<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 17, 1996
Date of Earliest Event Reported: December 4, 1996
TCI COMMUNICATIONS, INC.
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(Exact name of Registrant as specified in its charter)
State of Delaware
---------------------------------------------
(State or other jurisdiction of incorporation)
0-5550 84-0588868
- ----------------------- ----------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
5619 DTC Parkway
Englewood Colorado 80111
- --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 267-5500
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Item 5. Other Events.
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On December 4, 1996, Tele-Communications, Inc. ("TCI")
distributed (the "Distribution") to the holders of
shares of the TCI Group Common Stock of all of the
issued and outstanding common stock of TCI Satellite
Entertainment, Inc. ("Satellite"). At the time of the
Distribution, Satellite was a Delaware corporation and
a direct wholly-owned subsidiary of TCI Communications,
Inc. ("TCIC" or the "Company"). The Distribution was
effected as a tax-free dividend to, and did not involve
the payment of any consideration by, the holders of TCI
Group Common Stock. Prior to the Distribution, TCI
caused to be transferred to Satellite, or one or more
of Satellite's subsidiaries, certain assets and
businesses (and the related liabilities) of the TCI
Group constituting all of TCI's interests in the
business of distributing multichannel programming
services in the United States direct to the home via
medium power or high power broadcast satellite,
including the rental and sale of customer premises
equipment relating thereto.
Item 7. Financial Statements, Pro Forma Financial Information
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and Exhibits.
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(a) Financial Statements
None.
(b) Pro Forma Financial Information
Condensed Pro Forma Combined Balance Sheet,
September 30, 1996 (unaudited)
Condensed Pro Forma Combined Statement of Operations,
Nine months ended September 30, 1996 (unaudited)
Condensed Pro Forma Combined Statement of Operations,
Year ended December 31, 1995 (unaudited)
Notes to Condensed Pro Forma Combined Financial
Statements, September 30, 1996 (unaudited)
(c) Exhibits
None.
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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 hereunto duly authorized.
Date: December 17, 1996
TCI COMMUNICATIONS, INC.
(Registrant)
By:/s/ Stephen M. Brett
Stephen M. Brett
Senior Vice President
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TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Pro Forma Combined Financial Statements
September 30, 1996
(unaudited)
The following unaudited condensed pro forma combined balance
sheet of TCI Communications, Inc., dated as of September 30,
1996, assumes that the Distribution (see note 1) had occurred as
of such date.
Additionally, the following unaudited condensed pro forma
combined statements of operations of TCIC for the nine months
ended September 30, 1996 and the year ended December 31, 1995
assume that the acquisition by TCIC of all the common stock of a
subsidiary of Viacom, Inc. ("VII Cable") (the "VII Cable
Acquisition") (see note 2) and the Distribution had occurred as
of January 1, 1995.
The unaudited pro forma results do not purport to be
indicative of the results of operations that would have been
obtained if the VII Cable Acquisition and the Distribution had
occurred as of January 1, 1995. These condensed pro forma
combined financial statements of TCIC should be read in
conjunction with the historical financial statements and the
related notes thereto of TCIC.
<PAGE>
<TABLE>
TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Pro Forma Combined Balance Sheet
(unaudited)
<CAPTION>
September 30, 1996
------------------------------------
TCIC Satellite TCIC
Historical Distribution(1) Pro forma
----------- -------------- ---------
amounts in millions
Assets
- ------
<S> <C> <C> <C>
Cash and receivables $ 281 (24) 257
Note receivable from Satellite -- 250 250
Investment in affiliates
and related receivables 1,472 (30) 1,442
Property and equipment, net of
accumulated depreciation 8,368 (1,136) 7,232
Franchise costs and other assets, 15,184 -- 15,184
net of amortization ------ ------ ------
$25,305 (940) 24,365
======= ====== ======
Liabilities and Stockholder's Equity
- ------------------------------------
Payables and accruals $1,379 (460) 919
Debt 14,491 -- 14,491
Deferred income taxes 5,491 (23) 5,468
Other liabilities 69 -- 69
------ ----- -----
Total liabilities 21,430 (483) 20,947
------ ----- ------
Minority interests 821 -- 821
Redeemable preferred stock 232 -- 232
Company-obligated mandatorily
redeemable preferred securities
of subsidiary trusts holding
solely subordinated debt
securities of the Company 1,000 -- 1,000
Common stockholder's equity:
Class A common stock 1 -- 1
Class B common stock -- -- --
Additional paid-in capital 3,679 (457) 3,222
Unrealized holding gains for
available-for-sale securities 4 -- 4
Accumulated deficit (630) -- (630)
Investment in TCI (1,143) -- (1,143)
Intercompany receivable (89) -- (89)
------ ----- -------
1,822 (457) 1,365
------ ----- -------
$25,305 (940) 24,365
------- ----- --------
</TABLE>
See accompanying notes to unaudited condensed pro forma combined
financial statements.
<PAGE>
<TABLE>
TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Pro Forma Combined Statement of Operations
(unaudited)
<CAPTION>
Nine months ended September 30, 1996
--------------------------------------------------
TCIC Satellite VII Cable Pro forma TCIC
Historical Distribution(1) Historical(2) Adjustments(2) Pro forma
---------- --------------- ------------- -------------- ---------
amounts in millions
<S> <C> <C> <C> <C> <C>
Revenue $4,554 (300) 293 (1)(3) 4,546
Operating, selling,
general and administrative
expenses and
compensation relating
to stock
appreciation rights (2,900) 294 (189) -- (2,795)
Depreciation and
amortization (1,039) 87 (52) (14)(4) (1,018)
------- ---- ----- ------- ------
Operating income 615 81 52 (15) 733
Interest expense (760) -- (31) (46)(5) (837)
Interest income 31 19 2 -- 52
Share of losses of
affiliates, net (150) 1 -- -- (149)
Other income (expense),
net (89) -- 1 (18)(6) (106)
------ ------ ----- ----- -----
Earnings (loss) before
income taxes (353) 101 24 (79) (307)
Income tax benefit
(expense) 93 (31) (13) 12 (7) 61
------ ------ ----- ---- ----
Net earnings (loss) (260) 70 11 (67) (246)
Preferred stock dividend
requirements (7) -- -- -- (7)
Net earnings (loss)
attributable to common
stockholder $(267) 70 11 (67) (253)
======= ====== ====== ====== =====
</TABLE>
See accompanying notes to unaudited condensed pro forma combined
financial statements.
<PAGE>
<TABLE>
TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Pro Forma Combined Statement of Operations
(unaudited)
<CAPTION>
Year ended December 31, 1995
----------------------------------------------------
TCIC Satellite VII Cable Pro forma TCIC
Historical Distribution(1) Historical(2) Adjustments(2) Pro forma
---------- ---------------- ------------- -------------- ---------
amounts in millions
<S> <C> <C> <C> <C> <C>
Revenue $5,118 (209) 442 (2)(3) 5,349
Operating, selling,
general and
administrative expenses
and compensation relating to
stock appreciation rights (3,092) 214 (279) -- (3,157)
Depreciation and
amortization (1,223) 56 (82) (36)(4) (1,285)
------- ---- ------ ----- ------
Operating income 803 61 81 (38) 907
Interest expense (962) -- (48) (84)(5) (1,094)
Interest income 34 25 -- -- 59
Share of losses of
affiliates, net (43) 9 -- -- (34)
Other income (expense), (1) -- 34 (27)(3) (25)
net (31)(6)
------ ----- ----- ---- -----
Earnings (loss) before
income taxes (169) 95 67 (180) (187)
Income tax benefit
(expense) 49 (32) (33) 45(7) 29
------ ----- ----- ---- -----
Net earnings (loss) $ (120) 63 34 (135) (158)
) ====== ===== ===== ===== ======
</TABLE>
See accompanying notes to unaudited condensed pro forma combined
financial statements.
<PAGE>
TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
Notes to Condensed Pro Forma Combined Financial Statements
September 30, 1996
(unaudited)
(1) On December 4, 1996, TCI completed the Distribution by TCI
to the holders of shares of the TCI Group common stock of
all of the issued and outstanding common stock of Satellite.
At the time of the Distribution, Satellite was a Delaware
corporation and a direct wholly-owned subsidiary of TCIC.
The Distribution was effected as a tax-free dividend to, and
did not involve the payment of any consideration by, the
holders of TCI Group common stock. Prior to the
Distribution, TCI caused to be transferred to Satellite, or
one or more of Satellite's subsidiaries, certain assets and
businesses (and the related liabilities) of the TCI Group
constituting all of TCI's interests in the business of
distributing multichannel programming services in the United
States direct to the home via medium power or high power
broadcast satellite, including the rental and sale of
customer premises equipment relating thereto.
On the date of the Distribution, Satellite issued to TCIC a
promissory note in the principal amount of $250 million,
representing a portion of Satellite's intercompany balance
owed to TCIC on that date. The remainder of such
intercompany balance was assumed by TCI on the date of the
Distribution in the form of a capital contribution to
Satellite. Such promissory note will bear interest at the
rate of 10% per annum and will mature on September 30, 2001.
Such interest income to TCIC, amounting to $25 million per
annum, has been reflected in the accompanying condensed
proforma combined statements of operations.
(2) On July 31, 1996, pursuant to certain agreements entered
into among TCIC, TCI, Viacom International Inc. and Viacom,
Inc. ("Viacom"), TCIC acquired all of the common stock of
VII Cable which, at the time of such acquisition, owned
Viacom's cable systems and related assets.
The transaction was structured as a tax-free reorganization
in which VII Cable initially transferred all of its non-
cable assets, as well as all of its liabilities other than
current liabilities, to a new subsidiary of Viacom ("New
Viacom Sub"). VII Cable also transferred to New Viacom Sub
the proceeds (the "Loan Proceeds") of a $1.7 billion loan
facility (the "Loan Facility") arranged by TCIC, TCI and VII
Cable. Following these transfers, VII Cable retained cable
assets with a value at closing of approximately $2.326
billion and the obligation to repay the Loan Proceeds
borrowed under the Loan Facility. Neither Viacom nor New
Viacom Sub has any obligation with respect to repayment of
the Loan Proceeds.
(continued)
<PAGE>
TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
Notes to Condensed Pro forma Combined Financial Statements
Prior to the consummation of the VII Cable Acquisition,
Viacom offered to the holders of shares of Viacom Class A
Common Stock and Viacom Class B Common Stock (collectively,
"Viacom Common Stock") the opportunity to exchange (the
"Exchange Offer") a portion of their shares of Viacom Common
Stock for shares of Class A Common Stock, par value $100 per
share, of VII Cable ("VII Cable Class A Stock").
Immediately following the completion of the Exchange Offer,
TCIC acquired from VII Cable shares of VII Cable Class B
Common Stock (the "Share Issuance") in exchange for
$350 million (which was used to reduce VII Cable's
obligations under the Loan Facility). At the time of the
Share Issuance, the VII Cable Class A Stock received by
Viacom stockholders pursuant to the Exchange Offer
automatically converted into 5% Class A Senior Cumulative
Exchangeable Preferred Stock (the "Exchangeable Preferred
Stock") of VII Cable with a stated value of $100 per share.
The cost to acquire VII Cable was approximately $2.326
billion, consisting of the Loan Proceeds and the $626
million aggregate par value of the VII Cable Exchangeable
Preferred Stock. The accompanying unaudited pro forma
condensed combined statements of operations do not reflect
potential cost savings attributable to (i) economics of
scale which may be realized in connection with purchases of
programming and equipment or (ii) consolidation of certain
operating and administrative functions including the
elimination of duplicative facilities and personnel.
(3) Reflects the conveyance to New Viacom Sub of certain
nonmaterial assets, liabilities and related results of
operations of VII Cable, including for the year ended
December 31, 1995, a pre-tax gain of $27 million from the
sale of marketable securities and a provision for income
taxes of $11 million.
(4) Represents amortization of VII Cable's allocated excess
purchase price, based upon a weighted average life of 40
years for franchise costs. The valuations and other studies
which will provide the basis of the allocation of the cost
to acquire VII Cable have not yet been completed and,
consequently, the purchase accounting adjustments made in
connection with the development of the unaudited condensed
pro forma combined financial statements are preliminary.
(5) Represents assumed additional interest expense (after taking
into consideration interest expense reflected in the
historical VII Cable operations) incurred by the Company on
the borrowings of the Loan Proceeds. Solely for the
purposes of this presentation, the Company has assumed an
interest rate of 7.50% and 7.78% for the seven months ended
July 31, 1996 and for the year ended December 31, 1995,
respectively, based upon historical interest rates adjusted
for terms of the Loan Facility.
(6) Reflects a 5.0% cumulative annual dividend on the $626
million of VII Cable Exchangeable Preferred Stock included
in minority share of losses of consolidated subsidiaries.
(7) Reflects the estimated income tax effect of the pro forma
adjustments. The effective income tax rate on a pro forma
basis is adversely affected by the amortization of excess
acquisition costs, which are assumed not to be deductible
for tax purposes.
