<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____ to _____
Commission file number 0-20421
UNITED ARTISTS ENTERTAINMENT
EMPLOYEE STOCK OWNERSHIP PLAN
-----------------------------
(Full title of the Plan)
TELE-COMMUNICATIONS, INC.
----------------------------------------------------
(Issuer of the securities held pursuant to the Plan)
5619 DTC Parkway
Englewood, Colorado 80111
-------------------------------------------
(Address of its principal executive office)
<PAGE>
REQUIRED INFORMATION
- --------------------
Financial Statements: Page No.
-------------------- --------
<TABLE>
<CAPTION>
<S> <C>
Independent Auditors' Report 1
Statements of Net Assets Available for Participant
Benefits - December 31, 1997 and 1996 2
Statement of Changes in Net Assets Available for
Participant Benefits - Year ended December 31, 1997 3
Statement of Changes in Net Assets Available for
Participant Benefits - Year ended December 31, 1996 4
Statement of Changes in Net Assets Available for
Participant Benefits - Year ended December 31, 1995 5
Notes to Financial Statements -
December 31, 1997, 1996 and 1995 6
Schedule 1 - Item 27a - Schedule of Assets Held for
Investment Purposes - December 31, 1997 12
</TABLE>
Exhibit -
-------
23-Consent of KPMG Peat Marwick LLP
SIGNATURE
- ---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
members of the Plan Committee have duly caused this annual report to be signed
on its behalf by the undersigned hereunto duly authorized.
UNITED ARTISTS ENTERTAINMENT
EMPLOYEE STOCK OWNERSHIP PLAN
(Name of Plan)
Date: June 29, 1998 By /s/Gary K. Bracken
--------------------------------------------------
Gary K. Bracken
Plan Administrator
and Member of Plan Committee
<PAGE>
Independent Auditors' Report
----------------------------
The Plan Committee
United Artists Entertainment
Employee Stock Ownership Plan:
We have audited the accompanying statements of net assets available for
participant benefits of the United Artists Entertainment Employee Stock
Ownership Plan as of December 31, 1997 and 1996, and the related statements of
changes in net assets available for participant benefits for each of the years
in the three-year period ended December 31, 1997. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for participant benefits of the
United Artists Entertainment Employee Stock Ownership Plan as of December 31,
1997 and 1996, and the changes in net assets available for participant benefits
for each of the years in the three-year period ended December 31, 1997 in
conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes is presented for the purpose of additional analysis and
is not a required part of the basic financial statements but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The fund information in the statements of net assets available for
participant benefits and the statements of changes in net assets available for
participant benefits is presented for purposes of additional analysis rather
than to present the net assets available for participant benefits and changes in
net assets available for participant benefits of each fund. The supplemental
schedule and fund information have been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
KPMG Peat Marwick LLP
Denver, Colorado
June 17, 1998
1
<PAGE>
UNITED ARTISTS ENTERTAINMENT
EMPLOYEE STOCK OWNERSHIP PLAN
Statements of Net Assets Available
for Participant Benefits
December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
amounts in thousands
Assets
- ------
Cash and cash equivalents $ 48 ---
Investments, at market value (note 2):
Tele-Communications, Inc. ("TCI"):
Series A TCI Group Common Stock (974,000 and 1,162,000 shares, with a
cost of $10,281,000 and $12,268,000 at December 31, 1997 and 1996,
respectively) 27,206 15,178
Series A Liberty Media Group Common Stock (601,000 and 661,000 shares,
with a cost of $4,075,000 and $4,484,000 at December 31, 1997 and 14,525 8,393
1996, respectively)
Series A TCI Ventures Group Common Stock (163,000 shares with a cost
of $860,000 at December 31, 1997) 2,305 ---
------- -------
44,036 23,571
Investment in TCI Satellite Entertainment, Inc. ("TSAT") Series A Common
Stock (78,000 and 119,000 shares, with a cost of $782,000 and
$1,199,000 at December 31, 1997 and 1996, respectively) 534 1,177
Other (note 3) 781 1,014
------- -------
45,399 25,762
------- -------
Liabilities
- -----------
Due to broker for securities purchased
--- 56
------- -------
Net assets available for participant benefits, including $726,000 of
benefits payable to participants at December 31, 1996 (note 6) $45,399 25,706
======= =======
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
UNITED ARTISTS ENTERTAINMENT
EMPLOYEE STOCK OWNERSHIP PLAN
Statement of Changes in Net Assets Available
for Participant Benefits
Year ended December 31, 1997
(amounts in thousands)
Net investment income:
Net unrealized appreciation of investments (note 4) $ 22,635
Realized gain on securities transactions 107
Interest income 43
--------
Total net investment income 22,785
Distributions to participants (3,092)
--------
Increase in net assets available for participant
benefits 19,693
Net assets available for participant benefits:
Beginning of year 25,706
--------
End of year $ 45,399
========
See accompanying notes to financial statements.
3
<PAGE>
UNITED ARTISTS ENTERTAINMENT
EMPLOYEE STOCK OWNERSHIP PLAN
Statement of Changes in Net Assets Available
for Participant Benefits
Year ended December 31, 1996
-------------------------------
Income
Stock Accumulation
Fund Fund Total
------- ------------ -------
amounts in thousands
Net investment income (loss):
Net unrealized depreciation of
investments (note 4) $(6,715) -- (6,715)
Realized gain on securities transactions 138 -- 138
Interest income -- 55 55
------- ------ -------
Total net investment income (loss) (6,577) 55 (6,522)
------- ------ -------
Distributions to participants (2,406) -- (2,406)
Intrafund transfers 1,028 (1,028) --
------- ------ -------
Decrease in net assets available
for participant benefits (7,955) (973) (8,928)
Net assets available for participant
benefits:
Beginning of year 33,661 973 34,634
------- ------ -------
End of year $25,706 -- 25,706
======= ====== =======
See accompanying notes to financial statements.
4
<PAGE>
UNITED ARTISTS ENTERTAINMENT
EMPLOYEE STOCK OWNERSHIP PLAN
Statement of Changes in Net Assets Available
for Participant Benefits
Year ended December 31, 1995
-----------------------------
Income
Stock Accumulation
Fund Fund Total
------- ------- -------
amounts in thousands
Net investment income:
Net unrealized appreciation of
investments (note 4) $ 6,196 -- 6,196
Realized gain on securities transactions 111 -- 111
Interest income 2 95 97
------- ------- -------
Total net investment income 6,309 95 6,404
------- ------- -------
Proceeds received upon settlement of
claim (note 5) 14 -- 14
Distributions to participants (3,227) (75) (3,302)
------- ------- -------
Increase in net assets available
for participant benefits 3,096 20 3,116
Net assets available for participant
benefits:
Beginning of year 30,565 953 31,518
------- ------- -------
End of year $33,661 973 34,634
======= ======= =======
See accompanying notes to financial statements.
5
<PAGE>
UNITED ARTISTS ENTERTAINMENT
EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 1997, 1996 and 1995
(1) Summary of Significant Accounting Policies
------------------------------------------
Basis of Presentation
---------------------
The accompanying financial statements of the United Artists Entertainment
Employee Stock Ownership Plan (the "Plan") have been prepared on an accrual
basis and present the net assets available for participant benefits and the
changes in those net assets.
Trust Fund Managed by US Bank ("Trustee")
-----------------------------------------
The Trustee manages a trust fund on behalf of the Plan and has been granted
discretionary authority concerning purchases and sales of investments.
Beginning December 2, 1991, the Trustee could invest up to 100% of the
assets of the Stock Fund (as defined in note 2) in TCI's common stock or
make other investments as defined by the Plan.
Cash and Cash Equivalents
-------------------------
The Plan considers investments with initial maturities of three months or
less to be cash equivalents, which are recorded at cost which approximates
fair value.
Investments
-----------
Investments are reflected in the accompanying financial statements at
current market value. Current market value represents the closing prices
for those securities having readily available market quotations and fair
value as determined by the Trustee with respect to other securities. The
values used for the Tele-Communications, Inc. Series A TCI Group Common
Stock, par value $1.00 per share ("TCI Group Series A Stock"), the Tele
Communications, Inc. Series A Liberty Media Group Common Stock, par value
$1.00 per share ("Liberty Media Group Series A Stock"), the Tele
Communications, Inc. Series A TCI Ventures Group Common Stock, par value
$1.00 per share ("TCI Ventures Group Series A Stock") and the TCI Satellite
Entertainment, Inc. Series A Common Stock, par value $1.00 per share ("TSAT
Series A Stock") were $27.93, $24.17, $14.14 and $6.85 per share,
respectively, at December 31, 1997. The value used for the TCI Group Series
A Stock, the Liberty Media Group Series A Stock and the TSAT Series A Stock
were $13.06, $12.70 and $9.89 per share, respectively, at December 31,
1996. The foregoing prices are the closing market prices of the common
stock on those dates. Securities transactions are accounted for on the
trade date. Distributions are priced at current market value as of the last
day of the calendar month in which the event requiring distribution occurs.
Any appreciation (depreciation) and realized gains associated with the
stock held by the Plan during 1997, 1996 and 1995 were calculated based on
the weighted average cost basis of the shares on the applicable date. See
note 2.
(continued)
6
<PAGE>
UNITED ARTISTS ENTERTAINMENT
EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
Income Taxes
------------
The Internal Revenue Service has determined and informed the Plan by a
letter dated November 15, 1996, that the Plan and related trust are
designed in accordance with applicable sections of the Internal Revenue
Code ("IRC"). The Plan has been amended since receiving the determination
letter. However, the Plan administrator and the Plan's tax counsel believe
that the Plan is designed and is currently being operated in compliance
with the applicable requirements of the IRC.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Plan Expenses
-------------
Administrative expenses of the Plan are paid by TCI. Accordingly, such
expenses are not reflected in the accompanying financial statements.
(2) Description of Plan
-------------------
On December 2, 1991, United Artists Entertainment Company ("UAE") and TCI
Communications, Inc. (formerly Tele-Communications, Inc. or "Old TCI")
consummated a merger (the "TCI/UAE Merger") pursuant to which UAE became a
wholly-owned subsidiary of Old TCI. Under the TCI/UAE Merger agreement,
outstanding shares of UAE's Class A and Class B common stock, including
such shares of stock held by the Plan, were converted into Old TCI Class A
common stock on the basis of 1.02 Old TCI Class A shares for each share of
either class of UAE's common stock. Employees of UAE became employees of
Old TCI and, as such, are entitled to participate in Old TCI's benefit
plan, if eligible. The Plan became "inactive" as of the date of the
TCI/UAE Merger and all participants automatically became fully vested in
all employer contributions. Participant contributions were always fully
vested. In conjunction with the TCI/UAE Merger, the cost basis for each
share of stock then held by the Plan was adjusted to reflect the merger
conversion ratio of 1.02. Such adjustment effectively created a new cost
basis for the Old TCI Class A common stock of $15.26 per share.
(continued)
7
<PAGE>
UNITED ARTISTS ENTERTAINMENT
EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
As of January 27, 1994, Old TCI and Liberty Media Corporation ("Liberty")
entered into a definitive agreement to combine the two companies (the
"TCI/Liberty Merger"). The transaction was consummated on August 4, 1994
and was structured as a tax free exchange of Class A and Class B shares of
both companies and preferred stock of Liberty for like shares of a newly
formed holding company, TCI/Liberty Holding Company. In connection with
the TCI/Liberty Merger, Old TCI changed its name to TCI Communications,
Inc. and TCI/Liberty Holding Company changed its name to Tele-
Communications, Inc. Old TCI shareholders received one share of TCI for
each of their shares. Liberty common shareholders received 0.975 of a
share of TCI for each of their common shares. Each share of Old TCI Class
A common stock held by the Plan was converted into one share of TCI Class A
common stock.
On August 3, 1995, the stockholders of TCI authorized the Board of
Directors of TCI (the "Board") to issue a new class of stock ("Liberty
Group Stock") which is intended to reflect the separate performance of
TCI's business which produces and distributes cable television programming
services ("Liberty Media Group"). On August 10, 1995, TCI distributed one
hundred percent of the equity value attributable to the Liberty Media Group
(the "Distribution") to its security holders of record on August 4, 1995.
As a result of the Distribution, 494,396 shares of Liberty Media Group
Series A Stock were distributed to the Plan during 1995. Additionally, the
stockholders of TCI approved the redesignation of the previously authorized
TCI Class A and B common stock into TCI Group Series A Stock and Tele-
Communications, Inc. Series B TCI Group common stock, par value $1.00 per
share ("TCI Group Series B Stock" and together with the TCI Group Series A
Stock, "TCI Group Stock"), respectively.
On December 4, 1996, all of the capital stock of TSAT ("TSAT Common Stock")
was distributed to holders of record of TCI Group Stock as of the close of
business on November 12, 1996 (the "Record Date"). Stockholders of record
of TCI Group Stock on the Record Date received one share of TSAT Common
Stock for each ten shares of TCI Group Stock owned of record at the close
of business on the Record Date (the "TSAT Distribution"). Fractional
shares were not issued. Fractions of one-half or greater of a share were
rounded up and fractions of less than one-half of a share were rounded down
to the nearest whole number of shares of TSAT Common Stock. As a result of
the TSAT Distribution, 1,273,108 shares of TSAT Series A Stock were
distributed to the Plan during 1996.
(continued)
8
<PAGE>
UNITED ARTISTS ENTERTAINMENT
EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
On August 28, 1997, the stockholders of TCI authorized the Board to issue
the TCI Ventures Group Series A Stock and Tele-Communications, Inc. Series
B TCI Ventures Group Common Stock, par value $1.00 per share (the "TCI
Ventures Group Series B Stock," and together with TCI Ventures Group Series
A Stock, the "TCI Ventures Group Stock"). The TCI Ventures Group Stock is
intended to reflect the separate performance of the "TCI Ventures Group,"
which is comprised of TCI's principal international assets and businesses
and substantially all of TCI's non-cable and non-programming assets.
In August 1997, TCI commenced offers (the "Exchange Offers") to exchange
shares of TCI Ventures Group Series A Stock and TCI Ventures Group Series B
Stock for up to 188,661,300 shares of TCI Group Series A Stock and up to
16,266,400 shares of TCI Group Series B Stock, respectively. The exchange
ratio for the Exchange Offers was two shares of the applicable series of
TCI Ventures Group Stock for each share of the corresponding series of TCI
Group Stock properly tendered up to the indicated maximum numbers. Upon the
September 10, 1997 consummation of the Exchange Offers, 188,661,300 shares
of TCI Group Series A Stock and 16,266,400 shares of TCI Group Series B
Stock were exchanged for 377,322,600 shares of TCI Ventures Group Series A
Stock and 32,532,800 shares of TCI Ventures Group Series B Stock.
Effective February 6, 1998, TCI issued stock dividends to holders of
Liberty Group Stock (the "1998 Liberty Stock Dividend") and TCI Ventures
Group Stock (the "Ventures Stock Dividend".) The 1998 Liberty Stock
Dividend consisted of one share of Liberty Group Stock for every two shares
of Liberty Group Stock owned. The Ventures Stock Dividend consisted of one
share of TCI Ventures Group Stock for every one share of TCI Ventures Group
Stock owned. The 1998 Liberty Stock Dividend and the Ventures Stock
Dividend have been treated as stock splits, and accordingly, all share and
per share amounts have been retroactively restated to reflect the 1998
Liberty Stock Dividend and the Ventures Stock Dividend.
In 1998, TSAT was a party to a restructuring agreement, asset transfer
agreement, merger agreement and other agreements resulting in the formation
of a new, independent corporation. Subsequent to these transactions, the
Plan continues to hold shares of TSAT Series A Stock for investment but no
longer purchases new shares of TSAT Series A Stock.
In conjunction with the Distribution, the TSAT Distribution, the Liberty
Group Stock Dividend, the 1998 Liberty Stock Dividend and the Ventures
Stock Dividend, the weighted average cost basis of the Plan's shares of TCI
Group Series A Stock, Liberty Media Group Series A Stock, TCI Ventures
Group Series A Stock and TSAT Series A Stock was adjusted.
Until the plan became inactive, the participants had the choice to invest
their contributions in either the common stock of TCI ("Stock Fund") or an
"Income Accumulation Fund". Lump-sum payments received by participants
from other qualified plans could also be deposited into the Plan as
"rollover contributions". At December 31, 1997, approximately 2,000
participants had balances remaining in the plan.
(continued)
9
<PAGE>
UNITED ARTISTS ENTERTAINMENT
EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
There were no contributions or forfeitures (due to a participant's
termination prior to full vesting) during 1997, 1996 and 1995 as the Plan
was inactive. Vested benefits become distributable if a participant dies,
suffers total disability, retires, or terminates employment for any other
reason. Benefits are generally payable in a single lump sum equal to the
participant's vested benefits or, upon participant termination, in not more
than five annual installments if the participant's vested benefits exceed
$3,500. Benefits are paid in cash or shares of TCI common stock at the
participant's or beneficiary's (as applicable) election.
The "Plan Committee" is responsible for the management and operation of the
Plan. The Plan provides for "hardship withdrawals" by participants under
certain circumstances, subject to approval by the Plan Committee.
(3) Other Investment
----------------
The investment contract held is fully benefit responsive and as such is
valued at contract value. Contract value represents prior year's balance
plus earnings, less participant withdrawals. The Plan's other investment
(at contract value) at December 31 is shown below:
1997 1996
Description ------ -------
----------- amounts in thousands
Prudential Insurance
Company of America
Retirement Annuity $781 1,014
==== =====
The contract value of the above investment approximates its fair value at
December 31, 1997 and 1996.
(4) Change in Unrealized Appreciation (Depreciation)
------------------------------------------------
Unrealized appreciation (depreciation) of investments held for the years
ended December 31, 1997, 1996 and 1995, is calculated as follows:
1997 1996 1995
------ ------ ------
amounts in thousands
End of year $28,572 6,801 14,189
Change in unrealized
appreciation of distributions 864 673 1,118
Less beginning of year (6,801) (14,189) (9,111)
------- ------- ------
Net unrealized appreciation
(depreciation) of investments $22,635 (6,715) 6,196
======= ======= ======
(continued)
10
<PAGE>
UNITED ARTISTS ENTERTAINMENT
EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
(5) Proceeds Received Upon Settlement of Claim
------------------------------------------
During 1995, the Plan received proceeds related to the settlement of a
claim by former employees of United Artists Theatre Circuit ("UATC") which
Old TCI acquired in the TCI/UAE Merger and subsequently sold in May 1992.
Such employees claimed they did not receive the proper stock valuation
price at the time of the UATC sale in 1992. TCI and UATC settled the claim
and contributed a total of $14,000 to the Plan during the year ended
December 31, 1995 for the benefit of the former employees. Such
contributions were distributed to the former employees in the year in which
they were contributed to the Plan.
(6) Reconciliation to Form 5500
---------------------------
The following represents a reconciliation between the Statement of Net
Assets Available for Participant Benefits included in the accompanying
financial statements and the Form 5500 at December 31, 1997 and 1996
(amounts in thousands):
Net Assets Available for Participant Benefits -
financial statements - December 31, 1997 $ 45,399
Benefits payable to participants --
--------
Net Assets Available for Participant Benefits -
Form 5500 - December 31, 1997 $ 45,399
========
Net Assets Available for Participant Benefits -
financial statements - December 31, 1996 $ 25,706
Benefits payable to participants (726)
--------
Net Assets Available for Participant Benefits -
Form 5500 - December 31, 1996 $ 24,980
========
The following represents a reconciliation between distributions to
participants in the Statement of Changes in Net Assets Available for
Participant Benefits included in the accompanying financial statements and
the Form 5500 for the year ended December 31, 1997 (amounts in thousands):
Distributions to participants - financial
statements $ 3,092
Reversal of prior year benefits payable to
participants (726)
--------
Distributions to participants - Form 5500 $ 2,366
========
11
<PAGE>
Schedule 1
----------
UNITED ARTISTS ENTERTAINMENT
EMPLOYEE STOCK OWNERSHIP PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1997
(amounts in thousands)
<TABLE>
<CAPTION>
(a)* (b) (c) (d) (e)
Description of investment Current
Identity of issuer including par value Cost value
- ------- --------------------- ------------------------- -------- --------
<S> <C> <C> <C> <C>
Tele-Communications, Series A TCI Group
Inc. Common Stock, par value
$1.00 per share $10,281 27,206
Tele-Communications, Series A Liberty Media
Inc. Group Common Stock,
par value $1.00 per share $ 4,075 14,525
Tele-Communications, Series A TCI Ventures
Inc. Group Common Stock,
par value $1.00 per share $ 860 2,305
TCI Satellite Series A TSAT Common Stock,
Entertainment, Inc. par value $1.00 per share $ 782 534
Prudential Insurance Retirement annuity
Company of America contract $ 781 781
</TABLE>
*None of the issuers represent parties in interest to the Plan.
See accompanying independent auditors' report.
12
<PAGE>
EXHIBIT INDEX
-------------
Shown below is the exhibit which is filed as a part of this Report -
23 - Consent of KPMG Peat Marwick LLP
13
<PAGE>
Exhibit 23
----------
Consent of Independent Auditors
-------------------------------
The Plan Committee
United Artists Entertainment
Employee Stock Ownership Plan:
We consent to incorporation by reference in the registration statement (No. 33-
44543) on Form S-8 of the United Artists Entertainment Employee Stock Ownership
Plan of our report dated June 17, 1998, relating to the statements of net assets
available for participant benefits of the United Artists Entertainment Employee
Stock Ownership Plan as of December 31, 1997 and 1996, and the related
statements of changes in net assets available for participant benefits for each
of the years in the three-year period ended December 31, 1997, and the related
schedule, which report appears in the December 31, 1997 Annual Report on Form
11-K of the United Artists Entertainment Employee Stock Ownership Plan.
KPMG Peat Marwick LLP
Denver, Colorado
June 26, 1998
14
