<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
TCI 401(K) STOCK PLAN
(formerly, TELE-COMMUNICATIONS, INC.
EMPLOYEE STOCK PURCHASE 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.
-------------------- --------
Independent Auditors' Report 1
Statements of Net Assets Available
for Participant Benefits,
December 31, 1997 and 1996 2
Statements of Changes in Net Assets
Available for Participant Benefits,
Years ended December 31, 1997, 1996 and 1995 3
Notes to Financial Statements,
December 31, 1997, 1996 and 1995 4
Schedule 1 - Item 27a - Schedule of Assets
Held for Investment Purposes 10
Schedule 2 - Item 27d - Schedule of Reportable
Transactions 11
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.
TCI 401(K) STOCK PLAN
(formerly, TELE-COMMUNICATIONS, INC.
EMPLOYEE STOCK PURCHASE PLAN)
(Name of Plan)
By /s/ Gary K. Bracken
--------------------------------
Gary K. Bracken
Plan Administrator
and Member of Plan Committee
June 29, 1998
<PAGE>
Independent Auditors' Report
----------------------------
The Plan Committee
TCI 401(K) Stock Plan
(formerly, Tele-Communications, Inc.
Employee Stock Purchase Plan):
We have audited the accompanying statements of net assets available for
participant benefits of the TCI 401(K) Stock 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
TCI 401(K) Stock 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 schedules of assets held
for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are 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 supplemental schedules
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>
TCI 401(K) STOCK PLAN
Statements of Net Assets Available
for Participant Benefits
December 31, 1997 and 1996
<TABLE>
<CAPTION>
Assets 1997 1996
- ------ ------------ ------------
amounts in thousands
<S> <C> <C>
Cash and cash equivalents $ 128 199
Investments in Tele-Communications, Inc. ("TCI")
common stock (note 2):
Series A TCI Group Common Stock (9,398,000
and 12,808,000 shares, with a cost of
$145,574,000 and $184,500,000 at
December 31, 1997 and 1996, respectively) 262,553 167,315
Series A Liberty Media Group Common Stock
(6,325,000 and 6,437,000 shares, with a
cost of $70,947,000 and $60,105,000 at
December 31, 1997 and 1996, respectively) 152,866 81,722
Series A TCI Ventures Group Common Stock
(8,226,000 shares with a cost of
$62,223,000 at December 31, 1997) 116,454 --
------------ ------------
531,873 249,037
Investment in TCI Satellite Entertainment, Inc.
("TSAT") Series A Common Stock (1,032,000 and
1,273,000 shares, with a cost of $14,174,000
and $17,485,000 at December 31, 1997 and
1996, respectively (note 2) 7,095 12,578
------------ ------------
539,096 261,814
Liabilities
- -----------
Net assets available for participant benefits,
including $6,275,000 of benefits payable to
participants at December 31, 1996 (note 5) $539,096 261,814
============ ============
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
TCI 401(K) STOCK PLAN
Statements of Changes in Net Assets Available
for Participant Benefits
Years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
amounts in thousands
<S> <C> <C> <C>
Contributions:
Employer $ 37,262 36,917 27,559
Employee 37,262 36,917 28,190
Transfers from other plans
(note 4) 100 193 457
------------ ------------ ------------
74,624 74,027 56,206
------------ ------------ ------------
Net investment income (loss):
Net unrealized appreciation
(depreciation) of securities
(note 3) 269,565 (61,563) 46,894
Realized gain (loss) on securities
transactions (196) 16 49
Interest income 29 42 45
------------ ------------ ------------
269,398 (61,505) 46,988
------------ ------------ ------------
Total contributions and net
investment income (loss) 344,022 12,522 103,194
Forfeitures used to pay plan
expenses (508) -- --
Distributions to participants (66,232) (28,601) (11,762)
------------ ------------ ------------
Increase (decrease) in net assets
available for participant benefits 277,282 (16,079) 91,432
Net assets available for participant
benefits:
Beginning of year 261,814 277,893 186,461
------------ ------------ ------------
End of year $ 539,096 261,814 277,893
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
TCI 401(K) STOCK PLAN
Notes to Financial Statements
December 31, 1997, 1996 and 1995
(1) Summary of Significant Accounting Policies
------------------------------------------
Basis of Presentation
---------------------
The accompanying financial statements 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")
-----------------------------------------
Under the terms of a trust agreement between the Trustee and the TCI 401(K)
Stock Plan (formerly, the Tele-Communications, Inc. Employee Stock Purchase
Plan) (the "Plan"), the Trustee manages a trust fund on behalf of the Plan.
The Trustee has been granted discretionary authority concerning purchases
and sales of investments for the trust fund. The Trustee may invest up to
100% of the assets of the Plan in employer securities without regard to any
fiduciary requirement to diversify Plan assets. Additionally, the Plan is
allowed to invest in non-employer securities.
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
market 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 $27.94, $24.17, $14.16 and $6.88 per share,
respectively, at December 31, 1997. The market values 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 $9.88 per share at December 31,
1996, respectively. 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 and
are accounted for when shares are transferred by the Trustee to
participants. The cost basis of such shares distributed is determined
using the "first-in, first-out" method.
(continued)
4
<PAGE>
TCI 401(K) STOCK PLAN
Notes to Financial Statements
Income Taxes
------------
The Internal Revenue Service ("IRS") 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
-------------
Any employer contribution amounts forfeited may be used to pay plan
expenses. Any additional administrative expenses of the Plan are paid by
TCI.
(2) Description of the Plan
-----------------------
As of January 27, 1994, TCI Communications, Inc. (formerly Tele-
Communications, Inc. or "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, 3,512,646 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.
(continued)
5
<PAGE>
TCI 401(K) STOCK PLAN
Notes to Financial Statements
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.
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.
(continued)
6
<PAGE>
TCI 401(K) STOCK PLAN
Notes to Financial Statements
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.
The Plan is a defined contribution plan sponsored by TCI. The Plan enables
participating employees to acquire a proprietary interest in TCI and to
receive benefits upon retirement. In addition, the Plan includes a salary
deferral feature with respect to employee contributions. At December 31,
1997, there were approximately 21,000 participants in the Plan and
approximately 29,000 employees who had one or more years of service and met
all other eligibility requirements who were eligible to participate. Under
the terms of the Plan, employees are eligible for participation after one
year of service (if at least 18 years old and work a minimum of 1,000 hours
per year) and the normal retirement age is 65 years. Participants may
contribute up to 10% of their compensation, as defined, to the Plan. TCI
(by annual resolution of the Board) may contribute up to 100% of the
participant contributions. Forfeitures (due to participants' withdrawal
prior to full vesting) may be applied to reduce TCI's otherwise determined
contributions or offset the expenses of maintaining the Plan. Such
forfeitures amounted to $3,485,000, $722,000 and $631,000 for the years
ended December 31, 1997, 1996 and 1995, respectively. Participant
contributions are always fully vested. Generally, participants acquire a
vested right in TCI contributions as follows:
Vesting
Years of service percentage
---------------- ----------
Less than 1 0%
1-2 20%
2-3 30%
3-4 45%
4-5 60%
5-6 80%
6 or more 100%
(continued)
7
<PAGE>
TCI 401(K) STOCK PLAN
Notes to Financial Statements
Although TCI has not expressed an intent to terminate the Plan, it may do
so at any time. The Plan provides for full and immediate vesting of all
participant rights upon termination of the Plan.
(3) 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:
<TABLE>
<CAPTION>
1997 1996 1995
------------------ ----------------- ------------------
amounts in thousands
<S> <C> <C> <C> <C>
End of year $ 246,050 (475) 71,387
Change in unrealized
appreciation of
distributions 23,040 10,299 3,602
Less beginning of year 475 (71,387) (28,095)
------------------ ----------------- ------------------
Net unrealized appreciation
(depreciation) of
investments $ 269,565 (61,563) 46,894
================== ================= ==================
</TABLE>
(4) Transfers from Other Plans
--------------------------
TCI has certain subsidiaries that maintain separate retirement savings
plans. Participants in a subsidiary plan may elect, on a quarterly basis,
to transfer their entire account balance to the Plan. During 1997, 1996 and
1995, transfers to the Plan from such subsidiary plans aggregated $100,000,
$193,000 and $457,000, respectively.
(5) 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:
1997 1996
---------- ----------
amounts in thousands
Net Assets Available for Participant
Benefits - financial statements $ 539,096 261,814
Benefits payable to participants -- (6,275)
---------- ----------
Net Assets Available for Participant
Benefits - Form 5500 $ 539,096 255,539
========== ==========
(continued)
8
<PAGE>
TCI 401(K) STOCK PLAN
Notes to Financial Statements
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 $ 66,232
Reversal of prior year benefits
payable to participants (6,275)
----------
Distributions to participants -
Form 5500 $ 59,957
==========
(6) Subsequent Event - Plan Changes
-------------------------------
Effective January 1, 1998, the Plan was amended, and is now called the TCI
401(k) Stock Plan. As amended, employees who are at least 18 years of age
and have worked at least three consecutive months of service are eligible
to participate in the Plan. As of the amendment date, the Plan has nine
investment options including six mutual funds and three TCI stock funds: a
Stable Value Fund, a Balanced Fund, a Core Equity Fund, an International
Equity Fund, a Growth Equity Fund, a Small Cap Equity Fund, a TCI Group
Common Stock Fund, a Liberty Media Group Common Stock Fund, and a TCI
Ventures Group Common Stock Fund. As amended, Plan participants may change
investment options and contribution percentages on a daily basis.
Distributions are processed on a monthly basis and other withdrawals are
processed twice a month. Additionally, participants acquire a vested right
in employer match contributions as follows:
Vesting
Years of service percentage
---------------- ----------
Less than 1 0%
1 year 33%
2 years 66%
3 years 100%
The Plan has not yet applied for a new determination letter from the IRS
for the amended plan, but expects to maintain its qualified status.
The Plan suspended the processing of transactions, including benefit
payments and distributions, during a December 1997 blackout period to allow
adequate time for the conversion of the record keeping system to the
"daily" methodology used by the amended Plan. As a result, there were no
benefits payable to Plan participants at December 31, 1997 as all such
withdrawals and distributions were paid prior to the blackout period.
9
<PAGE>
Schedule 1
----------
TCI 401(K) STOCK PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1997
(amounts in thousands)
<TABLE>
<CAPTION>
(a)* (b) (c) (d) (e)
Identity of Description of investment Current
issuer including par value Cost value
- ------- ----------- ------------------------- -------- ---------
<S> <C> <C> <C> <C>
Tele-Communications, Inc. Series A TCI Group Common
Stock, par value $1.00 per share $145,574 262,553
Tele-Communications, Inc. Series A Liberty Media Group
Common Stock, par value $1.00
per share $ 70,947 152,866
Tele-Communications, Inc. Series A TCI Ventures Group
Common Stock, par value $1.00
per share $ 62,223 116,454
TCI Satellite Series A TSAT Common Stock,
Entertainment, Inc. par value $1.00 per share $ 14,174 7,095
</TABLE>
* None of the issuers represent parties in interest to the Plan.
See accompanying independent auditors' report.
10
<PAGE>
Schedule 2
----------
TCI 401(K) STOCK PLAN
Item 27d - Schedule of Reportable Transactions
Year ended December 31, 1997
(amounts in thousands)
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Expense Current value
Identity of party Description of Purchase incurred with Cost of of asset on Net gain
involved asset price Selling price Lease rental transaction asset transaction date or (loss)
----------------- -------------- -------- -------------- ------------- -------------- -------- ---------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aim Short-Term Prime Money
Investment Co. Market fund $58,669 -- -- -- 58,669 58,669 --
Aim Short-Term Prime Money
Investment Co. Market Fund $ -- 58,864 -- -- 58,864 58,864 --
Tele-Communications, Series A TCI
Inc. Group Common
Stock $45,338 -- -- -- 45,338 45,338 --
Tele-Communications, Series A TCI
Group Common
Stock $ -- 493 -- -- 299 -- 194
Tele-Communications, Series A Liberty
Inc. Media Group
Common Stock $16,871 -- -- -- 16,871 16,871 --
Tele-Communications, Series A
Liberty Media
Group Common
Stock $ -- 135 -- -- 46 -- 89
</TABLE>
See accompanying independent auditors' report.
11
<PAGE>
EXHIBIT INDEX
-------------
Shown below is the exhibit which is filed as a part of this Report -
23-Consent of KPMG Peat Marwick LLP
12
<PAGE>
Exhibit 23
----------
Consent of Independent Auditors
-------------------------------
The Plan Committee
TCI 401(K) Stock Plan
(formerly, Tele-Communications, Inc.
Employee Stock Purchase Plan):
We consent to incorporation by reference in the registration statements (No.
333-42917) on Form S-8 of the TCI 401(k) Stock Plan of our report dated June 17,
1998, relating to the statements of net assets available for participant
benefits of the TCI 401(K) Stock 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 all
related schedules, which report appears in the December 31, 1997 Annual Report
on Form 11-K of the TCI 401(K) Stock Plan.
KPMG Peat Marwick LLP
Denver, Colorado
June 26, 1998
