<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
F O R M 10-Q/A
(Amendment #1)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from _____ to _____
Commission File Number 0-20421
TELE-COMMUNICATIONS, INC.
-----------------------------------------------------
(Exact name of Registrant as specified in its charter)
State of Delaware 84-1260157
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5619 DTC Parkway
Englewood, Colorado 80111
- --------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 267-5500
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
The number of shares outstanding of Tele-Communications, Inc.'s
common stock (net of treasury shares and shares held by subsidiaries) as of July
31, 1998, was:
Tele-Communications, Inc. Series A TCI Group common stock - 473,411,579 shares,
Tele-Communications, Inc. Series B TCI Group common stock - 49,932,623 shares,
Tele-Communications, Inc. Series A Liberty Media Group common stock -
326,005,365 shares, Tele-Communications, Inc. Series B Liberty Media Group
common stock - 31,699,575 shares, Tele-Communications, Inc. Series A TCI
Ventures Group common stock - 376,964,436 shares, and Tele-Communications, Inc.
Series B TCI Ventures Group common stock - 45,433,352 shares.
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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 thereunto duly authorized.
TELE-COMMUNICATIONS, INC.
Date: November 19, 1998 By: /s/ Stephen M. Brett
-------------------------------------
Stephen M. Brett
Executive Vice President,
General Counsel and
Secretary
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TELE-COMMUNICATIONS, INC.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There were no new material legal proceedings or material developments in
previously reported legal proceedings during the quarter ended June 30,
1998 to which TCI or any of its consolidated subsidiaries is a party or of
which any of its property is the subject, except as follows:
New Litigation
AT&T Merger Litigation. Between June 24 and July 1, 1998, thirteen
substantially similar purported class action complaints were filed by
stockholders of Tele-Communications, Inc. ("TCI") in the Court of Chancery
of the State of Delaware (the "Delaware Chancery Court") under the
captions Nieto v. Fisher, et al., C.A. No. 16470; Martin, et al. v.
Fisher, et al., C.A. No. 16471; Bove v. Fisher, et al., C.A. No. 16473;
Freiman v. Fisher, et al., C.A. No. 16474; Great Neck Capital Appreciation
Investment Partnership, L.P. v. Fisher, et al., C.A. No. 16477; Cohen v.
Fisher, et al., C.A. No. 16478; Silvert v. Fisher, et al., C.A. No. 16479;
Alex Cooper Profit Sharing Trust v. Fisher, et al., C.A. No. 16482; Satz
v. Fisher, et al., C.A. No. 16489; Stefansky, et al. v. Fisher, et al.,
C.A. No. 16490; Hushing v. Fisher, et al., C.A. No. 16491; Krim v. Fisher,
et al., C.A. No. 16495; and Hirsch v. Fisher, et al., C.A. No. 16501. All
thirteen complaints name as defendants TCI and the following directors of
TCI: Donne F. Fisher, John W. Gallivan, Paul A. Gould, Leo J. Hindery,
Jr., Jerome H. Kern, Kim Magness, John C. Malone, Robert A. Naify and J.C.
Sparkman. The complaints in C.A. Nos. 16470, 16471, 16474, 16478, 16479,
16495, and 16501 also name AT&T Corporation ("AT&T") as a defendant. The
complaints were filed in response to the announcement on June 24, 1998 of
a proposed merger between TCI and AT&T and allege substantially similar
claims.
The gravamen of the complaints is that the terms of the proposed TCI-AT&T
merger will unjustly benefit holders of TCI Group Class B common stock at
the expense of holders of TCI Group Class A common stock and that, by
approving the proposed merger, the directors of TCI have breached their
fiduciary duties to the TCI Group Class A stockholders. Plaintiffs in all
thirteen complaints seek to enjoin the proposed merger (or rescind the
merger in the event it is consummated) and unspecified compensatory
damages, fees and costs. In addition to the above complaints, the
complaint in an existing derivative action against TCI and the TCI board
of directors in the Delaware Chancery Court, In re Tele-Communications,
Inc. Shareholder Litigation, Consolidated C.A. No. 16128, was amended on
June 26, 1998 to include claims arising from the proposed TCI-AT&T merger
substantially similar to those alleged in the thirteen actions above. See
related discussion below. These actions remain pending and discovery has
not commenced. Based upon the facts available, management believes that,
although no assurance can be given as to the outcome of this action, the
ultimate disposition of this matter should not have a material adverse
effect upon the financial condition of the Company.
II-1
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TELE-COMMUNICATIONS, INC.
Item 1. Legal Proceedings (continued).
On June 25 and July 1, 1998, two other substantially similar purported
class action complaints alleging claims arising from the proposed TCI-AT&T
merger were filed in the Delaware Chancery Court under the captions Landau
v. Fisher, et al., C.A. No. 16492, and Getfinger v. Fisher, et al., C.A.
No. 16502, respectively. Named as defendants in both complaints are TCI,
AT&T and the TCI board of directors: Donne F. Fisher, John W. Gallivan,
Paul A. Gould, Leo J. Hindery, Jr., Jerome H. Kern, Kim Magness, John C.
Malone, Robert A. Naify and J.C. Sparkman. The two actions were brought on
behalf of holders of Series A TCI Ventures Group Common Stock and allege
that the TCI directors breached their fiduciary duty to plaintiffs by
failing to adequately represent the interests of the class in the proposed
consolidation of TCI Ventures Group ("Ventures") and Liberty Media Group
("Liberty") and the sale of Ventures' assets to TCI, both to be undertaken
in connection with the proposed TCI-AT&T merger. The complaints further
allege that the consideration to be received by the class in the
Ventures-Liberty consolidation is inadequate. Plaintiffs in the complaints
seek to enjoin the transactions complained of (or rescind the transactions
in the event they are consummated) and unspecified compensatory damages,
fees and costs. These actions remain pending and discovery has not
commenced. Based upon the facts available, management believes that,
although no assurance can be given as to the outcome of this action, the
ultimate disposition of this matter should not have a material adverse
effect upon the financial condition of the Company.
Tele-Communications International, Inc. Stockholder Litigation. On July
13, 1998, two putative class action complaints were filed by certain
stockholders of Tele-Communications International, Inc. ("TINTA") in the
Court of Chancery of the State of Delaware. The actions, which have
identical claims and allegations, are styled as Berkowitz v. Hindery, et
al., C.A. No. 16533, and Chetkov v. Hindery, et al., C.A. No. 16534,
respectively. The complaints were filed following the announcement of a
proposed business combination in which Liberty Media Group would acquire
all outstanding public shares of TINTA not already owned by TCI Ventures
Group. The defendants named in both complaints are Tele-Communications,
Inc., TINTA, and the Board of Directors of TINTA: Leo J. Hindery, John C.
Malone, Gary S. Howard, David J. Evans, Pierre Lescure, Paul A. Gould,
Fred A. Vierra, and Jerome H. Kern. The gravamen of both complaints is
that the TINTA directors will breach their fiduciary duties by approving
the merger and undervaluing the proposed merger consideration to the
detriment of the TINTA public stockholders. Plaintiffs in both actions
seek to enjoin the consummation or closing of the proposed merger, or the
rescission of the merger in the event it is consummated, and unspecified
compensatory damages, fees and costs. The actions remain pending and
discovery has not commenced. Based upon the facts available, management
believes that, although no assurances can be given as to the outcome of
this action, the ultimate disposition of this matter should not have a
material adverse effect upon the financial condition of the Company.
II-2
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TELE-COMMUNICATIONS, INC.
Item 1. Legal Proceedings (continued).
New Developments in Previously Reported Litigation
As previously reported, following the announcement of the proposed merger
(the "TBS-Time Warner Merger") between Turner Broadcasting Systems, Inc.
("TBS") and Time Warner, Inc. ("Time Warner") several purported class
action lawsuits were filed by TBS shareholders in Fulton County Superior
Court, Georgia. On November 1, 1995, plaintiffs in thirteen of the cases
filed a second amended class action Complaint in what became a
consolidated action styled Lewis v. TBS, Inc. C.A. No. B-41500 (the "Lewis
Action"). The defendants include, among others, Tele-Communications, Inc.,
John Malone, Peter Barton and Fred Vierra. The TBS-Time Warner merger was
consummated on October 10, 1996. On December 20, 1996, the Georgia State
Court dismissed the plaintiffs third amended complaint in the Lewis
Action. Plaintiffs stated their intention to appeal the dismissal order
and filed a fourth amended complaint on January 16, 1997. On July 14,
1997, the court granted defendants motion for summary judgment on the
fourth amended complaint. On October 14, 1997, plaintiffs filed an appeal
from dismissal of the third amended complaint and the order granting
summary judgment on claims raised in the fourth amended complaint. On
appeal, the Georgia State Court's dismissal of the third amended complaint
was affirmed by the Court of Appeals, and on July 9, 1998, the time period
during which plaintiffs could have applied for certiorari to the Georgia
Supreme Court expired. Such events represent the final resolution of this
matter and this case will not be reported on in the future.
As previously reported, during August 1996, five putative class action
complaints were filed with the Delaware Court of Chancery in C.A. Nos.
15179, 15187, 15188, 15189 and 15195 by stockholders of Home Shopping
Network, Inc. ("HSN"). The complaints were filed following the
announcement of the proposed merger between HSN and Silver King
Communications, Inc. ("Silver King"). The defendants in the actions
include HSN, Silver King, Tele-Communications, Inc. ("TCI"), Liberty Media
Corporation ("Liberty") and the directors of HSN (Barry Diller, James G.
Held, Peter R. Barton, Robert R. Bennett, Leo J. Hindery, Jr., H. Norman
Schwarzkopf and Mr. Eli Segal). Mr. Bennett is an executive officer of
Liberty. Mr. Hindery is an executive officer of TCI. The foregoing actions
have been consolidated for all purposes pursuant to an order by the court
which specifies that the complaint in C.A. No. 15188 is the designated
complaint in the consolidated action. The HSN-Silver King merger was
completed on December 20, 1996. This case was dismissed in April 1998 and
will not be reported on in the future.
II-3
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TELE-COMMUNICATIONS, INC.
Item 1. Legal Proceedings (continued).
As previously reported, in January of 1995, two class action complaints
("Actions") were filed against Interactive Network, Inc. ("Interactive")
and certain of its then current and former officers and directors
(collectively the "Interactive Defendants") in the United States District
Court for the Northern District of California which sought unspecified
damages for alleged violations of the disclosure requirements of the
federal securities laws. The actions were filed on behalf of a class of
shareholders that purchased the stock of Interactive during the period of
August 15, 1994 through November 22, 1994. Pursuant to an order of the
Court, the Actions were consolidated and in April 1995, a Consolidated
Amended Class Action Complaint captioned In re Interactive Network Inc.
Securities Litigation ("Consolidated Case") was filed in the same court
which sought damages against the Interaction Defendants for violation of
the federal securities law disclosure requirements during the class period
May 2, 1994 through March 31, 1995. On or about January 13, 1997,
Plaintiffs filed a Fourth Amended Complaint, seeking damages against the
Interactive Defendants and Tele-Communications, Inc., TCI Communications,
Inc., TCI Development Corporation, and Gary Howard (collectively, "the TCI
Defendants") for violation of federal securities law disclosure
requirements during the class period May 16, 1994 through March 31, 1995.
In addition, the Fourth Amended Complaint sought damages against the TCI
Defendants based upon the allegation that they were "controlling persons"
of Interactive at the time the alleged wrongs took place. On January 30,
1997, the TCI Defendants and the Interactive Defendants separately moved
to dismiss the Fourth Amended Complaint on the ground that it failed to
state a cause of action against them. On April 4, 1997, the Court issued
an order dismissing, with prejudice, the primary liability claims against
the TCI Defendants. The Court granted the Plaintiffs leave to amend their
Complaint as to their claim for violation of federal securities law
disclosure requirements against the Interactive Defendants. The Court
further granted Plaintiffs leave to amend their "controlling person" claim
against the TCI Defendants. On or about April 30, 1997, Plaintiffs filed a
Fifth Amended Complaint seeking damages for violation of federal
securities law disclosure requirements against the Interactive and TCI
Defendants during the class period January 19, 1994 through March 31,
1995. The Fifth Amended Complaint also seeks damages against the TCI
Defendants as "controlling persons." On October 9, 1997, the Court granted
the Interactive Defendants' Motion to Dismiss with Prejudice substantial
portions of the Fifth Amended Complaint. On March 30, 1998 the Court
entered a stipulated order dismissing all of the TCI Defendants from the
consolidated case. The stipulated dismissal did not have any adverse
effect upon the financial condition of the Company. Such stipulated
dismissal represents the final resolution of this matter and this case
will not be reported on in the future.
II-4
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TELE-COMMUNICATIONS, INC.
Item 1. Legal Proceedings (continued).
As previously reported, on February 24, 1997, James Dalton, et al. filed
suit in District Court for Arapahoe County, Colorado, Case No. 97-CV421,
against Tele-Communications, Inc. ("TCI") and certain current and former
officers of TCI and its subsidiary, TCI Communications, Inc. (John C.
Malone, Brendan R. Clouston, Barry P. Marshall, Camille K. Jayne, Sadie N.
Decker, Bruce W. Ravenel, Gerald W. Gaines, Bernard W. Schotters, II) and
Daniel L. Ritchie and Donne F. Fisher, in their capacity as co-personal
representatives of the Estate of Bob Magness. Plaintiffs filed this action
under the Colorado Securities Act and Colorado common law on behalf of all
persons who purchased TCI securities from January 10, 1996 through October
24, 1996 ("the class period"). On September 3, 1997, defendants motion to
dismiss was denied. Defendants answered the Complaint on October 3, 1997.
Discovery is proceeding and the parties have agreed to attend a mediation
which will take place at some date in the future. Based upon the facts
available, management believes that, although no assurances can be given
as to the outcome of this action, the ultimate disposition should not have
a material adverse effect upon the financial condition of the Company.
As previously reported, in September 1997, five substantially similar
purported class action complaints were filed by stockholders of BET
Holdings, Inc. ("BET") in the Court of Chancery of the State of Delaware
under the captions Herbert Behrens v. Robert L. Johnson, et al., C.A. No.
15921; Harbor Finance Partners v. Peter Barton, et al., C.A. No. 15923;
Alan Friedman v. Robert L. Johnson, et al., C.A. No. 15924; Tiger Options,
L.L.C. v. Robert L. Johnson, et al., C.A. No. 15936 and Jerome Ramos v.
Robert L. Johnson, et al., C.A. No. 15941. Subsequently, on October 14,
1997, an Order of Consolidation was entered consolidating these actions
under the caption In re BET Holdings, Inc. Shareholders Litigation, C.A.
No. 15921 (the "Consolidated Action"). In the designated complaint in the
Consolidated Action, the named defendants are: Robert L. Johnson, John C.
Malone, Peter R. Barton, Delano E. Lewis, Sheila Crump Johnson, Herbert P.
Wilkins, Denzel Washington, TCI, Liberty Media Corporation, and BET. The
Consolidated Action focuses on the announcement of an offer by TCI,
Liberty and Robert L. Johnson, the Chief Executive Officer of BET
(collectively, the "Acquisition Group") to purchase all outstanding shares
of BET for $48 per share, alleging that the proposed $48 per share price
was inadequate and that the transaction contemplated by the offer would
constitute a breach of fiduciary duty by the directors of BET. In March
1998, BET accepted a $63 per share merger proposal from the Acquisition
Group. At that time, the parties to the contractual action agreed to a
settlement in principle which is subject to final negotiation and
execution of settlement documents, confirmatory discovery, court approval
and other matters. On June 25, 1998, the parties to the Consolidated
Action filed a Stipulation of Settlement with the Delaware Chancery Court.
On July 28, 1998, the Delaware Chancery Court entered a final order
approving the settlement and dismissing the litigation. Such final order
represents the final resolution of this matter and this case will not be
reported on in future filings.
II-5
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TELE-COMMUNICATIONS, INC.
Item 1. Legal Proceedings (continued).
As previously reported, on October 7, 1997, a purported class lawsuit
captioned Yvonne Baskerville v. Robert L. Johnson, et al., Civil Action
No. 97ca00778 was filed in the Superior Court of The District of Columbia.
The defendants in the Baskerville action are: Robert L. Johnson, John C.
Malone, Denzel Washington, Delano E. Lewis, Sheila Crump Johnson, BET, TCI
and Liberty Media Corporation. The Baskerville action is substantially
similar to the Consolidated Action. The Complaint, among other things,
alleges Breach of Fiduciary Duty in connection with a proposed
"freeze-out" transaction, where they allege that defendants intended to
take full equity ownership of BET through a merger into a new entity. The
Complaint seeks judgment declaring class action; granting injunctive
relief against consummation of the transaction or order rescinding the
proposed merger transaction; and ordering defendants to account for all
damages including costs and disbursements, attorney fees, and expert fees.
By consent of the parties, proceedings in the Baskerville action have been
stayed conditionally. On July 30, 1998, the Superior Court of the District
of Columbia dismissed the Baskerville action. Such dismissal represents
the final resolution of this matter and this case will not be reported on
in future filings.
As previously reported, on January 8, 1998, the following actions were
filed in the Court of Chancery of the State of Delaware In and For New
Castle County: Morgan, et al. v. Tele-Communications, Inc., et al., Civil
Action No. 16128-NC; Steiner v. Tele-Communications, Inc., et al., Civil
Action No. 16130-NC; Weisberg v. Tele-Communications, Inc., et al., Civil
Action No. 16131-NC; Pan v. Tele-Communications, Inc., et al., Civil
Action No. 16133; Klein v. Tele-Communications, Inc., et al., Civil action
No. 16135; Crandon Capital Partners v. Tele-Communications, Inc., et al.,
Civil Action No. 16136; and Deutsch v. Tele-Communications, Inc., et al.,
Civil Action No. 16148. Also named as defendants in these cases are John
C. Malone, John W. Gallivan, Donne F. Fisher, Leo J. Hindery, Jr., J.C.
Sparkman, Paul A. Gould, Jerome H. Kern, Kim Magness, and Robert A. Naify.
On June 26, 1998, Plaintiffs filed an amended complaint to add claims
arising from the proposed TCI-AT&T merger substantially similar to those
alleged in the AT&T Merger litigation described above. Based upon the
facts available, management believes that, although no assurances can be
given as to the outcome of this action, the ultimate disposition of this
matter should not have a material adverse effect upon the financial
condition of the Company.
II-6
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TELE-COMMUNICATIONS, INC.
Item 2. Change in Securities.
TCI issued 1,135,288 shares of TCI Group Series A Stock on June 29, 1998
to the holder of shares of Series C-TCI Group Preferred Stock upon the
conversion, and pursuant to the terms, thereof. TCI issued the equity
securities described in this paragraph in reliance on the exemption from
the registration requirements of the Act provided by Section 3(a)(9)
thereof. TCI believes that such exemption from registration is available
because (i) shares of TCI Group Series A Stock were issued by TCI to
existing security holders exclusively in exchange for shares of Series
C-TCI Group Preferred Stock and (ii) no commission or other remuneration
was paid or given directly or indirectly for soliciting such exchange.
On April 30, 1998, TCI issued 153,183 shares of Liberty Group Series B
Stock valued at $5 million and conveyed a limited partnership interest in
a limited partnership with a capital account of $1 million to an
individual who is an executive officer and a director of TCI in exchange
for such individual's limited partnership interest in another limited
partnership. TCI issued the equity securities described in this paragraph
pursuant to the private placement exemption from the registration
requirements of the Act provided by Section 4(2) thereof.
Item 4. Submission of Matters to a Vote of Security Holders.
At the Annual Meeting of Stockholders, held on June 16, 1998 (the
"Meeting"), the following matters were voted upon by the stockholders of
TCI:
1. The election of three directors of TCI as follows: John W. Gallivan
by 99.57% of the votes cast at the Meeting (2,028,281,100 For;
8,587,036 Withheld), Paul A. Gould by 99.65% of the votes cast at
the meeting (2,029,756,903 For; 7,111,233 Withheld), and Jerome H.
Kern by 99.39% of the votes cast at the Meeting (2,024,445,253 For;
12,422,883 Withheld). The election of directors required a plurality
of the votes of the outstanding shares as of the record date of
April 30, 1998 (the "Record Date") of the TCI Group Series A Stock,
TCI Group Series B Stock, Liberty Group Series A Stock, Liberty
Group Series B Stock, TCI Ventures Group Series A Stock, TCI
Ventures Group Series B Stock, Class B 6% Cumulative Redeemable
Exchangeable Junior Preferred Stock, Series C-TCI Group Preferred
Stock, Series C-Liberty Media Group Preferred Stock, Series G
Preferred Stock and Series H Preferred Stock, voting as a single
class. Additionally, subsequent to the Meeting, Messrs. Leo J.
Hindery, Jr., John C. Malone, Robert A. Naify, Donne F. Fisher, Kim
Magness, and J C Sparkman continue to serve as members of the Board
of Directors subject to re-election over staggered three year terms.
II-7
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TELE-COMMUNICATIONS, INC.
2. A proposal to approve the Tele-Communications, Inc. 1998 Incentive
Plan (the "1998 Incentive Plan Proposal"), pursuant to which
employees of TCI and its subsidiaries and independent contractors
providing services to TCI or its subsidiaries ("Eligible
Participants" or, individually, an "Eligible Participant") may be
awarded additional remuneration for services rendered and encouraged
to invest in capital stock of TCI, thereby increasing such Eligible
Participants' proprietary interest in TCI's businesses, encouraging
such Eligible Participants to remain in the employ of TCI or its
subsidiaries, and increasing such Eligible Participants' interest in
the continued success and progress of the Company and its
subsidiaries. The 1998 Incentive Plan Proposal required the
affirmative vote of a majority of the combined voting power and a
majority of the combined number of shares outstanding, as of the
Record Date, of the TCI Group Series A Stock, the TCI Group Series B
Stock, the Liberty Group Series A Stock, the Liberty Group Series B
Stock, the TCI Ventures Group Series A Stock, the TCI Ventures Group
Series B Stock, the Series C-TCI Group Preferred Stock, and the
Series C-Liberty Media Group Preferred Stock entitled to vote,
voting as a single class (1,694,434,808 For; 324,942,209 Against;
10,132,349 Abstentions; and 6,224,633 Broker Non-Votes).
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits -
(3) The Restated Certificate of Incorporation, dated August
4, 1994, as amended on August 4, 1994, August 16, 1994,
October 11, 1994, October 21, 1994, January 26, 1995,
August 3, 1995, August 3, 1995, January 25, 1996,
January 25, 1996, April 7, 1997, August 28, 1997,
December 30, 1997, December 30, 1997, January 17, 1998
and April 24, 1998. *
(10.1) Employment Agreement, dated as of June 23, 1998, between
the Company and Leo J. Hindery, Jr. *
(10.2) Employment Agreement, dated as of June 1, 1998, between
the Company and Stephen M. Brett *
(10.3) Employment Agreement, dated as of January 1, 1998,
between the Company and Larry E. Romrell *
(27) Tele-Communications, Inc. Financial Data Schedule *
----------------
* Previously filed
(b) Reports on Form 8-K filed during the quarter ended June 30, 1998:
<TABLE>
<CAPTION>
Date of Items
Report Reported Financial Statements Filed
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<S> <C> <C>
March 6, 1998, as amended on June Item 7 Cablevision Systems Corporation
23 and June 30, 1998 Three and nine months ended
September 30, 1997
(unaudited)
Years ended December 31,
1996, 1995 and 1994
</TABLE>
II-8
