<PAGE>
Rule 424(b)(5)
Registration No. 33-56271
PROSPECTUS SUPPLEMENT
(To Prospectus dated February 3, 1995)
19,550,000 Shares
Tele-Communications, Inc.
----------------
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS RELATE TO
19,550,000 SHARES (THE "SHARES") OF CLASS A COMMON STOCK, PAR VALUE $1.00
PER SHARE (THE "CLASS A COMMON STOCK"), OF TELE-COMMUNICATIONS, INC., A
DELAWARE CORPORATION (THE "COMPANY"), TO BE OFFERED AND SOLD BY THE
UNDERWRITER NAMED BELOW. SEE "UNDERWRITER" HEREIN. THE SHARES OF THE
COMPANY'S CLASS A COMMON STOCK AND THE COMPANY'S CLASS B COMMON
STOCK, PAR VALUE $1.00 PER SHARE (THE "CLASS B COMMON STOCK"), ARE
TRADED IN THE OVER-THE-COUNTER MARKET ON THE NASDAQ NATIONAL
MARKET UNDER THE SYMBOLS TCOMA AND TCOMB, RESPECTIVELY. THE
CLASS A COMMON STOCK AND THE CLASS B COMMON STOCK ARE
IDENTICAL IN ALL RESPECTS EXCEPT THAT EACH SHARE OF CLASS B
COMMON STOCK HAS TEN VOTES PER SHARE AND EACH SHARE OF
CLASS A COMMON STOCK HAS ONE VOTE PER SHARE. EACH SHARE
OF CLASS B COMMON STOCK IS CONVERTIBLE, AT THE OPTION
OF THE HOLDER, INTO ONE SHARE OF CLASS A COMMON STOCK.
CLASS A COMMON STOCK IS NOT CONVERTIBLE. SEE
"DESCRIPTION OF COMMON STOCK" IN THE ACCOMPANYING
PROSPECTUS. ON FEBRUARY 3, 1995, THE LAST
REPORTED SALES PRICE FOR THE CLASS A COMMON
STOCK AS REPORTED ON THE NASDAQ NATIONAL MARKET
WAS $21 7/8.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
----------------
PRICE $21 A SHARE
----------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
------------ -------------- ------------
<S> <C> <C> <C>
Per Share.............................. $21 $.50 $20.50
Total ................................. $410,550,000 $9,775,000 $400,775,000
</TABLE>
- --------
(1) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933.
(2) Before deduction of expenses payable by the Company estimated at
$500,000.
----------------
The Shares are offered, subject to prior sale, when and if accepted by the
Underwriter named herein and subject to approval of certain legal matters by
Brown & Wood, counsel for the Underwriter. It is expected that delivery of the
Shares will be made on or about February 10, 1995 at the office of Morgan
Stanley & Co. Incorporated, New York, N.Y., against payment therefor in New
York funds.
----------------
MORGAN STANLEY & CO.
Incorporated
February 3, 1995
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SHARES OF THE
COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
OTHER THAN AS CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITER. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL
UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
----------------
USE OF PROCEEDS
The Company intends to use the net proceeds of the sale of the Shares to
reduce outstanding indebtedness incurred under (i) a reducing revolving loan
that matures on December 31, 1999 and has a current interest rate of 6.91%,
(ii) a reducing revolving loan that matures on December 31, 2003 and has a
current interest rate of 7.47%, (iii) a commercial paper program which has a
current interest rate of 6.48% and (iv) various short-term lines of credit
which have a current interest rate of 6.57%. The proceeds from such borrowings
were used to reduce then outstanding indebtedness under various credit
facilities of certain subsidiaries of the Company, for certain acquisitions,
for working capital and for general corporate purposes.
Amounts may be subsequently reborrowed under the foregoing credit facilities
and used for any of the purposes specified under "Use of Proceeds" in the
accompanying Prospectus.
S-2
<PAGE>
CAPITALIZATION
The following table sets forth (a) the historical capitalization of the
Company and its consolidated subsidiaries at September 30, 1994, (b) the pro
forma capitalization of the Company and its consolidated subsidiaries at
September 30, 1994 reflecting the TeleCable Merger, the Company's investment in
IP-IV and the QVC Transactions (as such terms are defined in the accompanying
Prospectus), and (c) the pro forma capitalization adjusted to reflect (i) the
issuance and sale of the Shares offered hereby and (ii) the application of the
net proceeds to reduce indebtedness outstanding under one of the Company's
reducing revolving loans as set forth under "Use of Proceeds." The following
should be read in conjunction with the Company's consolidated financial
statements and the notes thereto.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1994
---------------------------------
AS REPORTED PRO FORMA AS ADJUSTED
----------- --------- -----------
(IN MILLIONS)
<S> <C> <C> <C>
Total Debt................................... $10,654 $11,543 $11,142
Minority interests in equity of consolidated
subsidiaries................................ 446 449 449
Series D Redeemable Preferred Stock.......... -- 300 300
Stockholders' equity:
Class B Preferred Stock.................... -- -- --
Class A Common Stock....................... 571 613 633
Class B Common Stock....................... 89 89 89
Additional paid-in capital................. 2,833 3,791 4,172
Cumulative foreign currency translation
adjustment................................ (5) (5) (5)
Unrealized holding gains for available-for-
sale securities........................... 433 433 433
Note receivable from related party......... (15) (15) (15)
Accumulated deficit........................ (285) (285) (285)
Treasury stock, at cost.................... (646) (646) (646)
------- ------- -------
Total stockholders' equity................. 2,975 3,975 4,376
------- ------- -------
Total capitalization..................... $14,075 $16,267 $16,267
======= ======= =======
</TABLE>
S-3
<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
The following table sets forth selected historical financial data for the
Company for the nine-month periods ended September 30, 1994 and 1993 and for
each of the five fiscal years in the period ended December 31, 1993. The table
also sets forth selected unaudited pro forma balance sheet data for the
Company as of September 30, 1994, giving pro forma effect to the TeleCable
Merger, the Company's investment in IP-IV, and the QVC Transactions as if such
transactions had occurred as of September 30, 1994, and selected unaudited pro
forma statement of operations data for the Company for the nine months ended
September 30, 1994 and for the year ended December 31, 1993, giving pro forma
effect to the TCI/Liberty Combination (as defined in the accompanying
Prospectus), the TeleCable Merger, the Company's investment in IP-IV, and the
QVC Transactions as if the same had occurred prior to January 1, 1993. The pro
forma financial data are not necessarily indicative of the financial position
or results of operations that would have been obtained had the TCI/Liberty
Combination, the TeleCable Merger, the Company's investment in IP-IV, and the
QVC Transactions been effective at or prior to such assumed dates, or of the
future results of operations of the Company. The following information is
qualified in its entirety by, and should be read in conjunction with, the
consolidated financial statements and notes thereto of the Company and the
unaudited condensed pro forma financial statements and notes thereto of the
Company incorporated by reference in the accompanying Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------ ------------------------------------------------
PRO FORMA PRO FORMA
1994 1994 1993 1993 1993 1992 1991 1990 1989
--------- ------ ------ --------- ------ ------ ------ ------ ------
(IN MILLIONS, EXCEPT PER SHARE AND RATIO AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
DATA:
Revenue................ $ 4,402 $3,427 $3,104 $5,538 $4,153 $3,574 $3,214 $2,940 $2,358
Operating, selling,
general and
administrative
expenses.............. 2,910 2,088 1,695 3,468 2,295 1,937 1,784 1,678 1,343
Depreciation and
amortization.......... 823 722 671 1,053 911 764 756 716 560
Operating income....... 683 625 729 946 916 864 674 546 455
Earnings (loss) from:
Continuing
operations.......... 73 63 14 (35) (7) 7 (78) (191) (262)
Discontinued
operations.......... -- -- -- -- -- (15) (19) (63) (3)
------- ------ ------ ------ ------ ------ ------ ------ ------
73 63 14 (35) (7) (8) (97) (254) (265)
Dividend requirement
on redeemable
preferred stocks...... (21) (3) (2) (26) (2) (15) -- -- --
------- ------ ------ ------ ------ ------ ------ ------ ------
Net earnings (loss)
attributable to
common stockholders... $ 52 $ 60 $ 12 $ (61) $ (9) $ (23) $ (97) $ (254) $ (265)
======= ====== ====== ====== ====== ====== ====== ====== ======
Primary earnings
(loss) attributable
to common
stockholders per
common and common
equivalent share:
Continuing
operations.......... .08 .12 .03 (.10) (.02) (.01) (.22) (.54) (.74)
Discontinued
operations.......... -- -- -- -- -- (.04) (.05) (.18) (.01)
------- ------ ------ ------ ------ ------ ------ ------ ------
$ .08 $ .12 $ .03 $ (.10) $ (.02) $ (.05) $ (.27) $ (.72) $ (.75)
======= ====== ====== ====== ====== ====== ====== ====== ======
Primary weighted
average common shares
outstanding........... 650 517 432 591 433 424 360 355 353
OTHER DATA:
Operating income
before depreciation,
amortization and non-
cash operating
expenses(1)........... $ 1,492 $1,339 $1,409 $2,070 $1,858 $1,637 $1,430 $1,262 $1,015
Consolidated basic
subscribers........... 12.1 11.3 10.5 11.6 10.7 10.2 8.9 8.5 7.8
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
----------------- ---------------------------------------
PRO FORMA
1994 1994 1993 1992 1991 1990 1989
--------- ------- ------- ------- ------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY BALANCE SHEET
DATA:
Property and
equipment, net........ $ 6,320 $ 5,729 $ 4,935 $ 4,562 $ 4,081 $ 4,156 $ 3,692
Franchise costs, net... 12,625 9,391 9,197 9,300 8,104 7,348 6,811
Net assets of
discontinued
operations............ -- -- -- -- 242 54 580
Total assets........... 22,177 19,117 16,520 16,310 15,166 14,106 13,560
Total Debt............. 11,543 10,654 9,900 10,285 9,455 8,922 8,007
Stockholders' equity... 3,975 2,975 2,112 1,726 1,570 748 840
Shares outstanding
(net of treasury
shares):
Class A Common Stock. 527 485 403 382 370 310 305
Class B Common Stock. 86 86 47 48 49 48 48
</TABLE>
- --------
(1) Operating income before depreciation, amortization and non-cash operating
expenses should not be considered as an alternative to net income or to
cash flows provided by operating activities or to any other measure of
performance or liquidity as an indicator of an entity's operating
performance.
S-4
<PAGE>
PRICE RANGE OF CLASS A COMMON STOCK AND DIVIDENDS
The Class A Common Stock is traded on the Nasdaq National Market under the
symbol "TCOMA." The following table sets forth the high and low sales prices of
Class A Common Stock for the periods indicated. The prices have been rounded up
to the nearest eighth and do not include retail markups, markdowns or
commissions.
<TABLE>
<CAPTION>
HIGH LOW
--------- -------
<S> <C> <C>
Year ended December 31, 1993
First Quarter......................................... $25 1/2 $20 3/4
Second Quarter........................................ 24 17 1/2
Third Quarter......................................... 26 3/4 21 5/8
Fourth Quarter........................................ 33 1/4 24 7/8
Year ended December 31, 1994
First Quarter......................................... 30 1/4 20 3/8
Second Quarter........................................ 23 3/8 18 1/4
Third Quarter*........................................ 24 1/8 19 3/4
Fourth Quarter........................................ 25 20 1/4
Year ended December 31, 1995
First Quarter (through February 3, 1995).............. 22 53/64 21 3/8
</TABLE>
- --------
*The TCI/Liberty Combination was consummated on August 4, 1994.
On February 3, 1995, the last reported sale price of the Class A Common Stock
on the Nasdaq National Market was $21 7/8 per share.
The Company has not paid cash dividends on the Class A Common Stock or Class
B Common Stock and has no present intention of doing so. Payment of cash
dividends, if any, in the future will be determined by the Company's Board of
Directors in light of the Company's earnings, financial condition and other
relevant considerations. As a holding company, the Company's ability to pay
cash dividends is dependent upon its ability to receive cash dividends and
advances from its subsidiaries. Certain loan agreements to which certain
subsidiaries of the Company are parties or are subject contain restricted
payment provisions that limit the amount of dividends, other than stock
dividends, that those companies may pay. Future loan agreements may contain
similar provisions. See "Certain Considerations--Holding Company Structure;
Restrictions on Dividends" in the accompanying Prospectus.
S-5
<PAGE>
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS
The following is a general discussion of certain United States federal tax
consequences of the acquisition, ownership and disposition of the Shares by a
holder that, for United States federal income tax purposes, is not a "United
States person" (a "Non-United States Holder"). This discussion is based upon
the United States federal tax law now in effect, which is subject to change,
possibly retroactively. For purposes of this discussion, a "United States
person" means a citizen or resident of the United States; a corporation,
partnership, or other entity created or organized in the United States or under
the laws of the United States or of any political subdivision thereof; or an
estate or trust whose income is includible in gross income for United States
federal income tax purposes regardless of its source. This discussion does not
address investors other than original purchasers and does not consider any
specific facts or circumstances that may apply to a particular Non-United
States Holder. Prospective investors are urged to consult their tax advisors
regarding the United States federal tax consequences of acquiring, holding and
disposing of the Shares, as well as any tax consequences that may arise under
the laws of any state, municipality or other taxing jurisdiction.
DIVIDENDS
Dividends, if any, paid to a Non-United States Holder will generally be
subject to withholding of United States federal income tax at the rate of 30%
unless the dividend is effectively connected with the conduct of a trade or
business within the United States by the Non-United States Holder, in which
case the dividend will be subject to the United States federal income tax on
net income that applies to United States persons generally (and, with respect
to corporate holders and under certain circumstances, the branch profits tax).
Non-United States Holders should consult any applicable income tax treaties,
which may provide for a lower rate of withholding or other rules different from
those described above. A Non-United States Holder may be required to satisfy
certain certification requirements in order to claim treaty benefits or
otherwise claim a reduction of or exemption from withholding under the
foregoing rules.
GAIN ON DISPOSITION
A Non-United States Holder will generally not be subject to United States
federal income tax on any gain recognized on a sale or other disposition of the
Shares unless (i) the gain is effectively connected with the conduct of a trade
or business within the United States by the Non-United States Holder, (ii) in
the case of a Non-United States Holder who is a nonresident alien individual
and holds the Shares as a capital asset, such holder is present in the United
States for 183 or more days in the taxable year and certain other requirements
are met or (iii) the Company is or becomes a "United States real property
holding corporation" for United States federal income tax purposes and certain
other requirements are met. Gain that is effectively connected with the conduct
of a trade or business within the United States by the Non-United States Holder
will be subject to the United States federal income tax on net income that
applies to United States persons generally (and, with respect to corporate
holders and under certain circumstances, the branch profits tax) but will not
be subject to withholding. Non-United States Holders should consult applicable
treaties, which may provide for different rules.
Although the Company has not undertaken a thorough investigation of the book
value and fair market value of each of its assets and therefore cannot
represent with any certainty, the Company believes that presently it is not a
United States real property holding corporation ("USRPHC"). However, even if
the Company were or became a USRPHC, gain realized on the disposition of the
Shares by a Non-United States Holder who does not beneficially own, actually or
constructively, more than 5% of the outstanding Shares should not be subject to
United States income tax if the Shares are then "regularly traded" on an
established securities market in the United States. Since the Shares are traded
on the Nasdaq National Market and it is expected that the Shares will be
regularly quoted by brokers and dealers, the Shares should be considered
"regularly traded" on an established securities market. However, it is possible
to read the applicable temporary Treasury regulations as providing that the
Shares will not be considered "regularly traded" if 50% or more of the
outstanding Shares is owned by 100 or fewer persons. While the Company
S-6
<PAGE>
believes that such a reading is not the better construction and was not the
intent of the applicable temporary Treasury regulations, and that such reading
does not constitute the interpretation of such regulations by the Treasury
Department, no assurance can be given that such reading would not ultimately be
determined to be correct. Even if the Shares are regularly traded on an
established securities market in the United States, a Non-United States Holder
who beneficially owns (or at any time during the five years ending on the date
of the sale or disposition of Shares owned), actually or constructively, more
than 5% of the outstanding Shares generally will be subject to United States
federal income and withholding tax on the gain on such disposition if the
Company is a USRPHC at the time of disposition or was a USRPHC at any time
within the five years preceding such disposition.
FEDERAL ESTATE TAXES
Shares owned or treated as owned by an individual who is not a citizen or
resident (as specifically defined for United States federal estate tax
purposes) of the United States at the date of death will be included in such
individual's estate for United States federal estate tax purposes, unless an
applicable estate tax treaty provides otherwise. Such individual's estate may
be subject to United States federal estate tax on the property includible in
the estate for United States federal estate tax purposes. Estates of
nonresident aliens are generally allowed a credit that is equivalent to an
exclusion of $60,000 of assets from the estate for United States federal estate
tax purposes.
BACKUP WITHHOLDING AND INFORMATION REPORTING
The Company must report annually to the Internal Revenue Service (the "IRS")
and to each Non-United States Holder the amount of dividends paid to, and the
tax withheld with respect to, each Non-United States Holder. These information
reporting requirements apply regardless of whether withholding was reduced or
eliminated by an applicable tax treaty. Copies of these information returns
also may be made available under the provisions of a specific treaty or
agreement with the tax authorities in the country in which the Non-United
States Holder resides. Certain other United States information reporting and
backup withholding tax (which generally is a withholding tax imposed at the
rate of 31% on certain payments to United States persons that fail to furnish
the information required under the United States information reporting
requirements) generally will not apply to dividends paid on Shares to a Non-
United States Holder either at an address outside the United States (provided
that the payor does not have definite knowledge that the payee is a United
States person) or if the dividends are subject to withholding at the 30% rate
(or lower treaty rate).
The payment of the proceeds from the disposition of Shares to or through the
United States office of a broker will be subject to information reporting and
backup withholding unless the owner, under penalties of perjury, certifies,
among other things, as to its status as a Non-United States Holder or otherwise
establishes an exemption (and the broker has no actual knowledge to the
contrary). The payment of the proceeds from the disposition of Shares to or
through a Non-United States office or a broker generally will not be subject to
information reporting or backup withholding. However, information reporting
(but not backup withholding) will apply to a payment of the proceeds from a
sale of Shares if the payment is made through a Non-United States office of a
United States broker or through a Non-United States office of a Non-United
States broker that is (i) a controlled foreign corporation for United States
federal income tax purposes or (ii) a person 50% or more of whose gross income
for a certain three-year period is effectively connected with a United States
trade or business, unless the broker has documentary evidence in its records
that the holder is a Non-United States Holder and certain conditions are met,
or the holder otherwise establishes an exemption.
Any amount withheld under backup withholding rules may be refunded to the
holder or credited against the holder's United States federal income tax
liability, provided that the required information is furnished to the IRS.
The backup withholding and information reporting rules currently are under
review by the U.S. Treasury Department and their application to the Shares is
subject to change.
S-7
<PAGE>
UNDERWRITER
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date hereof (the "Underwriting Agreement"), Morgan Stanley
& Co. Incorporated (the "Underwriter") has agreed to purchase, and the Company
has agreed to sell to the Underwriter, the Shares.
The Underwriting Agreement provides that the obligation of the Underwriter to
pay for and accept delivery of the Shares is subject to the approval of certain
legal matters by its counsel and to certain other conditions. The Underwriter
is obligated to take and pay for all the Shares if any are taken.
The Underwriter initially proposes to offer the Shares directly to the public
at the public offering price set forth on the cover page hereof and to certain
dealers at a price that represents a concession not in excess of $.25 per
share. After the initial offering of the Shares, the offering price and other
selling terms may from time to time be varied by the Underwriter.
The Underwriter has represented and agreed that (i) it has not offered or
sold, and will not offer or sell, in the United Kingdom, by means of any
document, any Shares other than to persons whose ordinary business it is to buy
or sell shares or debentures, whether as principal or agent (except under
circumstances which do not constitute an offer to the public within the meaning
of the Companies Act 1985); (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Shares in, from or otherwise involving
the United Kingdom; and (iii) it has only issued or passed on, and will only
issue and pass on to any person in the United Kingdom, any document received by
it in connection with the issue of the Shares if that person is of a kind
described in Article 9(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1988 or is a person to whom the document may
otherwise lawfully be issued or passed on.
Except with respect to the United States, no action has been taken by the
Company or the Underwriter that would permit a public offering of the Shares in
any country or jurisdiction where action for that purpose is required.
Accordingly, the Shares may not be offered, sold or delivered, directly or
indirectly, and neither this document nor any offering circular, prospectus,
form of application, advertisement or other offering material may be
distributed or published in any other such country or jurisdiction except under
circumstances that will result in compliance with any applicable laws and
regulations.
Purchasers of the Shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practices of the country of
purchase in addition to the public offering price.
The Company has agreed, for a period of 90 days after the date of this
Prospectus Supplement, without the prior consent of the Underwriter, not to,
directly or indirectly, sell, offer to sell or otherwise dispose of any shares
of common stock of the Company (other than to the Underwriter pursuant to the
Underwriting Agreement) or securities convertible into or exchangeable for
common stock of the Company, subject to certain exceptions set forth in the
Underwriting Agreement, other than (i) shares of Class A Common Stock or
securities convertible into or exchangeable for common stock of the Company
offered or sold to directors, officers and employees of the Company pursuant to
existing options, employee benefit plans or as executive compensation and (ii)
such number of shares of common stock of the Company and securities convertible
into or exchangeable for common stock of the Company as may be required for the
Company to consummate certain pending acquisitions.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended, or contribute to payments which the Underwriter may be required to
make in respect thereof.
The Underwriter engages in transactions with and performs services for the
Company and certain of its subsidiaries in the ordinary course of business.
S-8
<PAGE>
VALIDITY OF THE SHARES
Certain legal matters with respect to the Shares offered hereby will be
passed upon for the Company by Baker & Botts, L.L.P., 885 Third Avenue, New
York, New York, 10022-4834. Jerome H. Kern, a partner of Baker & Botts, L.L.P.,
is a director of the Company and holds options to purchase shares of Class A
Common Stock. Certain legal matters in connection with the offering will be
passed upon for the Underwriter by Brown & Wood, One World Trade Center, New
York, New York 10048-0557.
S-9
<PAGE>
Rule No. 424(b)(5)
Registration No. 33-56271
PROSPECTUS
TELE-COMMUNICATIONS, INC.
COMMON STOCK
PREFERRED STOCK
WARRANTS
---------------
Tele-Communications, Inc. (the "Company") may offer from time to time (i)
shares of the Company's common stock, which may be Class A Common Stock, $1.00
par value per share ("Class A Common Stock"), Class B Common Stock, $1.00 par
value per share ("Class B Common Stock"), and/or any class of common stock that
may hereafter be created through an amendment to the Company's Restated
Certificate of Incorporation (collectively, "Common Stock"); (ii) shares of the
Company's Series Preferred Stock, $.01 par value per share ("Preferred Stock"),
which may be issued in the form of depositary shares evidenced by depositary
receipts ("Depositary Shares"), and (iii) warrants ("Warrants") to purchase
shares of Common Stock or Preferred Stock (which shares of Preferred Stock may
be issued in the form of Depositary Shares) (the Common Stock, Preferred Stock
and Warrants are collectively referred to as the "Offered Securities"), or any
combination of the foregoing, at an aggregate initial offering price not to
exceed $575,000,000, at prices and on terms to be determined at or prior to the
time of sale. Different classes of Common Stock may be offered in such amounts,
at market prices prevailing at the time of sale or at prices and on terms to be
determined at or prior to the time of sale and to be set forth in supplements
to this Prospectus. See "Description of Common Stock." The Preferred Stock may
be issued as convertible Preferred Stock which, unless previously redeemed or
otherwise purchased, will be convertible at any time during the specified
conversion period into shares of one or more classes of Common Stock. The
Preferred Stock may be offered as separate series in amounts, at prices, and on
terms to be determined at the time of sale and to be set forth in supplements
to this Prospectus. See "Description of Preferred Stock." The Warrants may be
issued in one or more separate series and may be offered independent of any
offering of Common Stock or Preferred Stock, or may be offered in combination
with any offering of Common Stock or Preferred Stock, in which case such
Warrants may remain attached to such Common Stock or Preferred Stock or may be
separable from such Common Stock or Preferred Stock. See "Description of
Warrants."
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered will be set forth in an accompanying Prospectus
Supplement ("Prospectus Supplement"). Such terms shall include, without
limitation, the following: (i) in the case of Common Stock, the class, number
of shares, initial public offering price, any redemption provisions, any
conversion or exchange rights, voting rights, and the terms of the offering and
sale thereof; (ii) in the case of Preferred Stock, the designation, number of
shares, liquidation preference per share, initial public offering price,
dividend rate (or method of calculation thereof), dates on which dividends
shall be payable and dates from which dividends shall accrue, any redemption or
sinking fund provisions, any conversion or exchange rights, voting rights, and
whether the Company has elected to offer the Preferred Stock in the form of
Depositary Shares; and (iii) in the case of Warrants, the number and terms
thereof, the designation and the number of securities issuable upon their
exercise, the exercise price, the exercise period, the initial public offering
price, the terms of the offering and sale thereof and, where applicable, the
duration and detachability thereof.
The Company may sell Offered Securities on a negotiated or competitive bid
basis to or through underwriters or dealers designated from time to time, which
may be a group of underwriters represented by one or more managing
underwriters. In addition, the Offered Securities may be sold directly by the
Company to other purchasers or through agents. See "Plan of Distribution." The
names of any such underwriters, dealers, managing underwriters, purchasers, or
agents involved in the sale of the Offered Securities in respect of which this
Prospectus is being delivered, the amounts, if any, to be purchased by
underwriters and the compensation, if any, of such underwriters, dealers,
purchasers, or agents will be set forth in the Prospectus Supplement. See "Plan
of Distribution" for possible indemnification arrangements for agents, dealers
and underwriters.
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by the Prospectus Supplement applicable to the Offered
Securities being sold.
SEE "CERTAIN CONSIDERATIONS" FOR CERTAIN FACTORS THAT SHOULD BE CAREFULLY
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE OFFERED SECURITIES.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------
The date of this Prospectus is February 3, 1995.
<PAGE>
The Company was incorporated in 1994 under the name "TCI/Liberty Holding
Company" for the purpose of combining the Company's predecessor, Tele-
Communications, Inc. (renamed "TCI Communications, Inc." and referred to herein
as "TCIC"), and Liberty Media Corporation ("Liberty"). On August 4, 1994 the
mergers (the "TCI/Liberty Combination") of TCIC and Liberty with separate
wholly-owned subsidiaries of the Company were consummated in a tax-free
transaction and each of TCIC and Liberty became wholly-owned subsidiaries of
the Company. In connection with the TCI/Liberty Combination, the Company
changed its name to Tele-Communications, Inc. and TCIC changed its name to TCI
Communications, Inc. UNLESS THE CONTEXT INDICATES OTHERWISE, AS USED IN THIS
PROSPECTUS THE TERM "COMPANY" MEANS, ON AND AFTER AUGUST 4, 1994, TELE-
COMMUNICATIONS, INC. (FORMERLY NAMED "TCI/LIBERTY HOLDING COMPANY") AND, BEFORE
AUGUST 4, 1994, TCIC (FORMERLY NAMED "TELE-COMMUNICATIONS, INC."), AND THEIR
RESPECTIVE CONSOLIDATED SUBSIDIARIES.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (together with all
amendments and exhibits, referred to as the "Registration Statement") under the
Securities Act of 1933, as amended, in connection with this offering. This
Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information, reference
is hereby made to the Registration Statement. Statements contained herein
concerning the provisions of any document are not necessarily complete and, in
each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements, information statements, and other
information with the Commission. Such reports, proxy statements, information
statements, and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549; 500
West Madison Street, Suite 1400, Chicago, Illinois 60661; and at 7 World Trade
Center, Suite 1300, New York, New York 10048; and copies of such material can
be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
INCORPORATION OF DOCUMENTS BY REFERENCE
The Company hereby incorporates in this Prospectus by reference the following
documents filed with the Commission under the Exchange Act: (i) the Company's
Annual Report on Form 10-K for the year ended December 31, 1993, as amended by
Form 10-K/A (Amendment 1) (Commission File No. 0-5550), (ii) the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1994, as amended
by Form 10-Q/A (Amendment 1) (Commission File No. 0-5550), (iii) the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1994 (Commission
File No. 0-5550), (iv) the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1994, as amended by Form 10-Q/A (Amendment 1) and
Form 10-Q/A (Amendment 2) (Commission File No. 0-20421), (v) the Company's
Current Reports on Form 8-K dated February 15, 1994, February 25, 1994, April
6, 1994, and May 27, 1994, as amended by Form 8-K/A (Amendment 1) (Commission
File No. 0-5550), and (vi) the Company's Current Reports on Form 8-K dated
August 5, 1994, August 18, 1994, August 26, 1994, October 27, 1994, December 2,
1994, as amended by Form 8-K/A (Amendment 1), January 23, 1995, and February 3,
1995 (Commission File No. 0-20421).
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14, or 15(d) of the Exchange Act after the date hereof and prior
to the termination of the offering of the Offered Securities shall be deemed to
be incorporated herein by reference and to be a part hereof from the respective
dates of the filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently filed document which
also is or
2
<PAGE>
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a Prospectus
is delivered, on the written or oral request of any such person, a copy of any
or all of the documents incorporated by reference herein other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
into the documents that this Prospectus incorporates). Such requests should be
addressed to Stephen M. Brett, Esq., Executive Vice President and General
Counsel, Tele-Communications, Inc., Terrace Tower II, 5619 DTC Parkway,
Englewood, Colorado 80111-3000; telephone (303) 267-5500.
CERTAIN CONSIDERATIONS
The following factors, among others, should be considered carefully before
making an investment decision with respect to any Offered Securities.
Losses. The Company incurred a net loss in each of the three fiscal years in
the period ended December 31, 1993 and losses from continuing operations in the
fiscal years ended December 31, 1993 and December 31, 1991. The Company had net
earnings for the nine-month periods ended September 30, 1994 and 1993.
Notwithstanding the losses it has incurred, the Company has been able to, and
expects to continue to be able to, satisfy its debt service and other
obligations as and when they become due. The Company's Operating Cash Flow
(operating income before depreciation, amortization and other non-cash credits
or charges) ($1,858 million, $1,637 million, and $1,430 million for the years
ended December 31, 1993, 1992, and 1991, respectively, and $1,339 million and
$1,409 million for the nine-month periods ended September 30, 1994 and 1993,
respectively) has historically been sufficient to cover its interest expense
($731 million, $718 million, and $826 million for the years ended December 31,
1993, 1992, and 1991, respectively, and $568 million and $549 million for the
nine-month periods ended September 30, 1994 and 1993, respectively). The
Company's interest coverage ratio for the years ended December 31, 1993, 1992,
and 1991 was 254%, 228%, and 173%, respectively, and for the nine months ended
September 30, 1994 and 1993 was 236% and 257%, respectively. Operating Cash
Flow is a measure of value and borrowing capacity within the cable television
industry and is not intended to be a substitute for cash flows provided by
operating activities, a measure of performance prepared in accordance with
generally accepted accounting principles, and should not be relied upon as
such.
Ratios of Earnings to Combined Fixed Charges and Preferred Stock
Dividends. The ratio of earnings to combined fixed charges and preferred stock
dividends was 1.02 and 1.22 for the years ended December 31, 1992 and 1993,
respectively, and 1.32 and 1.04 for the nine months ended September 30, 1993
and 1994, respectively. The ratio of earnings to combined fixed charges and
preferred stock dividends was less than 1.00 for the years ended December 31,
1991, 1990, and 1989 as earnings available for combined fixed charges and
preferred stock dividends were inadequate to cover combined fixed charges and
preferred stock dividends for such periods. See "Ratios of Earnings to Combined
Fixed Charges and Preferred Stock Dividends." The amounts of the coverage
deficiencies for the years ended December 31, 1991, 1990, and 1989 were
$177,000,000, $399,000,000, and $430,000,000, respectively. On a pro forma
basis, the effect of (i) the merger with TeleCable Corporation, (ii) the
TCI/Liberty Combination, (iii) the investment of the Company in Intermedia
Partners IV, L.P., and (iv) the QVC Transactions (as hereafter defined) would
change the historical ratios of earnings to combined fixed charges and
preferred stock dividends for the nine months ended September 30, 1994 from
1.04 to 1.26 and for the year ended December 31, 1993 from 1.22 to 1.14. For
the ratio calculations, earnings available for combined fixed charges and
preferred stock dividends consist of earnings (losses) before income taxes plus
combined fixed charges and preferred stock dividends (minus capitalized
interest), distributions from and (earnings) losses of less than 50%-owned
affiliates with debt not guaranteed by the Company (net of earnings not
distributed of less than 50%-owned affiliates), and minority interest in
earnings (losses) of consolidated subsidiaries (other than preferred stock
dividend requirements). Combined fixed charges and preferred stock dividends
consist of (i) interest (including capitalized interest)
3
<PAGE>
on indebtedness, excluding interest to 50%-owned affiliates, (ii) the Company's
proportionate share of interest of 50%-owned affiliates, (iii) that portion of
rental expense the Company believes to be representative of interest (one-third
of rental expense), (iv) amortization of deferred debt expense, (v) that
portion of minority interest in earnings of consolidated subsidiaries that
represents preferred stock dividend requirements, excluding preferred stock
dividend requirements to 50%-owned affiliates, (vi) preferred stock dividend
requirements of 50%-owned affiliates, other than amounts to the Company, and
(vii) preferred stock dividends of the Company. The Company has guaranteed the
debt of certain less than 50%-owned affiliates and certain other entities in
which it has an interest. Fixed charges of $13,833,000, $2,517,000, $506,000,
$710,000, and $745,000 relating to such guarantees for the years ended December
31, 1993, 1992, 1991, 1990, and 1989 respectively, and fixed charges of
$10,676,000 and $1,888,000 relating to such guarantees for the nine months
ended September 30, 1994 and 1993, respectively, and on a pro forma basis,
fixed charges of $10,676,000 and $14,365,000 relating to such guarantees for
the nine months ended September 30, 1994 and for the year ended December 31,
1993, respectively, have not been included in fixed charges.
Holding Company Structure; Restrictions on Dividends. The Company is a
holding company and its assets consist of investments in its subsidiaries.
Substantially all of the consolidated liabilities of the Company have been
incurred by its subsidiaries. The Company's rights, and therefore the extent to
which the holders of Common Stock and Preferred Stock will be able to
participate in the distribution of assets of any subsidiary upon the latter's
liquidation or reorganization, will be subject to prior claims of the
subsidiary's creditors, including trade creditors, except to the extent that
the Company may itself be a creditor with recognized claims against such
subsidiary (in which case the claims of the Company would still be subject to
the prior claims of any secured creditor of such subsidiary and of any holder
of indebtedness of such subsidiary that is senior to that held by the Company).
The Company's ability to pay dividends on the Common Stock or Preferred
Stock, and on any other classes and series of securities ranking on a parity
with the Common Stock or any class or series of Preferred Stock, is dependent
upon the ability of the Company's subsidiaries to distribute amounts to the
Company in the form of dividends, loans, or advances or in the form of
repayment of loans and advances from the Company. The subsidiaries are separate
and distinct legal entities and have no obligation, contingent or otherwise, to
pay any dividends on the Common Stock or Preferred Stock or to make any funds
available therefor, whether by dividends, loans, or other payments. The payment
of dividends, loans, or advances to the Company by its subsidiaries may be
subject to statutory or regulatory restrictions, is contingent upon the cash
flows generated by those subsidiaries, and is subject to various business
considerations. Further, certain of the Company's subsidiaries are subject to
loan agreements that prohibit or limit the transfer of funds by such
subsidiaries to the Company in the form of dividends, loans, or advances and
require that such subsidiaries' indebtedness to the Company be subordinate to
the indebtedness under such loan agreements. The amount of net assets of
subsidiaries subject to such restrictions exceeds the Company's consolidated
net assets.
THE COMPANY
The Company, through its subsidiaries and affiliates, is principally engaged
in the construction, acquisition, ownership, and operation of cable television
systems and the provision of satellite-delivered video entertainment,
information, and home shopping programming services to various video
distribution media, principally cable television systems. The Company also has
investments in cable and telecommunications operations and television
programming in certain international markets as well as investments in
companies and joint ventures involved in developing and providing programming
for new television and telecommunications technologies. The Company is a
Delaware corporation and its executive offices are located at Terrace Tower II,
5619 DTC Parkway, Englewood, Colorado 80111-3000; telephone (303) 267-5500.
The Company is organized into four principal business groups: Domestic Cable
and Communications; Domestic Programming; International Cable and Programming;
and Technology/Venture Capital.
4
<PAGE>
DOMESTIC CABLE AND COMMUNICATIONS
Based on the number of basic subscribers served by the Company and its
affiliates, the Company is the largest provider of cable television services in
the United States. At September 30, 1994, the Company, through its
subsidiaries, operated cable television systems serving approximately 11.3
million basic subscribers throughout the continental United States and Hawaii
(12.1 million after giving pro forma effect to the merger with TeleCable
Corporation ("TeleCable")). In addition, at December 31, 1993, the Company's
affiliates accounted for under the equity method provided cable television
services to approximately 4.7 million basic subscribers.
On January 20, 1995, Viacom International, Inc., Tele-Vue Systems, Inc.
("Tele-Vue") (a wholly-owned subsidiary of Viacom, Inc.), Intermedia Partners
IV, L.P. ("IP-IV"), and RCS Pacific, L.P. ("RCS") entered into an asset
purchase agreement, pursuant to which RCS will acquire from Tele-Vue cable
television systems serving, at December 31, 1994, approximately one million
basic subscribers. The purchase price for such systems is approximately
$1,983,000,000, subject to closing and other adjustments. The Company will
hold, through a subsidiary, a 25% limited partnership interest in IP-IV, and
IP-IV, in turn, will hold a 79% limited partnership interest in RCS. A
subsidiary of the Company has agreed to loan $600 million to IP-IV, which will
loan such funds to RCS. RCS may then use such funds to pay part of the purchase
price to Tele-Vue or, at the Company's option, purchase from the Company shares
of Class A Common Stock having an equivalent market value. If RCS purchases
such Class A Common Stock, RCS would tender to Tele-Vue, as part of the
purchase price, RCS's short-term note in the principal amount of $600 million,
which note would be secured by the Class A Common Stock purchased by RCS. The
Company would then guarantee to RCS that it would receive proceeds from the
sale of such Class A Common Stock that would pay RCS's obligations under its
secured note in full. The foregoing purchase and sale of the Tele-Vue cable
television systems is subject to a number of conditions, including receipt of
various franchise and other governmental approvals and receipt of "minority tax
certificates" from the Federal Communications Commission.
On January 26, 1995, the Company acquired TeleCable by means of a merger (the
"TeleCable Merger"). At September 30, 1994, TeleCable served approximately
750,000 basic subscribers in 15 states. In this transaction, TCIC assumed
approximately $300 million of TeleCable's net liabilities and the former
stockholders of TeleCable were issued approximately 42 million shares of Class
A Common Stock and one million shares of a new series of Preferred Stock,
designated "Convertible Preferred Stock, Series D." See "Description of
Preferred Stock--Outstanding Preferred Stock--Series D Preferred Stock."
In addition to its cable television systems, the Company has an investment,
along with other cable television operators, in Teleport Communications Group,
Inc. ("TCG"). TCG believes that, based on the number of route miles served by
TCG and its subsidiaries, it is the nation's largest competitive access
provider. The Company intends to expand further its telephony investments as
permitted by applicable federal and state regulatory authorities. The Company
also has an investment in Primestar Partners, a direct broadcast satellite
service.
Subsidiaries of the Company, Comcast Corporation ("Comcast"), Cox Cable
Communications, Inc. ("Cox"), and Sprint Corporation ("Sprint") have formed a
partnership ("WirelessCo") to engage in the business of providing wireless
communications services on a nationwide basis. At the date of this Prospectus,
through WirelessCo, the partners are bidding for broadband personal
communications services ("PCS") licenses in auctions (the "PCS Auctions") being
conducted by the Federal Communications Commission. The PCS Auctions commenced
in December 1994, and WirelessCo applied for eligibility to bid for licenses in
39 of the 51 Major Trading Areas ("MTAs") for which PCS licenses are being
auctioned. WirelessCo may also invest in, affiliate with, or acquire licenses
from successful bidders in the PCS Auctions. The Company owns a 30% interest in
WirelessCo. Subsidiaries of Cox, Sprint, and the Company have also formed a
separate partnership, in which the Company owns a 35.3% interest, to bid for
PCS licenses for the Philadelphia MTA. The Company cannot predict the cost of
obtaining licenses in the PCS Auctions or the likelihood that WirelessCo and
the Philadelphia partnership will be successful bidders for any of the PCS
licenses for which they have applied to bid. If the respective bidding
strategies of WirelessCo and the
5
<PAGE>
Philadelphia partnership are successful, however, the capital required to fund
the license costs and the construction of the PCS systems will be substantial
and the Company's share thereof would represent a material increase in its
capital requirements.
The Company, Comcast, Cox (collectively, the "Cable Partners"), and Sprint
have also agreed upon the basis upon which they would negotiate a definitive
agreement for the formation of a partnership ("NewTelco") to engage in the
business of providing local wireline communications services to residences
and businesses on a nationwide basis, using cable television facilities of the
Cable Partners and other cable television operators that agree to affiliate
with NewTelco. The parties intend that the Cable Partners would contribute
their interests in TCG and its affiliated entities and other competitive access
businesses to NewTelco. The Company currently owns an approximately 29.9%
interest in TCG and would own a 30% interest in NewTelco. The modification or
repeal of existing regulatory and legislative barriers to competition in the
local telephony market will be necessary in order for NewTelco to provide its
proposed services in most states. Formation of NewTelco is subject to certain
conditions including the negotiation of a definitive partnership agreement and
contribution agreement. The contributions of TCG and other competitive access
businesses to NewTelco will be subject, among other things, to the receipt of
necessary regulatory and other consents and approvals.
DOMESTIC PROGRAMMING
The Company and its affiliates provide satellite-delivered video
entertainment, information, and home shopping television services to video
distribution outlets, including cable television systems, broadcast television
stations, and the direct-to-home satellite market. The Company has ownership
interests in several domestic programming businesses, including Turner
Broadcasting System, Inc.; Discovery Communications, Inc.; Home Shopping
Network Inc.; QVC, Inc.; Encore Media Corporation; BET Holdings, Inc.;
International Family Entertainment; E! Entertainment Television; and two
national and 15 regional sports networks. Recently, the Company launched
STARZ!, a first-run premium programming service. The Company is also the owner
of Netlink USA, one of the larger providers, based on its number of
subscribers, of programming packages to home satellite dish owners.
Liberty Media Corporation ("Liberty"), a wholly-owned subsidiary of the
Company, Comcast, QVC Programming, Inc. (the "Purchaser"), a corporation which
is to be jointly owned by Comcast and Liberty, and QVC, Inc. ("QVC") are
parties to a merger agreement, dated August 4, 1994, as amended. Pursuant to
the merger agreement, the Purchaser commenced an offer to purchase all
outstanding shares of common stock and preferred stock of QVC, upon the terms
and subject to the conditions set forth in the Purchaser's Offer to Purchase,
dated August 11, 1994, as supplemented, and the related Letters of Transmittal
(the "QVC Tender Offer"). The QVC Tender Offer is scheduled to expire at
midnight, New York City time, on February 9, 1995. Upon consummation of the QVC
Tender Offer, the Purchaser will be merged with and into QVC (the "QVC Merger")
with QVC continuing as the surviving corporation. If the QVC Tender Offer and
the QVC Merger (collectively, the "QVC Transactions") are consummated, Liberty
would own approximately 43% of the post-merger QVC.
INTERNATIONAL CABLE AND PROGRAMMING
The Company has significant investments in cable and telecommunications
operations and television programming in international markets. The Company
seeks to invest in markets with favorable regulatory environments and
attractive growth opportunities. Among its overseas investments, the Company
has a 38.7% interest in TeleWest Communications plc ("TeleWest"), a joint
venture with U S WEST Communications, Inc. TeleWest provides cable television
and residential and business cable telephony in the United Kingdom. The Company
also has a majority interest in Flextech plc, which provides television
programming in the United Kingdom through its interests in Bravo, The
Children's Channel, UK Gold, UK Living and The Family Channel UK. Through
certain other joint ventures, the Company has interests in cable television
systems and television programming in Hungary, Norway, Sweden, Israel, Ireland,
Malta, France, Chile, Puerto Rico, the Dominican Republic, New Zealand,
Australia, Singapore, and Japan.
6
<PAGE>
TECHNOLOGY/VENTURE CAPITAL
The Company is an investor in companies and joint ventures involved in
developing and providing programming for new television and telecommunications
technologies. Current investments and technologies
under development include interactive and set-top box technology, entertainment
software, and other services for wireline and wireless switched broadband
interactive networks. The Company has formed a joint venture with Sega of
America and Time Warner Entertainment Company, L.P. to develop and market the
first video game channel, called "The Sega Channel." More recently, the Company
has made investments in TSX Corporation, a producer of communications
equipment, and Interactive Network, Inc., a developer of interactive television
programming systems. The Company has announced a proposed investment in Acclaim
Entertainment, Inc. ("Acclaim") and the formation of a joint venture with
Acclaim that will develop, acquire and distribute games and other interactive
entertainment software over various telecommunications networks. The Company
has also created the National Digital Television Center, a provider of digital
compression and authorization services to programming suppliers and to cable
television systems and other video distribution outlets.
In addition to its technology investments, the Company operates Western Tele-
Communications, Inc., a wholesale provider of long distance video, voice, data,
and other telecommunications services.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Offered Securities may
be used, together with internally generated funds: (i) for general corporate
purposes, which may include funding of current and future (a) investments, both
domestic and international, in cable, satellite, and telephony distribution
systems and related ventures, (b) programming investments and/or (c)
developmental expenses and investments in new telecommunications technologies
and related programming; (ii) to repay, redeem, or repurchase outstanding
indebtedness; (iii) for acquisitions, capital expenditures, and working capital
requirements; and/or (iv) for such other purposes as may be specified in a
Prospectus Supplement. All or a portion of such proceeds may be advanced to
subsidiaries of the Company in the form of loans or as a contribution to
capital.
A description of any indebtedness to be repaid with the proceeds of the
Offered Securities will be set forth in the Prospectus Supplement. Specific
plans, arrangements, or agreements, written or oral, with respect to any
material acquisitions by the Company by merger or otherwise, or with respect to
any material disposition of assets by the Company, if any, will, to the extent
not disclosed in a document incorporated by reference herein, be disclosed in
the Prospectus Supplement.
Pending application of the net proceeds to the foregoing uses, the net
proceeds will be added to working capital, invested in short-term interest-
bearing obligations, and/or used to reduce outstanding indebtedness under
credit facilities.
7
<PAGE>
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the Company's ratios of earnings to combined
fixed charges and preferred stock dividends for the nine month periods ended
September 30, 1994 and 1993 and for each of the five fiscal years in the
period ended December 31, 1993. The table also sets forth the unaudited pro
forma ratios of earnings to combined fixed charges and preferred stock
dividends for the nine months ended September 30, 1994 and for the fiscal year
ended December 31, 1993, giving pro forma effect to the TeleCable Merger, the
TCI/Liberty Combination, the Company's investment in IP-IV and the QVC
Transactions as if such transactions had occurred prior to January 1, 1993.
The pro forma ratios are not necessarily indicative of the ratios of earnings
to combined fixed charges and preferred stock dividends that would have been
obtained if such transactions had been effective at or prior to January 1,
1993.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
--------------------- ------------------------------------
PRO FORMA PRO FORMA
1994 1994 1993 1993 1993 1992 1991 1990 1989
--------- ----- ----- --------- ----- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
combined
fixed charges and pre-
ferred stock divi-
dends(1).............. 1.26x 1.04x 1.32x 1.14x 1.22x 1.02x -- -- --
</TABLE>
- --------
(1) For the ratio calculations, earnings available for combined fixed charges
and preferred stock dividends consist of earnings (losses) before income
taxes plus combined fixed charges and preferred stock dividends (minus
capitalized interest), distributions from and (earnings) losses of less
than 50%-owned affiliates with debt not guaranteed by the Company (net of
earnings not distributed of less than 50%-owned affiliates), and minority
interests in earnings (losses) of consolidated subsidiaries (other than
preferred stock dividend requirements). Combined fixed charges and
preferred stock dividends consist of (i) interest (including capitalized
interest) on indebtedness, excluding interest to 50%-owned affiliates,
(ii) the Company's proportionate share of interest of 50%-owned
affiliates, (iii) that portion of rental expense the Company believes to
be representative of interest (one-third of rental expenses), (iv)
amortization of deferred debt expense, (v) that portion of minority
interest in earnings of consolidated subsidiaries that represents
preferred stock dividend requirements, excluding preferred stock dividend
requirements to 50%-owned affiliates, (vi) preferred stock dividend
requirements of 50%-owned affiliates, other than amounts payable to the
Company, and (vii) preferred stock dividends of the Company. The Company
has guaranteed the debt of certain less than 50%-owned affiliates and
certain other entities in which it has an interest. Fixed charges of
$13,833,000, $2,517,000, $506,000, $710,000, and $745,000 relating to such
guarantees for the years ended December 31, 1993, 1992, 1991, 1990, and
1989, respectively, and $10,676,000 and $1,888,000 for the nine months
ended September 30, 1994 and 1993, respectively, and, on a pro forma
basis, fixed charges of $10,676,000 and $14,365,000 relating to such
guarantees for the nine months ended September 30, 1994 and for the year
ended December 31, 1993, respectively, have not been included in fixed
charges. The ratio of earnings to combined fixed charges and preferred
stock dividends was less than 1.00 for the years ended December 31, 1991,
1990, and 1989 as earnings available for combined fixed charges and
preferred stock dividends were inadequate to cover combined fixed charges
and preferred stock dividends for such periods. The amount of the coverage
deficiencies for the years ended December 31, 1991, 1990, and 1989 were
$177,000,000, $399,000,000, and $430,000,000, respectively. On a pro forma
basis, the effect of the TeleCable Merger, the TCI/Liberty Combination,
the Company's investment in IP-IV and the QVC Transactions would change
the historical ratios of earnings to combined fixed charges and preferred
stock dividends for the nine months ended September 30, 1994 from 1.04 to
1.26 and for the year ended December 31, 1993 from 1.22 to 1.14.
DESCRIPTION OF COMMON STOCK
Class A and Class B Common Stock. The statements below describing the Class
A Common Stock and the Class B Common Stock are in general terms and in all
respects are subject to and qualified in their entirety by reference to the
applicable provisions of the Company's Restated Certificate of Incorporation
and Bylaws.
The Company is authorized to issue 1,100,000,000 shares of Class A Common
Stock and 150,000,000 shares of Class B Common Stock. Each share of Class A
Common Stock has one vote and each share of Class B Common Stock has 10 votes
per share. The Class A and Class B Common Stock are otherwise identical in all
respects, except that each share of Class B Common Stock is convertible into
one share of Class A Common Stock at the option of the holder. A number of
shares of Class A Common Stock equal to the number of shares of Class B Common
Stock outstanding from time to time are set aside and reserved for issuance
upon conversion of shares of Class B Common Stock. The Class A Common Stock is
not convertible into Class B Common Stock.
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Subject to the preferential rights, if any, of holders of any then
outstanding preferred stock, the holders of the Class A and Class B Common
Stock are entitled to receive dividends when and as declared by the Board of
Directors out of funds legally available for such payment. Holders of Class A
and Class B Common Stock have no preemptive rights to purchase additional
shares. Subject to the preferential rights of holders of any then outstanding
preferred stock, the holders of Class A and Class B Common Stock are entitled
to share ratably in the assets of the Company available for distribution to
stockholders in the event of the Company's liquidation, dissolution, or winding
up.
The holders of the Class A and Class B Common Stock vote as one class for the
election of directors and have no cumulative voting rights in the election of
directors. The Company's Restated Certificate of Incorporation also provides
that the Board of Directors be divided into three classes of approximately
equal size, with one class to be elected for a three-year term at each annual
meeting of stockholders.
The Restated Certificate of Incorporation may be amended or repealed only
upon a vote of the holders of 66 2/3% of the total voting power of the
outstanding Class A and Class B Common Stock and any then outstanding preferred
stock entitled to vote with the Class A and Class B Common Stock generally on
matters submitted to stockholders for a vote (collectively "Voting Stock"),
voting as one class, and the Company's Bylaws may be amended only upon the
affirmative vote of at least 75% of the members of the Board of Directors, or
by a vote of holders of 66 2/3% of the total voting power of the outstanding
Voting Stock, voting as a single class. In addition, the Restated Certificate
of Incorporation provides that, subject to the rights of the holders of any
class or series of preferred stock, a vote of the holders of 66 2/3% of the
total voting power of the outstanding Voting Stock, voting as a single class,
is required to remove directors (who may be removed only for cause) and to
approve dissolution and certain mergers, consolidations, sales of assets, and
similar transactions.
Other Classes of Common Stock. The Company may create, after the date of this
Prospectus, one or more additional classes of Common Stock through an amendment
to the Company's Restated Certificate of Incorporation. Any such amendment
would require a vote of the holders of 66 2/3% of the total voting power of the
outstanding Voting Stock, voting as a single class. See "Class A and Class B
Common Stock" above.
On November 17, 1994, the Company announced that its Board of Directors had
approved a plan to create several new classes of Common Stock intended to track
and reflect the performance of each of the Company's four principal business
groups ("Tracking Common Stock"). Those groups comprise the following
operations of the Company: Domestic Cable and Communications; Domestic
Programming; International Cable and Programming; and Technology/Venture
Capital. For a summary description of each group, see "The Company." The
Tracking Common Stock may be initially issued in any one or more of several
ways to be determined by the Board of Directors, including as a rights offering
or an exchange offer to stockholders; as a distribution on outstanding shares
of Class A and Class B Common Stock; in one or more public offerings for cash;
in connection with future acquisitions or investments; or in a sale to
strategic investors. After the issuance of any class of Tracking Common Stock,
holders of such class would remain stockholders of the Company. Accordingly,
the Company would continue to be the owner of the subsidiaries in which the
four business groups are conducted, and holders of Tracking Common Stock would
have no direct equity interest in any such subsidiary. The issuance of any
class of Tracking Common Stock is subject to various contingencies, including
the approval of an amendment to the Company's Restated Certificate of
Incorporation, which would authorize each class of Tracking Common Stock, by
the holders of 66 2/3% of the total voting power of the outstanding Voting
Stock, voting as a single class, and further approvals by the Board of
Directors of the Company of the issuance of any class of Tracking Common Stock.
There can be no assurance that all such contingencies will be satisfied
(including that such approvals will be obtained) or that any class of Tracking
Common Stock will ultimately be issued by the Company.
The Prospectus Supplement relating to any class of Common Stock that is
created after the date of this Prospectus will set forth (i) the title of such
class of Common Stock and the number of shares offered; (ii)
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any special dividend rights; (iii) any special rights on liquidation; (iv) any
redemption provisions; (v) any conversion or exchange rights; (vi) voting
rights; and (vii) any relative, participating, optional, and special rights and
qualifications, limitations, and restrictions that are different from or in
addition to those pertaining to the Class A and Class B Common Stock. If any
class of such Common Stock consists of Tracking Common Stock, a detailed
description of the business group the performance of which such Tracking Common
Stock is intended to reflect, combined financial information for such business
group prepared in accordance with generally accepted accounting principles, and
a management's discussion and analysis of financial condition and results of
operations of such business group will, to the extent not disclosed in a
document incorporated by reference herein, be disclosed in the related
Prospectus Supplement.
DESCRIPTION OF PREFERRED STOCK
The Company is authorized to issue up to 12,375,096 shares of preferred
stock, divided into 700,000 shares of Class A Preferred Stock ("Class A
Preferred Stock"), 1,675,096 shares of Class B 6% Cumulative Redeemable
Exchangeable Junior Preferred Stock ("Class B Preferred Stock"), and 10,000,000
shares of Series Preferred Stock. The Series Preferred Stock is issuable in one
or more series, with such designations, preferences, and relative,
participating, optional, or other special rights, qualifications, limitations,
or restrictions thereof as shall be stated or expressed in a resolution or
resolutions providing for the issue of such series adopted by the Board of
Directors. All shares of any one series of the Series Preferred Stock are
required to be alike in every particular and all series are required to rank
equally and be identical in all respects, except insofar as they may vary with
respect to matters which the Board of Directors is expressly authorized by the
Company's Restated Certificate of Incorporation to determine in the resolution
or resolutions providing for the issue of any series of the Series Preferred
Stock. As of the date of this Prospectus, the Company has issued and
outstanding three series of Series Preferred Stock. For a description of each
outstanding class and series of the Company's preferred stock, see "--
Outstanding Preferred Stock" below.
As described under "Description of Depositary Shares" below, the Company may,
at its option, elect to offer Depositary Shares evidenced by depositary
receipts, each representing an interest in a fraction (to be specified in the
Prospectus Supplement relating to the particular series of Preferred Stock) of
a share of the particular series of Preferred Stock issued and deposited with a
depositary, in lieu of offering any shares of such series of Preferred Stock.
See "Description of Depositary Shares."
The Preferred Stock shall have the dividend, liquidation, redemption, and
voting rights set forth below unless otherwise provided in a Prospectus
Supplement relating to a particular series of the Preferred Stock. Reference is
made to the Prospectus Supplement relating to the particular series of the
Preferred Stock offered thereby for specific terms, including: (a) the
designation of such Preferred Stock and the number of shares offered; (b) the
amount of liquidation preference per share; (c) the initial public offering
price at which such Preferred Stock will be issued; (d) the dividend rate (or
method of calculation), the dates on which dividends shall be payable and the
dates from which dividends shall commence to cumulate, if any; (e) any
redemption or sinking fund provisions; (f) any conversion or exchange rights;
(g) whether the Company has elected to offer Depositary Shares as described
below under "Description of Depositary Shares;" and (h) any additional voting
and other rights, preferences, privileges, limitations, and restrictions of
such series of Preferred Stock.
The Preferred Stock will, when issued, be fully paid and nonassessable and
will have no preemptive rights. The rights of the holders of each series of the
Preferred Stock to receive dividends and distributions of assets will be
subordinate to those of the Company's general creditors, but superior to the
rights of holders of any capital stock of the Company ranking junior to the
Preferred Stock as to the payment of dividends, rights of redemption, and
rights on liquidation, including the Class A and Class B Common Stock. See
"Certain Considerations--Holding Company Structure; Restrictions on Dividends."
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DIVIDEND RIGHTS
Holders of Preferred Stock of each series will be entitled to receive, when,
as, and if declared by the Board of Directors of the Company, out of funds of
the Company legally available therefor, cash dividends on such dates and at
such rates as are set forth in, or as are determined by the method described
in, the Prospectus Supplement relating to such series of Preferred Stock. Such
rate may be fixed or variable or both. Each such dividend will be payable to
the holders of record as they appear on the stock books of the Company (or, if
applicable, the records of the Depositary (as hereinafter defined) referred to
under "Description of Depositary Shares") on such record dates, fixed by the
Board of Directors of the Company, as specified in the Prospectus Supplement
relating to such series of Preferred Stock.
Such dividends may be cumulative or noncumulative, as provided in the
Prospectus Supplement relating to such series of Preferred Stock. If the Board
of Directors of the Company fails to declare a dividend payable on a dividend
payment date on any series of Preferred Stock for which dividends are
noncumulative, then the right to receive a dividend in respect of the dividend
period ending on such dividend payment date will be lost, and the Company will
have no obligation to pay the dividend accrued for such period, whether or not
dividends on such series are declared payable on any future dividend payment
dates. Dividends on the shares of each series of Preferred Stock for which
dividends are cumulative will accrue from the date on which the Company
initially issues shares of such series.
Unless otherwise specified in the applicable Prospectus Supplement, if at any
time the Company shall have failed to pay, or declare and set aside the
consideration sufficient to pay, full dividends on any series of Preferred
Stock for the immediately preceding dividend period (or, if such Preferred
Stock is cumulative, for all prior dividend periods), and until such dividends
(or, if such Preferred Stock is cumulative, full cumulative dividends) are
paid, or declared and the consideration sufficient to pay the same in full is
set aside for such purpose and for no other purpose, the Company may not (i)
declare or pay any dividend on or make any distribution with respect to any
class or series of capital stock of the Company ranking pari passu with or
junior to such series of Preferred Stock, except for dividends declared and
paid on any such stock ranking on a parity basis with such Preferred Stock
contemporaneously and on a pro rata basis with dividends declared and paid on
such Preferred Stock, or (ii) redeem or otherwise acquire any shares of such
series of Preferred Stock, any parity stock, or any junior stock unless all
then outstanding shares of such Preferred Stock and any other class or series
of parity stock that by the terms of the instrument creating or evidencing such
parity stock is required to be redeemed under such circumstances are redeemed.
The failure of the Company to pay, or declare and set aside the consideration
sufficient to pay, full dividends (or, if such Preferred Stock is cumulative,
full cumulative dividends) on any series of Preferred Stock shall not prevent
the Company from (i) paying any dividends on junior stock solely in shares of
junior stock or the redemption or other acquisition of junior stock solely in
exchange for (together with a cash adjustment for fractional shares, if any)
shares of junior stock or (ii) paying any dividends on parity stock solely in
shares of parity stock or junior stock (or both) or the redemption or other
acquisition of shares of such series of Preferred Stock or parity stock solely
in exchange for shares of junior stock.
LIQUIDATION PREFERENCES
Unless otherwise specified in the applicable Prospectus Supplement, in the
event of any liquidation, dissolution, or winding up of the Company, whether
voluntary or involuntary, the holders of each series of Preferred Stock will be
entitled to receive out of the assets of the Company available for distribution
to stockholders, before any distribution of assets is made to the holders of
any capital stock of the Company ranking junior to the shares of such series of
Preferred Stock, the amount set forth in the Prospectus Supplement relating to
such series of Preferred Stock. If, upon any voluntary or involuntary
liquidation, dissolution, or winding up of the Company, the assets of the
Company available for distribution to the holders of shares of such series of
Preferred Stock and any other shares of capital stock of the Company ranking on
a parity with shares of such Preferred Stock upon liquidation will not be
sufficient to pay in full all amounts to
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which such holders are entitled, no such distribution will be made on account
of any other class or series of capital stock ranking on a parity as to
liquidation preference with the shares of such Preferred Stock unless
proportionate distributive amounts are paid on account of shares of such series
of Preferred Stock and shares of such parity stock ratably in proportion to the
full respective preferential amounts to which they are entitled. After payment
to the holders of Preferred Stock of the full preferential amounts of the
liquidating distribution to which they are entitled, the holders thereof will
be entitled to no further participation in any distribution of assets by the
Company.
REDEMPTION
A series of the Preferred Stock may be redeemable, in whole or from time to
time in part, at the option of the Company or the holder (or both), and may be
subject to mandatory redemption pursuant to a sinking fund or otherwise, in
each case upon terms, at the times, and at the redemption prices set forth in
the Prospectus Supplement relating to such series. Unless otherwise provided in
the applicable Prospectus Supplement, shares of a series of Preferred Stock
redeemed by the Company will be restored to the status of authorized but
unissued shares of Series Preferred Stock.
In the event that fewer than all of the outstanding shares of a series of
Preferred Stock are to be redeemed, whether by mandatory or optional
redemption, the number of shares to be redeemed will be determined by lot or
pro rata (subject to rounding to avoid fractional shares) as may be determined
by the Company or by any other method as may be determined by the Company in
its sole discretion to be equitable. From and after the redemption date (unless
default is made by the Company in providing for the payment of the redemption
price plus accumulated and unpaid dividends, if any) dividends will cease to
accumulate on the shares of Preferred Stock called for redemption and all
rights of the holders thereof (except the right to receive the redemption price
plus accumulated and unpaid dividends, if any) will cease.
Unless otherwise specified in the applicable Prospectus Supplement, if the
Company fails to redeem any shares of a series of Preferred Stock required to
be redeemed on a redemption date, and until such shares are redeemed in full,
the Company may not declare or pay any dividend on or make any distribution
with respect to any class or series of capital stock ranking junior to such
series of Preferred Stock, and neither the Company nor any subsidiary may
redeem any parity stock or junior stock, or purchase or otherwise acquire any
shares of such series of Preferred Stock, parity stock or junior stock. The
failure of the Company to so redeem shares of such series of Preferred Stock
shall not prevent the Company from (i) paying any dividends on junior stock
solely in shares of junior stock or the redemption or other acquisition of
junior stock solely in exchange for (together with a cash adjustment for
fractional shares, if any) shares of junior stock or (ii) the redemption or
other acquisition of shares of such Preferred Stock or parity stock solely in
exchange for shares of parity stock or junior stock (or both).
EXCHANGE OR CONVERSION RIGHTS
The terms, if any, on which shares of Preferred Stock of any series may be
exchanged for or converted (mandatorily or otherwise) into shares of a
particular class of Common Stock, another series of Preferred Stock or any
other capital stock of the Company will be set forth in the Prospectus
Supplement relating thereto.
VOTING RIGHTS
Except as indicated in a Prospectus Supplement relating to a particular
series of the Preferred Stock, or except as required by applicable law, the
holders of the Preferred Stock will not be entitled to vote for any purpose.
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OUTSTANDING PREFERRED STOCK
The following is a brief description of certain terms of the outstanding
classes and series of preferred stock of the Company. The description does not
purport to be complete and is qualified in its entirety by reference to the
Company's Restated Certificate of Incorporation (including the Certificate of
Designations with respect to each outstanding series of Series Preferred
Stock).
Class A Preferred Stock. The Company is authorized to issue 700,000 shares of
Class A Preferred Stock, of which 592,798 were issued and outstanding as of the
date of this Prospectus and all of which were held by a wholly owned subsidiary
of the Company. The dividend, liquidation, and redemption features of the Class
A Preferred Stock, each of which is discussed below, are determined by
reference to the liquidation value of the Class A Preferred Stock, which as of
any date of determination will be equal, on a per share basis, to the sum of
(i) $322.84, plus (ii) all dividends accrued on such share through the dividend
payment date on or immediately preceding such date of determination to the
extent not paid on or before such date, plus (iii), for purposes of determining
liquidation and redemption payments, all unpaid dividends accrued on the sum of
clauses (i) and (ii) above, to such date of determination.
Subject to the prior preferences and other rights of any class or series of
preferred stock ranking prior to the Class A Preferred Stock with respect to
the declaration or payment of dividends, the holders of Class A Preferred Stock
are entitled to receive preferential cumulative cash dividends when and as
declared by the Board of Directors out of unrestricted funds legally available
therefor. Dividends accrue cumulatively at an
annual rate of 9 3/8% of the liquidation value per share, whether or not such
dividends are declared or funds are legally or contractually available for
payment of dividends. Dividends not paid on any dividend payment date are added
to the liquidation value on such date and remain a part thereof until such
dividends and all dividends accrued thereon are paid in full.
Upon the dissolution, liquidation, or winding up of the Company, holders of
Class A Preferred Stock will be entitled to receive from the assets of the
Company available for distribution to stockholders an amount in cash or
property or a combination thereof, per share, equal to the liquidation value.
The Class A Preferred Stock is subject to optional redemption at any time by
the Company, in whole or in part, and to mandatory redemption by the Company on
the twelfth anniversary of the issue date, in each case at a redemption price
per share equal to the liquidation value of the Class A Preferred Stock.
The Class A Preferred Stock ranks senior to the Class A and Class B Common
Stock and Class B Preferred Stock and on a parity basis with the Series C
Preferred Stock, the Series D Preferred Stock, and the Series E Preferred Stock
(each as defined below) as to dividend rights, rights to redemption and rights
on liquidation.
For so long as any dividends are in arrears on the Class A Preferred Stock or
any class or series of preferred stock of the Company ranking pari passu with
the Class A Preferred Stock which is entitled to payment of cumulative
dividends prior to the redemption or other acquisition of the Class A Preferred
Stock, and until all dividends accrued up to the immediately preceding dividend
payment date on the Class A Preferred Stock and any such parity stock shall
have been paid or declared and set apart so as to be available for payment in
full thereof and for no other purpose, neither the Company nor any subsidiary
thereof may redeem or otherwise acquire any shares of Class A Preferred Stock,
any parity stock, or any class or series of capital stock of the Company
ranking junior to the Class A Preferred Stock, or set aside any money or assets
for any such purpose, unless all of the outstanding shares of Class A Preferred
Stock and such parity stock are redeemed. For so long as any dividends are in
arrears on the Class A Preferred Stock and until all dividends accrued up to
the immediately preceding dividend payment date on the Class A Preferred Stock
shall have been paid or declared and set apart so as to be available for
payment in full thereof and for no other purpose, the Company may not declare
or pay any dividend on or make any distribution with respect to any junior
stock or parity stock or set aside any money or assets for any such purpose,
except for dividends declared and paid on parity stock contemporaneously and on
a pro rata basis with dividends declared and
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paid on the Class A Preferred Stock. If the Company fails to redeem shares of
Class A Preferred Stock required to be redeemed on a redemption date, the
Company may not declare or pay any dividend on or make any distribution with
respect to any junior stock or set aside money or assets for any such purpose,
and neither the Company nor any subsidiary may redeem any parity stock or
junior stock, or purchase or otherwise acquire any Class A Preferred Stock,
parity stock, or junior stock, or set aside any money or assets for any such
purpose, until such shares are redeemed in full. The failure of the Company to
pay any dividends on any class or series of parity stock or to redeem on any
date fixed for redemption any shares of Class A Preferred Stock shall not
prevent the Company from (i) paying any dividends on junior stock solely in
shares of junior stock or the redemption or other acquisition of junior stock
solely in exchange for (together with a cash adjustment for fractional shares,
if any), or (but only in the case of failure to pay dividends on any parity
stock) through the application of the proceeds from the sale of shares of
junior stock; or (ii) the payment of dividends on any parity stock solely in
shares of parity stock and/or junior stock or the redemption or other
acquisition of Class A Preferred Stock or parity stock solely in exchange for
(together with a cash adjustment for fractional shares, if any), or (but only
in the case of a failure to pay dividends on any parity stock) through the
application of the proceeds from the sale of shares of parity stock and/or
junior stock.
The Class A Preferred Stock has no voting rights, except as required by the
Delaware General Corporation Law (the "DGCL"), and except that at such time as
any shares of Class A Preferred Stock are not held by the Company or its
majority-owned subsidiaries, such shares will vote with the Class A and Class B
Common Stock, on the basis of one vote per share, in any general election of
directors of the Company.
Class B Preferred Stock. The Company is authorized to issue 1,675,096 shares
of Class B Preferred Stock, all of which were issued and outstanding as of the
date of this Prospectus. Subject to the prior preferences and other rights of
any class or series of preferred stock ranking prior to the Class B Preferred
Stock with respect to the payment of dividends, the holders of Class B
Preferred Stock are entitled to receive preferential cumulative dividends, when
and as declared by the Board of Directors out of unrestricted funds legally
available therefor. Dividends accrue cumulatively (but without compounding) at
an annual rate of 6% of the stated liquidation value of $100 per share (the
"Stated Liquidation Value"), whether or not such dividends are declared or
funds are legally available for the payment of dividends. Accrued dividends are
payable annually and, in the sole discretion of the Board of Directors, may be
declared and paid in cash, in shares of Class A Common Stock or in any
combination of the foregoing. Accrued dividends not paid as provided above on
any dividend payment date will accumulate and such accumulated unpaid dividends
may be declared and paid in cash, shares of Class A Common Stock, or any
combination thereof at any time without reference to any regular dividend
payment date to holders of record of Class B Preferred Stock as of a special
record date fixed by the Board of Directors. No interest or additional
dividends will accrue or be payable with respect to any dividend payment on the
Class B Preferred Stock that may be in arrears or with respect to that portion
of any other payment on the Class B Preferred Stock that is in arrears which
consists of accumulated or accrued and unpaid dividends.
Upon the liquidation, dissolution, or winding up of the Company, the holders
of Class B Preferred Stock will be entitled, after payment of preferential
amounts on any class or series of preferred stock ranking prior to the Class B
Preferred Stock with respect to liquidating distributions, to receive from the
assets of the Company available for distribution to stockholders an amount in
cash or property or a combination thereof, per share, equal to the Stated
Liquidation Value, plus all accumulated and accrued but unpaid dividends
thereon to the date of payment.
The Class B Preferred Stock is redeemable at any time at the option of the
Company, in whole or in part, for a redemption price per share payable in cash
equal to the Stated Liquidation Value, plus all accumulated and accrued but
unpaid dividends thereon to and including the redemption date. The Company does
not have any mandatory obligation to redeem the Class B Preferred Stock as of
any fixed date, at the option of the holders or otherwise.
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Subject to the prior preferences and other rights of any class or series of
preferred stock, the Class B Preferred Stock is exchangeable at the option of
the Company in whole but not in part at any time for junior subordinated debt
securities of the Company ("Junior Exchange Notes"). If the Company exercises
its optional exchange right, each holder of outstanding shares of Class B
Preferred Stock will be entitled to receive in exchange therefor newly issued
Junior Exchange Notes of a series authorized and established for the purpose of
such exchange, the aggregate principal amount of which will be equal to the
aggregate Stated Liquidation Value of the shares of Class B Preferred Stock so
exchanged by such holder, plus all accumulated and accrued but unpaid dividends
thereon to and including the exchange date. The Junior Exchange Notes will
mature on the fifteenth anniversary of the date of issuance and will be subject
to earlier redemption at the option of the Company, in whole or in part, for a
redemption price equal to the principal amount thereof plus accrued but unpaid
interest. Interest will accrue, and be payable annually, on the principal
amount of the Junior Exchange Notes at a rate per annum to be determined prior
to issuance by adding a spread of 215 basis points to the "Fifteen Year
Treasury Rate" (as defined in the Indenture pursuant to which the Junior
Exchange Notes will be issued). Interest will accrue on overdue principal at
the same rate, but will not accrue on overdue interest.
The Class B Preferred Stock ranks senior to the Class A and Class B Common
Stock and junior to the Class A Preferred Stock, the Series C Preferred Stock,
the Series D Preferred Stock, and the Series E Preferred Stock as to dividend
rights, rights to redemption, and rights on liquidation.
For so long as any dividends are in arrears on the Class B Preferred Stock or
any class or series of preferred stock of the Company ranking pari passu with
the Class B Preferred Stock which is entitled to payment of cumulative
dividends prior to the redemption, exchange, purchase, or other acquisition of
the Class B Preferred Stock, and until all dividends accrued up to the
immediately preceding dividend payment date on the Class B Preferred Stock and
such parity stock shall have been paid or declared and set apart so as to be
available for payment in full thereof and for no other purpose, neither the
Company nor any subsidiary thereof may redeem, exchange, purchase, or otherwise
acquire any shares of Class B Preferred Stock, any such parity stock or any
class or series of its capital stock ranking junior to the Class B Preferred
Stock, or set aside any money or assets for such purpose, unless all of the
outstanding shares of Class B Preferred Stock and such parity stock are
redeemed. For so long as any dividends are in arrears on the Class B Preferred
Stock and until all dividends accrued up to the immediately preceding dividend
payment date on the Class B Preferred Stock shall have been paid or declared
and set apart so as to be available for payment in full thereof and for no
other purpose, the Company may not declare or pay any dividend on or make any
distribution with respect to any junior stock or parity stock or set aside any
money or assets for any such purpose, except for dividends declared and paid on
parity stock contemporaneously and on a pro rata basis with dividends declared
and paid on the Class B Preferred Stock. If the Company fails to redeem or
exchange shares of Class B Preferred Stock on a date fixed for redemption or
exchange, and until such shares are redeemed or exchanged in full, the Company
may not redeem or exchange any parity stock or junior stock, declare or pay any
dividend on or make any distribution with respect to any junior stock, or set
aside money or assets for such purpose and neither the Company nor any
subsidiary thereof may purchase or otherwise acquire any Class B Preferred
Stock, parity stock, or junior stock or set aside any money or assets for any
such purpose. The failure of the Company to pay any dividends on any class or
series of parity stock or to redeem or exchange on any date fixed for
redemption or exchange any shares of Class B Preferred Stock shall not prevent
the Company from (i) paying any dividends on junior stock solely in shares of
junior stock or the redemption, purchase, or other acquisition of junior stock
solely in exchange for (together with a cash adjustment for fractional shares,
if any), or (but only in the case of a failure to pay dividends on any parity
stock) through the application of the proceeds from the sale of, shares of
junior stock; or (ii) the payment of dividends on any parity stock solely in
shares of parity stock and/or junior stock or the redemption, exchange,
purchase, or other acquisition of Class B Preferred Stock or parity stock
solely in exchange for (together with a cash adjustment for fractional shares,
if any), or (but only in the case of a failure to pay dividends on any parity
stock) through the application of the proceeds from the sale of, parity stock
and/or junior stock.
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The Class B Preferred Stock has no voting rights, except as required by the
DGCL, and except that the holders of Class B Preferred Stock have the right to
vote with the Class A and Class B Common Stock, on the basis of one vote per
share, in any general election of directors of the Company.
Series C Preferred Stock. The Company is authorized to issue 80,000 shares of
Convertible Preferred Stock, Series C ("Series C Preferred Stock"), of which
70,559 were issued and outstanding as of the date of this Prospectus. Each
share of Series C Preferred Stock is convertible, at the option of the holder,
into 100 shares of Class A Common Stock, subject to anti-dilution adjustments.
The dividend, liquidation, and redemption features of the Series C Preferred
Stock, each of which is discussed below, are determined by reference to the
liquidation value of the Series C Preferred Stock, which as of any date of
determination is equal, on a per share basis, to the sum of (i) $2,375, plus
(ii) all dividends accrued on such share through the dividend payment date on
or immediately preceding such date of determination to the extent not paid on
or before such date, plus (iii), for purposes of determining liquidation and
redemption payments, all unpaid dividends accrued on the sums of clauses
(i) and (ii) above, to such date of determination.
Subject to the prior preferences and other rights of any class or series of
preferred stock ranking senior to or on a parity with the Series C Preferred
Stock, the holders of Series C Preferred Stock are entitled to receive
preferential cumulative cash dividends out of funds legally available therefor.
Dividends accrue cumulatively at an annual rate of 5 1/2% of the liquidation
value per share, whether or not such dividends are declared or funds are
legally or contractually available for payment of dividends, except that if the
Company fails to redeem shares of Series C Preferred Stock required to be
redeemed on a redemption date, dividends will thereafter accrue cumulatively at
an annual rate of 15% of the liquidation value per share. Dividends not paid on
any dividend payment date will be added to the liquidation value on such date
and remain a part thereof until such dividends and all dividends accrued
thereon are paid in full. Dividends will accrue on unpaid dividends at the rate
of 5 1/2% (15% under the circumstances described above) per annum, unless such
dividends remain unpaid for two consecutive quarters in which event such rate
will increase to 15% per annum until such dividends and all dividends accrued
thereon are paid in full.
Upon the dissolution, liquidation, or winding up of the Company, holders of
the Series C Preferred Stock will be entitled to receive from the assets of the
Company available for distribution to stockholders an amount in cash, per
share, equal to the liquidation value of the Series C Preferred Stock.
The Series C Preferred Stock is subject to optional redemption at any time
after August 8, 2001, in whole or in part, by the Company at a redemption price
per share equal to the then liquidation value of the Series C Preferred Stock.
Subject to the prior preferences and other rights of any other class or series
of preferred stock ranking senior to or on a parity with the Series C Preferred
Stock and subject to any prohibition or restriction contained in any instrument
evidencing indebtedness of the Company, the Series C Preferred Stock is
required to be redeemed by the Company at any time on or after August 8, 2001
at the option of the holder, in whole or in part (provided that the aggregate
liquidation value of the shares to be redeemed is in excess of $1 million), in
each case at a redemption price per share equal to the then liquidation value.
The Series C Preferred Stock ranks senior to the Class A and Class B Common
Stock and Class B Preferred Stock and on a parity basis with the Class A
Preferred Stock, the Series D Preferred Stock, and the Series E Preferred Stock
as to dividend rights, rights to redemption, and rights on liquidation.
For so long as any dividends are in arrears on the Series C Preferred Stock
and until all dividends accrued up to the immediately preceding dividend
payment date on the Series C Preferred Stock shall have been paid or declared
and set apart so as to be available for payment in full thereof and for no
other purpose, the Company may not redeem or otherwise acquire any shares of
Series C Preferred Stock or any shares of any class or series of its capital
stock ranking junior to the Series C Preferred Stock, unless all of the
outstanding shares of Series C Preferred Stock are redeemed. For so long as any
dividends are in arrears on the Series C Preferred Stock and until all
dividends accrued up to the immediately preceding dividend payment date on the
Series C Preferred Stock shall have been paid or declared and set apart so as
to be available for payment
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in full thereof and for no other purpose, the Company may not declare or pay
any dividend on or make any other distribution with respect to any junior stock
or set aside any money or assets for such purpose, except that the Company may
pay a dividend on any class or series of junior stock solely in shares of
capital stock ranking junior to the Series C Preferred Stock. If the Company
fails to redeem shares of Series C Preferred Stock required to be redeemed on a
redemption date, and until all then outstanding shares of Series C Preferred
Stock are redeemed in full, the Company may not redeem any junior stock, or
otherwise acquire any shares of such stock or Series C Preferred Stock, except
that the Company may acquire shares of Series C Preferred Stock pursuant to a
purchase or exchange offer made to holders of all outstanding shares of Series
C Preferred Stock, if as to holders of all outstanding shares of Series C
Preferred Stock, the terms of the purchase or exchange offer for all such
shares are identical.
The holders of Series C Preferred Stock are entitled to vote on an as
converted basis on all matters submitted to a vote of holders of Class A and
Class B Common Stock and any other class of capital stock of the Company
entitled to vote generally on the election of directors. Holders of Series C
Preferred Stock are not entitled to vote as a separate class except as
otherwise may be required by the DGCL.
Series D Preferred Stock. The Company is authorized to issue 1,000,000 shares
of Convertible Preferred Stock, Series D (the "Series D Preferred Stock"),
which are to be issued in connection with the TeleCable Merger, which was
effected on January 26, 1995. See "The Company."
Each share of Series D Preferred Stock is convertible, at the option of the
holder, into 10 shares of Class A Common Stock, subject to anti-dilution
adjustments. The dividend, liquidation, and redemption features of the Series D
Preferred Stock, each of which is discussed below, are determined by reference
to the liquidation value of the Series D Preferred Stock, which as of any date
of determination is equal, on a per share basis, to the sum of (i) $300, plus
(ii) all dividends accrued on such share through the dividend payment date on
or immediately preceding such date of determination to the extent not paid on
or before such date, plus (iii) for purposes of determining liquidation and
redemption payments, all unpaid dividends accrued on the sum of clauses (i) and
(ii) above, to such date of determination.
Subject to the prior preferences and other rights of any class or series of
preferred stock ranking senior to or on a parity with the Series D Preferred
Stock with respect to the payment or declaration of dividends, the holders of
Series D Preferred Stock are entitled to receive preferential cumulative cash
dividends out of funds legally available therefor. Dividends accrue on a daily
basis at an annual rate of 5 1/2% of the liquidation value per share, whether
or not such dividends are declared or funds are legally or contractually
available for payment of dividends, except that if the Company fails to redeem
shares of Series D Preferred Stock required to be redeemed on a redemption
date, dividends thereafter will accrue cumulatively at an annual rate of 10% of
the liquidation value per share until such shares are redeemed. Dividends not
paid on any dividend payment date will be added to the liquidation value on
such date and remain a part thereof until such dividends and all dividends
accrued thereon are paid in full. Dividends will accrue on unpaid dividends at
the rate of 5 1/2% (10% under the circumstances described above) per annum,
unless such dividends remain unpaid for two consecutive quarters in which event
such rate shall increase to 10% per annum until such dividends and all
dividends accrued thereon are paid in full. However, to the extent any cash
dividends are not paid on any dividend payment date, the amount of such
dividends will be converted, to the extent permissible under the DGCL, into
shares of Class A Common Stock at a conversion rate equal to 95% of the then
"current market price" of the Class A Common Stock, and upon issuance of Class
A Common Stock to holders of Series D Preferred Stock in respect of such
conversion such dividend will be deemed paid for all purposes.
Upon the dissolution, liquidation, or winding up of the Company, holders of
the Series D Preferred Stock will be entitled to receive from the assets of the
Company available for distribution to stockholders an amount in cash, per
share, equal to the liquidation value of the Series D Preferred Stock.
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The Series D Preferred Stock is subject to optional redemption by the Company
at any time after the fifth anniversary of its issuance, in whole or from time
to time in part, at a redemption price per share equal to the liquidation value
of the Series D Preferred Stock. Shares of Series D Preferred Stock will also
be subject to optional redemption by the Company after the third anniversary of
the issue date, in whole or from time to time in part, at a redemption price
per share equal to the liquidation value of the Series D Preferred Stock, if
the "market value" per share of Class A Common Stock shall have exceeded $37.50
for the period specified in the Certificate of Designations establishing the
Series D Preferred Stock. Subject to the prior preferences and other rights of
any other class or series of preferred stock ranking senior to or on a parity
basis with the Series D Preferred Stock and subject to any prohibition or
restriction contained in any instrument evidencing indebtedness of the Company,
any holder of Series D Preferred Stock, at such holder's option, may require
the Company, at any time after the tenth anniversary of the issuance of such
Series D Preferred Stock, to redeem all or a portion of such holder's shares of
Series D Preferred Stock, provided that the aggregate liquidation value of the
shares to be redeemed is in excess of $50,000 (or, if all of the shares of
Series D Preferred Stock held by such holder has an aggregate liquidation value
of less than $50,000, all but not less than all of such shares of Series D
Preferred Stock), in each case at a redemption price per share equal to the
then liquidation value of the Series D Preferred Stock. If the Company fails to
effect any redemption of Series D Preferred Stock called for redemption or
which a holder has validly requested be redeemed, the holders thereof will have
the option to convert their shares of Series D Preferred Stock into Class A
Common Stock at a conversion rate equal to the quotient obtained by dividing
the redemption price by 95% of the "current market value" of the Class A Common
Stock on the redemption date, provided that in the case of a failure by the
Company to redeem shares at the request of a holder, the exercise of the
foregoing conversion right will be delayed for one year.
If the Company issues to all holders of Class A Common Stock rights or
options to subscribe for or purchase shares of the capital stock (other than
Class A or Class B Common Stock) of the Company or of a subsidiary of the
Company which (a) is common stock of the issuer thereof or (b) participates in
one or more
business operations of the issuer thereof in such a manner that if such
operations were owned by a corporation and such capital stock were issued
thereby such capital stock would be common stock of such corporation, holders
of Series D Preferred Stock will have the option, in lieu of any anti-dilution
adjustment which might otherwise apply to the conversion rate of Series D
Preferred Stock, to exchange a portion of their shares of Series D Preferred
Stock for shares of a new series of preferred stock which would be convertible
into such capital stock issued upon exercise of such rights or options and
which would otherwise contain terms and conditions similar to the Series D
Preferred Stock.
The Series D Preferred Stock ranks senior to the Class A and Class B Common
Stock and the Class B Preferred Stock and on a parity basis with the Class A
Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock as to
dividend rights, rights to redemption, and rights on liquidation.
For so long as any dividends are in arrears on the Series D Preferred Stock
and until all dividends accrued up to the immediately preceding dividend
payment date on the Series D Preferred Stock shall have been paid or declared
and set apart so as to be available for payment in full thereof and for no
other purpose, the Company may not redeem or otherwise acquire any shares of
Series D Preferred Stock or any shares of any class or series of its capital
stock ranking pari passu with or junior to the Series D Preferred Stock, unless
all of the outstanding shares of Series D Preferred Stock are redeemed. For so
long as any dividends are in arrears on the Series D Preferred Stock and until
all dividends accrued up to the immediately preceding dividend payment date on
the Series D Preferred Stock shall have been paid or declared and set apart so
as to be available for payment in full thereof and for no other purpose, the
Company may not declare or pay any dividend on or make any other distribution
with respect to any junior stock or set aside any money or assets for such
purpose, except that the Company may pay a dividend on any class or series of
junior stock solely in shares of capital stock ranking junior to the Series D
Preferred Stock. If the Company fails to redeem shares of Series D Preferred
Stock required to be redeemed on a redemption date, and until all then
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outstanding shares of Series D Preferred Stock are redeemed in full, the
Company may not redeem any junior stock, or otherwise acquire any shares of
such stock or Series D Preferred Stock, except that the Company may acquire
shares of Series D Preferred Stock pursuant to a purchase or exchange offer
made to holders of all outstanding shares of Series D Preferred Stock, if as to
holders of all outstanding shares of Series D Preferred Stock the terms of the
purchase or exchange offer for all such shares are identical.
The Series D Preferred Stock has no voting rights, except as required by the
DGCL and except that without the consent of the holders of 66 2/3% in
liquidation value of the Series D Preferred Stock, the Company may not create
any series of Preferred Stock that is senior as to dividend rights, rights to
redemption, or rights on liquidation to the Series D Preferred Stock.
Series E Preferred Stock. The Company is authorized to issue 400,000 shares
of Redeemable Convertible Preferred Stock, Series E ("Series E Preferred
Stock"), of which 246,402 were issued and outstanding as of the date of this
Prospectus and all of which were held by wholly owned subsidiaries of the
Company. At any time after the Company amends its Restated Certificate of
Incorporation to increase the number of authorized shares of Class A Common
Stock to a number that would permit the conversion of all of the shares of
Series E Preferred Stock then outstanding, the shares of Series E Preferred
Stock shall be convertible, at the option of the holder, into Class A Common
Stock at the rate of 1,000 shares of Class A Common Stock for each share of
Series E Preferred Stock, subject to anti-dilution adjustments. The dividend,
liquidation, and redemption features of the Series E Preferred Stock, each of
which is discussed below, are determined by reference to the liquidation
preference of the Series E Preferred Stock, which as of any date of
determination is equal, on a per share basis, to the sum of (i) $22,303, plus
(ii) all dividends accrued on such share through the dividend payment date on
or immediately preceding such date of determination to the extent not paid on
or before such date, plus (iii) for purposes of determining liquidation and
redemption payments, all unpaid dividends accrued on the sum of clauses (i) and
(ii) above, to such date of determination.
Subject to the prior preferences and other rights of any class or series of
preferred stock ranking prior to the Series E Preferred Stock, the holders of
Series E Preferred Stock are entitled to receive preferential cumulative cash
dividends out of funds legally available therefor. Dividends accrue
cumulatively at an annual rate of 5% of the stated liquidation value per share,
whether or not such dividends are declared or funds are legally available for
payment of dividends. Dividends not paid on any dividend payment date are added
to the liquidation value on such date and remain a part thereof until such
dividends are paid. No interest or additional dividends will accrue or be
payable with respect to any dividend payment on the Series E Preferred Stock
that may be in arrears or with respect to that portion of any other payment on
the Series E Preferred Stock that is in arrears which consists of accumulated
or accrued and unpaid dividends.
Upon the dissolution, liquidation, or winding up of the Company, holders of
the Series E Preferred Stock will be entitled to receive from the assets of the
Company available for distribution to stockholders an amount in cash or
property or a combination thereof, per share, equal to the liquidation value of
the Series E Preferred Stock.
The Series E Preferred Stock is subject to optional redemption by the Company
at any time, in whole or in part, at a redemption price, per share, equal to
the then liquidation value of the Series E Preferred Stock. The Company may
elect to pay the redemption price (or designated portion thereof) of the shares
of Series E
Preferred Stock called for redemption by issuing to the holder thereof, in
respect of his shares to be redeemed, a number of shares of Class A Common
Stock equal to the aggregate redemption price (or designated portion thereof)
of such shares divided by the average of the last daily sales prices of the
Class A Common Stock for a specified period, subject to adjustments described
in the Certificate of Designations establishing the Series E Preferred Stock.
The Series E Preferred Stock ranks senior to the Class A and Class B Common
Stock and the Class B Preferred Stock and on a parity basis with the Class A
Preferred Stock, the Series C Preferred Stock, and the Series D Preferred Stock
as to dividend rights, rights to redemption, and rights on liquidation.
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For so long as any dividends are in arrears on the Series E Preferred Stock
or any class or series of preferred stock of the Company ranking pari passu
with the Series E Preferred Stock which is entitled to payment of cumulative
dividends prior to the redemption or other acquisition of the Series E
Preferred Stock, and until all dividends accrued up to the immediately
preceding dividend payment date on the Series E Preferred Stock and any such
parity stock shall have been paid or declared and set apart so as to be
available for payment in full thereof and for no other purpose, neither the
Company nor any subsidiary thereof may redeem or otherwise acquire any shares
of Series E Preferred Stock, any parity stock, or any class or series of
capital stock of the Company ranking junior to the Series E Preferred Stock, or
set aside any money or assets for any such purpose, unless all of the
outstanding shares of Series E Preferred Stock and such parity stock are
redeemed. For so long as any dividends are in arrears on the Series E Preferred
Stock and until all dividends accrued up to the immediately preceding dividend
payment date on the Series E Preferred Stock shall have been paid or declared
and set apart so as to be available for payment in full thereof and for no
other purpose, the Company may not declare or pay any dividend on or make any
distribution with respect to any junior stock or parity stock or set aside any
money or assets for any such purpose, except for dividends declared and paid on
parity stock contemporaneously and on a pro rata basis with dividends declared
and paid on the Series E Preferred Stock. If the Company fails to redeem shares
of Series E Preferred Stock required to be redeemed on a redemption date, the
Company may not declare or pay any dividend on or make any distribution with
respect to any junior stock or set aside money or assets for any such purpose,
and neither the Company nor any subsidiary may redeem any parity stock or
junior stock, or purchase or otherwise acquire any Series E Preferred Stock,
parity stock, or junior stock, or set aside any money or assets for any such
purpose, until such shares of Series E Preferred Stock are redeemed. The
failure of the Company to pay any dividends on any class or series of parity
stock or to redeem on any date fixed for redemption any shares of Series E
Preferred Stock shall not prevent the Company from (i) paying any dividends on
junior stock solely in shares of junior stock or the redemption or other
acquisition of junior stock solely in exchange for (together with a cash
adjustment for fractional shares, if any), or (but only in the case of failure
to pay dividends on any parity stock) through the application of the proceeds
from the sale of shares of junior stock; or (ii) the payment of dividends on
any parity stock solely in shares of parity stock and/or junior stock or the
redemption or other acquisition of Series E Preferred Stock or parity stock
solely in exchange for (together with a cash adjustment for fractional shares,
if any), or (but only in the case of a failure to pay dividends on any parity
stock) through the application of the proceeds from the sale of shares of
parity stock and/or junior stock.
The Series E Preferred Stock has no voting rights, except as required by the
DGCL, and except that at such time as any shares of Series E Preferred Stock
are not held by the Company or its majority-owned subsidiaries, such shares
will vote with the Class A and Class B Common Stock, on the basis of one vote
per share, in any general election of directors of the Company.
DESCRIPTION OF DEPOSITARY SHARES
If so indicated in the applicable Prospectus Supplement, shares of a
particular series of Preferred Stock will be represented by Depositary Receipts
(as defined below) evidencing Depositary Shares each equivalent to a specified
fractional interest in a share of such series of Preferred Stock. The
description set forth below and in any Prospectus Supplement of certain
provisions of the Deposit Agreement (as defined below) and of the Depositary
Shares and Depositary Receipts does not purport to be complete and is subject
to and qualified in its entirety by reference to the Deposit Agreement and
Depositary Receipts relating to such series of Preferred Stock, forms of which
are filed as exhibits to the Registration Statement of which this Prospectus is
a part.
GENERAL
The Company may, at its option, elect to offer interests in fractions of
shares of Preferred Stock in lieu of shares of the Preferred Stock. In such
event, the Company will provide for the issuance by a Depositary of
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receipts ("Depositary Receipts") for Depositary Shares, each of which will
represent an interest in a fraction (to be set forth in the Prospectus
Supplement relating to a particular series of the Preferred Stock) of a share
of a particular series of the Preferred Stock as described below.
The shares of any series of Preferred Stock underlying the Depositary Shares
will be deposited under a separate Deposit Agreement (the "Deposit Agreement")
between the Company and a bank or trust company selected by the Company having
its principal office in the United States and having a combined capital and
surplus of at least $50,000,000 (the "Depositary"). The Prospectus Supplement
relating to a series of Depositary Shares will set forth the name and address
of the Depositary. Subject to the terms of the Deposit Agreement, each owner of
a Depositary Share will be entitled, in proportion to the applicable fraction
of a share of Preferred Stock underlying such Depositary Share, to all the
rights and preferences of the Preferred Stock underlying such Depositary Share
(including dividend, voting, redemption, conversion, and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement.
Pending the preparation of definitive Depositary Receipts, the Depositary
may, upon the written order of the Company, issue temporary Depositary Receipts
substantially identical to (and entitling the holders thereof to all the rights
pertaining to) the definitive Depositary Receipts but not in definitive form.
Definitive Depositary Receipts will be prepared thereafter without unreasonable
delay, and temporary Depositary Receipts will be exchangeable for definitive
Depositary Receipts at the Company's expense.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash distributions
in respect of shares of Preferred Stock to the record holders of Depositary
Shares in proportion, insofar as practicable, to the number of Depositary
Shares owned by such holders.
In the event of a distribution other than cash in respect of shares of
Preferred Stock, the Depositary will distribute property received by it to the
record holders of Depositary Shares in proportion, insofar as practicable, to
the number of Depositary Shares owned by such holders, unless the Depositary
determines that it is not feasible to make such distribution, in which case the
Depositary may, with the approval of the Company, adopt such method as it deems
equitable and practicable for the purpose of effecting such distribution,
including sale (at public or private sale) of such property and distribution of
the net proceeds from such sale to such holders.
The amount distributed in any of the foregoing cases will be reduced by any
amount required to be withheld by the Company or the Depositary on account of
taxes.
REDEMPTION OF DEPOSITARY SHARES
If a series of Preferred Stock underlying the Depositary Shares is subject to
redemption, the Depositary Shares will be redeemed from the proceeds received
by the Depositary resulting from the redemption, in whole or in part, of such
series of Preferred Stock held by the Depositary. The redemption price per
Depositary Share will be equal to the applicable fraction of the redemption
price per share payable with respect to such series of Preferred Stock.
Whenever the Company redeems shares of Preferred Stock held by the Depositary,
the Depositary will redeem as of the same redemption date the number of
Depositary Shares relating to shares of Preferred Stock so redeemed. If less
than all the Depositary Shares are to be redeemed, the Depositary Shares to be
redeemed will be selected by lot or pro rata as may be determined by the
Depositary to be equitable.
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After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of such Depositary Shares will cease, except the right to receive the
moneys payable upon such redemption and any money or other property to which
the holders of such Depositary Shares were entitled upon such redemption upon
surrender to the Depositary of the Depositary Receipts evidencing such
Depositary Shares.
RECORD DATE
Whenever (i) any cash dividend or other cash distribution shall become
payable, any distribution other than cash shall be made, or any rights,
preferences, or privileges shall be offered with respect to the shares of a
series of Preferred Stock underlying the Depositary Shares, or (ii) the
Depositary shall receive notice of any meeting at which holders of shares of
such Preferred Stock are entitled to vote or of which holders of shares of such
Preferred Stock are entitled to notice, or of any election on the part of the
Company to call for redemption any shares of such Preferred Stock, the
Depositary shall in each such instance fix a record date (which shall be the
same date as the record date for the shares of such Preferred Stock) for the
determination of the holders of Depositary Shares (x) who shall be entitled to
receive such dividend, distribution, rights, preferences, or privileges, (y)
who shall be entitled to give instructions for the exercise of voting rights at
any such meeting or to receive notice of such meeting, or (z) who shall be
subject to such redemption, subject to the provisions of the Deposit Agreement.
VOTING
Upon receipt of notice of any meeting at which holders of shares of a series
of Preferred Stock underlying the Depositary Shares are entitled to vote, the
Depositary will mail the information contained in such notice of meeting to the
record holders of Depositary Shares relating to such Preferred Stock. Each
record holder of Depositary Shares on the record date (which will be the same
date as the record date for the underlying Preferred Stock) will be entitled to
instruct the Depositary as to the exercise of the voting rights pertaining to
the number of shares of Preferred Stock represented by such holder's Depositary
Shares. The Depositary will endeavor, insofar as practicable, to vote the
number of shares of Preferred Stock represented by such Depositary Shares in
accordance with such instructions, and the Company has agreed to take all
reasonable action which may be deemed necessary by the Depositary in order to
enable the Depositary to do so.
The Depositary will abstain from voting shares of Preferred Stock to the
extent it does not receive specific written voting instructions from the
holders of Depositary Shares representing such Preferred Stock.
WITHDRAWAL OF UNDERLYING PREFERRED STOCK
Unless otherwise indicated in the applicable Prospectus Supplement, upon
surrender of Depositary Receipts at the Corporate Office (as defined in the
Deposit Agreement) of the Depositary, the owner of the Depositary Shares
evidenced thereby will be entitled to delivery at such office of certificates
evidencing the number of shares of Preferred Stock (but only in whole shares of
Preferred Stock) represented by such Depositary Receipts. If the Depositary
Receipts delivered by a holder evidence a number of Depositary Shares in excess
of the number of Depositary Shares representing the number of whole shares of
Preferred Stock to be withdrawn, the Depositary will at the same time deliver
to such holder a new Depositary Receipt or Receipts evidencing such excess
number of Depositary Shares.
AMENDMENT AND TERMINATION OF DEPOSIT AGREEMENT
The form of Depositary Receipts and any provision of the Deposit Agreement
may at any time be amended by agreement between the Company and the Depositary.
However, any amendment that imposes any fees, taxes, or other charges payable
by holders of Depositary Shares (other than taxes and other governmental
charges, fees, and other expenses payable by such holders as stated under
"Charges of
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Depositary"), or that otherwise prejudices any substantial existing right of
holders of Depositary Shares, will not take effect as to outstanding Depositary
Shares until the expiration of 90 days after notice of such amendment has been
mailed to the record holders of outstanding Depositary Shares. Every holder of
Depositary Shares at the time any such amendment becomes effective shall be
deemed to consent and agree to such amendment and to be bound by the Deposit
Agreement, as so amended.
Whenever so directed by the Company, the Depositary will terminate the
Deposit Agreement after mailing notice of such termination to the record
holders of all Depositary Shares then outstanding at least 30 days prior to the
date fixed in such notice for such termination. The Depositary may likewise
terminate the Depositary Agreement if at any time 45 days shall have expired
after the Depositary shall have delivered to the Company a written notice of
its election to resign and a successor depositary shall not have been appointed
and accepted its appointment. If any Depositary Shares remain outstanding after
the date of termination, the Depositary thereafter will discontinue the
transfer of Depositary Shares, will suspend the distribution of dividends to
the holders thereof, and will not give any further notices (other than notice
of such termination) or perform any further acts under the Deposit Agreement
except as provided below and except that the Depositary will continue to
collect dividends on the Preferred Stock underlying such Depositary Shares and
any other distributions with respect thereto. At any time after the expiration
of two years from the date of termination, the Depositary may sell the
Preferred Stock then held by it at public or private sale, at such place or
places and upon such terms as it deems proper and may thereafter hold the net
proceeds of any such sale, together with any money and other property then held
by it, without liability for interest thereon, for the pro rata benefit of the
holders of Depositary Shares. The Company does not presently intend to
terminate any Deposit Agreement or to permit the resignation of any Depositary
without appointing a successor depositary.
CHARGES OF DEPOSITARY
The Company will pay all charges of the Depositary, including charges in
connection with the initial deposit of shares of any series of Preferred Stock,
the initial execution and delivery of the Depositary Receipts, the distribution
of information to the holders of Depositary Receipts with respect to matters on
which such Preferred Stock is entitled to vote, withdrawals of shares of such
Preferred Stock, or redemption or conversion of shares of such Preferred Stock,
except for taxes (including transfer taxes, if any) and other governmental
charges and such other charges as are provided in the Deposit Agreement to be
at the expense of holders of Depositary Receipts.
MISCELLANEOUS
The Depositary will make available for inspection by holders of Depositary
Receipts at its Corporate Office any reports and communications from the
Company that are delivered to the Depositary and made generally available to
the holders of shares of the series of Preferred Stock underlying the
Depositary Shares.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control from or in performing its
obligations under the Deposit Agreement.
DESCRIPTION OF WARRANTS
The Company may issue Warrants for the purchase of a particular class of
Common Stock or a particular series of Preferred Stock. If so indicated in the
applicable Prospectus Supplement, shares of a particular series of Preferred
Stock that may be purchased upon exercise of Warrants will be represented by
Depositary Receipts evidencing Depositary Shares, each equivalent to a
specified fractional interest in a share of such series of Preferred Stock. See
"Description of Depositary Shares." Warrants may be issued independently or
together with a particular class of Common Stock or a particular series of
Preferred Stock offered by any Prospectus Supplement and may be attached to or
separate form such Common Stock or Preferred Stock. Each series of Warrants
will be issued under a separate warrant agreement (a "Warrant Agreement") to be
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entered into between the Company and a warrant agent to be designated by the
Company (the "Warrant Agent"), all as set forth in the Prospectus Supplement
relating to the particular issue of offered Warrants. The Warrant Agent will
act solely as an agent of the Company in connection with the Warrants and will
not assume any obligation or relationship of agency or trust for or with any
holders of Warrants or beneficial owners of Warrants. Holders of Warrants
(without the consent of the Warrant Agent, the holders of any Common Stock or
Preferred Stock issued upon exercise of Warrants for the purchase of such
Common Stock or Preferred Stock, respectively, or the holder of any other
Warrants) may, on their own behalf and for their own benefit, enforce, and may
institute and maintain any suit, action, or proceeding against the Company
suitable to enforce or otherwise in respect of, their rights to exercise
Warrants evidenced by Warrant Certificates. Copies of the forms of Warrant
Agreements, including the forms of Warrant Certificates representing the
Warrants, are filed as exhibits to the Registration Statement of which this
Prospectus is a part. The following summary of certain provisions of the
Warrants does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Warrant Agreements.
Reference is made to the Prospectus Supplement relating to any particular
issue of Warrants for the terms of such Warrants, including, where applicable:
(i) the initial public offering price of such Warrants; (ii) the title and
terms of any class of Common Stock with which such Warrants are issued, the
number of such Warrants issued with each share of such Common Stock offered,
and the date, if any, on or after which such Warrants and the related Common
Stock will be separately transferable; (iii) the title, number, and terms of
any class of Common Stock purchasable upon exercise of Warrants to purchase
Common Stock and the price at which such number of shares of Common Stock of
such class may be purchased upon such exercise; (iv) the title and terms of any
series of Preferred Stock with which such Warrants are issued, the number of
such Warrants issued with each share of Preferred Stock offered, and the date,
if any, on or after which such Warrants and the related Preferred Stock will be
separately transferable; (v) the designation, number, stated value, and terms
(including, without limitation, liquidation, dividend, conversion, and voting
rights) of the series of Preferred Stock purchasable upon exercise of Warrants
to purchase Preferred Stock, the price at which such number of shares of
Preferred Stock of such series may be purchased upon such exercise, and whether
the Company has elected to deliver Depositary Shares for such Preferred Stock
upon exercise of such Warrants; (vi) the date on which the right to exercise
such Warrants shall commence and the date (the "Expiration Date") on which such
right shall expire; (vi) U.S. federal income tax consequences applicable to
such Warrants; and (vii) any other terms of such Warrants. Warrants will be
issued in registered form only. The exercise price for Warrants may be subject
to adjustment in accordance with the applicable Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, each Warrant
will entitle the holder thereof to purchase such number of shares of Common
Stock or Preferred Stock, as the case may be, at such exercise price as shall
in each case be set forth in, or calculable from, the Prospectus Supplement
relating to the offered Warrants, which exercise price may be subject to
adjustment upon the occurrence of certain events as set forth in such
Prospectus Supplement. After the close of business on the Expiration Date (or
such later date to which such Expiration Date may be extended by the Company),
unexercised Warrants will become void. The place or places where, and the
manner in which, Warrants may be exercised will be specified in the Prospectus
Supplement relating to such Warrants.
Prior to the exercise of any Warrants to purchase a particular class of
Common Stock or a particular series of Preferred Stock, holders of such
Warrants will not have any rights of holders of such Common Stock or Preferred
Stock purchasable upon such exercise, including the right to receive payments
of dividends, if any, on such Common Stock or Preferred Stock purchasable upon
such exercise or to exercise any applicable right to vote.
Unless otherwise provided in the related Prospectus Supplement, each Warrant
Agreement may be amended by the Company and the Warrant Agent (i) without the
consent of the holders of Warrants for the purpose of curing any ambiguity,
curing, correcting, or supplementing any defective provision contained therein
or making such provisions with respect to matters or questions arising
thereunder as the Company
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and the Warrant Agent may deem necessary or desirable, provided that such
action will not have a material adverse effect on the interests of the holders
of Warrants, and (ii) with the consent of the holders of not less than a
majority of the Warrants then outstanding and unexercised for any other reason.
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities on a negotiated or competitive
bid basis to or through underwriters or dealers, and also may sell the Offered
Securities directly to other purchasers or through agents.
The distribution of the Offered Securities may be effected from time to time
in one of more transactions at a fixed price or prices, which may be changed,
or at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
If an underwriter or underwriters are utilized in the sale, the Company will
execute an underwriting agreement with such underwriters and the names of the
underwriters and the terms of the transaction will be set forth in the
Prospectus Supplement, which will be used by the underwriters to make resales
of the Offered Securities. Unless otherwise indicated in the Prospectus
Supplement, the obligations of any underwriters to purchase the Offered
Securities will be subject to certain conditions precedent and the underwriters
will be obligated to purchase all of the Offered Securities if any are
purchased. Such underwriters may include Bear, Stearns & Co. Inc., Citicorp
Securities Markets, Inc., Donaldson, Lufkin & Jenrette Securities Corporation,
CS First Boston Corporation, Furman & Selz, Goldman, Sachs & Co., Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley &
Co. Incorporated, Oppenheimer & Co., Inc., PaineWebber Incorporated, or Salomon
Brothers Inc, or may be a group of underwriters represented by firms including
one or more of such firms.
If a dealer is utilized in the sale, the Company will sell the Offered
Securities to the dealer as principal. The dealer may then resell the Offered
Securities to the public at varying prices to be determined by such dealer at
the time of resale.
Offers to purchase Offered Securities may be solicited by the Company or
agents designated by the Company from time to time. Unless otherwise indicated
in the Prospectus Supplement, any such agent will be acting on a best efforts
basis for the period of its appointment.
In connection with the sale of the Offered Securities, underwriters, dealers,
and agents may receive compensation in the form of discounts, concessions, or
commissions from the Company or from purchasers of the Offered Securities for
whom they may act as agents. Underwriters, dealers, and agents that participate
in the distribution of the Offered Securities may be deemed to be underwriters
as that term is defined in the Securities Act, and any discounts or commissions
received by them from the Company and any profits on the resale of the Offered
Securities by them may be deemed to be underwriting discounts and commissions
under the Securities Act. Any such person who may be deemed to be an
underwriter will be identified and any such compensation received from the
Company will be described in the Prospectus Supplement.
If so indicated in the Prospectus Supplement, the Company will authorize
agents and underwriters to solicit offers by certain specified institutions to
purchase Offered Securities from the Company at the public offering price set
forth in the Prospectus Supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future.
Institutions with whom such contracts, when authorized, may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions, and other institutions but
shall in all cases be subject to the approval of the Company. Such contracts
will be subject only to those conditions set forth in the Prospectus Supplement
and the Prospectus Supplement will set forth the commission payable for
solicitation of such contracts.
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Agents, underwriters and dealers may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which the agents, underwriters, or dealers may be
required to make in respect thereof. Agents, underwriters, and dealers may be
customers of, engage in transactions with, or perform services for the Company
in the ordinary course of business.
The anticipated place and time of delivery for the Offered Securities will be
set forth in the Prospectus Supplement.
LEGAL MATTERS
Certain legal matters with respect to the Offered Securities offered hereby
will be passed upon for the Company by Baker & Botts, L.L.P., New York, New
York. Mr. Jerome H. Kern, a partner of Baker & Botts, L.L.P., is a director of
the Company. Mr. Kern holds options to purchase shares of Class A Common Stock.
EXPERTS
The consolidated balance sheets of TCI Communications, Inc. (formerly Tele-
Communications, Inc.) and subsidiaries as of December 31, 1993 and 1992, and
the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the years in the three-year period ended December 31,
1993, and the related financial statement schedules, which appear in the Annual
Report on Form 10-K, as amended, of TCI Communications, Inc. for the year ended
December 31, 1993, have been incorporated by reference herein in reliance upon
the reports, dated March 21, 1994, of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing. The reports of
KPMG Peat Marwick LLP refer to a change in the method of accounting for income
taxes in 1993.
The consolidated balance sheets of Liberty Media Corporation and subsidiaries
(Successor) as of December 31, 1993 and 1992, and the related consolidated
statements of operations, stockholders' equity, and cash flows for the years
ended December 31, 1993 and 1992 and the period from April 1, 1991 to December
31, 1991 (Successor Periods) and the consolidated statements of operations,
stockholders' equity, and cash flows of Liberty Media (a combination of certain
programming interests and cable television assets of TCI Communications, Inc.
(formerly Tele-Communications, Inc.)) (Predecessor) for the period from January
1, 1991 to March 31, 1991 (Predecessor Period), included in the Form 8-K of TCI
Communications, Inc. dated April 6, 1994, have been incorporated by reference
herein in reliance upon the report, dated March 18, 1994, of KPMG Peat Marwick
LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing. The report of KPMG Peat Marwick LLP refers to a change in the method
of accounting for income taxes in 1993.
The financial statements of TeleCable Corporation as of December 31, 1993 and
1992 and for each of the two years in the period ended December 31, 1993,
incorporated herein by reference to the Current Report on Form 8-K of the
Company dated August 26, 1994, have been so incorporated in reliance on the
report of Price Waterhouse LLP, independent accountants, given on the authority
of said firm as experts in accounting and auditing.
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