<PAGE>
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 2, 1994
Date of Earliest Event Reported: August 8, 1994
TELE-COMMUNICATIONS, INC.
AND
TCI COMMUNICATIONS, INC.
----------------------------------------------------------------
(Exact name of Registrants as specified in their charters)
State of Delaware
----------------------------------------------
(State or other jurisdiction of incorporation)
0-20421 and 0-5550 84-1260157 and 84-0588868
- ------------------------- -------------------------------------
(Commission File Numbers) (I.R.S. Employer Identification Nos.)
5619 DTC Parkway
Englewood, Colorado 80111
- ---------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
Registrants' telephone number, including area code: (303) 267-5500
<PAGE>
Item 2. Acquisition or Disposition of Assets
- ------- ------------------------------------
Subsequent to September 30, 1994, TCI was reorganized based upon four
lines of business: Domestic Cable and Communications; Programming; International
Cable and Programming; and Technology/Venture Capital. In connection with this
reorganization, on November 18, 1994, TCIC transferred its ownership of United
Artists International, Inc. to TCI International Holdings, Inc. in exchange for
79,903 shares of a newly created class of TCI preferred stock, Redeemable
Convertible Preferred Stock, Series E (the "Series E Preferred Stock"). Such
transaction has been reflected at historical cost. Series E Preferred Stock
accrues dividends at the rate of 5.0% per annum and is convertible into TCI
Class A common stock at the initial conversion rate of 1,000 shares of TCI Class
A common stock for one share of the Series E Preferred Stock.
Item 5. Other Events.
- ------- -------------
(a) Following a meeting of its Board of Directors on Wednesday, November 16,
Tele-Communications, Inc. affirmed that it has organized itself into four
business groups focusing on domestic distribution of cable and telephony;
programming and other software products; international investments and
operations; and technology ventures. TCI also announced its Board has approved a
plan to create four new classes of TCI common stock, intended to track and
reflect the performance of each of these four business groups. The plan is
subject to shareholder approval. Moreover, TCI's Board must adopt any plan for
distribution of these proposed securities, and no such Board action has been
taken.
In its action November 16, the TCI Board authorized management to prepare
proxy materials for a meeting of shareholders at which they will be asked to
approve amendments to the company's charter authorizing the four new classes of
common stock. Following shareholder approval, expected by the Spring of 1995,
the Board could issue all or a portion of one or more classes of the stock in a
manner it deems appropriate, such as a tax-free stock dividend, rights offering
or an exchange offer to current shareholders; a public offering for cash; an
offering in connection with future acquisitions or an offering to strategic
investor allies.
The plan would leave the currently existing TCI common stock outstanding,
except that these shares would represent TCI's retained interest in the various
business groups whether or not the new classes of stock are issued. The plan
would not require any transfer of legal title to TCI assets nor would it affect
the existing rights of the holders of TCI securities. The aforementioned
description is qualified in its entirety by reference to the Press Release,
dated November 17, 1994, included herein as Exhibit 99.
(b) As of August 8, 1994, Tele-Communications, Inc. (formerly TCI/Liberty
Holding Company or "TCI"), TCI Communications, Inc. ("TCIC") (formerly Tele-
Communications, Inc. or "Old TCI") and TeleCable Corporation ("TeleCable")
entered into a definitive merger agreement, whereby TeleCable will be merged
into TCIC, a wholly-owned subsidiary of TCI (the "Merger"). The aggregate $1.6
billion purchase price will be satisfied by TCIC's assumption of approximately
$300 million of TeleCable's net liabilities and the issuance to TeleCable's
shareholders of shares of TCI Class A common stock (currently estimated to be
approximately 42 million shares) and 1 million shares of TCI Convertible
Preferred Stock, Series D (the "Series D Preferred Stock") with an aggregate
initial liquidation value of $300 million. The Series D Preferred Stock, which
will accrue dividends at a rate of 5.5% per annum, will be convertible into 10
million shares of TCI Class A common stock. The Series D Preferred Stock will be
redeemable at the option of TCI after five years and at the option of either TCI
or the holder after ten years. Although the amount of net liabilities to be
assumed by TCIC and the number of shares of TCI Class A common stock to be
issued to TeleCable's shareholders are subject to closing adjustments,
management does not believe that any such adjustments will be material. The
merger agreement requires the approval of TeleCable's shareholders and various
franchise and other governmental authorities.
At September 30, 1994, TeleCable operated approximately 13,500 miles of
cable distribution systems that served approximately 750,000 basic subscribers
in 15 states. Historical and pro forma financial information reflecting the
proposed Merger is included herein under Item 7 of this Report.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
- ------- -------------------------------------------------------------------
(a) Financial Statements
--------------------
TeleCable Corporation,
Nine months ended September 30, 1994:
Condensed Consolidated Statement of Income,
Nine months ended September 30, 1994 and 1993 (unaudited)
Condensed Consolidated Balance Sheet,
September 30, 1994 and December 31, 1993 (unaudited)
Condensed Consolidated Statement of Stockholders' Deficit,
Nine months ended September 30, 1994 (unaudited)
Consolidated Statement of Cash Flows,
Nine months ended September 30, 1994 and 1993 (unaudited)
Notes to Condensed Consolidated Financial Statements,
Nine months ended September 30, 1994 (unaudited)
(b) Pro Forma Financial Information
-------------------------------
TCI Communications, Inc. and Subsidiaries:
Condensed Pro Forma Combined Balance Sheet,
September 30, 1994 (unaudited)
Condensed Pro Forma Combined Statement of Operations,
Nine months ended September 30, 1994 (unaudited)
Condensed Pro Forma Combined Statement of Operations,
Year ended December 31, 1993 (unaudited)
Notes to Condensed Pro Forma Combined Financial Statements,
September 30, 1994 (unaudited)
Tele-Communications, Inc. and Subsidiaries:
Condensed Pro Forma Combined Balance Sheet,
September 30, 1994 (unaudited)
Condensed Pro Forma Combined Statement of Operations,
Nine months ended September 30, 1994 (unaudited)
Condensed Pro Forma Combined Statement of Operations,
Year ended December 31, 1993 (unaudited)
Notes to Condensed Pro Forma Combined Financial Statements,
September 30, 1994 (unaudited)
<PAGE>
(c) Exhibits
--------
(2) Agreement and Plan of Merger, dated as of August 8, 1994, among Tele-
Communications, Inc., TCI Communications, Inc. and TeleCable
Corporation*
Incorporated herein by reference to Tele-Communications, Inc.'s
Current Report on Form 8-K dated August 18, 1994 (Commission
File No. 0-20421)
(99) Press Release, dated November 17, 1994.
-------------------------
* The Agreement and Plan of Merger contains indices identifying the
items, including exhibits and schedules, annexed thereto. A copy of
any omitted item will be furnished supplementally to the Commission
upon request.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrants have duly caused this report to be signed on their behalf by the
undersigned hereunto duly authorized.
Date: December 2, 1994
TELE-COMMUNICATIONS, INC.
(Registrant)
By:/s/ Stephen M. Brett
-------------------------------
Stephen M. Brett
Executive Vice President and
Secretary
TCI COMMUNICATIONS, INC.
(Registrant)
By:/s/ Stephen M. Brett
-------------------------------
Stephen M. Brett
Senior Vice President and
General Counsel
<PAGE>
TELECABLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Operating revenues....................................... $ 221,946 $ 213,675
Operating expenses....................................... (127,549) (119,986)
Depreciation and amortization............................ (33,796) (34,246)
--------- ---------
Operating income....................................... 60,601 59,443
Interest income.......................................... 559 445
Gain on sale of assets................................... 77 2,596
Interest expense......................................... (17,147) (17,811)
Other expense, net....................................... (401) (324)
Minority interest in earnings of consolidated
subsidiaries............................................ (261) (261)
--------- ---------
Income before taxes.................................... 43,428 44,088
Income tax expense....................................... (17,006) (17,058)
--------- ---------
Net income............................................. $ 26,422 $ 27,030
========= =========
Earnings per share....................................... $ 9.12 $ 9.37
========= =========
Weighted average number of common shares................. 2,896 2,886
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements
<PAGE>
TELECABLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1994 1993
------------- ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents............................ $ 2,553 $ 5,509
Trade and other receivables.......................... 13,904 10,766
Less--allowance for doubtful receivables........... 985 1,127
--------- ---------
12,919 9,639
--------- ---------
Inventories, net..................................... 974 887
Prepaid expenses..................................... 2,307 1,720
Investments and other assets......................... 21,473 13,324
Property, plant and equipment--at cost:
Distribution plant and other equipment............. 568,900 512,610
Land, buildings, and improvement................... 20,513 19,944
Vehicles........................................... 11,975 10,909
--------- ---------
601,388 543,463
Less--accumulated depreciation..................... 343,681 311,639
--------- ---------
257,707 231,824
--------- ---------
Cable television franchises.......................... 20,788 20,673
Less--accumulated amortization..................... 14,602 13,423
--------- ---------
6,186 7,250
--------- ---------
Purchased goodwill................................... 19,235 19,235
Less--accumulated amortization..................... 6,919 6,576
--------- ---------
12,316 12,659
--------- ---------
Other intangibles.................................... 5,685 5,493
Less--accumulated amortization..................... 5,036 4,822
--------- ---------
649 671
--------- ---------
Total assets......................................... $ 317,084 $ 283,483
========= =========
</TABLE>
(continued)
<PAGE>
TELECABLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1994 1993
------------- ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' DEFICIT
Accounts payable--trade............................. $ 3,611 $ 4,352
Accrued liabilities:
Payroll and related expenses...................... 3,152 3,979
Interest.......................................... 7,919 3,825
Franchise taxes................................... 3,521 4,353
Program services.................................. 5,193 3,917
Other............................................. 8,105 7,261
--------- ---------
27,890 23,335
--------- ---------
Income taxes payable................................ -- 1,666
Dividends payable................................... -- 2,172
Debt................................................ 281,810 278,372
Deferred income taxes............................... 47,747 45,163
Other liabilities................................... 6,243 5,406
--------- ---------
Total liabilities................................... 367,301 360,466
Minority interest in consolidated subsidiaries...... 2,605 2,344
Stockholders' deficit:
Common stock
Class A......................................... 291 291
Class B......................................... 6,950 6,950
Capital deficit................................... (262,410) (262,410)
Notes receivable--executive stock purchase plan... (3,252) (3,479)
Net unrealized gain on securities available for
sale............................................. 4,200 --
Retained earnings................................. 201,399 179,321
--------- ---------
(52,822) (79,327)
--------- ---------
Liabilities and stockholders' deficit............... $ 317,084 $ 283,483
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements
<PAGE>
TELECABLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
NINE MONTHS ENDED SEPTEMBER 30, 1994
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NET
NOTES UNREALIZED
COMMON STOCK RECEIVABLE GAIN ON TOTAL
------------ EXECUTIVE SECURITIES STOCK-
CLASS CLASS CAPITAL STOCK RETAINED AVAILABLE HOLDERS'
A B DEFICIT PLANS EARNINGS FOR SALE DEFICIT
----- ------ --------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1993................... $291 $6,950 $(262,410) $(3,479) $179,321 $ -- $(79,327)
Net income.............. 26,422 26,422
Dividends of $1.50 per
share.................. (4,344) (4,344)
Payments on executive
stock notes............ 227 227
Change in net unrealized
gain on securities
available for sale..... 4,200 4,200
---- ------ --------- ------- -------- ------ --------
Balance at September 30,
1994................... $291 $6,950 $(262,410) $(3,252) $201,399 $4,200 $(52,822)
==== ====== ========= ======= ======== ====== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements
<PAGE>
TELECABLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income............................................... $ 26,422 $ 27,030
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation........................................... 32,042 32,056
Amortization........................................... 1,754 2,190
Deferred income tax benefit............................ (90) (901)
Gain on sale of assets................................. (77) (2,533)
(Increase) decrease in certain assets:
Receivables.......................................... (3,279) (2,870)
Inventory............................................ (87) (49)
Prepaids............................................. (587) (926)
Increase (decrease) in certain liabilities:
Accounts payable..................................... (741) (503)
Accrued liabilities.................................. 5,379 3,953
Deferred income...................................... (196) (363)
Income taxes payable................................. (1,666) (1,012)
Other, net............................................. 209 93
-------- --------
Net cash provided by operating activities.............. 59,083 56,165
-------- --------
Cash flows from investing activities:
Purchases of property, plant and equipment............... (57,926) (32,789)
Proceeds from investments................................ 438 4,016
Purchase of investments and other assets................. (1,700) (1,180)
-------- --------
Net cash used by investing activities.................. (59,188) (29,953)
-------- --------
Cash flows from financing activities:
Change in revolving debt, net............................ (5,929) 1,824
Change in term debt...................................... 9,367 (23,071)
Dividends paid........................................... (6,516) (6,492)
Purchase of company stock................................ -- (412)
Payments received on stock notes receivable.............. 227 244
-------- --------
Net cash provided by (used for) financing activities... (2,851) (27,907)
-------- --------
Net decrease in cash and cash equivalents.................. (2,956) (1,695)
Cash and cash equivalents at beginning of period........... 5,509 7,160
-------- --------
Cash and cash equivalents at end of period................. $ 2,553 $ 5,465
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements
<PAGE>
TELECABLE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
(UNAUDITED)
NOTE 1--BASIS OF PRESENTATION:
The accompanying unaudited financial statements of TeleCable Corporation
and subsidiaries ("TeleCable") have been prepared using accounting
principles consistent with those disclosed in the December 31, 1993
financial statements. Due to the interim nature of the financial
statements, they do not include all of the disclosures and notes required
by generally accepted accounting principles. In the opinion of management,
all adjustments (consisting only of normal recurring accruals) considered
necessary for a fair presentation have been included. The results of
operations for the nine month periods ended September 30, 1994 and 1993
are not necessarily indicative of results that may be expected for the
entire year or any interim period. These financial statements should be
read in connection with TeleCable's December 31, 1993 financial
statements.
On January 1, 1994, TeleCable adopted Statement of Financial Accounting
Standards No. 115 ("FAS 115"), "Accounting for Certain Investments in Debt
and Equity Securities". One of the provisions of FAS 115 requires that
equity securities be classified as available for sale, or trading.
Available for sale securities are carried at their fair values with the
amount of unrealized gains and losses, net of income taxes, reported as a
separate component of stockholders' equity. TeleCable does not have any
securities classified as trading. Accordingly, TeleCable classified equity
securities with a fair value of $9.2 million at September 30, 1994 as
available for sale. Stockholders' deficit at September 30, 1994 includes
$4.2 million relating to unrealized gains on securities available for
sale, net of income taxes.
NOTE 2--DEBT:
In March 1994, TeleCable repaid $30 million of expiring term debt with
proceeds from a new unsecured $40 million note that is due 2004. Interest
is payable semi-annually at a fixed rate of 6.52%.
NOTE 3--PROPOSED MERGER TRANSACTION:
On August 8, 1994, TeleCable, Tele-Communications, Inc. ("TCI"), and TCI
Communications, Inc. ("TCIC") entered into a definitive merger agreement,
whereby TeleCable will be merged into TCIC, a wholly-owned subsidiary of
TCI. The aggregate $1.6 billion purchase price will be satisfied by TCIC's
assumption of approximately $300 million of TeleCable's net liabilities
and the issuance to TeleCable's shareholders of shares of TCI Class A
Common Stock (currently estimated to be approximately 42 million shares)
and 1 million shares of TCI Series D Preferred Stock with an aggregate
initial liquidation value of $300 million. The TCI Series D Preferred
Stock, which will accrue dividends at a rate of 5.5% per annum, will be
convertible into 10 million shares of TCI Class A Common Stock. The TCI
Series D Preferred Stock will be redeemable at the option of TCI after
five years and at the option of either TCI or the holder after ten years.
Although the amount of net liabilities to be assumed by TCIC and the
number of shares of TCI Class A Common Stock to be issued to TeleCable's
shareholders are subject to closing adjustments, TeleCable does not
believe that any such adjustments will be material. The merger agreement
requires the approval of TeleCable's shareholders and various franchise
and government authorities.
<PAGE>
TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
(formerly Tele-Communications, Inc.)
Condensed Pro Forma Combined Financial Statements
September 30, 1994
(unaudited)
The following unaudited condensed pro forma combined balance sheet of TCIC,
dated as of September 30, 1994, assumes that (i) the proposed TeleCable merger
(the "Merger") (ii) the combination of TCIC and Liberty Media Corporation
("Liberty"), whereby TCIC and Liberty each became a wholly-owned subsidiary of
TCI (the "TCI/Liberty Combination") and (iii) the transfer of United Artists
International, Inc. from TCIC to TCI International Holdings, Inc. (the
"International Transfer") had occurred as of such date. See notes (1), (2) and
(3).
In addition, the following unaudited condensed pro forma combined
statements of operations of TCIC for the nine months ended September 30, 1994
and the year ended December 31, 1993 assume that the proposed Merger, the
TCI/Liberty Combination and the International Transfer had occurred as of
January 1, 1993.
The unaudited pro forma results do not purport to be indicative of the
results of operations that would have been obtained if the proposed Merger, the
TCI/Liberty Combination and the International Transfer had occurred as of
January 1, 1993. These condensed pro forma combined financial statements of
TCIC should be read in conjunction with the condensed pro forma financial
statements and the related notes thereto of TCI included elsewhere herein and
the respective historical financial statements and the related notes thereto of
TCIC and TCI.
1
<PAGE>
TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
(formerly Tele-Communications, Inc.)
Condensed Pro Forma Combined Balance Sheet
(unaudited)
<TABLE>
<CAPTION>
September 30, 1994
-----------------------------------------------------------------------
International Pro forma
TCIC TeleCable Transfer Adjustments TCIC
Historical Historical(1) Historical(2) (1)(2)(3) Pro forma
---------- ------------- ------------- ----------- ---------
amounts in millions
<S> <C> <C> <C> <C> <C>
Assets
- ------
Cash and receivables $ 227 16 (21) -- 222
Due from affiliated companies 64 -- -- -- 64
Investment in other affiliates
and Turner Broadcasting System,
Inc., and related receivables 1,655 22 (404) -- 1,273
Property and equipment, net of
accumulated depreciation 5,471 258 (12) 333 (4) 6,050
Franchise costs and other assets,
net of amortization 9,791 21 (35) 1,020 (4) 11,580
783 (5)
------- ---- ---- ----- ------
$17,208 317 (472) 2,136 19,189
======= ==== ==== ===== ======
Liabilities and Stockholder's Equity
- ------------------------------------
Payables and accruals $ 871 31 (14) -- 888
Debt 10,479 282 (9) -- 10,752
Deferred income taxes 3,426 48 14 783 (5) 4,271
Other liabilities 89 6 -- -- 95
------- ---- ---- ----- ------
Total liabilities 14,865 367 (9) 783 16,006
------- ---- ---- ----- ------
Minority interests 312 3 (28) -- 287
Common stockholder's equity:
Class A common stock 1 -- -- -- 1
Class B common stock -- 7 -- (7) (6) --
Additional paid-in capital (deficit) 2,842 (262) (643) 262 (6) 4,142
1,300 (7)
643 (8)
Cumulative foreign currency
translation adjustment (5) -- 5 -- --
Unrealized holding gains for
available-for-sale securities 169 4 -- (4) (6) 169
Note receivable from executive
stock purchase plan -- (3) -- 3 (6) --
Accumulated earnings (deficit) (287) 201 203 (201) (6) (287)
(203) (8)
Investment in TCI (689) -- -- (440) (8) (1,129)
------- ---- ---- ----- ------
2,031 (53) (435) 1,353 2,896
------- ---- ---- ----- ------
$17,208 317 (472) 2,136 19,189
======= ==== ==== ===== ======
</TABLE>
See accompanying notes to unaudited condensed pro forma combined financial
statements.
2
<PAGE>
TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
(formerly Tele-Communications, Inc.)
Condensed Pro Forma Combined Statement of Operations
(unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30, 1994
-----------------------------------------------------------------------
International Pro forma
TCIC TeleCable Transfer Adjustments TCIC
Historical Historical(1) Historical(2) (1)(2)(3) Pro forma
---------- ------------- -------------- ----------- ---------
amounts in millions
<S> <C> <C> <C> <C> <C>
Revenue $ 3,213 222 (17) -- 3,418
Operating, selling, general and
administrative expenses and
compensation relating to stock
appreciation rights (1,882) (127) 30 -- (1,979)
Depreciation and amortization (711) (34) 2 (20) (9) (763)
------- ---- --- ---- ------
Operating income 620 61 15 (20) 676
Interest expense (566) (17) -- -- (583)
Interest and dividend income 26 -- (1) -- 25
Share of earnings of Liberty 125 -- -- (125) (10) --
Share of losses of other
affiliates, net (59) -- 46 -- (13)
Other expense, net (4) (1) (7) -- (12)
------- ---- --- ---- ------
Earnings before income taxes 142 43 53 (145) 93
Income tax expense (81) (17) (22) 59 (11) (61)
------- ---- --- ---- ------
Net earnings $ 61 26 31 (86) 32
======= ==== === ==== ======
</TABLE>
See accompanying notes to unaudited condensed pro forma combined financial
statements.
3
<PAGE>
TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
(formerly Tele-Communications, Inc.)
Condensed Pro Forma Combined Statement of Operations
(unaudited)
<TABLE>
<CAPTION>
Year ended December 31, 1993
------------------------------------------------------------------------
International Pro forma
TCIC TeleCable Transfer Adjustments TCIC
Historical Historical(1) Historical(2) (1)(2)(3) Pro forma
---------- ------------- ------------ ----------- ---------
amounts in millions
<S> <C> <C> <C> <C> <C>
Revenue $ 4,153 287 (2) -- 4,438
Operating, selling, general and
administrative expenses and
compensation relating to stock
appreciation rights (2,326) (163) 9 -- (2,480)
Depreciation and amortization (911) (45) 1 (28) (9) (983)
------- ---- ---- --- ------
Operating income 916 79 8 (28) 975
Interest expense (731) (24) -- -- (755)
Interest and dividend income 34 -- (2) -- 32
Share of earnings of Liberty 4 -- -- (4)(10) --
Share of losses of other
affiliates, net (76) -- 62 -- (14)
Gain on dispositions 42 2 -- -- 44
Other expense, net (28) -- -- -- (28)
------- ---- ----- ----- -----
Earnings before income taxes 161 57 68 (32) 254
Income tax expense (168) (23) (28) 13 (11) (206)
------- ---- ----- ------ ------
Net earnings (loss) (7) 34 40 (19) 48
Dividend requirement on
redeemable preferred stocks (2) -- -- 2 (12) --
------- ---- ----- ------ ------
Net earnings (loss) applicable
to common shareholders $ (9) 34 40 (17) 48
======= ==== ===== ====== ======
</TABLE>
See accompanying notes to unaudited condensed pro forma combined financial
statements.
4
<PAGE>
TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
(formerly Tele-Communications, Inc.)
Notes to Condensed Pro Forma Combined Financial Statements
September 30, 1994
(unaudited)
(1) As of August 8, 1994, TCI, TCIC and TeleCable entered into a definitive
merger agreement (the "Merger Agreement") whereby TeleCable will be merged
into TCIC. The aggregate $1.6 billion purchase price will be satisfied by
TCIC's assumption of approximately $300 million of TeleCable's net
liabilities and the issuance to TeleCable's shareholders of shares of TCI
Class A common stock (currently estimated to be approximately 42 million
shares) and 1 million shares of Series D Preferred Stock with an aggregate
initial liquidation value of $300 million. The Series D Preferred Stock,
which will accrue dividends at a rate of 5.5% per annum, will be
convertible into 10 million shares of TCI Class A common stock. The Series
D Preferred Stock will be redeemable at the option of TCI after five years
and at the option of either TCI or the holder after ten years. Although
the amount of net liabilities to be assumed by TCIC and the number of
shares of TCI Class A common stock to be issued to TeleCable's shareholders
are subject to closing adjustments, management does not believe that any
such adjustments will be material. The merger agreement requires the
approval of TeleCable's shareholders and various franchise and other
governmental authorities.
(2) Subsequent to September 30, 1994, TCI was reorganized based upon four lines
of business: Domestic Cable and Communications; Programming; International
Cable and Programming; and Technology/Venture Capital. In connection with
this reorganization, on November 18, 1994, TCIC transferred its ownership
of United Artists International, Inc. to TCI International Holdings, Inc.
in exchange for 79,903 shares of a newly created class of TCI preferred
stock, Redeemable Convertible Preferred Stock, Series E (the "Series E
Preferred Stock"). Such transaction has been reflected at historical cost.
Series E Preferred Stock accrues dividends at the rate of 5.0% per annum
and is convertible into TCI Class A common stock at the initial conversion
rate of 1,000 shares of TCI Class A common stock for one share of the
Series E Preferred Stock.
(3) The TCI/Liberty Combination, which were consummated on August 4, 1994, were
structured as a tax free exchange whereby the common stock of TCIC and
Liberty and the preferred stock of Liberty were exchanged for like shares
of TCI. The merger agreement provided that each share of TCIC's and
Liberty's common stock (including shares held by TCIC's or Liberty's
subsidiaries) would be converted into one share and 0.975 of a share,
respectively, of the corresponding class of TCI's common stock. Shares of
Liberty Class E Preferred Stock were converted into shares of a preferred
stock of TCI having designations, preferences, rights and qualifications,
limitations and restrictions substantially identical to the shares of
preferred stock being converted. Shares of the remaining Liberty preferred
stock held by subsidiaries of TCIC were converted into shares of a class of
TCI preferred stock having an equivalent fair value to that which was given
up. The TCI/Liberty Combination has been accounted for as a purchase of
Liberty by TCI utilizing Liberty's historical predecessor cost.
(continued)
5
<PAGE>
TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
(formerly Tele-Communications, Inc.)
Notes to Condensed Pro Forma Combined Financial Statements
September 30, 1994
(unaudited)
(4) Represents an allocation of the $1.6 billion purchase price of TeleCable to
its tangible and intangible assets. The cost allocations were estimated
using information available at the date of preparation of these condensed
pro forma combined financial statements and will be adjusted upon final
appraisal of the assets acquired. Therefore, the actual allocations may
differ from those allocations reflected herein.
(5) Represents the estimated incremental deferred income tax liability
associated with the TeleCable purchase price allocations, as described in
note (4) above. The adjustment assumes a combined federal and state income
tax rate of 41%.
(6) Represents the elimination of TeleCable's historical stockholders' deficit,
including the note receivable from the employee stock purchase plan.
Pursuant to the Merger Agreement, any portion of such note receivable that
remains unpaid at closing will not be included in the calculation of net
liabilities to be assumed by TCIC at closing.
(7) Represents TCI's capital contribution to TCIC resulting from the issuance
by TCI to TeleCable shareholders of shares of TCI Class A common stock
(currently estimated to be approximately 42 million shares) and 1 million
shares of Series D Preferred Stock with an aggregate liquidation of $300
million. The number of shares of TCI Class A common stock to be issued,
which will be calculated using a per share value of $24, is dependent upon
the amount of net liabilities of TeleCable that is assumed by TCIC at
closing and certain other factors. See note (1) above.
(8) Represents the elimination of the historical equity of the International
Transfer and the issuance of the Series E Preferred Stock to TCIC recorded
at historical cost.
(9) Represents depreciation and amortization of TeleCable's allocated excess
purchase price, based upon weighted average lives of 12-1/2 years for
property and equipment and 40 years for franchise costs. See note (4)
above.
(10) Reflects the elimination of TCIC's share of Liberty's historical earnings.
See note (3) above.
(11) Reflects the estimated income tax effect of the pro forma adjustments.
(12) Reflects the elimination of the preferred stock dividend requirement on
TCIC preferred stock converted into common stock of TCIC during the year
ended December 31, 1993.
6
<PAGE>
TELE-COMMUNICATIONS, INC. AND SUBSIDIARIES
(formerly TCI/Liberty Holding Company)
Condensed Pro Forma Combined Financial Statements
September 30, 1994
(unaudited)
The following unaudited condensed pro forma combined balance sheet of TCI,
dated as of September 30, 1994, assumes that (i) the proposed Merger and (ii)
the TCI/Liberty Combination had occurred as of such date. See notes (1) and
(2).
The following unaudited condensed pro forma combined statements of
operations of TCI for the nine months ended September 30, 1994 and the year
ended December 31, 1993, assume that the proposed Merger and the TCI/Liberty
Combination had occurred as of January 1, 1993.
The unaudited pro forma results do not purport to be indicative of the
results of operations that would have been obtained if the proposed Merger
and the TCI/Liberty Combination had occurred as of January 1, 1993. These
condensed pro forma combined financial statements of TCI should be read in
conjunction with the condensed pro forma financial statements and the related
notes thereto of TCIC included elsewhere herein and the respective historical
financial statements and the related notes thereto of TCIC and TCI .
7
<PAGE>
TELE-COMMUNICATIONS, INC. AND SUBSIDIARIES
(formerly TCI/Liberty Holding Company)
Condensed Pro Forma Combined Balance Sheet
(unaudited)
<TABLE>
<CAPTION>
September 30, 1994
----------------------------------------------------------
TCI TeleCable Pro forma TCI
Historical Historical (2) adjustments (2) Pro forma
----------- -------------- ----------------- ----------
amounts in millions
<S> <C> <C> <C> <C>
Assets
- ------
Cash, receivables and other
current assets $ 369 16 -- 385
Investment in other affiliates and
Turner Broadcasting System, Inc.,
and related receivables 2,218 22 -- 2,240
Property and equipment, net of
accumulated depreciation 5,729 258 333 (3) 6,320
Franchise costs, intangibles and
other assets, net of amortization 10,801 21 1,020 (3)
783 (4) 12,625
------- --- ----- ------
$19,117 317 2,136 21,570
======= === ===== ======
Liabilities and Stockholders' Equity
- --------------------------------------
Payables and accruals $ 1,182 31 -- 1,213
Debt 10,654 282 -- 10,936
Deferred income taxes 3,729 48 783 (4) 4,560
Other liabilities 131 6 -- 137
------- --- --- ------
Total liabilities 15,696 367 783 16,846
------- --- --- ------
Minority interests 446 3 -- 449
Series D Preferred Stock -- -- 300 (6) 300
Stockholders' equity:
Preferred Stock -- -- -- --
Class A common stock 571 -- 42 (6) 613
Class B common stock 89 7 (7) (5) 89
Additional paid-in capital 2,833 (262) 958 (6) 3,791
262 (5)
Cumulative foreign currency
translation adjustment (5) -- -- (5)
Unrealized holding gains for
available-for sale securities 433 4 (4) (5) 433
Retained earnings (deficit) (285) 201 (201) (5) (285)
Receivable from related party (15) (3) 3 (5) (15)
Treasury stock (646) -- -- (646)
------- ---- ---- ------
2,975 (53) 1,053 3,975
------- ---- ----- ------
$19,117 317 2,136 21,570
======= ==== ===== ======
</TABLE>
See accompanying notes to unaudited condensed pro forma combined financial
statements.
8
<PAGE>
TELE-COMMUNICATIONS, INC. AND SUBSIDIARIES
(formerly TCI/Liberty Holding Company)
Condensed Pro Forma Combined Statement of Operations
(unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30, 1994
---------------------------------------------------------------------------
TCI Liberty TeleCable Pro forma TCI
Historical Historical (1) Historical (2) adjustments(1)(2) Pro forma
----------- -------------- -------------- ----------------- -----------
amounts in millions, except per share amounts
<S> <C> <C> <C> <C> <C>
Revenue $ 3,427 222 790 (37) (7) 4,402
Operating, selling, general and
administrative expenses and
compensation relating to
stock appreciation rights (2,080) (127) (726) 37 (7) (2,896)
Depreciation and amortization (722) (34) (32) (20) (8) (808)
------- ---- ---- ---- ------
Operating income 625 61 32 (20) 698
Interest expense (568) (17) (22) 12 (9) (595)
Interest and dividend income 26 -- 15 (12) (9) 29
Share of earnings of Liberty 125 -- -- (125) (10) --
Share of earnings (losses) of
affiliates, net (56) -- 23 -- (33)
Gain on dispositions -- -- 183 -- 183
Other expense, net (4) (1) (11) -- (16)
------- ---- ---- ---- ------
Earnings before income taxes 148 43 220 (145) 266
Income tax expense (85) (17) (95) 59 (11) (138)
------- ---- ---- ---- ------
Net earnings 63 26 125 (86) 128
Dividend requirement on
redeemable preferred stocks (3) -- (14) (12) (12) (21)
8 (13)
------- ---- ---- ---- ------
Net earnings attributable
to common shareholders $ 60 26 111 (90) 107
======= ==== ==== ==== ======
Primary and fully diluted earnings
attributable to common shareholders
per common and common equivalent
share $ .17 (17)
======
</TABLE>
See accompanying notes to unaudited condensed pro forma combined financial
statements.
9
<PAGE>
TELE-COMMUNICATIONS, INC. AND SUBSIDIARIES
(formerly TCI/Liberty Holding Company)
Condensed Pro Forma Combined Statement of Operations
(unaudited)
<TABLE>
<CAPTION>
Year ended December 31, 1993
----------------------------------------------------------------------------
TCI Liberty TeleCable Pro forma TCI
Historical Historical(1) Historical(2) adjustments(1)(2) Pro forma
---------- ------------- ------------- ---------------------- ---------
<S> <C> <C> <C> <C> <C>
amounts in millions, except per share amounts
Revenue $ 4,153 287 1,153 (55) (7) 5,538
Operating, selling,
general and
administrative expenses
and compensation
relating to stock
appreciation rights (2,326) (163) (1,105) 55 (7) (3,539)
Depreciation and
amortization (911) (45) (49) (33) (8) (1,038)
------- ------ ------ ---- ------
Operating income
(loss) 916 79 (1) (33) 961
Interest expense (731) (24) (31) 17 (9) (769)
Interest and dividend
income 34 -- 23 (17) (9) 40
Share of earnings of
Liberty 4 -- -- (4) (10) --
Share of earnings (losses)
of affiliates, net (76) -- 34 -- (42)
Gain on dispositions 42 2 32 -- 76
Loss on transactions with
TCIC -- -- (30) -- (30)(16)
Loss on early
extinguishment of debt (17) -- (2) -- (19)
Other expense, net (11) -- (9) -- (20)
------- ------ ------ ---- ------
Earnings (loss) before
income taxes 161 57 16 (37) 197
Income tax expense (168) (23) (12) 15 (11) (188)
------- ------ ------ ---- ------
Net earnings (loss) (7) 34 4 (22) 9
Dividend requirement on
redeemable preferred
stocks (2) -- (32) (17) (12) (26)
9 (13)
2 (14)
14 (15)
------- ------ ------ ----- ------
Net loss attributable
to common
shareholders $ (9) 34 (28) (14) (17)
======= ====== ====== ===== ======
Loss per common share $ (.03)(18)
======
</TABLE>
See accompanying notes to unaudited condensed pro forma combined financial
statements.
10
<PAGE>
TELE-COMMUNICATIONS, INC. AND SUBSIDIARIES
(formerly TCI/Liberty Holding Company)
Notes to Condensed Pro Forma Combined Financial Statements
June 30, 1994
(unaudited)
(1) The TCI/Liberty Combination, which were consummated on August 4, 1994, were
structured as a tax free exchange whereby the common stock of TCIC and
Liberty and the preferred stock of Liberty were exchanged for like shares
of TCI. The merger agreement provided that each share of TCIC's and
Liberty's common stock (including shares held by TCIC's or Liberty's
subsidiaries) would be converted into one share and 0.975 of a share,
respectively, of the corresponding class of TCI's common stock. Shares of
Liberty Class E Preferred Stock were converted into shares of a preferred
stock of TCI having designations, preferences, rights and qualifications,
limitations and restrictions substantially identical to the shares of
preferred stock being converted. Shares of the remaining Liberty preferred
stock held by subsidiaries of TCIC were converted into shares of a class of
TCI preferred stock having an equivalent fair value to that which was given
up. All preferred stock of TCI held by TCIC or its subsidiaries has been
eliminated in consolidation. The TCI/Liberty Combination has been accounted
for as a purchase of Libery by TCI utilizing Liberty's historical
predecessor cost.
(2) As of August 8, 1994, TCI, TCIC and TeleCable entered into the Merger
Agreement whereby TeleCable will be merged into TCIC. The aggregate $1.6
billion purchase price will be satisfied by TCIC's assumption of
approximately $300 million of TeleCable's net liabilities and the issuance
to TeleCable's shareholders of shares of TCI Class A common stock
(currently estimated to be approximately 42 million shares) and 1 million
shares of Series D Preferred Stock with an aggregate initial liquidation
value of $300 million. The Series D Preferred Stock, which will accrue
dividends at a rate of 5.5% per annum, will be convertible into 10 million
shares of TCI Class A common stock. The Series D Preferred Stock will be
redeemable at the option of TCI after five years and at the option of
either TCI or the holder after ten years. Although the amount of net
liabilities to be assumed by TCIC and the number of shares of TCI Class A
common stock to be issued to TeleCable's shareholders are subject to
closing adjustments, management does not believe that any such adjustments
will be material. The merger agreement requires the approval of
TeleCable's shareholders and various franchise and other governmental
authorities.
(continued)
11
<PAGE>
TELE-COMMUNICATIONS, INC. AND SUBSIDIARIES
(formerly TCI/Liberty Holding Company)
Notes to Condensed Pro Forma Combined Financial Statements
(3) Represents an allocation of the purchase price of TeleCable to its
tangible and intangible assets. The cost allocations were estimated
using information available at the date of preparation of these condensed
pro forma combined financial statements and will be adjusted upon final
appraisal of the assets acquired. Therefore, the actual allocations may
differ from those allocations reflected herein.
(4) Represents the estimated incremental deferred income tax liability
associated with the TeleCable purchase price allocations, as described in
note (3) above. The adjustment assumes a combined federal and state income
tax rate of 41%.
(5) Represents the elimination of TeleCable's historical stockholders' deficit,
including the note receivable from the employee stock purchase plan.
Pursuant to the Merger Agreement, any portion of such note receivable that
remains unpaid at closing will not be included in the calculation of net
liabilities to be assumed by TCIC at closing.
(6) Represents TCI's capital contribution to TCIC resulting from the issuance
by TCI to TeleCable shareholders of shares of TCI Class A common stock
(currently estimated to be approximately 42 million shares) and 1 million
shares of Series D Preferred Stock with an aggregate liquidation of $300
million. The number of shares of TCI Class A common stock to be issued,
which will be calculated using a per share value of $24, is dependent upon
the amount of net liabilities of TeleCable that is assumed by TCIC at
closing and certain other factors. See note (2) above.
(continued)
12
<PAGE>
TELE-COMMUNICATIONS, INC. AND SUBSIDIARIES
(formerly TCI/Liberty Holding Company)
Notes to Condensed Pro Forma Combined Financial Statements
(7) Represents the elimination of intercompany revenue and operating expenses
between TCIC and Liberty arising from the sale of certain cable television
programming to their respective cable television subscribers. See note (2)
above.
(8) Represents depreciation and amortization of TeleCable's allocated excess
purchase price, based upon weighted average lives of 12-1/2 years for
property and equipment and 40 years for franchise costs. See note (1).
(9) Represents the elimination of interest on intercompany indebtedness between
TCIC and Liberty. See note (1) above.
(10) Represents the elimination TCIC's share of Liberty's historical earnings.
(11) Reflects the estimated income tax effect of the pro forma adjustments.
(12) Represents the dividend requirements on TCI's Series D Preferred Stock (to
be issued in connection with the proposed Merger - see note 2).
(13) Represents the elimination of the preferred stock dividend requirement on
certain preferred stock of Liberty repurchased from TCIC in June of 1993.
(14) Reflects the elimination of the preferred stock dividend requirement on
TCIC preferred stock converted into common stock of TCIC during the year
ended December 31, 1993.
(15) Represents the elimination of the preferred stock dividend requirements on
Liberty preferred stock held by TCIC converted into preferred stock of TCI.
(16) Amount not eliminated for pro forma purposes as a reserve for an impairment
would have been required (based upon fair market value of underlying asset)
equal to the loss recognized by Liberty.
(continued)
13
<PAGE>
TELE-COMMUNICATIONS, INC. AND SUBSIDIARIES
(formerly TCI/Liberty Holding Company)
Notes to Condensed Pro Forma Combined Financial Statements
(17) Reflects primary and fully diluted earnings per common and common
equivalent share based upon 650,686,837 weighted average shares. Such
amount is calculated utilizing 517,168,689 weighted average shares of TCI
at September 30, 1994 (such amount representing TCI's weighted average
shares, as disclosed in its historical financial statements), adjusted for
the effect of shares issued in the TCI/Liberty Combination as if such
transaction had occurred on January 1 and adjusted for the issuance of
42,000,000 shares of TCI Class A common stock to be issued in connection
with the proposed Merger. Shares issuable upon conversion of the Series D
Preferred Stock (see note 2) have not been included in the computation of
weighted average shares outstanding for the nine months ended September 30,
1994 because their inclusion would be anti-dilutive.
(18) Reflects loss per common share based upon 591,582,340 weighted average
shares. Such amount is calculated utilizing (i) 432,566,150 weighted
average shares of TCIC at December 31, 1993 (such amount representing
TCIC's weighted average shares, as disclosed in its historical financial
statements) reduced by 6,525,721 shares of TCIC common stock previously
held by Liberty (ii) 126,932,745 weighted averages shares of Liberty at
December 31, 1993 (such amount representing Liberty's weighted average
shares, as disclosed in its historical financial statements and Liberty
common stock repurchased from TCIC in 1993, all of which have been adjusted
by 0.975 of a share) reduced by 3,390,834 shares of Liberty common stock
(as adjusted by 0.975 of a share) previously held by TCIC and (iii)
42,000,000 shares of TCI Class A common stock to be issued in connection
with the proposed Merger. Shares issuable upon conversion of the Series D
Preferred Stock (see note 2) have not been included in the computation of
weighted average shares outstanding for the year ended December 31, 1993
because their inclusion would be anti-dilutive.
14
<PAGE>
EXHIBIT INDEX
-------------
Listed below are the exhibits which are filed as part of this report (according
to the number assigned to them in Item 601 of Regulation S-K):
(2) Agreement and Plan of Merger, dated as of August 8, 1994, among Tele-
Communications, Inc., TCI Communications, Inc. and TeleCable
Corporation*
Incorporated herein by reference to Tele-Communications, Inc.'s
Current Report on Form 8-K dated August 18, 1994 (Commission
File No. 0-20421)
(99) Press Release, dated November 17, 1994.
_________________________
* The Agreement and Plan of Merger contains indices identifying the
items, including exhibits and schedules, annexed thereto. A copy of
any omitted item will be furnished supplementally to the Commission
upon request.
<PAGE>
FOR IMMEDIATE RELEASE
November 17, 1994
Contact: Lela Cocoros (303) 267-5273
TCI AFFIRMS FOUR BUSINESS GROUPS;
ANNOUNCES PLAN FOR NEW CLASSES OF STOCK
Englewood, CO -- Following a meeting of its Board of Directors on Wednesday,
November 16, Tele-Communications, Inc. ("TCI") affirmed that it has organized
itself into four business groups focusing on domestic distribution of cable and
telephony; programming and other software products (Liberty Media);
international investments and operations; and technology ventures. TCI also
announced its Board has approved a plan to create four new classes of TCI common
stock, intended to track and reflect the performance of each of these four
business groups. The plan is subject to shareholder approval. Moreover, TCI's
Board must adopt any plan for distribution of these proposed securities, and no
such Board action has been taken.
CEOs of the four groups are Brendan R. Clouston (domestic
communications), Peter R. Barton (Liberty Media), Fred A. Vierra (international)
and Larry E. Romrell (technology ventures).
John Malone, President and Chief Executive Officer of TCI, said,
"Brendan, Peter, Fred and Larry are capable and experienced executives. They
already have taken command of their business groups and are now the ultimate
source of information from TCI about matters within their respective
jurisdictions."
On the new organization generally, Malone added, "TCI remains an
entrepreneurial company, committed to opportunistic growth in its rapidly
changing business environment. Our new structure will help us maintain these
fundamental aspects of our culture by balancing the virtues of financial and
operational independence in the four business groups with the synergies and
scale economies provided by a common corporate parent. The structure could also
make possible more flexible and dynamic ways for investors to participate in
TCI's growth."
In its action November 16, the TCI Board authorized management to
prepare proxy materials for a meeting of shareholders at which they will be
asked to approve amendments to the company's charter authorizing the four new
classes of common stock. Following shareholder approval, expected by the Spring
of 1995, the Board could issue all or a portion of one or more classes of the
stock in a manner it deems appropriate, such as a tax-free stock dividend,
rights offering or an exchange offer to current shareholders; a public offering
for cash; an offering in connection with future acquisitions or an offering to
strategic investor allies.
<PAGE>
Commenting on the plan for new classes of stock, Malone said, "This plan
will give TCI investors and the company itself enormous financial flexibility,
tax efficiencies and new capabilities. If any of the new securities are issued,
investors could target one or more of our lines of business while still relying
on the synergies and scale economies of the TCI parent. The company's capital
structure could more accurately reflect underlying values. Moreover, the
company would have more versatility in attracting capital and strategic allies,
tracking the success of its operating units and compensating key management and
employees."
The plan would leave the currently existing TCI common stock
outstanding, except that these shares would represent TCI's retained interest in
the various business groups whether or not the new classes of stock are issued.
The plan would not require any transfer of legal title to TCI assets nor would
it affect the existing rights of the holders of TCI securities.
TCI also stated that it has retained Lehman Brothers, Inc. and CS First
Boston as advisors in these matters.
Tele-Communications, Inc. is traded in the NASDAQ National Market with
Class A and Class B Common Stock, and Class B Preferred Stock, trading
separately under the symbols of TCOMA, TCOMB, and TCOMP, respectively.
