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Previous: GUTHRIE SAVINGS INC, SC 13D/A, 1998-12-08 |
Next: MILTON FEDERAL FINANCIAL CORP, PRE 14A, 1998-12-08 |
<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: December 8, 1998
Date of Earliest Event Reported: November 23, 1998
TELE-COMMUNICATIONS, INC.
-------------------------------------------------------
(Exact name of Registrant as specified in its charters)
State of Delaware
----------------------------------------------
(State or other jurisdiction of incorporation)
0-20421 84-1260157
- ------------------------ ------------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
5619 DTC Parkway
Englewood, Colorado 80111
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 267-5500
<PAGE> 2
Item 5. Other Events
Tele-Communications, Inc. ("TCI") held a 30% partnership interest in
Sprint Spectrum Holding Company L.P. and MinorCo, L.P. (collectively, "Sprint
PCS"), and a 35% interest in PhillieCo, L.P. ("PhillieCo" and, together with
Sprint PCS, the "PCS Ventures"). The PCS Ventures provide wireless
communications services, using the radio spectrum for broadband personal
communications services ("PCS"), to residential and business customers
nationwide, using the "Sprint" brand. The partners of Sprint PCS are
subsidiaries of Sprint Corporation ("Sprint"), Comcast Corporation ("Comcast"),
Cox Communications, Inc. ("Cox") and TCI. The partners of PhillieCo are
subsidiaries of Sprint, Cox and TCI.
On November 23, 1998, TCI, Comcast, and Cox exchanged their respective
interests in Sprint PCS and PhillieCo (the "Exchange") for shares of a new class
of tracking stock of Sprint (the "Sprint PCS Group Stock") which tracks the
performance of Sprint's newly created PCS Group (consisting initially of the PCS
Ventures and certain PCS licenses which were separately owned by Sprint). The
Sprint PCS Group Stock collectively represents an approximate 17% voting
interest in Sprint. As a result of the Exchange, TCI holds shares of Sprint PCS
Group Stock (as well as certain additional securities of Sprint exercisable for
or convertible into such securities) representing approximately 24% of the
equity value of Sprint attributable to its PCS Group and less than 1% of the
voting interest in Sprint. TCI accounted for its interest in the PCS Ventures
using the equity method of accounting, however, as a result of the Exchange and
TCI's less than 1% voting interest in Sprint, TCI no longer exercises
significant influence with respect to its investment in the PCS Ventures.
Accordingly, TCI will account for its investment in the Sprint PCS Group Stock
as an available-for-sale security.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Pro Forma Financial Information
Tele-Communications, Inc. and Subsidiaries:
Condensed Pro Forma Balance Sheet,
September 30, 1998 (unaudited)
Condensed Pro Forma Statement of Operations,
Nine months ended September 30, 1998 (unaudited)
Condensed Pro Forma Statement of Operations,
Year ended December 31, 1997 (unaudited)
TCI Group:
Condensed Pro Forma Statement of Operations,
Nine months ended September 30, 1998 (unaudited)
Condensed Pro Forma Statement of Operations,
Year ended December 31, 1997 (unaudited)
TCI Ventures Group:
Condensed Pro Forma Balance Sheet,
September 30, 1998 (unaudited)
Condensed Pro Forma Statement of Operations,
Nine months ended September 30, 1998 (unaudited)
Condensed Pro Forma Statement of Operations,
Year ended December 31, 1997 (unaudited)
Tele-Communications, Inc. and Subsidiaries:
Notes to Condensed Pro Forma Financial Statements,
September 30, 1998 (unaudited)
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: December 8, 1998
TELE-COMMUNICATIONS, INC.
(Registrant)
By: /s/ Stephen M. Brett
----------------------------------------
Stephen M. Brett
Executive Vice President
<PAGE> 4
TELE-COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Pro Forma Financial Statements
September 30, 1998
(unaudited)
The following unaudited condensed pro forma balance sheets of TCI and
TCI Ventures Group, dated as of September 30, 1998, assume that the Exchange
(see note 1) had occurred as of such date.
The following unaudited condensed pro forma statements of operations
of TCI for the nine months ended September 30, 1998 and the year ended December
31, 1997 assume that the Exchange and the Cablevision Transaction (see note 2)
had occurred as of January 1, 1997. The following unaudited condensed pro forma
statements of operations of TCI Group for the nine months ended September 30,
1998 and the year ended December 31, 1997 assume that the Cablevision
Transaction had occurred as of January 1, 1997. The following unaudited
condensed pro forma statements of operations of TCI Ventures Group for the nine
months ended September 30, 1998 and the year ended December 31, 1997 assume that
the Exchange had occurred as of January 1, 1997.
The unaudited pro forma results do not purport to be indicative of the
results of operations that would have been obtained if the Exchange and the
Cablevision Transaction had occurred as of January 1, 1997. These condensed pro
forma financial statements of TCI, TCI Group and TCI Ventures Group should be
read in conjunction with the historical financial statements and the related
notes thereto of TCI, TCI Group and TCI Ventures Group.
1
<PAGE> 5
TELE-COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Pro Forma Balance Sheet
(unaudited)
<TABLE>
<CAPTION>
September 30, 1998
---------------------------------------------
Exchange
TCI pro forma TCI
historical adjustments(1) pro forma
---------- -------------- ---------
amounts in millions
Assets
- ------
<S> <C> <C> <C>
Cash, receivables and other
current assets $ 1,595 -- 1,595
Investments in affiliates accounted for under the equity
method and related receivables 4,547 (258)(3) 4,289
Investments in Time Warner, Inc. and AT&T Corp. 7,765 -- 7,765
Investment in Sprint PCS Group -- 1,783 (4) 1,783
Property and equipment, net of
accumulated depreciation 6,992 -- 6,992
Franchise costs, intangibles and
other assets, net of amortization 15,466 -- 15,466
---------- -------------- ----------
$ 36,365 1,525 37,890
========== ============== ==========
Liabilities and Stockholders' Equity
- ------------------------------------
Payables and accruals $ 1,741 -- 1,741
Debt 14,895 -- 14,895
Deferred income taxes 7,871 592 (5) 8,463
Other liabilities 1,369 -- 1,369
---------- -------------- ----------
Total liabilities 25,876 592 26,468
---------- -------------- ----------
Minority interests 1,428 -- 1,428
Redeemable securities 327 -- 327
Company-obligated mandatorily redeemable preferred securities
of subsidiary trusts holding solely subordinated debt
securities of TCI Communications, Inc. 1,500 -- 1,500
Stockholders' equity:
TCI Group Series A common stock 610 -- 610
TCI Group Series B common stock 74 -- 74
Liberty Media Group Series A
common stock 358 -- 358
Liberty Media Group Series B
common stock 35 -- 35
TCI Ventures Group Series A common
stock 377 -- 377
TCI Ventures Group Series B common
stock 46 -- 46
Additional paid-in capital 5,275 -- 5,275
Accumulated other comprehensive earnings 1,715 -- 1,715
Retained earnings 490 933 (5) 1,423
Treasury stock (1,746) -- (1,746)
---------- -------------- ----------
7,234 933 8,167
---------- -------------- ----------
$ 36,365 1,525 37,890
========== ============== ==========
</TABLE>
See accompanying notes to unaudited condensed pro forma financial statements.
2
<PAGE> 6
TELE-COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Pro Forma Statement of Operations
(unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30, 1998
--------------------------------------------------------------------------
Cablevision Transaction (2)
-----------------------------
Contribution of Exchange TCI
TCI NJ/NY Systems Pro forma pro forma pro
historical To New CSC adjustments adjustments(1) forma
---------- --------------- ----------- -------------- -------
amounts in millions,
except per share amounts
<S> <C> <C> <C> <C> <C>
Revenue $ 5,510 (80) -- -- 5,430
Operating, selling, general and administrative
expenses, Year 2000 costs, AT&T merger costs,
stock compensation and cost of distribution
agreements (3,981) 43 -- -- (3,938)
Depreciation and amortization (1,250) 14 -- -- (1,236)
---------- --------------- ----------- -------------- -------
Operating income 279 (23) -- -- 256
Interest expense (808) 7 -- -- (801)
Share of losses of affiliates, net (986) -- (41)(6) 510 (7) (517)
Other income, net 3,953 -- -- -- 3,953
---------- --------------- ----------- -------------- -------
Earnings before income taxes 2,438 (16) (41) 510 2,891
Income tax expense (1,068) 4 16 (8) (198)(8) (1,246)
---------- --------------- ----------- -------------- -------
Net earnings 1,370 (12) (25) 312 1,645
Dividend requirements on preferred stocks (18) -- -- -- (18)
---------- --------------- ----------- -------------- -------
Net earnings attributable to common
stockholders $ 1,352 (12) (25) 312 1,627
========== =============== =========== ============== =======
Net earnings attributable to common stockholders:
TCI Group Series A and Series B common stock $ 130 (12) (25) -- 93
Liberty Media Group Series A and Series B
common stock 227 -- -- -- 227
TCI Ventures Group Series A and Series B
common stock 995 -- -- 312 1,307
---------- --------------- ----------- -------------- -------
$ 1,352 (12) (25) 312 1,627
========== =============== =========== ============== =======
Basic earnings attributable to common stockholders
per common share:
TCI Group Series A and Series B common stock $ .25 $ .18(9)
========== =======
Liberty Media Group Series A and Series B
common stock $ .64 $ .64
========== =======
TCI Ventures Group Series A and Series B
common stock $ 2.36 $ 3.10(10)
========== =======
Diluted earnings attributable to common stockholders
per common and potential common share:
TCI Group Series A and Series B common stock $ .22 $ .16(9)
========== =======
Liberty Media Group Series A and Series B
common stock $ .58 $ .58
========== =======
TCI Ventures Group Series A and Series B
common stock $ 2.20 $ 2.90(10)
========== =======
</TABLE>
See accompanying notes to unaudited condensed pro forma financial statements.
3
<PAGE> 7
TELE-COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Pro Forma Combined Statement of Operations
(unaudited)
<TABLE>
<CAPTION>
Year ended December 31, 1997
--------------------------------------------------------------------------
Cablevision Transaction(2)
--------------------------------
Contribution of
NJ/NY Exchange
TCI Systems to Pro forma pro forma TCI
historical New CSC adjustments adjustments(1) pro forma
---------- --------------- -------------- -------------- ---------
amounts in millions,
except per share amounts
<S> <C> <C> <C> <C> <C>
Revenue $ 7,570 (428) -- -- 7,142
Operating, cost of sales, selling, general
and administrative expenses, stock
compensation, cost of distribution
agreement, impairment of intangible
assets and restructuring charges (5,271) 231 -- -- (5,040)
Depreciation and amortization (1,614) 75 -- -- (1,539)
---------- --------- ----------- ----------- -------
Operating income 685 (122) -- -- 563
Interest expense (1,160) 39 -- -- (1,121)
Share of losses of affiliates, net (930) -- (182)(6) 493 (7) (619)
Other income, net 545 1 -- -- 546
---------- --------- ----------- ----------- -------
Loss before income taxes (860) (82) (182) 493 (631)
Income tax benefit 234 20 71 (8) (191)(8) 134
---------- --------- ----------- ----------- -------
Net loss (626) (62) (111) 302 (497)
Dividend requirements on preferred stocks (42) -- -- -- (42)
---------- --------- ----------- ----------- -------
Net loss attributable to common
stockholders $ (668) (62) (111) 302 (539)
========== ========= =========== =========== =======
Net earnings (loss) attributable to common
stockholders:
TCI Group Series A and Series B
common stock $ (537) (62) (111) 159 (11) (551)
Liberty Media Group Series A and
Series B common stock 125 -- -- -- 125
TCI Ventures Group Series A and
Series B common stock (256) -- -- 143 (11) (113)
---------- --------- ----------- ----------- -------
$ (668) (62) (111) 302 (539)
========== ========= =========== =========== =======
Basic earnings (loss) attributable to common
shareholders per common share:
TCI Group Series A and Series B
common stock $ (.85) $ (.87)(9)
========== =======
Liberty Media Group Series A and
Series B common stock $ .34 $ .34
========== =======
TCI Ventures Group Series A and
Series B common stock $ (.62) $ (.28)(10)
========== =======
Diluted earnings (loss) attributable to
common stockholders per common and
potential common share:
TCI Group Series A and Series B
common stock $ (.85) $ (.87)(9)
========== =======
Liberty Media Group Series A and
Series B common stock $ .31 $ .31
========== =======
TCI Ventures Group Series A and Series B
common stock $ (.62) $ (.28)(10)
========== =======
</TABLE>
See accompanying notes to unaudited condensed pro forma financial statements.
4
<PAGE> 8
TCI GROUP
Condensed Pro Forma Statement of Operations
(unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30, 1998
------------------------------------------------------------------------------
Cablevision Transaction (2)
-----------------------------------
Contribution TCI
TCI of NJ/NY Group
Group Systems to Pro forma pro
historical New CSC adjustments forma
----------- ------------- ----------- -------------
amounts in millions,
except per share amounts
<S> <C> <C> <C> <C>
Revenue $ 4,560 (80) -- 4,480
Operating, selling, general and
administrative expenses, Year 2000
costs, AT&T merger costs and stock
compensation (2,847) 43 -- (2,804)
Depreciation and amortization (1,111) 14 -- (1,097)
----------- ------------- ----------- -----------
Operating income 602 (23) -- 579
Interest expense (736) 7 -- (729)
Share of losses of affiliates, net (126) -- (41)(6) (167)
Other income, net 647 -- -- 647
----------- ------------- ----------- -----------
Earnings before income taxes 387 (16) (41) 330
Income tax expense (239) 4 16(8) (219)
----------- ------------- ----------- -----------
Net earnings 148 (12) (25) 111
Dividend requirements on preferred
stocks (18) -- -- (18)
----------- ------------- ----------- -----------
Earnings attributable to common
stockholders $ 130 (12) (25) 93
=========== ============= =========== ===========
Basic earnings attributable to TCI Group
Series A and Series B common stockholders
per common share $ .25 $ .18(9)
=========== ===========
Diluted earnings attributable to TCI Group
Series A and Series B common stockholders
per common and dilutive common share $ .22 $ .16(9)
=========== ===========
</TABLE>
See accompanying notes to unaudited condensed pro forma financial statements.
5
<PAGE> 9
TCI GROUP
Condensed Pro Forma Statement of Operations
(unaudited)
<TABLE>
<CAPTION>
Year ended December 31, 1997
-----------------------------------------------------------
Cablevision Transaction (2)
------------------------------
Contribution TCI
TCI of NJ/NY Group
Group Systems to Pro forma pro
historical New CSC adjustments forma
---------- ------------ ------------ -------
amounts in millions,
except per share amounts
<S> <C> <C> <C> <C>
Revenue $ 6,429 (428) -- 6,001
Operating, selling, general and administrative expenses,
stock compensation and restructuring charges (3,855) 231 -- (3,624)
Depreciation and amortization (1,427) 75 -- (1,352)
---------- ------------ ------------ -------
Operating income 1,147 (122) -- 1,025
Interest expense (1,105) 39 -- (1,066)
Share of losses of affiliates, net (90) -- (182)(6) (272)
Other expense, net (206) 1 -- (205)
---------- ------------ ------------ -------
Loss before income taxes (254) (82) (182) (518)
Income tax benefit 104 20 71 (8) 195
---------- ------------ ------------ -------
Net loss before loss of TCI Ventures Group (150) (62) (111) (323)
Loss of TCI Ventures Group through the date of the TCI
Ventures Exchange (345) -- 159 (11) (186)
---------- ------------ ------------ -------
Net loss (495) (62) 48 (509)
Dividend requirements on preferred
stocks (42) -- -- (42)
---------- ------------ ------------ -------
Net loss attributable to common stockholders $ (537) (62) 48 (551)
========== ============ ============ =======
Basic and diluted loss attributable to TCI Group Series A
and Series B common shareholders per common share $ (.85) $ (.87)(9)
========== =======
</TABLE>
See accompanying notes to unaudited condensed pro forma financial statements.
6
<PAGE> 10
TCI VENTURES GROUP
Condensed Pro Forma Balance Sheet
(unaudited)
<TABLE>
<CAPTION>
September 30, 1998
---------------------------------------------
TCI TCI
Ventures Exchange Ventures
Group pro forma Group
historical adjustments(1) pro forma
---------- -------------- ---------
Assets amounts in millions
- ------
<S> <C> <C> <C>
Cash, receivables and other
current assets $ 459 -- 459
Investments in affiliates accounted for under the
equity method and related receivables 1,520 (258)(3) 1,262
Investment in AT&T Corp. 2,744 -- 2,744
Investment in Sprint PCS Group -- 1,783 (4) 1,783
Property and equipment, net of
accumulated depreciation 540 -- 540
Franchise costs, intangibles and
other assets, net of amortization 1,332 -- 1,332
---------- -------------- --------
$ 6,595 1,525 8,120
========== ============== ========
Liabilities and Combined Equity
- -------------------------------
Payables and accruals $ 623 -- 623
Debt 1,204 -- 1,204
Deferred income taxes 771 592 (5) 1,363
Other liabilities 23 -- 23
---------- -------------- --------
Total liabilities 2,621 592 3,213
---------- -------------- --------
Minority interests 483 -- 483
Obligation to redeem TCI Ventures Group Stock 3 -- 3
Combined equity:
Combined equity 3,424 933 (5) 4,357
Accumulated other comprehensive earnings 44 -- 44
Due to related parties 20 -- 20
---------- -------------- --------
3,488 933 4,421
---------- -------------- --------
$ 6,595 1,525 8,120
========== ============== ========
</TABLE>
See accompanying notes to unaudited condensed pro forma financial statements.
7
<PAGE> 11
TCI VENTURES GROUP
Condensed Pro Forma Statement of Operations
(unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30, 1998
------------------------------------------------
TCI TCI
Ventures Exchange Ventures
Group pro forma Group
historical adjustments(1) Pro forma
------------ -------------- ----------
amounts in millions,
except per share amounts
<S> <C> <C> <C>
Revenue $ 685 -- 685
Operating, selling, general and administrative expenses,
Year 2000 costs, AT&T merger costs, stock compensation
and cost of distribution agreements (802) -- (802)
Depreciation and amortization (109) -- (109)
------------ -------------- ----------
Operating loss (226) -- (226)
Interest expense (38) -- (38)
Share of losses of affiliates, net (740) 510(7) (230)
Other income, net 2,710 -- 2,710
------------ -------------- ----------
Earnings before income taxes 1,706 510 2,216
Income tax expense (711) (198)(8) (909)
------------ -------------- ----------
Net earnings $ 995 312 1,307
============ ============== ==========
Basic earnings attributable to common stockholders per
common share $ 2.36 $ 3.10 (10)
============ ==========
Diluted earnings attributable to common stockholders per common
and potential common share
$ 2.20 $ 2.90 (10)
============ ==========
</TABLE>
See accompanying notes to unaudited condensed pro forma financial statements.
8
<PAGE> 12
TCI VENTURES GROUP
Condensed Pro Forma Statement of Operations
(unaudited)
<TABLE>
<CAPTION>
Year ended December 31, 1997
-------------------------------------------------
TCI TCI
Ventures Exchange Ventures
Group pro forma Group
historical adjustments(1) pro forma
---------- -------------- ---------
amounts in millions,
except per share amounts
<S> <C> <C> <C>
Revenue $ 969 -- 969
Operating, selling, general and administrative expenses,
stock compensation, cost of distribution agreement
and impairment of intangible assets (1,144) -- (1,144)
Depreciation and amortization (175) -- (175)
---------- ----------- --------
Operating loss (350) -- (350)
Interest expense (54) -- (54)
Share of losses of affiliates, net (819) 493(7) (326)
Other income, net 400 -- 400
---------- ----------- --------
Loss before income taxes (823) 493 (330)
Income tax benefit 223 (191)(8) 32
---------- ----------- --------
Net loss $ (600) 302 (298)
========== =========== ========
Basic and diluted loss attributable to common shareholders
per common share $ (.62) $ (.28)(10)
========== ========
</TABLE>
See accompanying notes to unaudited condensed pro forma financial statements.
9
<PAGE> 13
TELE-COMMUNICATIONS, INC. AND SUBSIDIARIES
Notes to Condensed Pro Forma Financial Statements
September 30, 1998
(unaudited)
(1) Tele-Communications, Inc. ("TCI") held a 30% partnership interest in
Sprint Spectrum Holding Company L.P. and MinorCo, L.P. (collectively,
"Sprint PCS") and a 35% interest in PhillieCo, L.P. ("PhillieCo" and,
together with Sprint PCS, the "PCS Ventures"). The PCS Ventures
provide wireless communications services, using the radio spectrum for
broadband personal communications services ("PCS"), to residential and
business customers nationwide, using the "Sprint" brand. The partners
of Sprint PCS are subsidiaries of Sprint Corporation ("Sprint"),
Comcast Corporation ("Comcast"), Cox Communications, Inc. ("Cox") and
TCI. The partners of PhillieCo are subsidiaries of Sprint, Cox and
TCI.
On November 23, 1998, TCI, Comcast, and Cox exchanged their respective
interests in Sprint PCS and PhillieCo (the "Exchange") for shares of a
new class of tracking stock of Sprint (the "Sprint PCS Group Stock")
which tracks the performance of Sprint's newly created PCS Group
(consisting initially of the PCS Ventures and certain PCS licenses
which were separately owned by Sprint). The Sprint PCS Group Stock
collectively represents an approximate 17% voting interest in Sprint.
As a result of the Exchange, TCI holds shares of Sprint PCS Group
Stock (as well as certain additional securities of Sprint exercisable
for or convertible into such securities) representing approximately
24% of the equity value of Sprint attributable to its PCS Group and
less than 1% of the voting interest in Sprint. TCI accounted for its
interest in the PCS Ventures using the equity method of accounting,
however, as a result of the Exchange and TCI's less than 1% voting
interest in Sprint, TCI no longer exercises significant influence with
respect to its investment in the PCS Ventures. Accordingly, TCI will
account for its investment in the Sprint PCS Group Stock as an
available-for-sale security.
10
<PAGE> 14
(2) On March 4, 1998 (the "Closing Date"), subsidiaries of TCI transferred
to CSC Parent Corporation, a Delaware corporation (to be known
immediately after the closing as Cablevision Systems Corporation)
("New CSC"), cable television systems owned and operated by TCI
serving approximately 830,000 subscribers, as of January 31, 1998. The
systems transferred were located in Union, Mercer, Monmouth, Somerest,
Middlesex, Morris, Sussex, Bergen and Passaic counties in New Jersey
and in Rockland, Suffolk and Westchester counties in New York (the
"NJ/NY Systems"). In addition to its ownership interest in the NJ/NY
Systems, New CSC will hold all of the common stock of the former
Cablevision Systems Corporation (to be known immediately after the
closing as CSC Holdings, Inc.). The NJ/NY Systems were transferred
either directly by the transfer of the assets of such cable systems or
indirectly by the transfer of partnership interests or capital stock
in the entities owning such cable systems, in exchange for
approximately 48.9 million shares of Class A common stock, par value
$0.01 per share, of New CSC representing an approximate 33% common
equity ownership interest in New CSC and assumption by New CSC of
certain liabilities, including approximately $669 million in debt,
relating to the cable television systems transferred by TCI to New
CSC. Such exchange was made pursuant to the terms of the Contribution
and Merger Agreement dated as of June 6, 1997, as amended and restated
by the Amended and Restated Contribution and Merger Agreement dated as
of June 6, 1997, by and among TCI Communications, Inc., a subsidiary
of TCI, New CSC, and certain affiliates of New CSC (the "Cablevision
Transaction"). The amount of the consideration payable in the
Cablevision Transaction was based on arm's-length negotiations between
the parties.
(3) Represents the elimination of TCI's equity method investment in the
PCS Ventures.
(4) Represents the receipt of 98,563,924 shares of Sprint PCS Group Stock
and certain additional securities of Sprint valued at approximately
$1,783 million. The value of the Sprint PCS Group Stock was based on a
ten day average trading price.
(5) Represents the estimated gain and related deferred taxes from the
Exchange. The estimated gain represents the excess of the fair value
of Sprint PCS Group Stock and certain additional securities of Sprint
received (approximately $1,783 million) over the net book value of
TCI's equity method investment in the PCS Ventures, net of deferred
taxes. The estimated gain from the Exchange has not been reflected in
the statement of operations because of its non-recurring nature.
(6) Represents TCI's proportionate share of New CSC's pro forma losses for
the applicable period, up to the Closing Date, including the
amortization, over an estimated 10 year life, of the difference
between the fair value of consideration received and TCI's
proportionate share of New CSC's net deficiency.
(7) Represents the elimination of TCI's share of losses for the PCS
Ventures for the applicable period.
(8) Represents the estimated tax effect of the pro forma adjustments,
assuming an effective tax rate of 39%.
11
<PAGE> 15
(9) Represents pro forma basic earnings (loss) per share assuming 521
million and 632 million weighted average shares of TCI Group common
stock were outstanding during the nine months ended September 30, 1998
and the year ended December 31, 1997, respectively, and pro forma
diluted earnings (loss) per share assuming 600 million and 632 million
diluted weighted average common shares were outstanding during the
nine months ended September 30, 1998 and the year ended December 31,
1997, respectively. Such amounts represent the weighted average shares
disclosed in TCI Group's historical financial statements. For purposes
of calculating diluted earnings per share for the nine months ended
September 30, 1998, net earnings for TCI Group common stockholders
includes the addition of $2 million for accrued interest assuming the
conversion of dilutive TCI Group convertible securities as of the
beginning of the period.
(10) Represents pro forma basic earnings (loss) per share assuming 422
million and 410 million weighted average shares of TCI Ventures Group
common stock were outstanding during the nine months ended September
30, 1998 and the period from the date of the TCI Ventures Exchange
(note 11) to December 31, 1997, respectively, and pro forma diluted
earnings (loss) per share assuming 451 million and 410 million diluted
weighted average common shares were outstanding during the nine months
ended September 30, 1998 and the period from the date of the TCI
Ventures Exchange to December 31, 1997, respectively. Such amounts
represent the weighted average shares disclosed in TCI Ventures
Group's historical financial statements. The basic and diluted loss
attributable to TCI Ventures Group common shareholders per common
share for the year ended December 31, 1997 was computed by dividing
the $113 million net loss attributable to TCI Ventures Group common
stockholders by the weighted average number of common shares
outstanding of TCI Ventures Group common stock for the period from the
date of the TCI Ventures Group Exchange to December 31, 1997 (410
million).
(11) On September 10, 1997, 188,661,300 shares of Tele-Communications, Inc.
TCI Group Series A Common Stock and 16,266,400 shares of
Tele-Communications, Inc. TCI Group Series B Common Stock were
exchanged for 377,322,600 shares of Tele-Communications, Inc. TCI
Ventures Group Series A Common Stock and 32,532,800 shares of
Tele-Communications, Inc. TCI Ventures Group Series B Common Stock
(the "TCI Ventures Exchange"). Earnings (loss) of TCI Ventures Group
prior to the TCI Ventures Exchange have been attributed to TCI Group's
common stockholders, accordingly, TCI's share of losses for the PCS
Ventures prior to the TCI Ventures Exchange have been attributed to
TCI Group's common stockholders.
12
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