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As filed with the Securities and Exchange Commission on September 9, 1997
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13E-4/A
(Amendment No. 3)
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
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TELE-COMMUNICATIONS, INC.
(Name of Issuer)
TELE-COMMUNICATIONS, INC.
(Name of Person(s) Filing Statement)
Tele-Communications, Inc. Series A TCI Group Common Stock and
Tele-Communications, Inc. Series B TCI Group Common Stock
(Title of Class of Securities)
87924V101 (Series A)
87924V200 (Series B)
(CUSIP Number of Class of Securities)
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Stephen M. Brett, Esq.
Tele-Communications, Inc.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111-3000
(303) 267-5500
(Name, Address, Including Zip Code and Telephone Number,
Including Area Code, of Person Authorized to Receive
Notices and Communications on Behalf
of the Person(s) Filing Statement)
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Copy to:
Elizabeth M. Markowski, Esq.
Baker & Botts, L.L.P.
599 Lexington Avenue
New York, New York 10022-6030
(212) 705-5000
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INTRODUCTORY STATEMENT
This Amendment No. 3 (the "Amendment No. 3") amends and supplements the
Issuer Tender Offer Statement on Schedule 13E-4 (together with all amendments
thereto, the "Schedule 13E-4") filed with the Securities and Exchange Commission
on August 12, 1997, as amended by Amendment No. 1 on August 28, 1997 and
Amendment No. 2 on September 5, 1997, by Tele-Communications, Inc., a Delaware
corporation (the "Company"), relating to the Company's offer to exchange (i) one
share of Series A TCI Ventures Group Common Stock for each share of Series A TCI
Group Common Stock properly tendered and not validly withdrawn, up to
188,661,300 shares of Series A TCI Group Common Stock, and (ii) one share of
Series B TCI Ventures Group Common Stock for each share of Series B TCI Group
Common Stock properly tendered and not validly withdrawn, up to 16,266,400
shares of Series B TCI Group Common Stock, upon the terms and subject to the
conditions set forth in the Offering Circular of the Company, dated August 7,
1997, and the related Letters of Transmittal. All capitalized terms used but
not defined in this Amendment No. 3 shall have the meanings ascribed thereto in
the Schedule 13E-4.
This Amendment No. 3 files herewith slides to be shown to large
institutional stockholders and other investors in presentations to be made by
the Company's officers in connection with the Exchange Offers, together with
explanatory notes to the slides for use by such officers.
Item 9. Material to be Filed as Exhibits.
Item 9(f) is hereby amended to read in its entirety as follows:
(f) Slides to be shown to large institutional stockholders and other
investors in presentations to be made by the Company's officers
in connection with the Exchange Offers, together with
explanatory notes to the slides for use by such officers.
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SIGNATURE
After due inquiry and to the best of the Company's knowledge and belief,
the undersigned certifies that the information set forth in this Schedule
13E-4/A (Amendment No. 3) is true, complete and correct.
Dated: September 9, 1997
TELE-COMMUNICATIONS, INC.
By: /s/ Stephen M. Brett
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Name: Stephen M. Brett
Title: Executive Vice President and Secretary
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EXHIBIT INDEX
Exhibit No. Description
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9(f) Slides to be shown to large institutional stockholders and other
investors in presentations to be made by the Company's officers
in connection with the Exchange Offers, together with explanatory
notes to the slides for use by such officers.
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EXHIBIT 9(f)
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TCI Organizational Chart
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TCI
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TCI Group TCI Ventures Group Liberty Media Group
(TCOMA/TCOMB) (TCIVA/TCIVB) (LBTYA/LBTYB)
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Strategic Direction
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. Good afternoon everyone. I would like to spend a few minutes with you
discussing our recently approved TCI Ventures Group, our Exchange Offers, our
improved cable operations financial performance, and conclude with what I
consider to be an exciting new strategic direction for TCI and the cable
industry.
. We continually seek to maximize the power of the assets within the TCI family
of companies to promote growth and to enhance shareholder value. As we move
toward the next millennium, we are taking steps to achieve these goals.
. We are reinvigorating our cable operations and building on the success of our
programming business.
. We are continuing our commitment to diversification, while seeking to
organize the Company to make it more easily understood by investors. And at
every turn, we remain committed to achieving our goal of building shareholder
value.
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Strategic Direction (Cont.)
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. We have long recognized the benefits of diversification to better manage
risk, identify and leverage new market opportunities, and combine the strengths
of parallel businesses. We have been very successful in these efforts.
. TCI common stock is currently traded through two tracking stocks; TCI Group
Common Stock, Series A and Series B (Nasdaq: TCOMA/TCOMB) and Liberty Media
Group Common Stock, Series A and Series B (Nasdaq: LBTYA/LBTYB).
. To continue our diversification efforts, we have created Series A and Series
B TCI Ventures Group Common Stock that will further segregate our business
activities.
. The new tracking stock, TCI Ventures Group Common Stock, is intended to
reflect the separate performance of those assets that are attributed to the TCI
Ventures Group, including the Company's principal international assets and
substantially all of TCI's non-cable and non-programming domestic assets and
investments - which I will detail for you in a moment.
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Reasons for Exchange Offers
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. Greater Market Recognition
. Remaining TCI Group More Homogeneous
. Greater Flexibility
. TCI Family Benefits Continue
. Exchange vs. Dividend / Rights / Warrants
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Reasons for Exchange Offers
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. Greater market recognition of the value of businesses and assets attributed
to the TCI Ventures Group, thereby enhancing stockholder value over time.
Expected to be a tax-free exchange for federal income tax purposes.
. Remaining assets and businesses attributed to the TCI Group are more
homogeneous and therefore should be easier to understand and value.
. Greater flexibility with regard to raising future capital, acquisitions or
investments and strategic partnering.
. Continued membership in the consolidated enterprise.
. In determining to offer the TCI Ventures Group Common Stock in exchange for
TCI Group Common Stock, the Board determined that the businesses and assets, the
attribution of which was being shifted to the TCI Ventures Group, represented
approximately 30 percent of the total value of the TCI Group.
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Reasons for Exchange Offers (Cont.)
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. In reaching its view as to relative common stockholders equity value, the
Board took into account a number of factors including:
- Recent trading prices of those assets that are publicly traded and of
public companies in the same industry as other assets that are not publicly
traded.
- The amount of capital invested in such assets by TCI and other third
parties.
- The recent financial performance of the various assets.
. These factors were compared to the trading prices of TCI Group Common Stock
and the financial performances of the TCI Group.
. The Board also considered the relative amounts of debt to which the assets
attributed to each such Group were subject, the capital expenditure requirements
of each Group and the relative prospects of the assets attributed to each such
Group.
. Neither the Company nor its Board of Directors is making any recommendation
to any stockholder as to whether to tender or refrain from tendering TCI Group
Common Stock pursuant to the Exchange Offers. Each stockholder must make his or
her own decision after carefully reviewing the Offering Circular.
. The Company has decided on an Exchange Offer in which current holders of TCI
Group stock can exchange their stock on a one-for-one basis for the new TCI
Ventures Group stock. Unlike a stock dividend, where the Company would
automatically dividend some proportionate share of the new Ventures Group to
stockholders, the Exchange gives stockholders the option of converting as many
or as little of their shares for the new Ventures Group.
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TCI Ventures Group Assets
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. Teleport Communications Group, Inc.
. Tele-Communications International, Inc.
. Sprint PCS
. At Home Corporation
. United Video Satellite Group, Inc.
. Other Investments
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TCI Ventures Group Assets
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. The assets attributed to the TCI Ventures Group include equity investments
in:
. Teleport Communications Group, Inc. a provider of competitive local
exchange carrier service.
. Tele-Communications International, Inc. the Company's primary vehicle
for the conduct of its International cable, telephony and programming
businesses.
. Sprint PCS, a provider of wireless communications services, using
radio spectrum for broadband personal communications services to
residential and business customers.
. At Home Corporation, a provider of high-speed multimedia Internet
services and the Company's interest in other Internet-related assets.
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TCI Ventures Group Assets (Cont.)
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- United Video Satellite Group, Inc. a provider of satellite-delivered
video, audio, data and program promotion services to cable television systems,
satellite dish owners, radio stations and private network users primarily
throughout North America.
- Other businesses and investments including Western Tele-Communications,
Inc., the National Digital Television Center and ETC w/tci, Inc.
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Continued Improvement:
Pro Forma Cable Operations
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(Dollars in Millions)
4Q96 1Q97 2Q97
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. Revenue $1,607 $1,562 $1,605
. OCF $622 $705 $706
. FCF ($217) $287 $282
. Leverage Ratio 6.0x 5.1x 5.0x
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Continued Improvement: Pro Forma Cable Operations
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. Cable Operations' pro forma revenue and cash flow were derived by adjusting
1996 and 1997 first quarter results for 1996 and early 1997 acquisitions and
dispositions as if they occurred prior to January 1, 1996, and excludes the
performance of PRIMESTAR by TCI which was spun off to shareholders on December
4, 1996, and the Company's telephony businesses, which are no longer reported
within Cable Operations.
. Cable Operations' cash flow, which we define as operating income before
depreciation, amortization and compensation relating to stock appreciation
rights, increased $84 million or almost 15 percent since year-end.
. Just as important, Free Cash Flow, which we define as Operating Cash Flow
less interest, preferred dividends and capital expenditures, increased from a
negative $217 million during the fourth quarter of 1996 to a positive $287
million and $282 million in the first and second quarters of 1997, respectively.
. Finally, the Company has reduced its leverage ratio a full multiple since
year-end from 6.0x to 5.0x.
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Cable Operations Initiatives
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. Localism / Decentralization
. Customer Growth / Marketing Initiatives
. Joint Ventures and Exchanges
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Cable Operations Initiatives
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. I believe that despite TCI's national stature, our cable business must have a
sharp local focus to prosper. Cable means local. We provide local broadcast
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signals, local programming, local service.
. Our first priority has been to get TCI refocused on the customer. We have
sought to improve customer satisfaction by pushing decision making back to our
local managers, enabling them to make decisions and identify and resolve
problems.
. We have also put in place programs to reach out more effectively to our
customers in their home markets. We have begun to manage the company from the
local system up, decentralizing and reorganizing our cable operations into
smaller regional units, each serving fewer than two and a half million
customers.
. Our customer growth is intrinsically tied to our marketing initiatives. We
must effectively market our services to our customers, to retain and grow our
customer base.
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Cable Operations Initiative (Cont.)
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. We also now recognize that in certain regions we may be able to better serve
our customers by developing partnerships with other cable operators. If one of
our systems is adjacent to an operator who has more extensive geographic
"clustering" or a deeper presence in that market, we now seek to create a joint
venture and let them manage the system.
. We are taking the GE approach to reorganize and strengthen our cable
operations. We want to be in markets where we have a dominant presence or can
have a major stake in the dominant operator.
. Overall, joint venture affiliation will also strengthen our ability to
introduce other wireline products. For example, Time Warner will distribute
Digital Cable Television, while Cable Vision will distribute our high-speed
Internet access service known as @Home by TCI.NET.
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Cable Joint Ventures
Contributions to-date
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. Homes Passed 3,919,000
. Customers 2,474,000
. OCF $565 million
. Debt $3.21 billion
. Leverage Ratio 5.7x
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Cable Joint Ventures
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. We have announced several joint ventures to-date and are working on several
others. By year-end, we intend to shift more than four million of our current
14 million customers to these joint ventures. As of today, we have announced
agreements shifting approximately 2.5 million customers to joint ventures.
. In the process, we have also transferred over three billion of debt from
TCI's balance sheet to the joint ventures' balance sheets. As the aggregate
leverage ratio associated with these agreements is 5.7x, the transfer of debt
has had the additional effect of deleveraging the Company.
. As these agreements represent only Letters of Intent, the terms and exact
corresponding numbers associated with these transactions could change prior to
closing.
. In total, we have identified 21 transactions, of which 13 have been announced
and eight are in negotiations. Approximately, 6.3 million TCI customers will be
affected, of which approximately 4.6 million will be placed in joint ventures,
approximately 1.6 million will be exchanged (swapped), and the remaining 0.1
million sold outright.
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Technology Outlook
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. Digital Set-top Boxes
. Cable Modems
. Network Development
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