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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: September 9, 1997
Date of Earliest Event Reported: August 12, 1997
TELE-COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
0-20421 84-1260157
(Commission File Number) (I.R.S. Employer Identification No.)
TERRACE TOWER II
5619 DTC PARKWAY
ENGLEWOOD, COLORADO 80111-3000
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (303) 267-5500
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ITEM 5. OTHER EVENTS.
As previously reported, Tele-Communications, Inc. (the
"Company") commenced on August 12, 1997, an offer to exchange (the "Exchange
Offers") (i) one share of Tele-Communications, Inc. Series A TCI Ventures
Group Common Stock (the "Series A TCI Ventures Group Common Stock"), for each
share of Tele-Communications, Inc. Series A TCI Group Common Stock (the
"Series A TCI Group Common Stock") properly tendered and not validly withdrawn
prior to 5:00 p.m., New York City time, on September 10, 1997 (such date as may
be extended from time to time in the discretion of the Company, the "Expiration
Date"), up to 188,661,300 shares of Series A TCI Group Common Stock, and (ii)
one share of Tele-Communications, Inc. Series B TCI Ventures Group Common Stock
(the "Series B TCI Ventures Group Common Stock" and, together with the Series A
TCI Ventures Group Common Stock, the "TCI Ventures Group Common Stock"), for
each share of Tele-Communications, Inc. Series B TCI Group Common Stock (the
"Series B TCI Group Common Stock") properly tendered and not validly withdrawn
prior to the Expiration Date, 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 (the "Offering
Circular"), and the related Letters of Transmittal. The Series A TCI Ventures
Group Common Stock, Series B TCI Ventures Group Common Stock, Series A TCI
Group Common Stock and Series B TCI Group Common Stock are each series of the
Company's Common Stock, par value $1.00 per share (the "Common Stock") which
also includes the Tele-Communications, Inc. Series A Liberty Media Group
Common Stock and the Tele-Communications, Inc. Series B Liberty Media Group
Common Stock.
The Company, certain subsidiaries of the Company (which
include entities now attributed to the TCI Group, the Liberty Media Group and
the TCI Ventures Group (each, a "Group")), and certain former subsidiaries of
the Company are parties to a tax sharing agreement (the "Old Tax Sharing
Agreement"), which was implemented effective July 1, 1995 for all periods after
July 1, 1995 and prior to October 1, 1997. In connection with the creation of
the TCI Ventures Group, the Company and certain subsidiaries of the Company
attributed to the TCI Group, the Liberty Media Group and the TCI Ventures Group
entered into a new tax sharing agreement (the "New Tax Sharing Agreement"), on
August 12, 1997 which will become effective on October 1, 1997 for all periods
on and after such date. The New Tax Sharing Agreement has been amended by the
First Amendment to the Tax Sharing Agreement (the "First Amendment"), dated as
of September 5, 1997, pursuant to which certain listed transactions will be
treated in a separate manner. A brief description of each of the Old Tax
Sharing Agreement, the New Tax Sharing Agreement and the First Amendment is set
forth below. The Old Tax Sharing Agreement and the New Tax Sharing Agreement,
as amended, encompass U.S. federal, state, local and foreign tax consequences
and rely upon the Internal Revenue Code of 1986, as amended (the "Code") and
any applicable state, local and foreign tax law and related regulations.
The Old Tax Sharing Agreement formalized certain of the
elements of a pre-existing tax sharing arrangement and contains additional
provisions regarding the allocation of certain consolidated income tax
attributes and the settlement procedures with respect to the intercompany
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allocation of current tax attributes. Under the Old Tax Sharing Agreement, the
entities attributed to each Group are responsible to the Company for their
share of consolidated income tax liabilities (computed as if the Company were
not liable for the alternative minimum tax) determined in accordance with the
Old Tax Sharing Agreement, and the Company is responsible to the entities
attributed to each Group to the extent that the income tax attributes generated
by them are utilized by the Company to reduce its consolidated income tax
liabilities (computed as if the Company were not liable for the alternative
minimum tax). The tax liabilities and benefits of such entities so determined
are charged or credited to intercompany accounts between the Company and each
of its first tier subsidiaries. Such intercompany accounts are required to be
settled only upon the date that an entity ceases to be a member of the
Company's consolidated group for federal income tax purposes. Under the Old
Tax Sharing Agreement, the Company retains the burden of any alternative
minimum tax and has the right to receive the tax benefits from an alternative
minimum tax credit attributable to any tax period beginning on or after July 1,
1995 and ending on or before October 1, 1997.
In connection with the creation of the TCI Ventures Group, it
was determined that the net amount of the balance of each intercompany account
under the Old Tax Sharing Agreement that is attributable to entities included
in the TCI Ventures Group for the period beginning July 1, 1995 and ending
prior to the consummation of the Exchange Offers will be reflected as a
component of the TCI Ventures Group's combined equity. The intercompany
account existing between the Company and Tele-Communications International,
Inc. ("International") for the period beginning July 1, 1995 and ending prior
to the consummation of the Exchange Offers will be required to be settled
between the TCI Ventures Group and International if and when International
ceases to be a member of the Company's consolidated group for federal income
tax purposes. Tax liabilities and benefits, as determined under the Old Tax
Sharing Agreement, that are generated by the entities comprising the TCI
Ventures Group for the period beginning on the consummation of the Exchange
Offers and ending prior to October 1, 1997 will be credited or debited to an
intercompany account between the Company and the TCI Ventures Group in
accordance with the Old Tax Sharing Agreement.
The New Tax Sharing Agreement will become effective on October
1, 1997 (the "Effective Date"), and will thereafter govern the allocation and
sharing of income taxes by the Groups. Effective for periods on and after the
Effective Date, federal income taxes will be computed based upon the type of
tax paid by the Company (on a regular tax or alternative minimum tax basis) on
a separate basis for each Group (applying provisions of the Code and related
regulations as if such Group filed a separate consolidated return for federal
income tax purposes, with certain adjustments, but was subject to the same type
of tax as the Company). Based upon these separate calculations, an allocation
of tax liabilities and benefits will be made such that each Group will be
required to make cash payments to the Company based on its allocable share of
the Company's consolidated federal income tax liabilities (on a regular tax or
alternative minimum tax basis, as applicable). The Company may be required at
the times and under the circumstances described below to make cash payments to
each Group for tax benefits (on a regular tax or alternative minimum tax basis,
as applicable) attributable to such Group and actually used by the Company in
reducing its consolidated federal income tax liability. Tax attributes,
including but not limited to net operating losses, foreign
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tax credits, investment tax credits, alternative minimum tax net operating
losses, deferred intercompany gains, and tax basis in assets would be
inventoried and tracked for ultimate credit to or charge against each Group.
Similarly, in each taxable period that the Company pays alternative minimum
tax, the federal income tax liabilities and federal income tax benefits of each
Group, computed as if such Group were subject to regular tax, would be
inventoried and tracked for payment to or payment by each Group (at the
difference between the amount such Group would have paid or received under the
New Tax Sharing Agreement if the Company had paid regular tax during such
taxable period and the amount such Group paid or received under the New Tax
Sharing Agreement on an alternative minimum tax basis for such taxable period)
in years that the Company utilizes the alternative minimum tax credit
associated with such taxable period. Even though the tax benefits of a Group
are utilized by the Company in reducing its consolidated federal income tax
liability, such Group may not receive current cash payments for such benefit
(or the difference between such Group's benefits computed under the New Tax
Sharing Agreement on a regular tax basis and on an alternative minimum tax
basis) if the Group against the income of which the tax benefits are applied
had other separate taxable losses (not currently utilized by the Company) which
would offset income attributable to such Group. The Group generating the
utilized tax benefits would receive a cash payment only if, and when, the
unutilized taxable losses of the other Group are actually utilized. If the
unutilized taxable losses expire without ever being utilized, the Group
generating the utilized tax benefits will never receive payment for such
benefits. In addition, if the unutilized taxable losses are connected with a
Group or part of a Group which ceases to be part of the Company's consolidated
group for federal income tax purposes, there can be no assurance that the
transferee will agree to pay for the eventual use of the unutilized taxable
losses. Pursuant to the New Tax Sharing Agreement, state and local income
taxes are calculated on a separate return basis for each Group (applying
provisions of state and local tax law and related regulations as if the Group
were a separate unitary or combined group for tax purposes), and the Company's
combined or unitary tax liability is allocated among the Groups based upon such
separate calculation. The Company has retained the right to file all returns,
make all elections and control all audits and contests.
Unutilized taxable losses of the TCI Ventures Group may be
used to offset the obligation of the TCI Ventures Group to pay dividends on any
preferred equity interest in the TCI Ventures Group that may be attributed to
the TCI Group following the Exchange Offers if the Exchange Offers are
undersubscribed (the "TCI Ventures Group Preferred Interest"). Any such
taxable losses which are so used will be considered taxable losses of the TCI
Group for all calculations under the New Tax Sharing Agreement relating to
federal income taxes. Such taxable losses will continue to be treated as
taxable losses of the TCI Ventures Group for all calculations relating to state
and local income taxes. In addition, any amount owed by the TCI Group with
respect to utilized taxable losses of the TCI Ventures Group may be canceled as
an offset to the obligation of the TCI Ventures Group to pay dividends on any
TCI Ventures Group Preferred Interest.
The First Amendment to the New Tax Sharing Agreement provides
that items of income, gain, loss, deduction or credit resulting from certain
transactions identified below that are
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consummated after the Effective Date pursuant to a letter of intent or
agreement that was entered into prior to the Effective Date shall be shared and
allocated pursuant to the terms of the Old Tax Sharing Agreement, as amended,
and that items of loss or deduction used to offset such income or gain from
such transactions for purposes of filing the Company's consolidated federal
income tax return shall be shared and allocated pursuant to the Old Tax Sharing
Agreement but reimbursed upon the earlier to occur of the deconsolidation of
the Group generating the loss or deduction or the deconsolidation of the Group
generating the corresponding income or gains. At such time, the Group which
generated the corresponding income or gain shall provide the funds for
reimbursement. Such transactions are: (i) the sale by HKP Partners of New
Zealand of all of its interest in Sky Network Television Limited; (ii) the
sale by International of all of its interest in Cablevision S.A.; (iii) the
sale by TCI SUMMITrak of Texas, Inc. and/or TCI SUMMITrak LLC of its SUMMITrak
assets; (iv) the sale by Liberty Cable, Inc. of its stock of Liberty Evangola,
Inc. and Liberty Tri-County, Inc. and (v) the exercise or lapse of the option
granted pursuant to the Option Agreement, dated June 24, 1997, among RET
Corporation, Southern Satellite Systems, Inc., et al., to purchase certain
assets of Southern Satellite Systems, Inc., LMC Satcom, Inc., and Royal
Communications, Inc. (and, if the option is exercised, the sale of such
assets).
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) The following exhibit is being filed with this Form 8-K:
(99.1) Tax Sharing Agreement, effective for periods on and after
October 1, 1997, among the Company and certain entities
attributed to each of the TCI Group, the Liberty Media Group
and the TCI Ventures Group, as amended by the First Amendment
to Tax Sharing Agreement, dated as of October 1, 1997, among
the Company and certain entities attributed to each of the TCI
Group, the Liberty Media Group and the TCI Ventures Group
(Incorporated herein by reference to Exhibit 9(c)(2) to the
Company's Schedule 13E-4/A (Amendment No. 2), Issuer Tender
Offer Statement, dated September 5, 1997 (Commission File No.
0-20421)).
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
Date: September 9, 1997
TELE-COMMUNICATIONS, INC.
By: /s/ Stephen M. Brett
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Stephen M. Brett
Executive Vice President and Secretary
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EXHIBIT INDEX
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<CAPTION>
Exhibit Description
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<S> <C>
(99.1) Tax Sharing Agreement, effective for periods on and after October 1, 1997, among the Company
and certain entities attributed to each of the TCI Group, the Liberty Media Group and the TCI
Ventures Group, as amended by the First Amendment to Tax Sharing Agreement, dated as of October
1, 1997, among the Company and certain entities attributed to each of the TCI Group, the
Liberty Media Group and the TCI Ventures Group (Incorporated herein by reference to Exhibit
9(c)(2) to the Company's Schedule 13E-4/A (Amendment No. 2), Issuer Tender Offer Statement,
dated September 5, 1997 (Commission File No. 0-20421)).
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