the owners of the copyrighted material
which is carried.  These copyright royalty payments are based upon a percentage
of a cable television system's gross revenues from basic subscriber service.
Every cable television system must submit statements of account and royalty
payments to the Copyright  Office.  The Copyright Act contains specific
formulas for calculating the amount of the royalty fee.  In general, under
these formulas, the larger the system and the greater the number of distant
signals carried, the greater will be the royalty fees.  Failure to comply
constitutes copyright infringement and may result in the imposition of fines
and other penalties.  The distribution of royalties is administered by the
Library or Congress which will use arbitration panels to resolve royalty
distribution disputes.





                                       27
<PAGE>   31
         The possible simplification, modification or elimination of the
compulsory license is the subject of continuing legislative review.
Consequently, the nature or amount of future royalty payments for broadcast
signal carriage cannot presently be predicted.  The elimination or substantial
modification of the cable compulsory license could adversely affect the
Company's ability to obtain suitable programming and could substantially
increase the cost of programming that would remain available for distribution
to the Company's cable subscribers.

         Copyrighted music performed in programming supplied to cable
television systems by pay cable networks (such as HBO) and cable programming
networks (such as USA Network) has generally been licensed by the networks
through private agreements with the American Society of Composers and
Publishers ("ASCAP") and BMI, Inc. ("BMI"), the two major performing rights
organizations in the United States.  ASCAP and BMI offer "through to the
viewer" licenses to the cable networks which cover the retransmission of the
cable networks' programming by cable television systems to their customers.
The cable industry has just concluded negotiations on licensing fees with BMI
for the use of music performed in programs locally originated by cable
television systems, although no actual agreements are in place; negotiations
with ASCAP are ongoing.  ASCAP has filed an infringement suit against several
cable operators as representatives of cable systems using its music in the pay
programming and cable programming networks provided to subscribers.

         STATE REGULATION.  Several states have subjected cable television
systems to the jurisdiction of state governmental agencies, some of which have
exercised jurisdiction over transfers of control of cable systems, customer
service standards and franchising requirements.  Attempts in other states to so
regulate cable television systems are continuing and can be expected to
increase.

         LOCAL REGULATION.  A cable television system is generally operated
pursuant to a non-exclusive franchise or permit granted by the local governing
body of the area to be served.  Franchises are granted for a stated term,
generally 10 to 15 years, and in many cases are cancelable for failure to
comply with various conditions and limitations, including compliance with
national, state and local safety and electrical codes, required rates of
construction and conditions of service.  Franchises usually call for the
payment of fees to the granting authority.  Some state and local regulations
governing cable television systems may be subject to requirements imposed by
the FCC and are also subject to the requirements imposed by Federal law.  The
FCC has generally preempted local regulation of the technical standards with
which cable television systems must comply, and has recently implemented
uniform standards for the industry.

         TECHNICAL AND REPORTING REQUIREMENTS.  The FCC licenses radio,
microwave and satellite facilities used by cable television systems.  The FCC
rules include technical standards for cable television systems with which all
systems must comply.  The FCC requires cable television systems to file annual
reports pertaining to frequency usage, subscriber information and equal
employment opportunity practices.  The FCC has recently adopted new technical
standards, and franchising authorities may not require cable television systems
to adhere to standards that are stricter than those of the FCC.





                                       28
<PAGE>   32
         REGULATORY FEES AND OTHER MATTERS.  Pursuant to the dictates of the
Communications Act, the FCC has adopted requirements for payment of annual
"regulatory fees" by the various industries it regulates, including the cable
television industry.  Currently, cable television systems are required to pay
regulatory fees which may be passed on to subscribers as "external cost"
adjustments to rates for basic cable service.  Effective September 18, 1995,
the per subscriber fee increased from $0.37 per subscriber per year to $0.49.
Fees for other FCC licenses increased as well, including licenses for business
radio, cable television relay systems (CARS) and earth stations.  Those fees
however, may not be collected directly from subscribers.

         In addition, the FCC has adopted regulations pursuant to the 1992
Cable Act which require cable systems to permit customers to purchase video
programming on a per-channel or a per-event basis without the necessity of
subscribing to any tier of service, other than the basic service tier, unless
the cable system is technically incapable of doing so.  Generally cable systems
must become technically capable of complying with the statutory obligation by
December 2002.  Consistent with its statutory obligations the FCC also has
adopted a number of measures for improving compatibility between existing cable
systems and consumer electronics equipment, including a prohibition from
scrambling program signals carried on the basic tier, absent a waiver.  The FCC
also is considering whether to extend this prohibition to cover all regulated
tiers of programming.

         MISCELLANEOUS PROVISIONS.  The Communications Act specifically
empowers the FCC to impose fines upon cable television system operators for
willful or repeated violation of the FCC's rules and regulations.  The FCC has
adjudicatory authority over pole attachment disputes where a state has not
asserted jurisdiction.  The 1996 Cable Act extends the regulation of rates, 
terms and conditions of pole attachments to telecommunications service 
providers and requires the FCC to prescribe regulations to govern the charges 
for pole attachments used by telecommunications carriers to provide 
telecommunications services when the parties fail to resolve the dispute over
such charges.  The 1996 Cable Act, among other provisions, increases 
significantly future pole attachment rates for cable systems which used pole 
attachments in connection with the provision of telecommunications services as 
a result of a new rate formula charged to telecommunication carriers for the 
non-usable space of each pole.  These rates are to be phased in after a 
five-year period.

         The 1996 Cable Act requires the FCC, in consultation with industry
standard-setting organizations, to adopt regulations which would encourage
commercial availability to consumers of all services offered by multichannel
video programming distributors.  The regulations adopted may not prohibit
programming distributors from offering consumer equipment, so long as the cable
operator's rates for such equipment are not subsidized by charges for the
services offered.  The rules also may not compromise the security of the
services offered, or the efforts of service providers from preventing theft of
service.  The FCC may waive these rules so as not to hinder the development of
advanced services and equipment.  The 1996 Cable Act requires the FCC to
examine the market for closed captioned programming and prescribe regulations
which ensure that video programming, with certain exceptions, is fully
accessible through closed captioning.

         In December 1994, the FCC announced that its long-standing Emergency
Broadcast System rules were to be replaced.  The new rules establish cable
television and technical standards to support





                                       29
<PAGE>   33
a new Emergency Alert System.  Cable operators must install and activate
equipment necessary for the new system by July 1, 1997.

         The FCC has initiated a rulemaking to consider, among other issues,
whether to adopt uniform regulations governing telephone and cable inside
wiring.  The regulations ultimately adopted by the FCC could affect the
Company's ownership interests and access to inside wiring used to provide
telephony and video programming services.  In a related rulemaking proceeding,
the FCC will consider the appropriate treatment of cable inside wiring in
multiple dwelling unit buildings.  The outcome of that rulemaking could affect
cable operators' access to inside wiring in MDUs.


                              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.  This building was completed in July 1985.  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 49% of the building to International and
certain other affiliates on the same terms and conditions as the primary lease.

         The Company leases from Jones Panorama Properties, Inc., a
wholly-owned subsidiary of the Company, an approximate 60,000 square foot
office building (the "Panorama Falls Building") located at 9085 E. Mineral
Avenue, Englewood, Colorado for a lease price of $12.00 per square foot.  The
Panorama Falls Building contains additional executive offices of the Company.
The Company has subleased approximately 35% of the Panorama Falls Building to
International and others on the same terms and conditions as the primary lease.

CABLE TELEVISION SYSTEMS OWNED BY THE COMPANY

         The following 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, 1995, the Company-owned cable television systems passed
approximately 650,800 homes, representing an approximate 67% penetration rate.
Figures for numbers of subscribers and homes passed are compiled from the
Company's records and may be subject to adjustments.





                                       30
<PAGE>   34
<TABLE>
<CAPTION>
ALEXANDRIA, VIRGINIA                              At 12/31/                         At 5/31/
--------------------                              ---------          --------------------------------------
                                                     1995            1995             1994             1993
                                                     ----            ----             ----             ----
<S>                                                <C>              <C>              <C>              <C>
Monthly basic plus service rate                    $23.33           $21.53           $21.53           $24.65
Basic subscribers                                  38,916           38,497           38,863           35,366
Pay units                                          32,510           32,590           32,524           29,797

<CAPTION>
ANNE ARUNDEL COUNTY, MARYLAND                     At 12/31/                         At 5/31/
-----------------------------                     ---------          --------------------------------------
                                                     1995            1995             1994             1993
                                                     ----            ----             ----             ----
<S>                                                <C>              <C>              <C>              <C>
Monthly basic plus service rate                    $22.85           $22.85           $21.95           $21.20
Basic subscribers                                  48,712           47,786           46,285           43,555
Pay units                                          43,895           42,590           41,682           38,004

<CAPTION>
                                                At 12/31/1995
                                                -------------
<S>                                                 <C>
AUGUSTA, GEORGIA *                         
----------------                           
Monthly basic plus service rate                     $23.98
Basic subscribers                                   84,146
Pay units                                           67,428
</TABLE>

*        In December 1995, the Augusta System (acquired by the Company in
         October 1995 from one of its managed limited partnerships) and the
         North Augusta System were combined.


<TABLE>
<CAPTION>
AUGUSTA, GEORGIA                                                    At 5/31/
----------------                                     --------------------------------------
                                                     1995             1994             1993
                                                     ----             ----             ----
<S>                                                 <C>              <C>              <C>
Monthly basic plus service rate                     $23.20           $23.20           $23.20
Basic subscribers                                   66,950           65,339           63,758
Pay units                                           55,320           52,776           52,226

<CAPTION>
                                                                                                
                                                                                                
                                                                                  At Acquisition
                                                                                  --------------
NORTH AUGUSTA, SOUTH CAROLINA                               At 5/31/                  (12/15    
-----------------------------                        ---------------------            ------    
                                                     1995             1994             1993
                                                     ----             ----             ----
<S>                                                 <C>              <C>              <C>
Monthly basic plus service rate                     $21.45           $21.45           $21.45
Basic subscribers                                   15,477           15,065           15,080
Pay units                                           10,157            9,680            7,221
</TABLE>





                                       31
<PAGE>   35
<TABLE>
<CAPTION>
CHARLES COUNTY, MARYLAND                        At 12/31/                         At 5/31/
------------------------                        ---------          --------------------------------------
                                                   1995            1995             1994             1993
                                                   ----            ----             ----             ----
<S>                                               <C>              <C>              <C>              <C>
Monthly basic plus service rate                   $26.33           $24.80           $24.80           $23.59
Basic subscribers                                 23,285           22,702           21,690           20,784
Pay units                                         35,589           34,186           32,578           31,460

<CAPTION>
DALE CITY, VIRGINIA                                     At Acquisition
-------------------                                     --------------
                                                           11/29/95
                                                           --------
<S>                                                          <C>
Monthly basic plus service rate                              $24.07
Basic subscribers                                            49,297
Pay units                                                    44,935

<CAPTION>
HILO, HAWAII                                      At 12/31/                         At 5/31/
------------                                      ---------          --------------------------------------
                                                     1995            1995             1994             1993
                                                     ----            ----             ----             ----
<S>                                                 <C>              <C>              <C>              <C>
Monthly basic plus service rate                     $21.57           $21.57           $21.68           $21.45
Basic subscribers                                   17,289           17,140           16,696           15,924
Pay units                                           13,820           13,516           12,810           11,468

<CAPTION>
                                                   At 12/31/1995
                                                   -------------
<S>                                                    <C>
JEFFERSON COUNTY, COLORADO  *
--------------------------   
Monthly basic plus service rate                        $23.06
Basic subscribers                                      26,954
Pay units                                              26,666
</TABLE>

*        The Clear Creek County and Jefferson County Systems have been
combined.

<TABLE>
<CAPTION>
CLEAR CREEK, COLORADO                                               At 5/31/
---------------------                                --------------------------------------
                                                     1995             1994             1993
                                                     ----             ----             ----
<S>                                                 <C>              <C>              <C>
Monthly basic plus service rate                     $21.97           $21.97           $22.60
Basic subscribers                                    1,587            1,585            1,537
Pay units                                              933              948              981

<CAPTION>
JEFFERSON COUNTY/
EVERGREEN, COLORADO                                                 At 5/31/
-------------------                                  --------------------------------------
                                                     1995             1994             1993
                                                     ----             ----             ----
<S>                                                 <C>              <C>              <C>
Monthly basic plus service rate                     $23.06           $22.06           $21.25
Basic subscribers                                   24,538           23,027           21,613
Pay units                                           25,069           24,880           22,687
</TABLE>





                                       32
<PAGE>   36

<TABLE>
<CAPTION>
KENOSHA, WISCONSIN                              At 12/31/                         At 5/31/
------------------                              ---------          --------------------------------------
                                                   1995            1995             1994             1993
                                                   ----            ----             ----             ----
<S>                                                <C>              <C>              <C>              <C>
Monthly basic plus service rate                    $19.94           $19.94           $21.18           $22.95
Basic subscribers                                  28,131           27,056           25,047           23,188
Pay units                                          20,554           18,937           18,175           17,934

<CAPTION>
OXNARD, CALIFORNIA                              At 12/31/                           At 5/31/
------------------                              ---------            --------------------------------------
                                                   1995              1995             1994             1993
                                                   ----              ----             ----             ----
<S>                                                <C>              <C>              <C>              <C>
Monthly basic plus service rate                    $19.15           $19.15           $20.00           $23.95
Basic subscribers                                  39,101           39,032           37,338           35,953
Pay units                                          26,751           25,952           23,851           22,237

<CAPTION>

PANAMA CITY BEACH, FLORIDA                        At 12/31/                         At 5/31/
--------------------------                        ---------          --------------------------------------
                                                     1995            1995             1994             1993
                                                     ----            ----             ----             ----
<S>                                                <C>              <C>              <C>              <C>
Monthly basic plus service rate                    $21.10           $21.10           $21.20           $21.20
Basic subscribers*                                  7,380            7,893            8,406            7,984
Pay units**                                         6,285            5,966            9,399            5,522
</TABLE>

*        During 1995, the Panama City Beach System has lost subscribers to an
         overbuilder.  (See Item 1, Competition.)

**       The number of pay units in the Panama City Beach System has 
         fluctuated during fiscal years 1994 and 1995 due to pay unit 
         marketing promotions.  These marketing promotions resulted in 
         periodic increases in pay units, followed by decreases in pay units 
         upon the expiration of the promotional period.

<TABLE>
<CAPTION>
PIMA COUNTY, ARIZONA                                At 12/31/                           At 5/31/
--------------------                                ---------            --------------------------------------
                                                       1995              1995             1994             1993
                                                       ----              ----             ----             ----
<S>                                                    <C>              <C>              <C>              <C>
Monthly basic plus service rate                        $24.00           $24.00           $22.50           $23.20
Basic subscribers                                      56,512           53,279           49,311           46,739
Pay units                                              35,532           35,084           32,442           30,529

<CAPTION>
WALNUT VALLEY, CALIFORNIA                           At 12/31/                           At 5/31/
-------------------------                           ---------            --------------------------------------
                                                       1995              1995             1994             1993
                                                       ----              ----             ----             ----
<S>                                                    <C>              <C>              <C>              <C>
Monthly basic plus service rate                        $23.75           $22.06           $22.74           $23.75
Basic subscribers                                      18,944           18,669           17,790           17,193
Pay units                                              13,321           13,290           13,097           13,375
</TABLE>





                                       33
<PAGE>   37
                           ITEM 3.  LEGAL PROCEEDINGS

Alexandria Litigation

         On February 22, 1994, the Company and The Jones Group, Ltd. (the
"Jones Group"), a subsidiary of the Company engaged in the cable television
system brokerage business, were named as defendants in a lawsuit brought by
three individuals who are Class A Unitholders in Jones Intercable Investors,
L.P. (the "Partnership"), a master limited partnership in which the Company is
general partner.  The litigation, entitled Luva Vaughan et al v. Jones
Intercable, Inc. et al, Case No. CV 94-3652, was filed in the Circuit Court for
Jackson County, Missouri, and purports to be "for the use and benefit of" the
Partnership.  As originally filed, the suit sought rescission of the sale of
the Alexandria, Virginia cable television system (the "Alexandria System") by
the Partnership to the Company, which sale was completed on November 2, 1992.
It also sought a constructive trust on the profits derived from the operation
of the Alexandria System since the date of the sale and an accounting and other
equitable relief.  The plaintiffs also alleged that the $1,800,000 commission
paid to Jones Group by the Partnership in connection with such sale was
improper, and asked the Court to order that such commission be repaid to the
Partnership.

         Under the terms of the partnership agreement of the Partnership, the
Company has the right to acquire cable television systems from the Partnership
at a purchase price equal to the average of three independent appraisals of the
cable television system to be acquired.  The plaintiffs claim that the
appraisals obtained in connection with the sale of the Alexandria System were
improperly obtained, were not made by qualified appraisers and were otherwise
improper.  The purchase price paid by the Company upon such sale was
approximately $73,200,000.  The amount of damages being sought by the
plaintiffs has not been specified.

         On October 21, 1994, plaintiffs filed a motion to dismiss Jones Group
in response to Jones Group's argument that Missouri lacked personal
jurisdiction over it.  Plaintiffs' motion was granted, and plaintiffs then
filed an action in Colorado against Jones Group seeking a return of the
brokerage commission.

         The Company and Jones Group filed motions for summary judgment in the
Missouri and Colorado cases, respectively.  The Missouri court granted the
Company's motion in part and dismissed all counts of the complaint for
rescission.  It also struck the plaintiffs' jury demand.  The Colorado court
also granted Jones Group's motion in part finding that the payment of the
brokerage commission was not a breach of the partnership agreement, but leaving
for trial the issue of whether such payment constituted a breach of fiduciary
duty.

         Subsequently, the plaintiffs have filed an amended complaint in the
Missouri case, recasting their allegations in terms of breach of contract,
common law fraud, conversion and breach of fiduciary duty.  The plaintiffs have
reasserted their right to a jury trial.  On October 4, 1995, the Court granted
the Company's motion for summary judgment on the common law fraud, conversion
and breach of fiduciary duty claims and also struck plaintiffs' demand for a
jury trial.  As a result,





                                       34
<PAGE>   38
there is only one remaining substantive claim (breach of contract); no claim
for punitive damages; and the trial will be to the Court commencing on April
29, 1996.

         On October 25, 1995, plaintiffs and Jones Group filed, in the Colorado
action, a joint motion to stay the Colorado action until the resolution of the
Missouri action.  The motion to stay is pending before the Colorado court.

         The Company has conducted written discovery in the form of
interrogatories and requests for production of documents; has noticed the
depositions of plaintiffs and plaintiffs' expert and has retained an expert to
testify that the three appraisals were performed in accordance with standard
appraisal methodologies.  Although plaintiffs have retained an "expert"
appraiser to testify that the value of the Alexandria System in November 1992
was $85 million, approximately $12 million more than the purchase price, the
Company believes both that the purchase price was fair and that the brokerage
commission was properly paid to Jones Group in accordance with the express
terms of the partnership agreement.  Consequently, the Company intends to
defend the litigation at trial in April 1996.

Tampa Litigation

         In August 1995, Cable TV Fund 12-BCD Venture (the "Venture"), a
Colorado joint venture in which Cable TV Fund 12-B, Ltd., Cable TV Fund 12-C,
Ltd. and Cable TV Fund 12-D, Ltd., Colorado limited partnerships, are general
partners, entered into a purchase and sale agreement pursuant to which the
Venture agreed to sell its Tampa, Florida cable television system (the "Tampa
System") to the Company.  The Company is the general partner of each of Cable
TV Fund 12-B, Ltd., Cable TV Fund 12-C, Ltd. and Cable TV Fund 12-D, Ltd.  The
Company subsequently assigned its rights and obligations under the purchase 
and sale agreement to JCH.  JCH acquired the Tampa System on February 28, 
1996, and the Tampa System, together with other systems owned by JCH, was 
exchanged for systems owned by an unaffiliated cable television operator on 
February 29, 1996.  See Item 1, Recent Acquisitions of Cable Television 
Systems and Recent Exchange of Cable Television Systems.

         On September 20, 1995, a civil action entitled David Hirsch, on behalf
of himself and all others similarly situated, Plaintiff vs. Jones Intercable,
Inc., Defendant, was filed in the District Court, County of Arapahoe, State of
Colorado (Case No. 95-CV-1800).  The plaintiff has brought the action as a
class action on behalf of himself and all other limited partners of Cable TV
Fund 12-D, Ltd. ("Fund 12-D") against the Company seeking to recover damages
caused by the Company's alleged breaches of its fiduciary duties to the limited
partners of Fund 12-D in connection with the sale of the Tampa System.  On
January 25, 1996, the plaintiff filed an amended complaint and request for a
jury trial.  On February 20, 1996, the Company filed a Motion to Dismiss the
Complaint on the ground that it fails to state a claim upon which relief can be
granted as a matter of law.   The Company believes that it has meritorious 
defenses, and the Company intends to defend this lawsuit vigorously.

         On November 17, 1995, a civil action entitled Martin Ury, derivatively
on behalf of Cable TV Fund 12-B, Ltd., Cable TV Fund 12-C, Ltd. and Cable TV
Fund 12-D, Ltd., Plaintiff vs. 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, was filed in the District Court,





                                       35
<PAGE>   39
County of Arapahoe, State of Colorado (Case No. 95-CV-2212).  The plaintiff, a
limited partner of Fund 12-D, has brought the action as a derivative action on
behalf of the three partnerships that comprise the Venture against the Company
seeking to recover damages caused by the Company's alleged breaches of its
fiduciary duties to the Venture and to the limited partners of the three
partnerships that comprise the Venture in connection with the sale of the 
Tampa System and the subsequent exchange of the Tampa System with an 
unaffiliated cable television operator in return for systems owned by that
operator.  On February 1, 1996, the Company filed a Motion to Dismiss the
Complaint on the ground that it fails to state a claim upon which relief can be
granted as a matter of law.  The Company believes that it has meritorious 
defenses, and the Company intends to defend this lawsuit vigorously.


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

         None.


                       EXECUTIVE OFFICERS OF THE COMPANY

<TABLE>
<S>                                        <C>  <C>
Glenn R. Jones                             66   Chairman of the Board and
                                                Chief Executive Officer
James B. O'Brien                           46   President
Ruth E. Warren                             46   Group Vice President/Operations
Kevin P. Coyle                             44   Group Vice President/Finance
Christopher J. Bowick                      40   Group Vice President/Technology
George H. Newton                           61   Group Vice President/Telecommunications
Timothy J. Burke                           45   Group Vice President/Taxation/Administration
Raymond L. Vigil                           49   Group Vice President/Human Resources
Cynthia A. Winning                         44   Group Vice President/Marketing
Elizabeth M. Steele                        44   Vice President/General Counsel/Secretary
Larry W. Kaschinske                        36   Controller
</TABLE>

         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 was elected a member
of the Executive Committee of the Board of Directors in April 1985.  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 was appointed Vice Chairman of the Board of Directors of Bell Canada
International Inc. in February 1995.  Mr. Jones has been involved in the cable
television business in various capacities since 1961, is a past and present
member of the Board of Directors and the Executive Committee of the National
Cable Television Association.  He also is on the Executive Committee of Cable
in the Classroom, an organization dedicated to education via cable.
Additionally, in March 1991, Mr. Jones was appointed to the Board of Governors
for the American Society for Training and Development, and in November 1992 to
the





                                       36
<PAGE>   40
Board of Education Council of the National Alliance of Business.  Mr. Jones is
also a founding member of the James Madison Council of the Library of Congress.
Mr. Jones is a past director and member of the Executive Committee of C- Span.
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 Chairman's Award from the Investment Partnership
Association, which is an association of sponsors of public syndications; the
cable television industry's Public Affairs Association President's Award in
1990, the Donald G. McGannon award for the advancement of minorities and women
in cable; 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 Women in Cable Accolade in 1990 in recognition of support of
this organization; the Most Outstanding Corporate Individual Achievement award
from the International Distance Learning Conference; 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 also President and a Director of Jones Cable Group, Ltd., Jones
Global Funds, Inc. and Jones Global Management, Inc., all affiliates of 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 a director of the
Cable Television Administration and Marketing Association and as a director of
the Walter Kaitz Foundation, a foundation that places people of ethnic minority
groups in positions with cable television systems, networks and vendor
companies.

         Ms. Ruth E. Warren joined the Company in August 1980 and has served in
various operational capacities, including system manager and Fund Vice
President, since then.  Ms. Warren was elected Group Vice President/Operations
of the Company in September 1990.

         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.

         Mr. Christopher J. Bowick joined the Company in September 1991 as
Group Vice President/Technology and Chief Technical Officer.  Previous to
joining the Company, Mr. Bowick worked for Scientific Atlanta's Transmission
Systems Business Division in various technical management capacities since
1981, and as Vice President of Engineering since 1989.

         Mr. George H. Newton joined the Company in January 1996 as Group Vice
President/Telecommunications.  Prior to joining the Company, Mr. Newton was
President of his





                                       37
<PAGE>   41
own consulting business, Clear Solutions, and since 1994 Mr. Newton has served
as a Senior Advisor to Bell Canada International.  From 1990 to 1993, Mr.
Newton served as the founding Chief Executive Officer and Managing Director of
Clear Communications, New Zealand, where he established an alternative
telephone company in New Zealand.  From 1964 to 1990, Mr. Newton held a wide
variety of operational and business assignments with Bell Canada International.

         Mr. Timothy J. Burke joined the Company in August 1982 as corporate
tax manager, was elected Vice President/Taxation in November 1986 and Group
Vice President/Taxation/Administration in October 1990.

         Mr. Raymond L. Vigil joined the Company in June 1993 as Group Vice
President/Human Resources.  Previous to joining the Company, Mr. Vigil served
as Executive Director of Learning with USWest.  Prior to USWest, Mr. Vigil
worked in various human resources posts over a 14-year term with the IBM
Corporation.

         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. Winning also serves as a board member of Cities in Schools,
a dropout intervention/prevention program.

         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. 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 and named Controller in August 1994.


                                    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





                                       38
<PAGE>   42
         The following table shows the high and low prices as quoted on the
NASDAQ/National Market System for each quarterly period of calendar years ended
December 31, 1995 and 1994 for each class of the Company's stock:


<TABLE>
<CAPTION>
                                                       Common Stock                  Class A Common Stock
                                                       ------------                  --------------------
Calendar Year Ended 12/31/95                      High              Low             High              Low
                                                  ----              ---             ----              ---
         <S>                                      <C>              <C>              <C>              <C>
         First Quarter                            17 1/2           11 7/8           17 1/2           12
         Second Quarter                           16 1/4           13 1/2           16 1/2           12 7/8
         Third Quarter                            16 1/4           14 5/8           15 1/2           13 3/8
         Fourth Quarter                           14 1/2           13 3/4           14               13 1/4

<CAPTION>
                                                       Common Stock                  Class A Common Stock
                                                       ------------                  --------------------
Calendar Year Ended 12/31/94                      High              Low             High              Low
                                                  ----              ---             ----              ---
         <S>                                      <C>              <C>              <C>              <C>
         First Quarter                            17 1/2           13 3/8           18               13 1/2
         Second Quarter                           14 3/4           10 3/4           14 3/4           11
         Third Quarter                            15 7/8           11 7/8           15 3/8           12
         Fourth Quarter                           15 1/2           11 3/8           15 1/8           11 3/8
</TABLE>


         At December 31, 1995, the Common Stock and Class A Common Stock of the
Company were held of record by 793 and 1,524 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 credit arrangements restrict the right of the Company
to declare and pay cash dividends without the consent of the holders of the
debt.





                                       39
<PAGE>   43
Item 6.  Selected Financial Data

    The Company changed its fiscal year end from May 31 to December 31,
effective December 31, 1995.  The following table sets forth selected financial
data regarding the Company's financial position and operating results restated
to reflect the change in fiscal year end.  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>
                                          1995              1994               1993              1992               1991
                                        ---------         ---------          --------          --------           -------
                                                                   (in thousands except per share data)
<S>                                   <C>               <C>               <C>               <C>                 <C>
REVENUES:
  Cable Television Revenue
    Subscriber service fees           $   135,350       $   103,335       $    99,438       $    82,033         $  78,243
    Management fees                        21,462            17,952            17,255            16,820            15,709
    Distributions from managed
      partnerships                            -                 -                 -                 -              26,790
  Non-cable Revenue                        32,026            10,602             7,624             6,943             4,774
                                        ---------         ---------          --------          --------           -------

TOTAL REVENUES                            188,838           131,889           124,317           105,796           125,516
                                        ---------         ---------          --------          --------           -------

COSTS AND EXPENSES:
  Cable Television Expenses
    Operating expenses                     77,638            55,196            54,307            38,579            41,388
    General and administrative              8,284             8,120            10,034             9,304             4,985
  Non-cable operating, general and
    administrative                         32,382            11,810             7,989             6,793             5,747
  Depreciation and amortization            55,805            45,585            43,328            39,597            40,541
                                        ---------         ---------          --------          --------           -------

OPERATING INCOME                      $    14,729       $    11,178       $     8,659       $    11,523         $  32,855
                                        =========         =========          ========          ========           =======

INCOME (LOSS) BEFORE INCOME
  TAXES AND EXTRAORDINARY ITEMS       $   (21,024)      $    (8,691)      $   (36,066)      $   (26,308)        $   6,371
INCOME TAX BENEFIT
  (PROVISION)                                 -                 -                 -                 -                 -  
                                        ---------         ---------          --------          --------           -------

INCOME (LOSS) BEFORE
  EXTRAORDINARY ITEMS                     (21,024)           (8,691)          (36,066)          (26,308)            6,371

Extraordinary items-
  Gain (loss) on early
  extinguishment of debt                     (692)              -             (12,781)          (11,409)            6,036
Cumulative effect of change
  in accounting method-
    Change in method of
    accounting for income taxes               -                 -                 -               3,862               -  
                                        ---------         ---------          --------          --------           -------

NET INCOME (LOSS)                     $   (21,716)      $    (8,691)      $   (48,847)      $   (33,855)        $  12,407
                                        =========         =========          ========          ========           =======

PRIMARY EARNINGS (LOSS)
  PER SHARE:
    Income (loss) before
      extraordinary items             $      (.67)      $      (.45)      $     (2.16)      $     (2.05)        $     .53
    Extraordinary items                      (.02)              -                (.76)             (.88)              .50
    Accounting change                         -                 -               -                   .30               -  
                                        ---------         ---------          --------          --------           -------
                                      $      (.69)      $      (.45)      $     (2.92)      $     (2.63)        $    1.03
                                        =========         =========          ========          ========           =======

WEIGHTED AVERAGE
  SHARES OUTSTANDING:
    Primary                                31,270            19,517            16,728            12,849            12,010
                                        =========         =========          ========          ========           =======

TOTAL ASSETS                          $   860,499       $   608,289       $   434,298       $   434,670         $ 364,342
                                        =========         =========          ========          ========           =======

TOTAL DEBT                            $   492,714       $   281,578       $   372,908       $   382,245         $ 311,855
                                        =========         =========          ========          ========           =======

SHAREHOLDERS'
  INVESTMENT                          $   292,795       $   271,284       $    17,503       $    13,996         $  29,696
                                        =========         =========          ========          ========           =======
</TABLE>






                                        40
<PAGE>   44



Item 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

         RESULTS OF OPERATIONS

         Year Ended December 31, 1995 Compared to Year Ended December 31, 1994

         Revenues

         The Company derives its revenues from four primary sources: subscriber
fees from Company-owned cable television systems, management fees from revenues
earned by managed limited partnerships, fees and distributions payable upon the
sale of cable television properties owned by managed limited partnerships and
revenues from non-cable television subsidiaries.  Total revenues for the year
ended December 31, 1995 totaled $188,838,000, an increase of $56,949,000, or
43%, over the total of $131,889,000 for the year ended December 31, 1994.  This
increase reflects the Company's acquisition of the assets of Jones Spacelink,
Ltd. ("Spacelink") on December 20, 1994, the purchase of the cable television
system serving areas in and around Augusta, Georgia (the "Augusta System") on
October 20, 1995, the purchase of the cable television system serving areas in
and around Dale City, Virginia (the "Dale City System") on November 29, 1995
and were offset, in part, by the sale of the Company's Gaston County, North
Carolina cable television system (the "Gaston System") on July 22, 1994 (the
"Purchase and Sale Transactions").  Disregarding the effect of the Purchase and
Sale Transactions, total revenues would have increased $10,898,000, or 9%.

         The Company's subscriber service fees increased $32,015,000, or 31%,
to $135,350,000 in 1995 from $103,335,000 in 1994.  The effect of the Purchase
and Sale Transactions accounted for $22,865,000, or 71%, of this increase.
Disregarding the effect of the Purchase and Sale Transactions, subscriber
service fees would have increased $8,068,000, 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.

         The Company receives management fees generally equal to 5% of the
gross operating revenues of its managed partnerships.  Management fees totaled
$21,462,000 for 1995, an increase of $3,510,000, or 20%, over the total of
$17,952,000 reported in 1994.  The growth of management fee revenue is the
result of the acquisition of Spacelink's assets, which included general partner
interests in a number of limited partnerships, as well as increases in
operating revenues of the Company's managed partnerships.  Partnership revenues
increased as a result of increases in basic subscribers, increases in
advertising sales revenue and basic service rate adjustments.  Disregarding the
effect of the Spacelink transaction, management fees increased approximately
10%.

         In its capacity as the general partner of its managed partnerships,
the Company also receives revenues in the form of distributions upon the sale
of cable television properties owned by such partnerships.  No such revenues
were recognized during the years ended December 31, 1995, 1994 or 1993.  The
general partner distribution received by the Company as a result of the sale of
the Augusta System by Fund 12-B in October 1995 was recorded as a reduction in
the basis of the assets of the Augusta System due to the Company's continuing
interest in the Augusta System.

         The Company also operates certain non-cable subsidiaries.  Such
subsidiaries include Jones Satellite Programming, Inc. ("JSP"), a distributor
of satellite programming to satellite dish owners; Jones Futurex, Inc.
("Futurex"), a manufacturer of various electronic components; and Jones
Satellite Networks, Inc. ("JSN"), a distributor of radio programming to radio
stations.  Futurex and JSN were acquired as part of the acquisition of
Spacelink's assets.  Non-cable revenue totaled $32,026,000 in 1995, an increase
of $21,424,000, or 202%, over the $10,602,000 recorded in 1994.  The
acquisition of Futurex and JSN accounted for 79% of this increase.  The
remainder of this increase was due to an increase in the revenue of JSP.





                                       41
<PAGE>   45
         Costs and Expenses

         Operating, general and administrative expenses consist primarily of
costs associated with the administration of Company-owned cable television
systems, the administration of managed partnerships and the administration of
the non-cable television entities.  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, professional fees, subscriber billing
costs, data processing costs, rent for leased facilities, cable system
maintenance expenses and consumer marketing expenses.

         Cable operating expenses increased $22,442,000, or 41%, to $77,638,000
in 1995 compared to $55,196,000 in 1994.  The Purchase and Sale Transactions
accounted for $13,954,000, or 62%, of this increase.  Disregarding the effect
of the Purchase and Sale Transactions, cable operating expense would have
increased $6,406,000, or 12%.  This increase was due primarily to increases in
premium and satellite programming costs.

         Cable general and administrative expense increased $164,000, or 2%, to
$8,284,000 in 1995 from $8,120,000 in 1994.  Disregarding the effect of the
Purchase and Sale Transactions, cable general and administrative expenses
decreased $718,000, or 9%.  This decrease was due primarily to the fact that
the Company paid no transponder fees to Jones Earth Segment, Inc. in 1995.  The
remainder of the decrease is due to a reduction in general and administrative
expense.

         Non-cable operating, general and administrative expense increased
$20,572,000, or 174%, to $32,382,000 in 1995 from $11,810,000 in 1994.  The
acquisition of Futurex and JSN accounted for this increase.

         Depreciation and amortization expense increased $10,220,000, or 22%,
to $55,805,000 in 1995 from $45,585,000 in 1994.  The effect of the Purchase
and Sale Transactions, as well as capital additions in 1995, were responsible
for this increase.

         Operating Income

         Operating income increased $3,551,000, or 32%, to $14,729,000 in 1995
from $11,178,000 in 1994, due to the factors discussed above.

         The cable television industry generally measures the performance of a
cable television system in terms of cash flow or operating income before
depreciation and amortization.  The value of a cable television system is often
determined using multiples of 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 increased $13,771,000, or 24%, to
$70,534,000 in 1995 from $56,763,000 in 1994.  Disregarding the effect of the
Purchase and Sale Transactions, operating income before depreciation and
amortization would have increased $5,218,000, or 10%.

         Other Income (Expense)

         Interest expense increased $12,669,000, or 34%, to $49,552,000 in 1995
from $36,883,000 in 1994.  This increase was due primarily to interest on the
$200 million of Senior Notes sold in March 1995 which was offset, in part, by a
decrease in interest expense on the Company's credit facility due to lower
outstanding balances.





                                      42
<PAGE>   46
         In 1995, the Company recorded net equity in the losses of affiliates
totaling $58,000 compared to $3,707,000 in 1994.  The Company recognized equity
in the losses of its managed partnerships, Mind Extension University, IDS/Jones
Joint Venture Partners and Jones Customer Service Management, LLC.  Such losses
were offset, in part, by equity in the net income of Jones Intercable
Investors, L.P. and Jones Global Group, Inc. ("JGG").  JGG, an affiliate of
which the Company owns a 38% interest, recognized gains on the sale of certain
of JGG's Bell Cablemedia ADSs.

         Interest income increased $8,497,000, or 144%, to $14,383,000 in 1995
from $5,886,000 in 1994.  This increase was due to the increase in the
Company's cash on hand during the year, prior to the acquisition of the Augusta
System and the Dale City System, from the Bell Canada International Inc.
investment in December 1994 and the sale of $200 million of Senior Notes in
March 1995.

         The Company recorded a gain of $15,496,000 in July 1994 on the sale of
its Gaston System.  No similar gain was recognized during 1995.

         The Company recognized a loss of $692,000 in 1995 related to the
redemption of its 7.5% Convertible Subordinated Debentures.  No similar loss
was recognized in 1994.

         Net loss increased $13,025,000, or 150%, to $21,716,000 in 1995 from
$8,691,000 in 1994.  This increase was primarily due to the gain recognized in
1994 on the sale of the Gaston System.

         The Company anticipates the continued recognition of operating income
prior to depreciation and amortization charges, but net losses resulting from
depreciation, amortization and interest expenses may continue in the future.
To the extent the Company recognizes general partner distributions from its
managed partnerships and/or gains on the sale of Company-owned systems in the
future, such losses may be reduced or eliminated; however, there is no
assurance as to the timing or recognition of these distributions or sales.

         Year Ended December 31, 1994 Compared to Year Ended December 31, 1993

         Revenues

         Total revenues for the year ended December 31, 1994 increased
$7,572,000, or 6%, to $131,889,000 in 1994 from $124,317,000 in 1993.  An
increase in the revenues of JSP accounted for approximately 39% of this
increase.  Increases in the number of basic subscribers and advertising revenue
accounted for 41% of this increase.  The net effect of the purchase of the
North Augusta System and the sales of the Gaston System and the Company's cable
television system serving areas around San Diego, California (the "San Diego
System") accounted for approximately 11% of this increase.  The increase in
revenue would have been greater but for the effect of the reduction in basic
rates due to rate regulations issued by the FCC in implementing the 1992 Cable
Act.

         In 1994, the Company's subscriber service fees increased $3,897,000,
or 4%, from $99,438,000 in 1993 to $103,335,000 in 1994.  The net effect of the
purchase of the North Augusta System and the sale of the Gaston System and the
San Diego System accounted for 21% of this increase.  The remainder of this
increase was due to increases in subscribers and advertising sales revenue.

         Management fees increased approximately 4%, from $17,255,000 in 1993
to $17,952,000 in 1994.  Partnership revenues increased as a result of
increases in the number of basic subscribers in partnership systems as well as
increases in revenues from pay-per-view, advertising sales and the installation
of service.  These increases somewhat mitigated the effect of the reduction in
basic rates by the Company's managed partnerships due to the FCC's basic rate
regulations.





                                       43
<PAGE>   47
         Non-cable revenue increased $2,978,000, or 39%, from $7,624,000 in
1993 to $10,602,000 in 1994.  This increase was due to an increase in the
revenues of JSP.

         Costs and Expenses

         For the year ended December 31, 1994, cable operating expenses
increased $889,000, or 2%, from $54,307,000 in 1993 to $55,196,000 in 1994.
This increase was due primarily to increases in satellite programming fees and
premium service programming fees.

         For the year ended December 31, 1994, cable general and administrative
expense decreased $1,914,000, or 19%, from $10,034,000 in 1993 to $8,120,000 in
1994.  This decrease was due to a decrease in transponder fees paid to Jones
Earth Segment, Inc.  In addition, the Company recognized non-cash compensation
expense related to the grant of certain stock options in 1993.  No such expense
was recognized in 1994.

         For the year ended December 31, 1994, non-cable operating, general and
administrative expenses increased $3,821,000, or 48%, from $7,989,000 in 1993
to $11,810,000 in 1994.  This increase was due to increases in the expenses of
JSP, which consist primarily of programming costs.

         Depreciation and amortization expense increased $2,257,000, or 5%, for
the year ended December 31, 1994 totaling $45,585,000 in 1994 and $43,328,000
in 1993.  This increase was due to the purchase of the North Augusta System and
to capital additions in 1994.

         Operating Income

         Operating income increased $2,519,000, or 29%, to $11,178,000 in 1994
from $8,659,000 in 1993.  This increase was due primarily to the decrease in
general and administrative expenses.

         Operating income before depreciation and amortization increased
$4,776,000, or 9%, to $56,763,000 in 1994 from $51,987,000 in 1993.
Disregarding the net effect of the purchase of the North Augusta System and the
sale of the Gaston System and the San Diego System, operating income before
depreciation and amortization increased 8%.

         Other Income (Expense)

         Interest expense decreased $3,897,000, or 10%, to $36,883,000 in 1994
from $40,780,000 in 1993.  This decrease was due primarily to the redemption of
the remaining $138,000,000 principal amount of the Company's 13% Subordinated
Debentures due 2000 in May 1993.  The effect of this redemption was somewhat
mitigated by an increase in interest expense as a result of higher balances
outstanding on the Company's revolving credit facility.

         Equity in losses of affiliated entities decreased $110,000, or 3%,
from $3,817,000 in 1993 to $3,707,000 in 1994.

         Interest income increased $1,967,000, or 50%, for the year ended
December 31, 1994 from $3,919,000 in 1993 to $5,886,000 in 1994.  This increase
was due to higher average balances outstanding from certain managed
partnerships as well as interest income earned on advances made to Mind
Extension University, Inc.

         The Company recognized a $15,496,000 gain on the sale of its Gaston
System in 1994.  In 1993, the Company recognized a $3,231,000 loss on the sale
of its San Diego System.





                                      44
<PAGE>   48
         In 1993, the Company recognized a loss on the early extinguishment of
debt totaling $12,781,000.  No similar loss was recognized in 1994.

         For the year ended December 31, 1994, net loss decreased $40,156,000,
from $48,847,000 in 1993 to $8,691,000 in 1994.  This decrease was due
primarily to the effect of the gain on the Gaston System, the loss of the San
Diego System and the loss on early extinguishment of debt.

         Regulatory Matters

         As a result of rate orders issued by the FCC, cost-of-service showings
have been filed for the following Company-owned cable television systems:
Jefferson County, Colorado; Charles County, Maryland; Dale City, Virginia;
Manassas, Virginia; Pima County, Arizona; Alexandria, Virginia; and Augusta,
Georgia.  For these systems, the Company anticipates no further reductions in
revenues or operating income before depreciation and amortization resulting
from the FCC's rate regulations.  The cost-of-service showings have not yet
received final approval from franchising authorities, however, and there can be
no assurance that the cost-of-service showings will prevent further rate
reductions until such final approvals are received.

         On January 31, 1996, Congress passed the Telecommunications
Competition and Deregulation Act of 1996 (the "1996 Act") which substantially
revised the federal laws regulating the Company's cable television business.
The President signed the 1996 Act into law on February 8, 1996.  Among other
things, the 1996 Act promotes increased competition from the delivery of video,
data and other services by local telephone companies (also known as local
exchange carriers or "LECs") and others, permits cable television operators to
provide local voice and data communications services and deregulates the
customer programming service rates of smaller operations upon enactment and
other operators in 1999.  The 1996 Act allows telephone companies to provide
cable television services within their telephone service areas operating as
conventional cable systems, or "open video systems" that afford access to other
video providers.  Telephone companies offering stand-alone cable television
service or cable television service in connection with an open video system
could provide substantial competition to the Company's owned and managed
systems.  The 1996 Act also permits entities to provide local
telecommunications services in competition with the LECs.  The 1996 Act
establishes local exchange competition as a national policy by preempting laws
that prohibit competition in the local exchange and establishes uniform
requirements and standards for entry, competitive carrier interconnection and
unbundling of LEC monopoly services.  One premise of the 1996 Act is that
additional regulatory flexibility for LECs is necessary to allow them to
respond to competition.  Depending on the degree and form of regulatory
flexibility afforded the LECs, the Company's ability to compete to provide
telephony services may be adversely affected.

         FINANCIAL CONDITION

         The Company historically has grown by acquiring and developing cable
television systems for both itself and its managed limited partnerships,
primarily in suburban areas with attractive demographic characteristics.  The
Company intends to liquidate its Company-managed limited partnerships as
opportunities for sales of partnership cable television systems arise in the
marketplace over the next several years.

         The Company is implementing a balanced strategy of acquiring cable
television systems from Company-managed limited partnerships and from third
parties.  As part of this process, certain systems owned by the Company and its
managed partnerships may be sold to third parties and Company-owned systems may
be exchanged for systems owned by other cable system operators.  It is the
Company's plan to cluster its cable television properties, to the extent
feasible, in geographic areas.  Clustering systems may enable the Company to
obtain operating efficiencies, and it should position the Company to capitalize
on new revenue and business opportunities as the telecommunications industry
evolves.  The Company also intends to maintain and enhance the value of its
current cable television systems through capital





                                       45
<PAGE>   49
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.

         Acquisitions of cable television systems, the development of new
services and capital expenditures for system extensions and upgrades are
subject to the availability of cash generated from operations, debt and/or
equity financing.  The capital resources to accomplish these strategies are
expected to be provided by the sale of debt and/or equity securities (subject
to market conditions), borrowings under the Company's $500 million revolving
credit facility and cash generated from the Company's operating activities.  In
addition, the Company may explore other financing options such as private
equity capital and/or the sale of non-strategic assets.  There can be no
assurance that the capital resources necessary to accomplish the Company's
acquisition and development plans will be available on terms and conditions
acceptable to the Company, or at all.

         In conjunction with the Company's acquisition strategy, the Company
purchased the cable television systems serving areas in and around Augusta,
Georgia (the "Augusta System") in October 1995, Dale City, Virginia (the "Dale
City System") in November 1995 and Manassas, Virginia (the "Manassas System")
in January 1996.  These transactions are described in detail in Note 2 of the
Notes to Consolidated Financial Statements.

         The $129,396,000 of capital required to purchase the Augusta System,
which represents the purchase price of $142,618,000 less the Company's general
partner distribution of approximately $13,222,000, was provided by cash on
hand.  The $123,000,000 of capital required to purchase the Dale City System
was provided by cash on hand and $30,000,000 of borrowings available under the
Company's credit facility.  The $71,000,000 of capital required to purchase the
Manassas System was provided by borrowings available under the Company's
revolving credit facility.

         On February 28, 1996, the Company purchased the cable television
systems serving areas in and around Tampa, Florida (the "Tampa System"), areas
in and around Carmel, Indiana (the "Carmel System") and areas in and around
Orangeburg, South Carolina (the "Orangeburg System") from certain of its
limited partnerships.  The $172,979,000 of capital required to purchase such
systems was provided by borrowings available under the Company's revolving
credit facility.      On February 29, 1996, the Company transferred the Tampa
System, the Carmel System and the Orangeburg System to an unaffiliated party in
exchange for the cable television systems serving portions of Prince Georges
County, Maryland (the "Prince Georges County System") and portions of Fairfax
County, Virginia (the "Reston System").

         The above transactions increased the Company's basic subscriber base
by approximately 229,000 basic subscribers to approximately 547,000 basic
subscribers.  In addition, these transactions are part of the Company's
strategy to cluster its cable systems.  The Augusta System is contiguous to the
Company's cable television system serving areas in and around North Augusta,
South Carolina (the "North Augusta System").  The Dale City System, the
Manassas System, the Prince Georges County System and the Reston System are
near other Company owned and managed systems in the Washington/Baltimore area.

         The Company has entered into agreements with certain of its managed
partnerships to purchase the cable television systems serving Manitowoc,
Wisconsin (the "Manitowoc System"), Lodi, Ohio (the "Lodi System"), Lake
Geneva, Wisconsin (the "Lake Geneva System") and Ripon, Wisconsin (the "Ripon
System").  Such transactions are expected to close in the first half of 1996.

         In addition, the Company has entered into an agreement to acquire the
cable television system serving Savannah, Georgia (the "Savannah System").
This transaction is also part of the Company's strategy to cluster its cable
systems since the Savannah System is in relatively close proximity to the
Company's Augusta System.  This transaction is expected to close in the first
half of 1996.  To acquire the Savannah System, the Company will transfer the
Manitowoc System, the Lodi System, the Ripon System





                                      46
<PAGE>   50
and the Lake Geneva System, together with the Company-owned cable television
systems serving Kenosha, Wisconsin and Hilo, Hawaii, to an unaffiliated party
in exchange for the Savannah System.  The Savannah System serves approximately
63,000 subscribers.

         From time to time, the Company makes loans to its managed
partnerships, although it is not required to do so.  As of December 31, 1995,
the Company had advanced funds to various managed partnerships and other
affiliates of the Company totaling approximately $14,311,000, a decrease of
approximately $13,712,000 over the amount advanced at December 31, 1994.  Of
the total balance of $14,311,000, an advance to Cable TV Fund 15-A Ltd. ("Fund
15-A"), one of the Company's managed partnerships, accounted for approximately
$4,815,000, or 34%.  The Company advanced funds to Fund 15-A primarily to fund
that partnership's capital expenditures.  It is anticipated that Fund 15-A will
repay this advance over time with cash generated from operations and borrowings
available under its credit facility.  In addition, an advance to Cable TV Fund
12-BCD Venture (the "Venture") accounted for approximately $4,113,000, or 29%,
of the outstanding balance.  The Venture renogotiated its credit agreements and
repaid the advance in February 1996.  The remainder of the advances represent
funds for capital expansion and improvements of properties owned by 22
partnerships where additional credit sources were not then available to the
partnerships.  None of these advances are individually significant.  These
advances reduce the Company's available cash and its liquidity.  The Company
anticipates the repayment of these advances over time.  The Company does not
anticipate significant increases in the amount advanced to its managed
partnerships during 1996.  These advances bear interest at rates equal to the
Company's weighted average cost of borrowing.

         The Company purchased property, plant and equipment totaling
approximately $63,216,000 during the year ended December 31, 1995.  Such
expenditures were principally the result of the following: (a) the upgrade and
rebuild of the cable plant in the Alexandria, Virginia and North Augusta, South
Carolina systems; and (b) new extension projects, drop materials, converters
and various maintenance projects in the Pima County, Arizona; Anne Arundel,
Maryland; and Charles County, Maryland systems.  Estimated capital
expenditures, excluding acquisitions, for 1996 are approximately $78,000,000.
Funding for such expenditures is expected to be provided by cash generated from
operations and borrowings available under the Company's credit facility, as
discussed below.

         On October 12, 1995, the Company redeemed the remaining outstanding
7.5% Convertible Subordinated Debentures (the "Debentures") due 2007, at a
price equal to 101.5% of the principal amount, plus accrued interest.  The
total principal amount of the debentures was $43,100,000, of which $23,732,000
were held by the Company and $19,368,000 were held by unaffiliated investors.
The Debentures were redeemed with cash on hand.  The Company recognized a loss
of $692,000 related to the redemption.

         Sources of Funds

         The Company's cash balance at December 31, 1995, was $2,314,000.  The
decrease in such balance from December 31, 1994 reflects the cash used for the
acquisitions of the Augusta System and the Dale City System.

         On October 31, 1995, the Company, through Jones Cable Holdings, Inc.
("JCH"), a new wholly owned subsidiary, entered into a $500,000,000 reducing
revolving credit facility with a group of commercial banks.  The new credit
facility provides for the transfer of a majority of the Company's cable
television properties to JCH, which is the borrower under the new credit
facility.  The entire $500,000,000 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, 1995, $30,000,000 was
outstanding under this agreement.  Interest on outstanding obligations ranges
from Base Rate to Base Rate plus 1/8% or LIBOR plus 5/8% to LIBOR plus 1 1/8%
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





                                       47
<PAGE>   51
interest rate on amounts outstanding at December 31, 1995 was 6.56%.  Upon the
completion of the acquisition of the Manassas System, the Prince Georges County
System and the Reston System in the first quarter of 1996, the balance
outstanding on this credit facility was approximately $285,000,000.

         On October 6, 1995, Cable TV Fund 11-B, Ltd. ("Fund 11-B"), one of the
Company's managed limited partnerships, entered into an agreement to sell the
cable television systems serving areas in and around Lancaster, New York to an
unaffiliated third party for $84,000,000.  Upon closing of this transaction,
Fund 11-B will repay its indebtedness, a brokerage fee and a sales tax
liability, and Fund 11-B then will distribute the remaining proceeds to its
partners.  The Company, as general partner of Fund 11-B, expects to receive a
distribution of approximately $13,950,000 related to this transaction.  In
addition, The Jones Group, Ltd., a wholly-owned subsidiary of the Company, will
receive a fee of $2,100,000 for acting as the broker in this transaction.  The 
closing of this transaction is expected to occur in the first half of calendar 
1996.

         The Company has an effective registration statement relating to the
sale of $600 million of senior debt securities, senior subordinated debt
securities, subordinated debt securities and Class A Common Stock.  The Company
may, from time to time, issue securities not to exceed $600 million pursuant to
this registration statement.  Proceeds would be used for general corporate
purposes, which may include acquisitions of cable television systems from
managed partnerships and/or from unaffiliated parties, refinancings of
indebtedness, working capital, capital expenditures, and repurchases and
redemptions of securities.

         The Company has sufficient sources of capital available, consisting of
cash generated from operations and available borrowings from its credit
facility, to complete the above described acquisitions and meet its operational
needs.





                                      48
<PAGE>   52
Item 8.  Financial Statements and Supplementary Data


                         INDEX TO FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                                                                                    Page
                                                                                                    ----
<S>                                                                                                 <C>

Report of Independent Public Accountants                                                            50

Consolidated Balance Sheets                                                                         51

Consolidated Statements of Operations                                                               53

Consolidated Statements of Shareholders' Investment                                                 54

Consolidated Statements of Cash Flows                                                               55

Notes to Consolidated Financial Statements                                                          56
</TABLE>





                                       49
<PAGE>   53
                    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,
1995 and 1994, and the related consolidated statements of operations,
shareholders' investment and cash flows for each of the three years in the
period ended December 31, 1995.  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, 1995 and 1994, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.



Denver, Colorado,
  March 1, 1996                                          ARTHUR ANDERSEN LLP









                                      50
<PAGE>   54
<TABLE>
<CAPTION>
CONSOLIDATED
BALANCE SHEETS                                                                               Jones Intercable, Inc.
As of December 31, 1995 and 1994                                                                   and Subsidiaries
-------------------------------------------------------------------------------------------------------------------

ASSETS                                                                            1995                     1994
                                                                                      (Stated in Thousands)       
-------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>                      <C>
CASH AND CASH EQUIVALENTS                                                     $    2,314               $    78,646

RESTRICTED CASH                                                                    9,770                     1,196

RECEIVABLES:
  Trade receivables, net of allowance for
    doubtful accounts of $1,056,000 in 1995
    and $1,008,000 in 1994                                                        19,332                    11,783
  Affiliated entities                                                             14,311                    28,023
  Other                                                                            2,442                       957

INVESTMENT IN CABLE TELEVISION PROPERTIES:
  Property, plant and equipment, at cost                                         475,436                   333,666
    Less - Accumulated depreciation                                             (171,948)                 (144,043)
                                                                                --------                 --------- 
                                                                                 303,488                   189,623

  Franchise costs, net of accumulated
    amortization of $118,601,000 in 1995
    and $100,056,000 in 1994                                                     186,096                    81,204
  Cost in excess of interests in net assets
    purchased, net of accumulated
    amortization of $8,654,000 in 1995
    and $7,249,000 in 1994                                                        66,562                    62,237
  Noncompete agreement, net of accumulated
    amortization of $1,360,000 in 1995
    and $1,217,000 in 1994                                                         2,097                       428
  Subscriber lists, net of accumulated
    amortization of $42,882,000 in 1995
    and $37,236,000 in 1994                                                       55,058                    16,260
  Investments in affiliates and domestic cable
    television partnerships                                                       45,745                    41,056
  Investment in Bell Cablemedia plc                                               99,613                    56,893
                                                                                --------                 ---------

TOTAL INVESTMENT IN CABLE TELEVISION PROPERTIES                                  758,659                   447,701
                                                                                --------                 ---------

DEFERRED TAX ASSET, net of valuation
  allowance of $70,748,000 in 1995 and
  $63,636,000 in 1994                                                              3,862                     3,862

DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS                                       49,809                    36,121
                                                                                --------                 ---------

TOTAL ASSETS                                                                  $  860,499               $   608,289
                                                                                ========                 =========
</TABLE>


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





                                       51
<PAGE>   55
<TABLE>
<CAPTION>
CONSOLIDATED
BALANCE SHEETS                                                                                Jones Intercable, Inc.
As of December 31, 1995 and 1994                                                                    and Subsidiaries
--------------------------------------------------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' INVESTMENT                                          1995                     1994
                                                                                      (Stated in Thousands)  
--------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>                       <C>
LIABILITIES:
  Accounts payable and accrued liabilities                                 $      69,411             $      49,324
  Subscriber prepayments and deposits                                              5,579                     6,103
  Subordinated debentures and other debt                                         462,714                   281,578
  Credit facility                                                                 30,000                        - 
                                                                              ----------               -----------

TOTAL LIABILITIES                                                                567,704                   337,005
                                                                              ----------               -----------

COMMITMENTS AND CONTINGENCIES (Notes 2, 4 and 11)

SHAREHOLDERS' INVESTMENT:
  Class A Common Stock, $.01 par value, 60,000,000
    shares authorized; 26,212,055 and 26,131,388
    shares issued at December 31, 1995
    and 1994, respectively                                                           262                       261
  Common Stock, $.01 par value, 5,550,000 shares
    authorized; 5,113,021 shares issued at December 31, 1995
    and 1994                                                                          51                        51
  Additional paid-in capital                                                     394,875                   394,153
  Unrealized holding gain on marketable securities                                42,504                       -
  Accumulated deficit                                                           (144,897)                 (123,181)
                                                                              ----------               ----------- 

TOTAL SHAREHOLDERS' INVESTMENT                                                   292,795                   271,284
                                                                              ----------               -----------

TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT                             $     860,499             $     608,289
                                                                              ==========               ===========
</TABLE>


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





                                      52
<PAGE>   56



<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS                                                             Jones Intercable, Inc.
For the years ended December 31, 1995, 1994 and 1993                                                    and Subsidiaries
------------------------------------------------------------------------------------------------------------------------

                                                                      1995                 1994                  1993
                                                                             (In Thousands Except Per Share Data) 
------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>                  <C>                  <C>
REVENUES FROM CABLE TELEVISION OPERATIONS:
Cable Television Revenue
  Subscriber service fees                                         $  135,350           $   103,335          $    99,438
  Management fees                                                     21,462                17,952               17,255
Non-cable Revenue                                                     32,026                10,602                7,624
                                                                    --------             ---------             --------

TOTAL REVENUES                                                       188,838               131,889              124,317

COSTS AND EXPENSES:
Cable Television Expenses
  Operating expenses                                                  77,638                55,196               54,307
  General and administrative expenses (including
    approximately $2,717,000, $2,994,000 and $3,849,000
      of related party expenses during the years ended
      December 31, 1995, 1994 and 1993, respectively)                  8,284                 8,120               10,034
Non-cable operating, general and administrative                       32,382                11,810                7,989
Depreciation and amortization                                         55,805                45,585               43,328
                                                                    --------             ---------             --------

OPERATING INCOME                                                      14,729                11,178                8,659

OTHER INCOME (EXPENSE):
Interest expense                                                     (49,552)              (36,883)             (40,780)
Equity in losses of affiliated entities                                  (58)               (3,707)              (3,817)
Interest income                                                       14,383                 5,886                3,919
Gain (loss) on sale of assets                                            -                  15,496               (3,231)
Other, net                                                              (526)                 (661)                (816)
                                                                    --------             ---------             -------- 

LOSS BEFORE INCOME TAXES AND
   EXTRAORDINARY ITEM                                                (21,024)               (8,691)             (36,066)
                                                                                  
Income tax provision                                                     -                     -                    -  
                                                                    --------             ---------             --------

LOSS BEFORE EXTRAORDINARY ITEM                                       (21,024)               (8,691)             (36,066)

EXTRAORDINARY ITEM:
  Loss on early extinguishment of debt,
    net of related income taxes                                         (692)                  -                (12,781)
                                                                    --------             ---------             -------- 

NET LOSS                                                          $  (21,716)          $    (8,691)         $   (48,847)
                                                                    ========             =========             ======== 

PRIMARY LOSS PER SHARE:
      Loss before extraordinary item                              $     (.67)          $      (.45)         $     (2.16)
      Extraordinary item                                                (.02)                  -                   (.76)
                                                                    --------             ---------             -------- 
                                                                  $     (.69)          $      (.45)         $     (2.92)
                                                                    ========             =========             ======== 

WEIGHTED AVERAGE NUMBER OF CLASS A COMMON
  AND COMMON SHARES OUTSTANDING                                       31,270                19,517               16,728
                                                                    ========             =========             ========
</TABLE>


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





                                       53
<PAGE>   57
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF
SHAREHOLDERS' INVESTMENT                                                                                 Jones Intercable, Inc.
For the years ended December 31, 1993, 1994 and 1995                                                           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>
BALANCES, December 31, 1992            8,834   $       88         4,913   $        49   $    67,343   $       -     $  (53,482)

Proceeds from stock options
  exercised                               46            1           -             -             305           -            -

Sale of Class A Common
  Stock                                3,449           34           -             -          48,582           -            -

Class A Common Stock
  issued upon conversion of
  Subordinated Debentures                  6          -             -             -             100           -            -

Class A Stock Option Grants              -            -             -             -           4,080           -            -

Purchase of Company Stock
  from Jones Spacelink, Ltd.             (60)          (1)          -             -            (413)          -           (336)

Net loss                                 -            -             -             -             -             -        (48,847)
                                   ---------     --------      --------      --------     ---------     ---------     -------- 

BALANCES, December 31, 1993           12,275          122         4,913            49       119,997           -       (102,665)


Proceeds from stock options
  exercised                               42            1           200             2         1,460           -            -

Class A Stock Option Grants              -            -             -             -             261           -            -

Spacelink Acquisition                  3,900           39           -             -          16,241           -        (11,825)

Sale of Class A Common Stock
  to Bell Canada International Inc.    9,914           99           -             -         256,194           -            -

Net loss                                 -            -             -             -             -             -         (8,691)
                                   ---------     --------      --------      --------     ---------     ---------     -------- 


BALANCES, December 31, 1994           26,131          261         5,113            51       394,153           -       (123,181)

Proceeds from stock options
  exercised                               81            1           -             -             461           -            -

Class A Common Stock Grants              -            -             -             -             261           -            -

Unrealized holding gain on
  marketable securities                  -            -             -             -             -          42,504          -

Net loss                                 -            -             -             -             -             -        (21,716)
                                   ---------     --------      --------      --------     ---------     ---------     -------- 


BALANCES, December 31, 1995           26,212   $      262         5,113   $        51   $   394,875   $    42,504   $ (144,897)
                                   =========     ========      ========      ========     =========     =========     ======== 
</TABLE>



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





                                      54
<PAGE>   58



<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF
CASH FLOWS                                                                                           Jones Intercable, Inc.
For the years ended December 31, 1995, 1994 and 1993                                                       and Subsidiaries
---------------------------------------------------------------------------------------------------------------------------
                                                                           1995                 1994                 1993
                                                                                       (Stated in Thousands)               
---------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>                  <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                              $   (21,716)         $    (8,691)          $  (48,847)
Adjustments to reconcile net loss
  to net cash provided by operating activities:
    Extraordinary loss on early extinguishment
      of debentures, net of related income taxes                              692                  -                 12,781
    Class A Common Stock option expense                                       261                  261                  -
    Loss (gain) on sale of assets                                             -                (15,496)               3,231
    Depreciation and amortization                                          55,805               45,585               43,328
    Equity in losses of affiliated entities                                    58                3,707                3,817
    Increase in restricted cash                                            (8,574)              (1,196)                 -
    Increase in trade receivables                                          (7,549)              (2,193)              (1,154)
    Increase in other receivables, deposits,
      prepaid expenses and other assets                                   (14,526)                (827)             (12,865)
    Increase in accounts payable, accrued
      liabilities and subscriber prepayments and deposits                  19,040                7,597                4,910
                                                                        ---------             --------             --------
Net cash provided by operating activities                                  23,491               28,747                5,201
                                                                        ---------             --------             --------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of cable television systems                                     (253,724)                 -                (26,455)
Sale of cable television systems                                              -                 35,587               15,258
Purchase of property and equipment                                        (63,216)             (28,801)             (20,155)
Investment in cable television partnerships and affiliates                 (4,200)             (34,846)             (16,918)
Acquisition Costs                                                             -                 (5,438)                 -
Other, net                                                                   (304)                 997                  -  
                                                                        ---------             --------             --------
Net cash used in investing activities                                    (321,444)             (32,501)             (48,270)
                                                                        ---------             --------             -------- 

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings                                                   30,000               84,000              192,000
Repayment of debt                                                             -               (251,000)            (164,000)
BCI Investment                                                                -                258,893                  -
Equity acquisition fees                                                       -                 (2,600)                 -
Proceeds from Senior Note Offering                                        200,000                  -                    -
Senior Note offering costs                                                 (3,500)                 -                    -
Proceeds from issuance of Class A Common
  Stock and Class A Common Stock options                                      462                1,463               53,004
Decrease (increase) in accounts receivable from affiliated entities        13,712               (9,680)              (1,218)
Purchase of Company stock                                                     -                    -                   (748)
Redemption of debentures                                                  (19,368)                 -               (138,000)
Proceeds from debenture offerings, net                                        -                    -                 98,115
Other, net                                                                    315                  670                  761
                                                                        ---------             --------             --------
Net cash provided by financing activities                                 221,621               81,746               39,914
                                                                        ---------             --------             --------

Increase (decrease) In Cash and Cash Equivalents                          (76,332)              77,992               (3,155)

Cash and Cash Equivalents, beginning of year                               78,646                  654                3,809
                                                                        ---------             --------             --------

Cash and Cash Equivalents, end of year                                $     2,314          $    78,646           $      654
                                                                        =========             ========             ========
</TABLE>





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





                                      55
<PAGE>   59
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the years ended December 31, 1995, 1994 and 1993


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, 1995, through a total
of 54 owned and managed cable television systems, the Company served
approximately 1.4 million subscribers in the United States.  On December 19,
1994, the shareholders of the Company approved an Exchange Agreement and Plan
of Reorganization and Liquidation dated May 31, 1994, as amended, between the
Company and Jones Spacelink, Ltd. ("Spacelink") providing for the acquisition
by the Company of substantially all of the assets of Spacelink and the
assumption by the Company of all of the liabilities of Spacelink.  On December
20, 1994, the Company acquired all of the assets of Spacelink (except for the
2,859,240 shares of the Company's Common Stock owned by Spacelink) and assumed
all of the liabilities of Spacelink (other than liabilities with respect to
Spacelink shareholders exercising dissenters' rights) in exchange for 3,900,000
shares of the Company's Class A Common Stock.  Glenn R. Jones, Chairman and
Chief Executive Officer of the Company, controls the election of a majority of
the Company's Board of Directors, through his ownership of a majority of the
Company's outstanding Common Stock.

         In May 1994, the Company and Bell Canada International Inc. ("BCI")
entered into an agreement whereby BCI agreed to acquire an approximate 30%
economic interest in the Company through the purchase of approximately 38% of
the Class A Common Stock of the Company.  BCI is a wholly owned subsidiary of
BCE Inc., Canada's largest telecommunications company.  On December 19, 1994,
the shareholders of the Company approved the agreement.  The investment by BCI
was made in two installments: the purchase of 2,500,000 newly issued shares of
Class A Common Stock of the Company at $22 per share for $55,000,000 in March
1994, and the purchase of 7,414,300 newly issued shares of Class A Common Stock
of the Company at $27.50 per share for $203,893,250 in December 1994, resulting
in BCI owning an approximate 30% economic interest in the Company for a total
consideration of approximately $258,900,000.  BCI also has a contractual
commitment to invest up to an additional $141,100,000 to maintain its 30%
interest in the event the Company offers additional Class A Common Stock.  BCI
has the right to maintain or increase its ownership by investing amounts beyond
the $141,100,000 commitment.

         On December 20, 1994, Jones International, Ltd. ("International"),
which is wholly owned by Glenn R. Jones, Chairman and Chief Executive Officer
of the Company, as well as certain subsidiaries of International, and Mr. Jones
individually, granted BCI options to acquire 2,878,151 shares of the Common
Stock of the Company.  Except in limited circumstances, the option will only be
exercisable during the eighth year after December 20, 1994.  The exercise of
such options would result in BCI holding a sufficient number of shares of the
Common Stock of the Company to enable BCI to elect a majority of the Company's
Board of Directors.

         Effective Registration Statement

         The Company has an effective registration statement relating to the
sale of $600 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 $600 million
pursuant to this





                                      56
<PAGE>   60
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
              For the years ended December 31, 1995, 1994 and 1993



registration statement.  Proceeds would be used for general corporate purposes,
which may include the acquisition of cable television systems from managed
partnerships and/or from unaffiliated parties, refinancings of indebtedness,
working capital, capital expenditures, and repurchases and redemptions of
securities.

         Summary of Significant Accounting Policies

         Basis of Presentation

         The Company has changed its fiscal year end from May 31 to December
31, effective December 31, 1995.  Accordingly, the accompanying financial
statements have been restated to present the Company's financial position as of
December 31, 1995 and 1994 and its results of operations, changes in
shareholders' investments and cash flows for each of the three years in the
period ended December 31, 1995.

         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, including Jones Cable Holdings, Inc.
("JCH"), a wholly owned subsidiary formed in October 1995 that owns a majority
of the cable television assets currently held by the Company.  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.

         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,            
                                                           -------------------------------------------------
                                                               1995               1994                1993  
                                                           -------------------------------------------------
         <S>                                                <C>                <C>                <C>
         (Stated in Thousands)
         Income taxes                                       $    -             $    -             $    -    
                                                              ========           ========           ========
         Interest                                           $   43,079         $   36,904         $   39,751
                                                              ========           ========           ========
</TABLE>


         Non-cash transactions:  On July 22, 1994, the Company and certain of
its wholly owned subsidiaries transferred all of their interests in their
cable/telephony properties in the United Kingdom to Bell Cablemedia plc ("Bell
Cablemedia"), in exchange for 6,035,648 ADSs representing 30,178,240 Ordinary
Shares of Bell Cablemedia.  On October 13, 1994, Jones Spanish Holdings, Inc.
("Spanish





                                      57
<PAGE>   61
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
              For the years ended December 31, 1995, 1994 and 1993



Holdings") and Jones International Spanish Investments, Inc. transferred all of
their interests in their Spanish cable/telephony properties to Bell Cablemedia
in exchange for a total of 190,148 ADSs, representing 950,740 Ordinary Shares
of Bell Cablemedia.  As described above, on December 20, 1994, the Company
acquired substantially all of the assets of Spacelink and assumed all of the
liabilities of Spacelink in exchange for 3,900,000 shares of the Company's
Class A Common Stock.  As described in Note 4, on April 11, 1995, the Company
converted its $20,000,000 in advances to the Mind Extension University, Inc.
("ME/U") into Class A Common Shares of Jones Education Networks, Inc. ("JEN").
During 1995 and 1994, the Company recorded $261,000 and $261,000, respectively
of Additional Paid-in Capital related to Class A Common Stock option grants as
discussed in Note 9.

         Restricted Cash

         Restricted cash consists of $3,413,000 relating to a non-qualified
deferred compensation plan in which certain employees of the Company
participate and $6,357,000 pledged to commercial banks for letters of credit.
In February 1996, $4,600,000 of the cash pledged for letters of credit was
released by the banks.

         Property, Plant and Equipment

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

<TABLE>
                 <S>                                                                       <C>
                 Distribution systems including capitalized
                    interest and operating expenses                                        Primarily 15 years
                 Buildings                                                                 10-20 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
</TABLE>

         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 18 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 on the
Company's Consolidated Statements of Operations.





                                      58
<PAGE>   62
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
              For the years ended December 31, 1995, 1994 and 1993



         Investment in Equity Securities

         The 6,225,796 American Depository Shares ("ADSs") of Bell Cablemedia
plc held by the Company are now considered available for sale because of an
effective shelf registration statement that is available to the Company.  In
accordance with Statement of Financial Accounting Standards No. 115 "Accounting
for Certain Investments in Debt and Equity Securities," the ADSs are reflected
at their quoted fair market value with the unrealized holding gain reflected as
a separate component of shareholders' investment.

         Deferred Financing Costs

         Costs incurred in connection with the issuance of 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 related to 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 related to
cable television properties sold by such partnerships to the Company are
treated as a reduction of the purchase prices of the cable television systems
purchased.  Distributions earned by the Company as general partner of its
managed partnerships related to cable television properties sold by such
partnerships to entities in which the Company has a continuing equity interest
are deferred and recognized as revenue in future periods.

         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.
Common stock equivalents were not significant to the computation of primary
earnings per share.

         Treasury Stock

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

2.       ACQUISITIONS, EXCHANGES AND SALES

         Acquisitions by the Company

         On October 20, 1995, the Company purchased the cable television system
serving areas in and around Augusta, Georgia (the "Augusta System") from Cable
TV Fund 12-B, Ltd. ("Fund 12-B"), one of the Company's managed limited
partnerships.  The purchase price was $142,618,000, subject to normal closing
adjustments.  The purchase price was determined by averaging three separate
independent appraisals of the fair market value of the Augusta System.  The
Company, as general partner of Fund 12-





                                       59
<PAGE>   63
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
              For the years ended December 31, 1995, 1994 and 1993



B, received a distribution from Fund 12-B of $13,222,000 upon the closing of
this transaction.  Such distribution reduced the Company's basis in the assets
of the Augusta System.  The Augusta System passes approximately 102,000 homes
and serves approximately 68,200 basic subscribers.  Funding for this
transaction was provided by cash on hand.

         On November 29, 1995, the Company purchased the cable television
system serving Dale City, Lake Ridge, Woodbridge, Fort Bevoir, Triangle,
Dumfries, Quantico, Accoquan and portions of Prince William County, all in the
state of Virginia (the "Dale City System") from an unaffiliated party.  The
purchase price was $123,000,000, subject to normal closing adjustments.  The
purchase was funded by cash on hand and borrowings available under the
Company's credit facility.  The Company paid Jones Financial Group, Ltd.
("Financial Group"), a subsidiary of Jones International, Ltd.,  a fee of
$1,328,400 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 brokers.  The
Dale City System passes approximately 65,100 homes and serves approximately
49,300 basic subscribers.

         On January 10, 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 $71,000,000, subject to normal closing adjustments.  The
purchase was funded by borrowings available under the Company's credit
facility.  The Company paid Financial Group a fee of $896,000 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 brokers.  The Manassas System passes
approximately 39,300 homes and serves approximately 26,500 basic subscribers.

         On August 11, 1995, the Company entered into a purchase and sale
agreement with IDS/Jones Growth Partners 87-A, Ltd., one of the Company's
managed partnerships, to acquire from such partnership 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
Carmel System passes approximately 24,400 homes and serves approximately 19,200
basic subscribers.  Closing of this transaction was completed February 28,
1996.  The purchase of the Carmel System was funded by borrowings available
under the Company's revolving credit facility.

         On August 11, 1995, the Company entered into a purchase and sale
agreement with Jones Cable Income Fund 1-B, Ltd., one of the Company's managed
partnerships, to acquire from such partnership 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 Orangeburg System passes approximately 16,530 homes and services
approximately 12,500 basic subscribers.  Closing of this transaction was
completed February 28, 1996.  The purchase of the Orangeburg System was funded
by borrowings available under the Company's revolving credit facility.

         On August 11, 1995, the Company entered into a purchase and sale
agreement with the Cable TV Fund 12-BCD Venture (the "Venture"), a joint
venture of three of the Company's managed partnerships,





                                      60
<PAGE>   64
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
              For the years ended December 31, 1995, 1994 and 1993



to acquire from the Venture 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 Tampa System passes
approximately 128,500 homes and serves approximately 65,000 basic subscribers.
Closing of this transaction was completed February 28, 1996.  The purchase of
the Tampa System was funded by borrowings available under the Company's
revolving credit facility.

         Exchange by the Company

         On August 11, 1995, the Company entered into an asset exchange
agreement (the "TWEAN Exchange Agreement") with Time Warner
Entertainment-Advance/Newhouse Partnership ("TWEAN"), an unaffiliated cable
television system operator.  Pursuant to the TWEAN Exchange Agreement, on
February 29, 1996, the Company conveyed to TWEAN the Carmel System, the
Orangeburg System and the Tampa System and cash in the amount of $3,500,000
(subject to normal closing adjustments).  In return, the Company 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 "Prince Georges County System"), and portions of
Fairfax County, Virginia (the "Reston System").  These systems serve
approximately 85,000 subscribers.  This transaction was considered a
non-monetary exchange of similar productive assets for accounting purposes and
the 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.
The Company paid Financial Group a $1,668,000 fee upon the completion of the
TWEAN Exchange Agreement 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 brokers.

         The pro forma effect of the above-described acquisitions and exchange
on the Company's results of operations for the year ended December 31, 1995,
assuming the transactions occurred January 1, 1995, are presented in the
following unaudited tabulation.  The Company expects operating income before
depreciation and amortization to increase approximately $40,230,000 as a result
of these transactions, but depreciation and amortization charges will cause
operating income to decrease and net loss to increase.

<TABLE>
<CAPTION>
                                                                For the year ended December 31, 1995:
                                                                -------------------------------------

                                                        As Reported          Adjustments            Pro Forma 
                                                        -----------          -----------           -----------
         <S>                                         <C>                  <C>                   <C>
         Revenues                                    $       188,838      $        98,703       $       287,541
                                                       =============         ============         =============

         Operating Income                            $        14,729      $        (8,260)      $         6,469
                                                       =============         ============         =============

         Net Loss                                    $       (21,716)     $       (38,859)      $       (60,575)
                                                       =============         ============         ============= 

         Loss Per Share                              $          (.69)                           $         (1.94)
                                                       =============                              =============  
</TABLE>





                                       61
<PAGE>   65
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
              For the years ended December 31, 1995, 1994 and 1993



         The pro forma effect of the above-described acquisitions and exchange
and the acquisition of the assets of Jones Spacelink, Ltd. in December 1994 on
the Company's results of operations for the year ended December 31, 1994,
assuming the transactions occurred January 1, 1994, are presented in the
following unaudited tabulation:

<TABLE>
<CAPTION>
                                                                For the year ended December 31, 1994:
                                                                -------------------------------------

                                                        As Reported          Adjustments            Pro Forma 
                                                        -----------          -----------           -----------
               <S>                                   <C>                  <C>                   <C>
               Revenues                              $       131,889      $       133,958       $       265,847
                                                       =============         ============         =============

               Operating Income                      $        11,178      $       (15,504)      $        (4,326)
                                                       =============         ============         =============  

               Net Loss                              $        (8,691)     $       (54,632)      $       (63,323)
                                                       =============         ============         ============= 

               Loss Per Share                        $          (.45)                           $         (3.24)
                                                       =============                              =============  
</TABLE>

         Prior Year Acquisition

         In December 1993, the Company acquired the cable television systems
serving North Augusta, South Carolina and surrounding areas (the "North Augusta
System") for $27,200,000.  The Company paid The Jones Group, Ltd. $680,000 for
brokerage services related to this acquisition.  At that time, the Company
owned only 20% of The Jones Group, Ltd.  The North Augusta System acquisition
was accounted for using the purchase method of accounting.  Its results of
operations are included in the Company's Consolidated Statements of Operations
from December 15, 1993 forward.

         Proposed Acquisitions by the Company

         On September 5, 1995, the Company entered into an asset purchase
agreement with Cable TV Joint Fund 11, a joint venture (the "Venture") among
Cable TV Fund 11-A, Ltd., Cable TV Fund 11-B, Ltd., Cable TV Fund 11-C, Ltd.
and Cable TV Fund 11-D, Ltd., Colorado limited partnerships managed by the
Company, to acquire from the Venture the cable television system serving the
City of Manitowoc, Wisconsin (the "Manitowoc System").  The purchase price is
$15,735,667, which is the average of three separate independent appraisals of
the fair market value of the Manitowoc System.  The closing of this transaction
is contingent upon  the City of Manitowoc's approval of the renewal and
transfer of the City of Manitowoc cable television franchise and the approval
of the transaction by a majority of the limited partners of each of the four
partnerships that form the Venture.  The Company, as general partner of the
partnerships that form the Venture, will receive a distribution of
approximately $3,900,000 upon the closing of this transaction.  The Manitowoc
System passes approximately 16,000 homes and serves approximately 10,800 basic
subscribers.

         On September 5, 1995, the Company entered into an asset purchase
agreement with Jones Spacelink Income Partners 87- 1, L.P., a Colorado limited
partnership managed by the Company, to acquire from that partnership 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





                                      62
<PAGE>   66
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
              For the years ended December 31, 1995, 1994 and 1993



Area, Rittman, West Salem, Bloomville, Spencer, Polk and Congress, all in the
State of Ohio (the "Lodi System").  The purchase price is $25,706,000, which is
the average of three separate independent appraisals of the fair market value
of the Lodi System.  The Lodi System passes approximately 20,600 homes and
serves approximately 15,100 basic subscribers.

         On September 5, 1995, the Company entered into an asset purchase
agreement with Jones Spacelink Income/Growth Fund 1-A, Ltd., a Colorado limited
partnership managed by the Company, to acquire from that partnership the cable
television system serving the areas in and around Ripon, Wisconsin (the "Ripon
System").  The purchase price is $3,712,667, which is the average of three
separate independent appraisals of the fair market value of the Ripon System.
The Ripon System passes approximately 2,500 homes and serves approximately
2,450 basic subscribers.

         On September 5, 1995, the Company entered into a second asset purchase
agreement with Jones Spacelink Income/Growth Fund 1-A, Ltd. to acquire from
that partnership the cable television system serving the areas in and around
Lake Geneva, Wisconsin (the "Lake Geneva System").  The purchase price is
$6,345,667, which is the average of three separate independent appraisals of
the fair market value of the Lake Geneva System.  The Lake Geneva System passes
approximately 5,400 homes and serves approximately 3,600 basic subscribers.

         Funding for these acquisitions is expected to be provided by
borrowings available under the Company's revolving credit facility.  The
closings of the Company's acquisitions of the Manitowoc System, the Lodi
System, the Ripon System and the Lake Geneva System are not contingent upon the
closing of the Time Warner exchange.

         Proposed Exchange by the Company

         On September 1, 1995, the Company entered into an asset exchange
agreement (the "Time Warner Exchange Agreement") with Time Warner Entertainment
Company, L.P. ("Time Warner"), an unaffiliated party.  Pursuant to the Time
Warner Exchange Agreement, the Company will convey to Time Warner the cable
television system serving Hilo, Hawaii (the "Hilo System") and the cable
television system serving Kenosha, Wisconsin (the "Kenosha System") as well as
the Manitowoc System, the Lodi System, the Ripon System and the Lake Geneva
System.  The Hilo System and the Kenosha System serve approximately 17,000 and
27,000 basic subscribers, respectively, and pass approximately 23,000 and
39,000 homes, respectively.  In return, the Company will receive from Time
Warner the cable television systems serving the communities in and around
Savannah, Georgia (the "Savannah System") and cash in the amount of $4,000,000,
subject to normal closing adjustments.  Taking into account the aggregate
purchase price to be paid by the Company for the Lodi System, the Lake Geneva
System, the Ripon System and the Manitowoc System and the estimated valuation
of the Hilo System and the Kenosha System, less the $4,000,000 cash purchase
price to be paid by Time Warner to the Company, the aggregate consideration to
be paid for the Savannah System is approximately $119,195,000.  The Savannah
System passes approximately 100,000 homes and serves approximately 63,000
subscribers.  This transaction will be considered a non-monetary exchange of
similar productive assets for accounting purposes and the Savannah System will
be recorded at the historic costs of the assets given up less the $4,000,000
cash consideration.





                                       63
<PAGE>   67
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
              For the years ended December 31, 1995, 1994 and 1993



         The closing of the transaction contemplated by the Time Warner
Exchange Agreement is subject to customary closing conditions, including
obtaining necessary governmental and other third party consents.  The parties
intend to complete the transactions during the first half of 1996, but there
can be no assurance that all conditions will be satisfied or waived by that
time.  Either party may terminate the Time Warner Exchange Agreement if the
transactions are not completed on or before September 30, 1996.  The Company
will pay Financial Group a $1,286,000 fee upon the completion of the Time
Warner Exchange Agreement 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 brokers.

         Sales by the Company

         During 1993, the Company sold the cable television system serving a
portion of San Diego County, California for $15,258,000.  Brokerage fees
totaling approximately $381,000, or 2 1/2% of the sales prices, were paid to
The Jones Group, Ltd., which at the time was owned 20% by the Company.  The
Company recognized a loss relating to this transaction of $3,231,000 during
1993.

         On January 7, 1994, the Company entered into an agreement with Bresnan
Communications Company ("Bresnan") to sell its Gaston County, North Carolina
cable television system (the "Gaston System") to Bresnan for $36,500,000,
subject to normal closing adjustments.  Closing on this transaction occurred in
July 1994.  The Company paid The Jones Group, Ltd., which at the time was owned
20% by the Company, $912,500 for brokerage services related to this
acquisition.  Proceeds from the sale of the Gaston System were used to repay
amounts outstanding on the Company's credit facility.  The Company recognized a
gain of $15,496,400 related to this transaction.

         Proposed Sale by Managed Partnership

         On October 6, 1995, Cable TV Fund 11-B, Ltd. ("Fund 11-B"), one of the
Company's managed partnerships, entered into an agreement to sell the cable
television systems serving areas in and around Lancaster, New York to an
unaffiliated third party for $84,000,000.  Upon closing of this transaction,
Fund 11-B will repay its indebtedness, a brokerage fee and a sales tax
liability, and Fund 11-B then will distribute the remaining proceeds to its
partners.  The Company, as general partner of Fund 11-B, expects to receive a
distribution of approximately $13,950,000 related to this transaction.  In
addition, The Jones Group, Ltd., which became a wholly owned subsidiary of the
Company on December 20, 1994, will receive a fee of $2,100,000 for acting as
the broker in this transaction.  The closing of this transaction is expected to
occur in the first half of 1996.

3.       TRANSACTIONS WITH RELATED PARTIES

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





                                      64
<PAGE>   68
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
              For the years ended December 31, 1995, 1994 and 1993



         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 all 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 affiliated partnerships for the
years ended December 31, 1995, 1994 and 1993 totaled $6,439,000, $5,361,000 and
$4,175,000, 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 49% of
the building to International and certain affiliates of International on the
same terms and conditions as the above-mentioned lease.  Rent payments to Jones
Properties, Inc., net of subleasing reimbursements, for the three years ended
December 31, 1995, 1994 and 1993 were $1,645,000, $1,762,000 and $1,735,000,
respectively.

         Upon the closing of the BCI investment in December 1994, the Company
entered into a Secondment Agreement with BCI.  Pursuant to the Secondment
Agreement, BCI provided nine secondees during 1995.  These secondees worked for
the Company and its managed partnerships.  The Company reimbursed BCI for the
full employment costs of such individuals.  The Company reimbursed BCI $823,000
during the year ended December 31, 1995.  No such reimbursements were made
during 1994 or 1993.

         The Company paid approximately 25%, 21% and 21% of the above-described
data processing, rental and secondment expenses during the years ended December
31, 1995, 1994 and 1993, respectively.  The remainder of the expenses were
allocated to and paid by the Company's managed limited partnerships.

         Costs Borne and Payments Received by the Company

         In 1992, the Company entered into a license agreement with Jones Space
Segment, Inc. ("Space Segment"), an affiliate of International, to use a
non-preemptible transponder on a domestic communications satellite leased by
Space Segment.  Under the license agreement, as amended, which expired December
31, 1994, the Company, Jones Infomercial Networks, Inc. and Jones Computer
Network, Ltd. ("JCN"), both affiliates of International, had a license to use
the transponder for their respective purposes.  The Company recognized
$1,172,000 and $2,400,000 of rental expense related to this lease agreement
during the years ended December 31, 1994 and 1993, respectively.  Because the
license has expired, no expense related to this lease agreement was recognized
during the year ended December 31, 1995.

         Product Information Network, Inc. ("PIN") is an affiliate of
International that provides a satellite programming service.  PIN shows 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





                                       65
<PAGE>   69
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
              For the years ended December 31, 1995, 1994 and 1993



totaled approximately $300,000 and $103,000 for the years ended December 31,
1995 and 1994, respectively.  No such payments were made for the year ended
December 31, 1993.

         The Company has incurred approximately $2,717,000, $2,994,000 and
$3,849,000 of related party expenses in connection with the related party
transactions shared with managed partnerships and the related party costs borne
solely by the Company, which have been charged to operating, general and
administrative expenses during the years ended December 31, 1995, 1994 and
1993, respectively.

         Effective upon the closing of the BCI investment in December 1994, the
Company entered into a Supply and Services Agreement with BCI.  Pursuant to the
Supply and Services Agreement, BCI provides the Company with access to the
expert advice of personnel from BCI and its affiliates for the equivalent of
three man-years on an annual basis.  The Company will pay an annual fee of
$2,000,000 to BCI during the term of the agreement.  Payments to BCI under the
Supply and Services Agreement during the year ended December 31, 1995 totaled
$2,000,000.  No payments were made during the years ended December 31, 1994 and
1993.

         Financial Group, which is owned by International and Glenn R. Jones,
performs services for the Company as its agent in connection with negotiations
regarding various financial arrangements of the Company.  The Company has
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
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 term
of the Financial Services Agreement is for eight years.  The Company paid fees
totaling $1,328,400 in 1995 related to the purchase of the Dale City System.
In December 1994, the Company paid fees of $2,000,000 to Financial Group for
its services to the Company in connection with the BCI investments in the
Company (see Note 1).  In addition, the Company paid an advisory fee of
L.414,854 (approximately $632,600) to Financial Group in 1994 for its services
to the Company in connection with the Company's transfer of all of its
interests in its cable/telephony properties in the United Kingdom to Bell
Cablemedia plc (see Note 4).

         During 1994 and 1993, the Company carried accounts receivable from
International and its affiliates totaling $2,000,000.  This receivable was
repaid in January 1995.  Interest on such receivables was charged at the
Company's average cost of borrowing plus 2%.

         For information about additional transactions between the Company and
related parties, see Note 4 below.

4.       INVESTMENTS IN CABLE TELEVISION PARTNERSHIPS AND JOINT VENTURES

         Jones Global Group, Inc.

         The Company owns a 38% interest in Jones Global Group, Inc. ("Jones
Global Group"), a Colorado corporation of which 62% is owned by International.
On July 22, 1994, Jones Global Group and certain of Jones Global Group's wholly
owned subsidiaries transferred all of their interests in their cable/telephony
properties in the United Kingdom to Bell Cablemedia plc, a public limited
company





                                      66
<PAGE>   70
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
              For the years ended December 31, 1995, 1994 and 1993



incorporated under the laws of England and Wales, in exchange for 3,663,584
American Depository Shares ("ADSs") representing 18,317,920 Ordinary Shares of
Bell Cablemedia.  In July 1994, Jones Global Group sold 1,100,000 ADSs.  Jones
Global Group paid an advisory fee of L.251,812 (approximately $384,000) to
Financial Group for its services to Jones Global Group in connection with the
aforementioned United Kingdom transactions.  In 1995, Jones Global Group sold
an additional 444,200 ADSs.  The Company accounts for Jones Global Group using
the equity method of accounting and accordingly has recorded its share of gain
relating to the sale of ADSs by Jones Global Group.

         Bell Cablemedia plc

         On July 22, 1994, the Company and certain of its wholly owned
subsidiaries transferred all of their interests in their cable/telephony
properties in the United Kingdom to Bell Cablemedia plc in exchange for
6,035,648 ADSs representing 30,178,240 Ordinary Shares of Bell Cablemedia.  As
a result of this transaction, the Company no longer owns any direct interest in
cable/telephony properties in the United Kingdom.  Jones Spanish Holdings, Inc.
("Spanish Holdings") is an affiliate indirectly owned 38% by the Company and
62% by International.  On October 13, 1994, Spanish Holdings and Jones
International Spanish Investments, Inc., a subsidiary of International,
transferred all of their interests in their cable/telephony properties in Spain
to Bell Cablemedia in exchange for a total of 190,148 ADSs representing 950,740
Ordinary Shares of Bell Cablemedia.  Such shares subsequently were transferred
to the Company in repayment of advances made to finance such affilates' Spanish
operations.  As a result of this transaction, the Company and its affiliates no
longer own any direct interest in cable/telephony properties in Spain.  The
Company paid an advisory fee of L.414,854 (approximately $632,600) to Financial
Group in 1994 for its services to the Company in connection with the
aforementioned United Kingdom and Spain transactions.  The 6,225,796 ADSs of
Bell Cablemedia plc held by the Company are now considered available for sale
because of an effective shelf registration statement that is available to the
Company.  In accordance with Statement of Financial Accounting Standards No.
115 "Accounting for Certain Investments in Debt and Equity Securities," the
ADSs are reflected at their estimated fair market value with the unrealized
holding gain reflected as a separate component of shareholders' investment.

         Mind Extension University, Inc.

         During 1992, the Company invested $10,000,000 in ME/U, an affiliated
company and subsidiary of JEN, that provides educational programming through
affiliated and unaffiliated cable television systems, for 25% of the stock of
ME/U, which also received certain advertising avails and administrative and
marketing considerations from the Company.  The number of shares of Class A
Common Stock of ME/U issued to the Company was based on the average of two
separate independent appraisals of ME/U.  Through its acquisition of the assets
of Spacelink, the Company obtained an additional 13% interest in ME/U in
December 1994.  Spacelink had acquired such interest for $3,135,000.  Payments
made to ME/U by the Company for programming provided to the Company's owned
cable television systems for the years ended December 31, 1995, 1994 and 1993
totaled approximately $196,000, $116,000 and $90,000, respectively.  At
December 31, 1995, the Company's net investment in ME/U was $2,419,977.

         Jones Education Networks, Inc.

         In 1993, 1994 and 1995, the Company advanced a total of $20,000,000 to
ME/U.  Interest on such advances was charged at the Company's weighted average
cost of borrowing plus two percent.  On





                                       67
<PAGE>   71
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
              For the years ended December 31, 1995, 1994 and 1993



April 11, 1995, the Company converted its advances to ME/U into shares of Class
A Common Stock of Jones Education Networks, Inc. ("JEN"), the parent company of
ME/U, for an approximate 17% equity interest in JEN.  JEN is an affiliate of
International and, in addition to its 51% ownership of ME/U, JEN owns an 81%
interest in Jones Computer Network, Ltd.  ("JCN").  Payments made to JCN by the
Company for programming provided to the Company's owned cable television
systems for the years ended December 31, 1995 and 1994 totaled approximately
$488,000 and $68,000, respectively.  No such payments were made for the year
ended December 31, 1993.

         Jones Intercable Investors, L.P.

         The Company is the general partner of Jones Intercable Investors,
L.P., a Colorado limited partnership, which was formed on September 18, 1986,
and the Company owns a 1% general partner interest.  In a series of
transactions, the Company purchased limited partnership units, giving the
Company an approximate 19% limited partner interest in Jones Intercable
Investors, L.P.  The Company's net investment in this partnership totaled
approximately $3,982,000 at December 31, 1995.  Based upon the quoted market
price of $12.38 per unit at December 31, 1995, the quoted market value of this
investment was approximately $19,709,000.  The Company has accounted for this
investment using the equity method of accounting.

         Jones Cyber Solutions, Ltd.

         The Company and Jones Cyber Solutions, Ltd. ("JCS"), an indirect
subsidiary of International, have formed a venture, known as Jones Customer
Service Management, L.L.C., for the purpose of developing a subscriber billing
and management system.  As of December 31, 1995, the Company had invested
$5,200,000 in the venture.  JCS is performing the basic system development work
for the venture and is being paid periodically on a time and materials basis,
plus 10% of the amount charged, for its own service.  Upon the completion of
the billing and management system software, the Company and JCS will have
license rights to use such system in perpetuity.  The venture will also perform
additional services to the Company in the implementation of the new subscriber
billing and management system.  The venture intends to subcontract such
maintenance and conversion services to JCS on the basis of time and materials
plus 10% of the amount of the JCS services.  The venture will grant to JCS the
exclusive right to distribute the system to third parties for a period of five
years for a commission on the license fees to be earned by the venture from
such licensing.

5.       MANAGED PARTNERSHIPS

         Organization

         The Company is general partner for a number of limited partnerships
formed to acquire, construct, develop and operate cable television systems.  In
addition, through its acquisition of Spacelink, the Company obtained general
partner interests in a number of partnerships previously managed by Spacelink.
Partnership capital has been raised principally through a series of public
offerings of limited partnership interests.  The Company 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.





                                      68
<PAGE>   72
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
              For the years ended December 31, 1995, 1994 and 1993



         Management Fees

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

         Distributions

         Any partnership distributions made from cash flow (defined as cash
receipts derived from routine operations, less debt principal and interest
payments and cash expenses) are generally allocated 99% to the limited partners
and 1% to the general partner.  With respect to Cable TV Funds 11 and 12, any
distributions other than from cash flow, such as from sale or refinancing of
the system or upon dissolution of the partnership, are generally made as
follows:  first, to the limited partners in an amount which, together with all
prior distributions, will equal the amount initially contributed to the
partnership capital by the limited partners and the balance, 75% to the limited
partners and 25% to the general partner.  With respect to Cable TV Fund 14, any
distributions other than from cash flow are generally made as follows:  first,
to the limited partners in an amount which, together with all prior
distributions from cash flow, will equal 125% of the amount initially
contributed to the partnership and the balance, 75% to the limited partners and
25% to the general partner.  With respect to Cable TV Fund 15, any
distributions other than from cash flow are generally made as follows:  first,
to the limited partners and general partner in an amount which, together with
all prior distributions, will equal the amount initially contributed to the
partnership capital by the limited partners and general partner; second, to the
limited partners which, together with all prior distributions, will equal a 6%
per annum cumulative and noncompounded return on the capital contributions of
the limited partners; the balance, 75% to the limited partners and 25% to the
general partner.

         With respect to the Jones Cable Income Fund partnerships, any
distributions other than from cash flow are generally made as follows:  first,
to the limited partners in an amount which, together with all prior
distributions made from sources other than cash flow, will equal the amount
initially contributed to partnership capital; second, to the limited partners
in an amount which, together with all prior distributions from cash flow, will
equal a liquidation preference ranging from 10% to 12% per annum, cumulative
and noncompounded, on their initial capital contributions and the balance, 75%
to the limited partners and 25% to the general partner.

         Any distributions other than from cash flow made by Jones Intercable
Investors, L.P. (Note 4) are generally distributed as follows:  first, to the
holders of the Class A Units an amount which, together with all prior
distributions of cash flow from operations, will equal a preferred return equal
to 10% per annum, cumulative and noncompounded, on an amount equal to $16.00
per Class A Unit, less any portion of such amount which may have been returned
to the Unitholders from prior sale or refinancing proceeds; second, to the
holders of Class A Units an amount which, together with all prior distributions
other than distributions of cash flow from operations, will equal $16.00 per
Class A Unit, and the remainder, 60% to the holders of the Class A Units and
40% to the general partner.

         For the partnerships formerly managed by Spacelink, any partnership
distributions made from cash flow, as defined, are generally allocated 99% to
the limited partners and 1% to the general partner.  The





                                       69
<PAGE>   73
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
              For the years ended December 31, 1995, 1994 and 1993



general partner is also entitled to partnership distributions other than from
cash flow, such as from the sale or refinancing of systems or upon dissolution
of the partnerships, which are a portion of the net remaining assets of such
partnership ranging from 15% to 40% after payment of partnership debts and
after investors have received an amount equal to their capital contribution
plus, in most cases, a preferential return on their investment.

         The Company recognized distributions from managed partnerships
totaling $13,222,000 for the year ended December 31, 1995.  No such
distributions were recognized during 1994 or 1993.  The $13,222,000
distribution received during 1995 from Cable TV Fund 12-B, Ltd. upon the sale
to the Company of the cable television system serving the area in and around
Augusta, Georgia was recorded as a reduction in the Company's basis in the
assets of the Augusta 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 BCI), 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 have been allocated based
on revenues and/or the relative cost of partnership assets managed.  As of
December 1993, remaining overhead costs have been allocated based solely on
revenues.  Company-owned systems are also allocated a proportionate share of
these expenses under the allocation formulas described above.  Amounts charged
partnerships and other affiliated companies have directly offset the Company's
general and administrative expenses by approximately $31,987,000, $32,645,000
and $30,196,000 for the years ended December 31, 1995, 1994 and 1993,
respectively.

         Advances

         The Company has made advances to certain of the limited 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, 1995
was 10.51%.  Interest charged to the limited partnerships for the years ended
December 31, 1995, 1994 and 1993 was $2,592,000, $4,250,000 and $1,814,000,
respectively.





                                      70
<PAGE>   74
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
              For the years ended December 31, 1995, 1994 and 1993



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

<TABLE>
<CAPTION>
                                                                                  December 31,           
                                                            --------------------------------------------------
                                                                     1995             1994              1993  
                                                            --------------------------------------------------
                                                                              (Stated in Thousands)
<S>                                                          <C>                 <C>              <C>
Total assets                                                 $    806,319        $     923,117    $     986,560
Debt                                                              676,760              688,393          668,015
Amounts due general partner                                        14,969               25,735           20,631
Partners' Capital (Net of
  accumulated deficit)                                             99,505              174,001          262,230

Revenues                                                          427,877              397,318          385,990
Depreciation and amortization                                     151,236              153,520          157,643
Operating loss                                                    (16,438)             (34,565)         (32,987)
Net income (loss)                                                  20,964              (80,988)         (73,655)
</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, with the exception of
Spacelink Fund 4, Ltd. ("Fund 4").  The Company has reserved the portion of its
advance to Fund 4 that exceeds the fair value of Fund 4's assets.

         The amount reported as combined net income (loss) for all managed
limited partnerships for the year ended December 31, 1995 included gains on
sales and liquidations recognized by certain partnerships which totaled
approximately $91,693,000.  No such gains were recognized during the years
ended December 31, 1994 or 1993.

6.       NOTES RECEIVABLE

         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 is $6,554,500.  Interest on the principal is at the prime rate
plus one percent and is paid quarterly.  The note matures on December 19, 1999.
The note is secured by the real and personal property of Earth Segment.

         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, 1995 was $1,834,000.





                                       71
<PAGE>   75
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
              For the years ended December 31, 1995, 1994 and 1993




7.       DEBT

         Debt consists of the following:
<TABLE>
<CAPTION>
                                                                                         December 31,             
                                                                                 ----------------------------
                                                                                   1995               1994      
                                                                                 ----------        ----------
                                                                                     (Stated in Thousands)
<S>                                                                            <C>               <C>
LENDING INSTITUTIONS:
   Credit facility                                                             $     30,000      $        -  

SENIOR NOTES:
   Senior Notes due March 15, 2002, interest payable
     semi-annually at 9 5/8%                                                        200,000               -

SUBORDINATED DEBENTURES:
   Debentures due July 15, 2004, interest payable
     semi-annually at 11.5%, redeemable at the Company's
     option on or after July 15, 1997 at 106.75% of par,
     declining to par by July 15, 2000                                              160,000           160,000
   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
   Convertible debentures due June 1, 2007, interest
     payable semi-annually at 7.5%, redeemed October 12, 1995                           -              19,368

OTHER:
   Capitalized equipment lease
     obligations due in installments through 1998 and other debt                      2,714             2,210
                                                                                 ----------        ----------

                 Total debt                                                    $    492,714      $    281,578
                                                                                 ==========        ==========
</TABLE>

         On October 31, 1995, the Company, through JCH, entered into a
$500,000,000 reducing revolving credit facility with a group of commercial
banks.  The new credit facility provides for the transfer of a majority of the
Company's cable television properties to JCH, which is the borrower under the
credit facility.  The entire $500,000,000 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 1995, $30,000,000 was
outstanding under this agreement.  Interest on outstanding obligations ranges
from Base Rate to Base Rate plus 1/8% or LIBOR plus 5/8% to LIBOR plus 1 1/8%
based on certain financial 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, 1995 was 6.56%.

         On March 23, 1995, the Company sold $200 million of 9 5/8% Senior
Notes due 2002.  The Senior Notes mature on 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, commencing
September 15, 1995.  The Senior Notes are not redeemable prior to maturity and
are not





                                      72
<PAGE>   76
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
              For the years ended December 31, 1995, 1994 and 1993



subject to any sinking fund.  The Senior Notes are senior unsecured obligations
of the Company.  The Company paid fees of $3,500,000 relating to this
transaction.  Such fees will be amortized over the life of the notes.

         The 11.5% Senior Subordinated Debentures due 2004 described above
provide for annual sinking fund payments of $50,000,000 commencing July 15,
2002 which are calculated to retire 62 1/2% of the issue prior to maturity
after consideration of the debt redemptions.  There are no sinking fund
requirements related to the 10.5% Senior Subordinated Debentures due March 1,
2008.

         On October 12, 1995, the Company redeemed the remaining outstanding
7.5% Convertible Subordinated Debentures (the "Convertible Debentures") due
2007, at a price equal to 101.5% of the principal amount, plus accrued
interest.  The total principal amount of the Convertible Debentures was
$43,100,000, of which $23,732,000 were held by the Company and $19,368,000 were
held by unaffiliated investors. The Convertible Debentures were redeemed with
cash on hand.  The Company recognized a loss of $692,000 relating to this
redemption.

         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 credit 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, 1995, the carrying amount of the Company's long-term
debt was $492,714,000 and the estimated fair value was $536,814,000.  The fair
value of the Company's long-term debt is estimated based on the quoted market
prices for the same issues.  There are not significant debt maturities in the
five years ended December 31, 2000.

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 taxes.

         During 1995, 1994, and 1993, 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 by a valuation allowance of an equal amount.  No current or deferred
federal income tax expense or benefit was recorded from continuing operations
during the reporting periods.





                                       73
<PAGE>   77
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
              For the years ended December 31, 1995, 1994 and 1993



         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 1995, 1994, and 1993 as a result of the following:

<TABLE>
<CAPTION>
                                                                              Year Ended December 31,         
                                                            --------------------------------------------------
                                                                    1995             1994                1993 
                                                            --------------------------------------------------
                                                                            (Stated in Thousands)
<S>                                                         <C>                <C>                <C>
Computed "expected" tax (benefit) expense                   $     (7,358)      $     (3,042)      $     (12,623)

State and local taxes, net of federal income
  tax benefit                                                       (619)              (194)             (1,150)
Dividends excluded for income tax purposes                           (73)              (118)                (21)
Intangibles not deductible for tax purposes                          500                971                 243
Tax credits                                                          -                  -                   591
Other                                                                261                 98                  17
                                                              ----------         ----------         -----------

Total income tax (benefit) provision from operations              (7,289)            (2,285)            (12,943)
Tax effect of extraordinary operations                              (265)               -                (4,889)
Valuation Allowance                                                7,554              2,285              17,832
                                                              ----------         ----------         -----------

Total income tax benefit                                    $        -         $        -         $        -  
                                                              ==========         ==========         ===========
</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, 1995 and 1994 are presented below:

<TABLE>
<CAPTION>
                                                                                 December 31,                   
                                                             ---------------------------------------------------
                                                                   1995                              1994    
                                                               ------------                      ------------
                                                                            (Stated in Thousands)
                                                                                                 
<S>                                                             <C>                           <C>
Deferred Tax Assets:
  Net operating loss carryforwards                              $     58,411                  $     53,226
  Investment tax credit carryforwards                                  1,076                         1,076
  Alternative minimum tax credit carryforwards                         1,116                         1,116
  Investment in affiliates and domestic television
    partnerships                                                       9,661                        10,093
Future deductible amounts associated with other
  assets and liabilities                                               2,330                         1,987
                                                                  ----------                    ----------

Total gross deferred tax assets                                       72,594                        67,498

Valuation allowance on deferred tax assets                           (29,253)                      (43,509)

Deferred tax liabilities
  Property and equipment, due to differences
    in depreciation methods for financial statement
    and tax purposes                                                 (24,608)                      (21,596)
Investment in Bell Cablemedia plc                                    (14,871)                        1,469
                                                                  ----------                    ----------

Net deferred tax asset                                          $      3,862                  $      3,862
                                                                  ==========                    ==========
</TABLE>





                                      74
<PAGE>   78
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
              For the years ended December 31, 1995, 1994 and 1993



         At December 31, 1995, the Company had net operating loss carryforwards
for income tax purposes aggregating approximately $75,371,000 for alternative
minimum tax ("AMT") and $152,709,000 for regular tax which expire $43,126,000
in 2004, $26,203,000 in 2007, $40,809,000 in 2008, $30,216,000 in 2009,
4,025,000 in 2010 and $8,330,000 in 2011.  The Company also had investment tax
credit carryforwards of $1,076,000 expiring in 1998 through 2005.

         The Company entered into transactions during the current year 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 believes that sufficient taxable income will be incurred
during the loss carryforward period to utilize approximately $81,961,000 of the
$152,709,000 of regular tax loss carryforwards at December 31, 1995.
Therefore, a valuation allowance has been established for approximately
$70,748,000 of net operating losses and for all investment tax credits and
alternative minimum tax credit carryforwards.

9.       STOCK OPTIONS

         In 1984, the shareholders of the Company approved the adoption of a
nonqualified stock option plan (the "1984 Plan") to provide for the grant of
stock options to key contributors to the Company.  As of December 31, 1995,
options to purchase 708,396 shares had been granted under the 1984 Plan, of
which 411,131 shares were exercised and options to purchase 216,005 shares had
been terminated or forfeited upon resignation of the holders.  No additional
options will be granted pursuant to the 1984 Plan.

         The Company's 1992 stock option plan (the "1992 Plan") was approved by
the Company's shareholders in August 1992.  Under the terms of the 1992 Plan, a
maximum of 1,800,000 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.  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 1994 and 1995, the Company recognized approximately $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 December 31, 1995, options to
purchase 1,445,039 shares of Class A Common Stock had been granted, of which
options to purchase 10,367 shares had been exercised and 34,078 shares had been
terminated or forfeited upon resignation of the holders.  As of December 31,
1995, all 200,000 of the Common Stock options authorized by the 1992 Plan had
been granted and exercised.





                                       75
<PAGE>   79
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
              For the years ended December 31, 1995, 1994 and 1993



         Information concerning Class A Common Stock options is as follows:

<TABLE>
<CAPTION>
                                                                           December 31,                
                                                  ----------------------------------------------------------
                                                       1995                    1994                 1993 
                                                  ----------------------------------------------------------
<S>                                                <C>                 <C>                  <C>
Available for grant                                        396,108            1,166,768            1,148,541

Outstanding                                              1,482,394              792,401              852,628
  Price range, per share                           $   5.625-13.81     $    5.625-13.81     $    5.625-13.81

Exercisable                                                412,095              266,123              120,150
  Price range, per share                           $   5.625-13.81     $    5.625-13.81     $   5.625-6.1875

Granted during period                                      786,511                  -                610,928

Terminated during period                                    15,851               18,227                  -

Exercised during period                                     80,667               42,000               45,425
  Price range, per share                           $   5.625-13.81     $          5.625     $          5.625
</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.  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.





                                      76
<PAGE>   80
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
              For the years ended December 31, 1995, 1994 and 1993



11.      COMMITMENTS AND CONTINGENCIES

         The Company rents office facilities and equipment under various
long-term lease arrangements.  Minimum commitments under noncancellable
operating leases for the five years ending December 31, 2000 and thereafter are
as follows:

<TABLE>
<CAPTION>
                                                Building         Facilities      Equipment
                                                  Lease            Leases            Leases           Total  
                                               -----------      -----------      -------------    -----------
                                                                      (Stated in Thousands)
                 <S>                           <C>              <C>              <C>              <C>
                     1996                      $    1,242       $    1,700       $      334       $    3,276
                     1997                           1,242            1,276              287            2,805
                     1998                           1,242            1,119              124            2,485
                     1999                           1,242              814               71            2,127
                     2000                             725              660               29            1,414
                 Thereafter                           -              1,201              -              1,201
                                                 --------         --------         --------         --------

                 Total commitments             $    5,693       $    6,770       $      845       $   13,308
                                                 ========         ========         ========         ========
</TABLE>

          Rent paid during the years ended December 31, 1995, 1994 and 1993,
totaled $3,698,000, $3,062,000 and $2,925,000, respectively.

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

         On February 22, 1994, the Company and Jones Group were named as
defendants in a lawsuit brought by three individuals who are Class A
Unitholders in Jones Intercable Investors, L.P. (the "Partnership"), a master
limited partnership in which the Company is general partner.  The litigation,
entitled Luva Vaughan et al v. Jones Intercable, Inc.  et al, Case No. CV
94-3652 was filed in the Circuit Court for Jackson County, Missouri, and
purports to be "for the use and benefit of" the Partnership.  As originally
filed, the suit sought rescission of the sale of the Alexandria, Virginia cable
television system (the "Alexandria System") by the Partnership to the Company,
which sale was completed on November 2, 1992.  It also sought a constructive
trust on the profits derived from the operation of the Alexandria System since
the date of the sale and an accounting and other equitable relief.  The
plaintiffs also alleged that the $1,800,000 commission paid to Jones Group by
the Partnership in connection with such sale was improper, and asked the Court
to order that such commission be repaid to the Partnership.

         Under the terms of the partnership agreement of the Partnership, the
Company has the right to acquire cable television systems from the Partnership
at a purchase price equal to the average of three independent appraisals of the
cable television system to be acquired.  The plaintiffs claim that the
appraisals obtained in connection with the sale of the Alexandria System were
improperly obtained, were not made by qualified appraisers and were otherwise
improper.  The purchase price paid by the Company upon such sale was
approximately $73,200,000.  The amount of damages being sought by the
plaintiffs has not been specified.





                                       77
<PAGE>   81
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
              For the years ended December 31, 1995, 1994 and 1993



         On October 21, 1994, plaintiffs filed a motion to dismiss Jones Group
in response to Jones Group's argument that Missouri lacked personal
jurisdiction over it.  Plaintiffs' motion was granted, and plaintiffs then
filed an action in Colorado against Jones Group seeking a return of the
brokerage commission.

         The Company and Jones Group filed motions for summary judgment in the
Missouri and Colorado cases, respectively.  The Missouri court granted the
Company's motion in part and dismissed all counts of the complaint for
rescission.  It also struck the plaintiffs' jury demand.  The Colorado court
also granted Jones Group's motion in part finding that the payment of the
brokerage commission was not a breach of the partnership agreement, but leaving
for trial the issue of whether such payment constituted a breach of fiduciary
duty.

         Subsequently, the plaintiffs have filed an amended complaint in the
Missouri case, recasting their allegations in terms of breach of contract,
common law fraud, conversion and breach of fiduciary duty.  The plaintiffs
reasserted their right to a jury trial.  On October 4, 1995, the court granted
the Company's motion for summary judgment on the common law fraud, conversion
and breach of fiduciary duty claims and also struct plaintiffs' demand for a
jury trial.  As a result, there is only one remaining substantive claim (breach
of contract); no claim for punitive damages; and the trial will be to the Court
commencing on April 29, 1996.

         On October 25, 1995, plaintiffs and Jones Group filed, in the Colorado
action, a joint motion to stay the Colorado action until the resolution of the
Missouri action.  The motion to stay is pending before the Colorado court.

         The Company has conducted written discovery in the form of
interrogatories and requests for production of documents; has noticed the
depositions of plaintiffs and plaintiffs' expert and has retained an expert to
testify that the three appraisals were performed in accordance with standard
appraisal methodologies.  Although plaintiffs have retained an "expert"
appraiser to testify that the value of the Alexandria System in November 1992
was $85 million, approximately $12 million more than the purchase price, the
Company believes both that the purchase price was fair and that the brokerage
commission was properly paid to Jones Grouip in accordance with the express
terms of the partnership agreement.  Consequently, the Company intends to
defend the litigation at trial in April 1996.

         In August 1995, Cable TV Fund 12-BCD Venture (the "Venture"), a
Colorado joint venture in which Cable TV Fund 12-B, Ltd., Cable TV Fund 12-C,
Ltd. and Cable TV Fund 12-D, Ltd., Colorado limited partnerships, are general
partners, entered into a purchase and sale agreement pursuant to which the
Venture agreed to sell the Tampa, Florida cable television system (the "Tampa
System") to the Company.  The Company is the general partner of each of Cable
TV Fund 12-B, Ltd., Cable TV Fund 12-C, Ltd. and Cable TV Fund 12-D, Ltd.
Closing of the purchase of the Tampa System by the Company occurred on February
28, 1996.  After closing, the Company exchanged the Tampa System with an
unaffiliated cable television operator in return for systems owned by that
operator.

         On September 20, 1995, a civil action entitled David Hirsch, on behalf
of himself and all others similarly situated, Plaintiff vs. Jones Intercable,
Inc., Defendant, was filed in the District Court, County of Arapahoe, State of
Colorado (Case No. 95-CV-1800).  The plaintiff has brought the action as a
class action on behalf of himself and all other limited partners of Cable TV
Fund 12-D, Ltd. against the





                                      78
<PAGE>   82
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
              For the years ended December 31, 1995, 1994 and 1993



Company seeking to recover damages caused by the Company's alleged breaches of
its fiduciary duties to the limited partners of Cable TV Fund 12-D, Ltd. in
connection with the sale to the Company of the Tampa System.  On January 25,
1996, the Plaintiff filed an amended complaint and request for a jury trial.
The Company believes that it has meritorious defenses, and the Company intends
to defend this lawsuit vigorously.

         On November 17, 1995, a civil action entitled Martin Ury, derivatively
on behalf of Cable TV Fund 12-B, Ltd., Cable TV Fund 12-C, Ltd. and Cable TV
Fund 12-D, Ltd., Plaintiff vs. 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, was filed in the District Court,
County of Arapahoe, State of Colorado (Case No. 95-CV-2212).  The plaintiff, a
limited partner of Cable TV Fund 12-D, Ltd., has brought the action as a
derivative action on behalf of the three partnerships that comprise the Venture
against the Company seeking to recover damages caused by the Company's alleged
breaches of its fiduciary duties to the Venture and to the limited partners of
the three partnerships that comprise the Venture in connection with the sale to
the Company of the Tampa System and the subsequent exchange of the Tampa System
with an unaffiliated cable television operator in return for systems owned by
that operator.  On February 1, 1996, the Company filed a Motion to Dismiss the
Complaint on the ground that it fails to state a claim upon which relief can be
granted as a matter of law.  The Company believes that it has meritorious
defenses, and the Company intends to defend this lawsuit vigorously.

         In addition to the above matters, the Company is involved in certain
other litigation in its normal course of business.  The Company is also
negotiating the renewal of certain franchise agreements with franchising
authorities.  Management believes that the ultimate resolution of such matters
will not have a material adverse effect on the Company's financial position or
results of operations.

12.      PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment as of December 31, 1995 and 1994,
consisted of the following:

<TABLE>
<CAPTION>
                                                                                December 31,   
                                                                            -------------------
                                                                           1995             1994
                                                                           ----             ----
         <S>                                                          <C>              <C>
         Cable distribution systems                                   $     358,242    $     249,130
         Buildings                                                           13,721            7,055
         Land                                                                 3,665            2,212
         Equipment and tools                                                 12,277            9,273
         Premium service equipment                                           33,481           27,717
         Earth receive stations                                               3,450            3,667
         Vehicles                                                             3,125            1,873
         Leasehold improvements and office furniture                         20,049           15,480
         Construction work in progress                                        4,029              583
         Other                                                               23,397           16,676
                                                                        -----------      -----------
                                                                            475,436          333,666

         Accumulated depreciation                                          (171,948)        (144,043)
                                                                        -----------      ----------- 
                                                                      $     303,488    $     189,623
                                                                        ===========      ===========
</TABLE>





                                       79
<PAGE>   83
                    JONES INTERCABLE, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Concluded)
              For the years ended December 31, 1995, 1994 and 1993



13.      QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                 1995                        
                                                    ------------------------------------------------------------
                                                                          Three Months Ended                    
                                                    ------------------------------------------------------------
                                                     March 31         June 30       September 30     December 31
                                                    ----------     -------------    ------------     -----------
                                                                (In Thousands Except Per Share Data)
         <S>                                        <C>             <C>             <C>             <C>
         Revenues                                   $    43,891     $    43,816     $    44,736     $   56,395
         Depreciation and
           amortization                                  12,014          12,811          12,796         18,184
         Operating income                                 3,859           3,310           4,469          3,091
         Net loss                                        (3,855)         (6,195)         (4,449)        (7,217)
         Net loss per share                         $      (.12)    $      (.20)    $      (.14)    $     (.23)
</TABLE>


<TABLE>
<CAPTION>
                                                                                 1994                        
                                                    ------------------------------------------------------------
                                                                          Three Months Ended                    
                                                    ------------------------------------------------------------
                                                     March 31         June 30       September 30     December 31
                                                    ----------     -------------    ------------     -----------
                                                                (In Thousands Except Per Share Data)
         <S>                                        <C>             <C>             <C>             <C>
         Revenues                                   $    32,495     $    32,908     $    32,616     $   33,870
         Depreciation and
           amortization                                  10,682          12,248          10,525         12,130
         Operating income                                 3,608           2,232           3,365          1,973
         Net income (loss)                               (6,361)         (7,137)         10,585         (5,778)
         Net income (loss) per share                $      (.35)    $      (.36)    $       .53     $     (.27)
</TABLE>





                                      80
<PAGE>   84
             ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                      ON ACCOUNTING AND FINANCIAL DISCLOSURE

         None.


                                    PART III

         The information required by Part III (Items 10, 11, 12 and 13) of Form
10-K is incorporated by reference from the Company's definitive proxy statement
to be filed pursuant to Regulation 14A of the Securities Exchange Act of 1934,
as amended, not later than April 29, 1996.  The information regarding executive
officers required by Item 401 of Regulation S-K of the Form 10-K may be found
under the caption "Executive Officers of the Company" at the end of Part I of
this Form 10-K.


                                    PART IV

ITEM 14.                  EXHIBITS AND REPORTS ON FORM 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                       Exchange Agreement and Plan of Reorganization and
                          Liquidation, dated as of May 31, 1994 by and between
                          the Company and Jones Spacelink, Ltd. (1)

2.2                       Stock Purchase Agreement dated as of May 31, 1994,
                          between Bell Canada International Inc. and the
                          Company. (1)

2.3                       Transaction Agreement dated as of May 31, 1994, among
                          Glenn R. Jones, Jones International, Ltd., Bell
                          Canada International Inc. and Jones Spacelink, Ltd.
                          (1)

2.4                       Purchase and Sale Agreement dated February 22, 1995
                          between Cable TV Fund 12-B, Ltd. and the Company.
                          (22)





                                       81
<PAGE>   85
2.5                       Amendment No. 1 dated July 24, 1995 to Purchase and
                          Sale Agreement dated February 22, 1995 between Cable
                          TV Fund 12-B, Ltd. and the Company.  (25)

2.6                       Asset Purchase Agreement dated May 31, 1995 between
                          Benchmark Manassas Cable Fund Limited Partnership and
                          the Company.  (23)

2.7                       Asset Purchase Agreement dated May 31, 1995 between
                          Cablevision of Manassas Park, Inc. and the Company.
                          (23)

2.8                       Asset Purchase Agreement dated as of June 30, 1995
                          between Columbia Associates, L.P. and the Company.
                          (25)

2.9                       Purchase and Sale Agreement dated as of August 11,
                          1995 between IDS/Jones Growth Partners 87-A, Ltd. and
                          the Company.  (25)

2.10                      Purchase and Sale Agreement dated as of August 11,
                          1995 between Jones Cable Income Fund 1-B, Ltd. and
                          the Company.  (25)

2.11                      Purchase and Sale Agreement dated as of August 11,
                          1995 between Cable TV Fund 12-BCD Venture and the
                          Company.  (25)

2.12                      Asset Exchange Agreement dated as of August 11, 1995
                          between Time Warner Entertainment-Advance/Newhouse
                          Partnership and the Company.  (25)

2.13                      Asset Purchase Agreement dated September 5, 1995
                          between Cable TV Joint Fund 11 and the Company
                          relating to the Manitowoc System.  (26)

2.14                      Asset Purchase Agreement dated September 5, 1995,
                          between Jones Spacelink Income Partners 87-1, L.P.
                          and the Company relating to the Lodi System.  (26)

2.15                      Asset Purchase Agreement dated September 5, 1995,
                          between Jones Spacelink Income/Growth Fund 1-A, Ltd.
                          and the Company relating to the Ripon System.  (26)

2.16                      Asset Purchase Agreement dated September 5, 1995,
                          between Jones Spacelink Income/Growth Fund 1-A, Ltd.
                          and the Company relating to the Lake Geneva System.
                          (26)

2.17                      Asset Exchange Agreement dated September 1, 1995,
                          between the Company and Time Warner Entertainment
                          Company, L.P.  (26)





                                       82
<PAGE>   86
2.18                      Assignment and Assumption Agreement dated as of
                          September 15, 1995 between the Company and Jones
                          Cable Holdings, Inc.

2.19                      Purchase and Sale Agreement dated as of October 18,
                          1995 between the Company and Jones Cable Holdings,
                          Inc.

3.1                       Articles of Incorporation and amendments thereto of
                          the Company.  (2)

3.2                       Amendment to Articles of Incorporation of Company
                          filed July 24, 1995.  (25)

3.3                       Bylaws of the Company.  (25)

4.1                       Indenture, dated as of May 15, 1987, between the
                          Company and United Bank of Denver National
                          Association.  (4)

4.2                       Indenture, dated as of July 15, 1992, between the
                          Company and First Trust National Association.  (5)

4.3                       First Supplemental Indenture, dated as of July 15,
                          1992, between the Company and First Trust National
                          Association.  (5)

4.4                       Second Supplemental Indenture, dated as of March 1,
                          1993, between the Company and First Trust National
                          Association.  (6)

4.5                       Form of Shareholders Agreement among Glenn R. Jones,
                          Jones International, Ltd., Bell Canada International
                          Inc. and the Company. (1)

4.6                       Indenture dated March 23, 1995 with respect to the
                          Senior Notes, between the Company and U.S. Trust
                          Company of California, N.A.  (31)

4.7                       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 the Trustee.  (31)

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)





                                       83
<PAGE>   87
10.1.3                    Form of Supply and Services Agreement between Bell
                          Canada International Inc. and the Company. (1)

10.1.4                    Form of Secondment Agreement between Bell Canada
                          International Inc. and the Company. (1)

10.1.5                    Form of Option Agreement for Glenn R. Jones and Jones
                          International, Ltd. between Bell Canada International
                          Inc. and Newco. (1)

10.1.6                    Affiliate Agreement dated August 1, 1994 between the
                          Company and Jones Computer Network, Ltd.  (25)

10.1.7                    Affiliate Agreement dated August 1, 1994 between the
                          Company and Jones Infomercial Networks, Inc.  (25)

10.1.8                    Services Agreement between the Company and Jones
                          Interactive, Inc.  (25)

10.1.9                    Indemnification Agreement dated March 14, 1994, among
                          the Company, Howard O. Thrall and George J.
                          Feltovich.  (21)

10.2.1                    Non-Qualified Stock Option Plan of the Company. (7)

10.2.2                    Form of Non-Qualified Stock Option Agreement. (7)

10.2.3                    1992 Stock Option Plan. (8)

10.2.4                    Form of Basic Incentive Stock Option Agreement. (8)

10.2.5                    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.  (25)

10.4.1                    Partnership Agreement for Cable TV Fund 11.  (10)

10.4.2                    Partnership Agreement for Cable TV Fund 12.  (9)

10.4.3                    Partnership Agreement for Cable TV Fund 14.  (11)





                                       84
<PAGE>   88
10.4.4                    Partnership Agreement for Jones Cable Income Fund 1.
                          (12)

10.4.5                    First Restated Agreement of Limited Partnership for
                          Jones Intercable Investors, L.P.  (13)

10.4.6                    Partnership Agreement for IDS/Jones Growth Partners.
                          (14)

10.4.7                    Partnership Agreement for Cable TV Fund 15.  (15)

10.4.8                    Partnership Agreement for IDS/Jones Growth Partners
                          II, L.P.  (16)

10.4.9                    Partnership Agreement of Jones United Kingdom Fund,
                          Ltd.  (18)

10.5.1                    Credit Agreement dated December 8, 1992 among the
                          Company, Barclays Bank PLC, Corestates Bank, N.A. and
                          The Bank of Nova Scotia, as Co-Agents and the various
                          lenders named therein.  (3)

10.5.2                    First Amendment and Waiver to Credit Agreement dated
                          as of January 22, 1993, among the Company, Barclays
                          Bank PLC, Corestates Bank, N.A. and The Bank of Nova
                          Scotia, as Co-Agents and NationsBank of Texas, N.A.,
                          as Managing Agent for various lenders.  (3)

10.5.3                    Second Amendment to Credit Agreement dated November
                          30, 1994 among the Company, Barclays Bank PLC,
                          CoreStates Bank, N.A. and The Bank of Nova Scotia, as
                          Lenders and as co-agents, and NationsBank of Texas,
                          N.A., as a Lender and as Managing Agent.  (25)

10.5.4                    Third Amendment dated as of December 19, 1994 among
                          the Company, Barclays Bank PLC, CoreStates Bank, N.A.
                          and The Bank of Nova Scotia, as Lenders and as
                          co-agents, and NationsBank of Texas, N.A., as a
                          Lender and as Managing Agent.  (25)

10.5.5                    Credit Agreement 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.

10.6.1                    Copy of a franchise and related documents thereto
                          granting a cable television system franchise for Town
                          of Marana, Arizona.  (3)

10.6.2                    Copy of a franchise and related documents thereto
                          granting a cable television system franchise for Oro
                          Valley, Arizona.  (2)





                                       85
<PAGE>   89
10.6.3                    Copy of a franchise and related documents thereto
                          granting a cable television system franchise for Pima
                          County, Arizona.  (2)

10.6.4                    Copy of a franchise and related documents thereto
                          granting a cable television system franchise for The
                          Tucson National Golf Club.  (2)

10.6.5                    Copy of a franchise and related documents thereto
                          granting a cable television system franchise for Los
                          Angeles County, California.  (17)

10.6.6                    Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Diamond Bar, California.  (17)

10.6.7                    Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Oxnard, California.  (2)

10.6.8                    Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Port Hueneme, California.  (3)

10.6.9                    Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Naval Construction Battalion Center, Port Hueneme,
                          California.  (2)

10.6.10                   Modification of franchise agreement dated June 23,
                          1993 for the Naval Construction Battalion Center,
                          Port Hueneme, California.  (3)

10.6.11                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          County of Ventura, California.  (3)

10.6.12                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for
                          Arapahoe County, Colorado.  (2)

10.6.13                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for
                          certain portions of Jefferson County, Colorado.  (2)

10.6.14                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Morrison, Colorado.  (3)

10.6.15                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for
                          Clear Creek County, Colorado.  (32)

10.1.16                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Empire, Colorado.  (32)





                                       86
<PAGE>   90
10.1.17                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Georgetown, Colorado.  (32)

10.1.18                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Idaho Springs, Colorado.  (33)

10.1.19                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Municipality of Silver Plume, Colorado.  (32)

10.1.20                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for Bay
                          County, Florida.  (33)

10.1.21                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Panama City Beach, Florida.  (33)

10.1.22                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          District of Hamakua, Hawaii.  (34)

10.1.23                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Districts of South Hilo and Puna, Hawaii.  (34) and
                          (32)

10.6.24                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for
                          Aiken County, South Carolina. (21)

10.6.25                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Dearing, Georgia.  (21)

10.6.26                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for
                          Edgefield County, South Carolina.  (21)

10.6.27                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for
                          McDuffie County, Georgia.  (21)

10.6.28                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of North Augusta, South Carolina.  (21)





                                       87
<PAGE>   91
10.6.29                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Thomson, Georgia.  (21)

10.6.30                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Trenton, South Carolina.  (21)

10.1.31                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Augusta, Georgia (Fund 12-B).  (27)

10.1.32                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Blythe, Georgia (Fund 12-B).  (28)

10.1.33                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          County of Burke, Georgia (Fund 12-B).  (29)

10.1.34                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Unincorporated Area of Columbia County, Georgia (Fund
                          12- B).  (30)

10.1.35                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Hephzibah, Georgia (Fund 12-B).  (27)

10.1.36                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Unincorporated Area of Richmond County, Georgia (Fund
                          12- B).  27)

10.6.37                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for Anne
                          Arundel County, Maryland.  (2)

10.6.38                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for
                          Elizabeth Landing, Maryland.  (2)

10.6.39                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for Ft.
                          George G. Meade, Maryland.  (17)

10.6.40                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Indian Head, Maryland.  (3)





                                       88
<PAGE>   92
10.6.41                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Indian Head Division, Naval Surface Warfare Center,
                          Indian Head, Maryland.  (3)

10.6.42                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of La Plata, Maryland.  (2)

10.6.43                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Cherryville, North Carolina.  (2)

10.6.44                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for
                          Cleveland County, North Carolina.  (2)

10.6.45                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Cramerton, North Carolina.  (3)

10.6.46                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Gastonia, North Carolina.  (2)

10.6.47                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Williamsburg and Jamestown subdivision of Gastonia,
                          North Carolina.  (2)

10.6.48                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Kings Mountain, North Carolina.  (2)

10.6.49                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Lowell, North Carolina.  (2)

10.6.50                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of McAdenville, North Carolina.  (3)

10.6.51                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Ranlo, North Carolina.  (3)





                                       89
<PAGE>   93
10.6.52                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Stanley, North Carolina.  (3)

10.6.53                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Clover, South Carolina.  (3)

10.6.54                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for York
                          County, South Carolina.  (3)

10.6.55                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Alexandria, Virginia.  (24)

10.6.56                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for Fort
                          Myer, Virginia.  (18)

10.6.57                   Amendment dated April 6, 1990, of franchise granting
                          a cable television system franchise for Fort Myer,
                          Virginia.  (20)

10.6.58                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Dumfries, Virginia.

10.6.59                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for Fort
                          Belvoir, Virginia.

10.6.60                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for Lake
                          Ridge Parks & Recreation Association, Lake Ridge,
                          Virginia.

10.6.61                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for
                          Prince William County, Virginia.

10.6.62                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for
                          Quantico, Virginia.

10.6.63                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          United States Marine Corps Base, Quantico, Virginia.

10.6.64                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Haymarket, Virginia.

10.6.65                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Manassas, Virginia.





                                       90
<PAGE>   94
10.6.66                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Manassas Park, Virginia.

10.6.67                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for
                          Prince William County, Virginia.

10.6.68                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Kenosha, the Town of Somers and the Village
                          of Pleasant Prairie, Wisconsin.  (35)

10.6.69                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Kenosha, Wisconsin.  (32)

10.6.70                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Village of Pleasant Prairie, Wisconsin.  (32)

10.6.71                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for Town
                          of Somers, Wisconsin.  (32)

21                        List of Subsidiaries of the Company.

23                        Consent of Arthur Andersen & Co., 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,
                          1988.

(3)                       Incorporated by reference from the Company's Annual
                          Report on Form 10-K for the fiscal year ended May 31,
                          1993

(4)                       Incorporated by reference from Registration Statement
                          No. 33-13545 on Form S-2, filed on April 17, 1987,
                          and Amendment No. 1 thereto, filed on May 8, 1987.

(5)                       Incorporated by reference from 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.





                                       91
<PAGE>   95
(6)                       Incorporated by reference from the Company's Current
                          Report on Form 8-K, filed on March 1, 1993.

(7)                       Incorporated by reference from Registration Statement
                          No. 2-91911 on Form S-2, filed on June 27, 1984, and
                          Amendment No. 1 thereto, filed on July 17, 1984.

(8)                       Incorporated by reference from Registration No.
                          33-54596 on Form S-8, filed on November 16, 1992.

(9)                       Incorporated by reference from Registration Statement
                          No. 2-94127.

(10)                      Incorporated by reference from the Company's Annual
                          Report on Form 10-K for the fiscal year ended May 31,
                          1983.

(11)                      Incorporated by reference from Registration Statement
                          No. 33-6976, filed on July 3, 1986, and Amendment No.
                          1 thereto, filed on November 17, 1986.

(12)                      Incorporated by reference from Registration Statement
                          No. 33-00968 on Form S-1, filed on October 18, 1985.

(13)                      Incorporated by reference from the Company's Annual
                          Report on Form 10-K for the fiscal year ended May 31,
                          1992.

(14)                      Incorporated by reference from Registration Statement
                          No. 33-12473.

(15)                      Incorporated by reference from Registration Statement
                          No. 33-24358.

(16)                      Incorporated by reference from the Company's
                          Registration Statement on Form 8-A No.  0-18133,
                          dated November 16, 1989.

(17)                      Incorporated by reference from the Company's Annual
                          Report on Form 10-K for the fiscal year ended May 31,
                          1989.

(18)                      Incorporated by reference from Form 8-A of Jones
                          United Kingdom Fund, Ltd.  (Commission File No.
                          0-19889).

(19)                      Incorporated by reference from the Company's Annual
                          Report on Form 10-K for the fiscal year ended May 31,
                          1990.

(20)                      Incorporated by reference from the Annual Report on
                          Form 10-K of Jones Intercable Investors, L.P.
                          (Commission File No. 1-9287) for the fiscal year
                          ended May 31, 1986.





                                       92
<PAGE>   96
(21)                      Incorporated by reference from the Company's Form S-4
                          Registration Statement filed on July 11, 1994.

(22)                      Incorporated by reference from the Company's Current
                          Report on Form 8-K dated March 10, 1995.

(23)                      Incorporated by reference from the Company's Current
                          Report on Form 8-K dated June 7, 1995.

(24)                      Incorporated by reference from the Company's Annual
                          Report on Form 10-K for the fiscal year ended May 31,
                          1994.

(25)                      Incorporated by reference from the Company's Annual
                          Report on Form 10-K for the fiscal year ended May 31,
                          1995.

(26)                      Incorporated by reference from the Company's Current
                          Report on form 8-K dated September 8, 1995.

(27)                      Incorporated by reference from Cable TV Fund 12-B,
                          Ltd.'s Report on Form 10-K for the fiscal year ended
                          December 31, 1985 (Commission File Nos. 0-13193,
                          0-13807, 0- 13964 and 0-14206).

(28)                      Incorporated by reference from Cable TV Fund 12-B,
                          Ltd.'s Report on Form 10-K for the fiscal year ended
                          December 31, 1987 (Commission File Nos. 0-13193,
                          0-13807, 0- 13964 and 0-14206).

(29)                      Incorporated by reference from Cable TV Fund 12-B,
                          Ltd.'s Report on Form 10-K for the fiscal year ended
                          December 31, 1990 (Commission File Nos. 0-13193,
                          0-13807, 0- 13964 and 0-14206).

(30)                      Incorporated by reference from Cable TV Fund 12-B,
                          Ltd.'s Report on Form 10-K for the fiscal year ended
                          December 31, 1992 (Commission File Nos. 0-13193,
                          0-13807, 0- 13964 and 0-14206).

(31)                      Incorporated by reference from the Company's Current
                          Report on form 8-K dated March 23, 1995.

(32)                      Incorporated by reference from the Jones Spacelink,
                          Ltd. Annual Report on Form 10-K for the fiscal year
                          ended May 31, 1993 (Commission File No. 0-8947).

(33)                      Incorporated by reference from the Jones Spacelink,
                          Ltd. Annual Report on Form 10-K for the fiscal year
                          ended May 31, 1987.





                                       93
<PAGE>   97
(34)                      Incorporated by reference from the Jones Spacelink,
                          Ltd. Annual Report on Form 10-K for the fiscal year
                          ended May 31, 1988.

(35)                      Incorporated by reference from the Jones Spacelink,
                          Ltd. Annual Report on Form 10-K for the fiscal year
                          ended May 31, 1985.

(b)                       Reports on Form 8-K

                          Current Report on Form 8-K dated October 10, 1995,
                          describing the David Hirsch civil action regarding
                          the sale of the Tampa System.

                          Current Report on Form 8-K dated Noember 1, 1995,
                          describing the acquisition by Jones Cable Holdings,
                          Inc. of the Augusta System.

                          Current Report on Form 8-K dated November 10, 1995,
                          describing the execution of a letter of intent to
                          acquire a cable television system serving subscribers
                          in Anne Arundel County, Maryland.

                          Current Report on Form 8-K dated December 4, 1995,
                          describing the Martin Ury civil action regarding the
                          sale of the Tampa System.

                          Current Report on Form 8-K dated December 4, 1995
                          describing the acquisition by Jones Communications of
                          Virginia, Inc. of the Dale City System.





                                       94
<PAGE>   98
                                   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.

<TABLE>
<S>                                                          <C>
                                                             JONES INTERCABLE, INC.



                                                             By: /s/ Glenn R. Jones
                                                                 -----------------------------------
                                                                 Glenn R. Jones
                                                                 Chairman of the Board and Chief
Dated:  March 12, 1996                                           Executive Officer


</TABLE>



        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.


<TABLE>
<S>                                                          <C>
                                                             By: /s/ Glenn R. Jones
                                                                 -----------------------------------
                                                                 Glenn R. Jones
                                                                 Chairman of the Board and Chief
                                                                 Executive Officer
Dated:  March 12, 1996                                           (Principal Executive Officer)


                                                             By: /s/ Kevin P. Coyle
                                                                 -----------------------------------
                                                                 Kevin P. Coyle
                                                                 Group Vice President/Finance
Dated:  March 12, 1996                                           (Principal Financial Officer)


                                                             By: /s/ Larry W. Kaschinske
                                                                 -----------------------------------
                                                                 Larry W. Kaschinske
                                                                 Controller
Dated:  March 12, 1996                                           (Principal Accounting Officer)



</TABLE>


                                       95
<PAGE>   99
<TABLE>
<S>                                                          <C>
                                                             By: /s/ James B. O'Brien
                                                                 -----------------------------------
                                                                 James B. O'Brien
Dated:  March 12, 1996                                           President and Director


                                                             By: /s/ Raymond L. Vigil
                                                                 -----------------------------------
                                                                 Raymond L. Vigil
Dated:  March 12, 1996                                           Group Vice President and Director


                                                             By: /s/ Derek H. Burney
                                                                 -----------------------------------
                                                                 Derek H. Burney
Dated:  March 12, 1996                                           Director


                                                             By: /s/ William E. Frenzel
                                                                 -----------------------------------
                                                                 William E. Frenzel
Dated:  March 12, 1996                                           Director


                                                             By: /s/ Donald L. Jacobs
                                                                 -----------------------------------
                                                                 Donald L. Jacobs
Dated:  March 12, 1996                                           Director


                                                             By: /s/ James J. Krejci
                                                                 -----------------------------------
                                                                 James J. Krejci
Dated:  March 12, 1996                                           Director


                                                             By: /s/ Christine Jones-Marocco
                                                                 -----------------------------------
                                                                 Christine Jones-Marocco
Dated:  March 12, 1996                                           Director


                                                             By: /s/ John A. MacDonald
                                                                 -----------------------------------
                                                                 John A. MacDonald
Dated:  March 12, 1996                                           Director


                                                             By: 
                                                                 -----------------------------------
                                                                 Daniel E. Somers
Dated:                                                           Director

</TABLE>




                                       96
<PAGE>   100
<TABLE>
<S>                                                          <C>
                                                             By: /s/ Howard O. Thrall
                                                                 -----------------------------------
                                                                 Howard O. Thrall
Dated:  March 12, 1996                                           Director



                                                             By: /s/ Robert B. Zoellick
                                                                 -----------------------------------
                                                                 Robert B. Zoellick
Dated:  March 12, 1996                                           Director


                                                             By: /s/ David K. Zonker
                                                                 -----------------------------------
                                                                 David K. Zonker
Dated:  March 12, 1996                                           Director



</TABLE>


                                       97
<PAGE>   101

                                EXHIBIT INDEX

EXHIBIT 
NUMBER                                 DESCRIPTION
------                                 -----------

2.1                       Exchange Agreement and Plan of Reorganization and
                          Liquidation, dated as of May 31, 1994 by and between
                          the Company and Jones Spacelink, Ltd. (1)

2.2                       Stock Purchase Agreement dated as of May 31, 1994,
                          between Bell Canada International Inc. and the
                          Company. (1)

2.3                       Transaction Agreement dated as of May 31, 1994, among
                          Glenn R. Jones, Jones International, Ltd., Bell
                          Canada International Inc. and Jones Spacelink, Ltd.
                          (1)

2.4                       Purchase and Sale Agreement dated February 22, 1995
                          between Cable TV Fund 12-B, Ltd. and the Company.
                          (22)





<PAGE>   102
2.5                       Amendment No. 1 dated July 24, 1995 to Purchase and
                          Sale Agreement dated February 22, 1995 between Cable
                          TV Fund 12-B, Ltd. and the Company.  (25)

2.6                       Asset Purchase Agreement dated May 31, 1995 between
                          Benchmark Manassas Cable Fund Limited Partnership and
                          the Company.  (23)

2.7                       Asset Purchase Agreement dated May 31, 1995 between
                          Cablevision of Manassas Park, Inc. and the Company.
                          (23)

2.8                       Asset Purchase Agreement dated as of June 30, 1995
                          between Columbia Associates, L.P. and the Company.
                          (25)

2.9                       Purchase and Sale Agreement dated as of August 11,
                          1995 between IDS/Jones Growth Partners 87-A, Ltd. and
                          the Company.  (25)

2.10                      Purchase and Sale Agreement dated as of August 11,
                          1995 between Jones Cable Income Fund 1-B, Ltd. and
                          the Company.  (25)

2.11                      Purchase and Sale Agreement dated as of August 11,
                          1995 between Cable TV Fund 12-BCD Venture and the
                          Company.  (25)

2.12                      Asset Exchange Agreement dated as of August 11, 1995
                          between Time Warner Entertainment-Advance/Newhouse
                          Partnership and the Company.  (25)

2.13                      Asset Purchase Agreement dated September 5, 1995
                          between Cable TV Joint Fund 11 and the Company
                          relating to the Manitowoc System.  (26)

2.14                      Asset Purchase Agreement dated September 5, 1995,
                          between Jones Spacelink Income Partners 87-1, L.P.
                          and the Company relating to the Lodi System.  (26)

2.15                      Asset Purchase Agreement dated September 5, 1995,
                          between Jones Spacelink Income/Growth Fund 1-A, Ltd.
                          and the Company relating to the Ripon System.  (26)

2.16                      Asset Purchase Agreement dated September 5, 1995,
                          between Jones Spacelink Income/Growth Fund 1-A, Ltd.
                          and the Company relating to the Lake Geneva System.
                          (26)

2.17                      Asset Exchange Agreement dated September 1, 1995,
                          between the Company and Time Warner Entertainment
                          Company, L.P.  (26)





<PAGE>   103
2.18                      Assignment and Assumption Agreement dated as of
                          September 15, 1995 between the Company and Jones
                          Cable Holdings, Inc.

2.19                      Purchase and Sale Agreement dated as of October 18,
                          1995 between the Company and Jones Cable Holdings,
                          Inc.

3.1                       Articles of Incorporation and amendments thereto of
                          the Company.  (2)

3.2                       Amendment to Articles of Incorporation of Company
                          filed July 24, 1995.  (25)

3.3                       Bylaws of the Company.  (25)

4.1                       Indenture, dated as of May 15, 1987, between the
                          Company and United Bank of Denver National
                          Association.  (4)

4.2                       Indenture, dated as of July 15, 1992, between the
                          Company and First Trust National Association.  (5)

4.3                       First Supplemental Indenture, dated as of July 15,
                          1992, between the Company and First Trust National
                          Association.  (5)

4.4                       Second Supplemental Indenture, dated as of March 1,
                          1993, between the Company and First Trust National
                          Association.  (6)

4.5                       Form of Shareholders Agreement among Glenn R. Jones,
                          Jones International, Ltd., Bell Canada International
                          Inc. and the Company. (1)

4.6                       Indenture dated March 23, 1995 with respect to the
                          Senior Notes, between the Company and U.S. Trust
                          Company of California, N.A.  (31)

4.7                       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 the Trustee.  (31)

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)





<PAGE>   104
10.1.3                    Form of Supply and Services Agreement between Bell
                          Canada International Inc. and the Company. (1)

10.1.4                    Form of Secondment Agreement between Bell Canada
                          International Inc. and the Company. (1)

10.1.5                    Form of Option Agreement for Glenn R. Jones and Jones
                          International, Ltd. between Bell Canada International
                          Inc. and Newco. (1)

10.1.6                    Affiliate Agreement dated August 1, 1994 between the
                          Company and Jones Computer Network, Ltd.  (25)

10.1.7                    Affiliate Agreement dated August 1, 1994 between the
                          Company and Jones Infomercial Networks, Inc.  (25)

10.1.8                    Services Agreement between the Company and Jones
                          Interactive, Inc.  (25)

10.1.9                    Indemnification Agreement dated March 14, 1994, among
                          the Company, Howard O. Thrall and George J.
                          Feltovich.  (21)

10.2.1                    Non-Qualified Stock Option Plan of the Company. (7)

10.2.2                    Form of Non-Qualified Stock Option Agreement. (7)

10.2.3                    1992 Stock Option Plan. (8)

10.2.4                    Form of Basic Incentive Stock Option Agreement. (8)

10.2.5                    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.  (25)

10.4.1                    Partnership Agreement for Cable TV Fund 11.  (10)

10.4.2                    Partnership Agreement for Cable TV Fund 12.  (9)

10.4.3                    Partnership Agreement for Cable TV Fund 14.  (11)





<PAGE>   105
10.4.4                    Partnership Agreement for Jones Cable Income Fund 1.
                          (12)

10.4.5                    First Restated Agreement of Limited Partnership for
                          Jones Intercable Investors, L.P.  (13)

10.4.6                    Partnership Agreement for IDS/Jones Growth Partners.
                          (14)

10.4.7                    Partnership Agreement for Cable TV Fund 15.  (15)

10.4.8                    Partnership Agreement for IDS/Jones Growth Partners
                          II, L.P.  (16)

10.4.9                    Partnership Agreement of Jones United Kingdom Fund,
                          Ltd.  (18)

10.5.1                    Credit Agreement dated December 8, 1992 among the
                          Company, Barclays Bank PLC, Corestates Bank, N.A. and
                          The Bank of Nova Scotia, as Co-Agents and the various
                          lenders named therein.  (3)

10.5.2                    First Amendment and Waiver to Credit Agreement dated
                          as of January 22, 1993, among the Company, Barclays
                          Bank PLC, Corestates Bank, N.A. and The Bank of Nova
                          Scotia, as Co-Agents and NationsBank of Texas, N.A.,
                          as Managing Agent for various lenders.  (3)

10.5.3                    Second Amendment to Credit Agreement dated November
                          30, 1994 among the Company, Barclays Bank PLC,
                          CoreStates Bank, N.A. and The Bank of Nova Scotia, as
                          Lenders and as co-agents, and NationsBank of Texas,
                          N.A., as a Lender and as Managing Agent.  (25)

10.5.4                    Third Amendment dated as of December 19, 1994 among
                          the Company, Barclays Bank PLC, CoreStates Bank, N.A.
                          and The Bank of Nova Scotia, as Lenders and as
                          co-agents, and NationsBank of Texas, N.A., as a
                          Lender and as Managing Agent.  (25)

10.5.5                    Credit Agreement 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.

10.6.1                    Copy of a franchise and related documents thereto
                          granting a cable television system franchise for Town
                          of Marana, Arizona.  (3)

10.6.2                    Copy of a franchise and related documents thereto
                          granting a cable television system franchise for Oro
                          Valley, Arizona.  (2)





<PAGE>   106
10.6.3                    Copy of a franchise and related documents thereto
                          granting a cable television system franchise for Pima
                          County, Arizona.  (2)

10.6.4                    Copy of a franchise and related documents thereto
                          granting a cable television system franchise for The
                          Tucson National Golf Club.  (2)

10.6.5                    Copy of a franchise and related documents thereto
                          granting a cable television system franchise for Los
                          Angeles County, California.  (17)

10.6.6                    Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Diamond Bar, California.  (17)

10.6.7                    Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Oxnard, California.  (2)

10.6.8                    Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Port Hueneme, California.  (3)

10.6.9                    Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Naval Construction Battalion Center, Port Hueneme,
                          California.  (2)

10.6.10                   Modification of franchise agreement dated June 23,
                          1993 for the Naval Construction Battalion Center,
                          Port Hueneme, California.  (3)

10.6.11                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          County of Ventura, California.  (3)

10.6.12                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for
                          Arapahoe County, Colorado.  (2)

10.6.13                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for
                          certain portions of Jefferson County, Colorado.  (2)

10.6.14                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Morrison, Colorado.  (3)

10.6.15                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for
                          Clear Creek County, Colorado.  (32)

10.1.16                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Empire, Colorado.  (32)





<PAGE>   107
10.1.17                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Georgetown, Colorado.  (32)

10.1.18                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Idaho Springs, Colorado.  (33)

10.1.19                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Municipality of Silver Plume, Colorado.  (32)

10.1.20                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for Bay
                          County, Florida.  (33)

10.1.21                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Panama City Beach, Florida.  (33)

10.1.22                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          District of Hamakua, Hawaii.  (34)

10.1.23                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Districts of South Hilo and Puna, Hawaii.  (34) and
                          (32)

10.6.24                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for
                          Aiken County, South Carolina. (21)

10.6.25                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Dearing, Georgia.  (21)

10.6.26                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for
                          Edgefield County, South Carolina.  (21)

10.6.27                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for
                          McDuffie County, Georgia.  (21)

10.6.28                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of North Augusta, South Carolina.  (21)





<PAGE>   108
10.6.29                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Thomson, Georgia.  (21)

10.6.30                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Trenton, South Carolina.  (21)

10.1.31                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Augusta, Georgia (Fund 12-B).  (27)

10.1.32                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Blythe, Georgia (Fund 12-B).  (28)

10.1.33                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          County of Burke, Georgia (Fund 12-B).  (29)

10.1.34                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Unincorporated Area of Columbia County, Georgia (Fund
                          12- B).  (30)

10.1.35                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Hephzibah, Georgia (Fund 12-B).  (27)

10.1.36                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Unincorporated Area of Richmond County, Georgia (Fund
                          12- B).  27)

10.6.37                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for Anne
                          Arundel County, Maryland.  (2)

10.6.38                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for
                          Elizabeth Landing, Maryland.  (2)

10.6.39                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for Ft.
                          George G. Meade, Maryland.  (17)

10.6.40                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Indian Head, Maryland.  (3)





<PAGE>   109
10.6.41                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Indian Head Division, Naval Surface Warfare Center,
                          Indian Head, Maryland.  (3)

10.6.42                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of La Plata, Maryland.  (2)

10.6.43                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Cherryville, North Carolina.  (2)

10.6.44                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for
                          Cleveland County, North Carolina.  (2)

10.6.45                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Cramerton, North Carolina.  (3)

10.6.46                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Gastonia, North Carolina.  (2)

10.6.47                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Williamsburg and Jamestown subdivision of Gastonia,
                          North Carolina.  (2)

10.6.48                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Kings Mountain, North Carolina.  (2)

10.6.49                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Lowell, North Carolina.  (2)

10.6.50                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of McAdenville, North Carolina.  (3)

10.6.51                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Ranlo, North Carolina.  (3)





<PAGE>   110
10.6.52                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Stanley, North Carolina.  (3)

10.6.53                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Clover, South Carolina.  (3)

10.6.54                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for York
                          County, South Carolina.  (3)

10.6.55                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Alexandria, Virginia.  (24)

10.6.56                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for Fort
                          Myer, Virginia.  (18)

10.6.57                   Amendment dated April 6, 1990, of franchise granting
                          a cable television system franchise for Fort Myer,
                          Virginia.  (20)

10.6.58                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Dumfries, Virginia.

10.6.59                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for Fort
                          Belvoir, Virginia.

10.6.60                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for Lake
                          Ridge Parks & Recreation Association, Lake Ridge,
                          Virginia.

10.6.61                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for
                          Prince William County, Virginia.

10.6.62                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for
                          Quantico, Virginia.

10.6.63                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          United States Marine Corps Base, Quantico, Virginia.

10.6.64                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Town of Haymarket, Virginia.

10.6.65                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Manassas, Virginia.





<PAGE>   111
10.6.66                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Manassas Park, Virginia.

10.6.67                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for
                          Prince William County, Virginia.

10.6.68                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Kenosha, the Town of Somers and the Village
                          of Pleasant Prairie, Wisconsin.  (35)

10.6.69                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          City of Kenosha, Wisconsin.  (32)

10.6.70                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for the
                          Village of Pleasant Prairie, Wisconsin.  (32)

10.6.71                   Copy of a franchise and related documents thereto
                          granting a cable television system franchise for Town
                          of Somers, Wisconsin.  (32)

21                        List of Subsidiaries of the Company.

23                        Consent of Arthur Andersen & Co., 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,
                          1988.

(3)                       Incorporated by reference from the Company's Annual
                          Report on Form 10-K for the fiscal year ended May 31,
                          1993

(4)                       Incorporated by reference from Registration Statement
                          No. 33-13545 on Form S-2, filed on April 17, 1987,
                          and Amendment No. 1 thereto, filed on May 8, 1987.

(5)                       Incorporated by reference from 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.





<PAGE>   112
(6)                       Incorporated by reference from the Company's Current
                          Report on Form 8-K, filed on March 1, 1993.

(7)                       Incorporated by reference from Registration Statement
                          No. 2-91911 on Form S-2, filed on June 27, 1984, and
                          Amendment No. 1 thereto, filed on July 17, 1984.

(8)                       Incorporated by reference from Registration No.
                          33-54596 on Form S-8, filed on November 16, 1992.

(9)                       Incorporated by reference from Registration Statement
                          No. 2-94127.

(10)                      Incorporated by reference from the Company's Annual
                          Report on Form 10-K for the fiscal year ended May 31,
                          1983.

(11)                      Incorporated by reference from Registration Statement
                          No. 33-6976, filed on July 3, 1986, and Amendment No.
                          1 thereto, filed on November 17, 1986.

(12)                      Incorporated by reference from Registration Statement
                          No. 33-00968 on Form S-1, filed on October 18, 1985.

(13)                      Incorporated by reference from the Company's Annual
                          Report on Form 10-K for the fiscal year ended May 31,
                          1992.

(14)                      Incorporated by reference from Registration Statement
                          No. 33-12473.

(15)                      Incorporated by reference from Registration Statement
                          No. 33-24358.

(16)                      Incorporated by reference from the Company's
                          Registration Statement on Form 8-A No.  0-18133,
                          dated November 16, 1989.

(17)                      Incorporated by reference from the Company's Annual
                          Report on Form 10-K for the fiscal year ended May 31,
                          1989.

(18)                      Incorporated by reference from Form 8-A of Jones
                          United Kingdom Fund, Ltd.  (Commission File No.
                          0-19889).

(19)                      Incorporated by reference from the Company's Annual
                          Report on Form 10-K for the fiscal year ended May 31,
                          1990.

(20)                      Incorporated by reference from the Annual Report on
                          Form 10-K of Jones Intercable Investors, L.P.
                          (Commission File No. 1-9287) for the fiscal year
                          ended May 31, 1986.





<PAGE>   113
(21)                      Incorporated by reference from the Company's Form S-4
                          Registration Statement filed on July 11, 1994.

(22)                      Incorporated by reference from the Company's Current
                          Report on Form 8-K dated March 10, 1995.

(23)                      Incorporated by reference from the Company's Current
                          Report on Form 8-K dated June 7, 1995.

(24)                      Incorporated by reference from the Company's Annual
                          Report on Form 10-K for the fiscal year ended May 31,
                          1994.

(25)                      Incorporated by reference from the Company's Annual
                          Report on Form 10-K for the fiscal year ended May 31,
                          1995.

(26)                      Incorporated by reference from the Company's Current
                          Report on form 8-K dated September 8, 1995.

(27)                      Incorporated by reference from Cable TV Fund 12-B,
                          Ltd.'s Report on Form 10-K for the fiscal year ended
                          December 31, 1985 (Commission File Nos. 0-13193,
                          0-13807, 0- 13964 and 0-14206).

(28)                      Incorporated by reference from Cable TV Fund 12-B,
                          Ltd.'s Report on Form 10-K for the fiscal year ended
                          December 31, 1987 (Commission File Nos. 0-13193,
                          0-13807, 0- 13964 and 0-14206).

(29)                      Incorporated by reference from Cable TV Fund 12-B,
                          Ltd.'s Report on Form 10-K for the fiscal year ended
                          December 31, 1990 (Commission File Nos. 0-13193,
                          0-13807, 0- 13964 and 0-14206).

(30)                      Incorporated by reference from Cable TV Fund 12-B,
                          Ltd.'s Report on Form 10-K for the fiscal year ended
                          December 31, 1992 (Commission File Nos. 0-13193,
                          0-13807, 0- 13964 and 0-14206).

(31)                      Incorporated by reference from the Company's Current
                          Report on form 8-K dated March 23, 1995.

(32)                      Incorporated by reference from the Jones Spacelink,
                          Ltd. Annual Report on Form 10-K for the fiscal year
                          ended May 31, 1993 (Commission File No. 0-8947).

(33)                      Incorporated by reference from the Jones Spacelink,
                          Ltd. Annual Report on Form 10-K for the fiscal year
                          ended May 31, 1987.





<PAGE>   114
(34)                      Incorporated by reference from the Jones Spacelink,
                          Ltd. Annual Report on Form 10-K for the fiscal year
                          ended May 31, 1988.

(35)                      Incorporated by reference from the Jones Spacelink,
                          Ltd. Annual Report on Form 10-K for the fiscal year
                          ended May 31, 1985.