<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: January 15, 1999
Date of Earliest Event Reported: December 31, 1998
TCI COMMUNICATIONS, INC.
-----------------------------------------------------
(Exact name of Registrant as specified in its charters)
State of Delaware
----------------------------------------------
(State or other jurisdiction of incorporation)
0-20421 84-1260157
- ------------------------ -----------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
5619 DTC Parkway
Englewood, Colorado 80111
- --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 267-5500
<PAGE> 2
Item 2. Disposition of Assets
Effective December 31, 1998, TCI Communications, Inc. ("TCIC") and Time
Warner, Inc., Time Warner Entertainment Company, L.P. and Time Warner
Entertainment Advance/Newhouse (collectively, "Time Warner") formed a
50-50 joint venture (the "Joint Venture"). TCIC and Time Warner each
contributed cable television systems in Houston, Texas and portions of
Southern Texas serving approximately 540,000 customers to the Joint
Venture. In addition, the parties to the Joint Venture transferred debt
aggregating $1.3 billion to the Joint Venture, of which $637 million
was transferred by TCIC. The amount of debt transferred to the Joint
Venture by each party was based on arm's-length negotiations between
the parties. Time Warner will manage the Joint Venture. The press
release announcing the formation of the Joint Venture is included as
Exhibit 99.1 to this Current Report on Form 8-K.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Pro Forma Financial Information
TCI Communications, Inc. and Subsidiaries:
Condensed Pro Forma Balance Sheet,
September 30, 1998 (unaudited)
Condensed Pro Forma Statement of Operations,
Nine months ended September 30, 1998 (unaudited)
Condensed Pro Forma Statement of Operations,
Year ended December 31, 1997 (unaudited)
Notes to Condensed Pro Forma Financial Statements,
September 30, 1998 (unaudited)
(c) Exhibits
(99.1) TCIC press release dated January 4, 1999
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: January 15, 1999
TELE-COMMUNICATIONS, INC.
(Registrant)
By: /s/ Stephen M. Brett
----------------------------------
Stephen M. Brett
Executive Vice President
<PAGE> 4
TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
(A Subsidiary of Tele-Communications, Inc.)
Condensed Pro Forma Financial Statements
September 30, 1998
(unaudited)
The following unaudited condensed pro forma balance sheet of TCIC,
dated as of September 30, 1998, assumes that the Joint Venture (see note 1) had
occurred as of such date.
The following unaudited condensed pro forma statements of operations of
TCIC for the nine months ended September 30, 1998 and the year ended December
31, 1997 assume that the Joint Venture, the IP-VI Transfer (see note 2) and the
Cablevision Transaction (see note 3) had occurred as of January 1, 1997.
The unaudited pro forma results do not purport to be indicative of the
results of operations that would have been obtained if the Joint Venture, the
IP-VI Transfer and the Cablevision Transaction had occurred as of January 1,
1997. These condensed pro forma financial statements of TCIC should be read in
conjunction with the historical financial statements and the related notes
thereto of TCIC.
1
<PAGE> 5
TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
(A Subsidiary of Tele-Communications, Inc.)
Condensed Pro Forma Balance Sheet
(unaudited)
<TABLE>
<CAPTION>
September 30, 1998
------------------------------------------------------
TCIC Contribution to TCIC
historical Joint Venture (1)(4) pro forma
Assets ---------- --------------------- ---------
amounts in millions
<S> <C> <C> <C>
Restricted cash, receivables and other
current assets $ 814 (13) 801
Investment in Cablevision Systems Corporation
("CSC"), accounted for under the equity
method 574 -- 574
Investments in other affiliates accounted for
under the equity method and related
receivables 588 90 678
Property and equipment, net of
accumulated depreciation 6,309 (267) 6,042
Franchise costs, intangibles and
other assets, net of amortization 12,809 (465) 12,344
-------- -------- --------
$ 21,094 (655) 20,439
======== ======== ========
Liabilities and Stockholders' Equity
Payables and accruals $ 1,236 (18) 1,218
Debt 12,244 (637) 11,607
Deferred income taxes 5,355 -- 5,355
Other liabilities 284 -- 284
-------- -------- --------
Total liabilities 19,119 (655) 18,464
-------- -------- --------
Minority interests 668 -- 668
Redeemable preferred stock 232 -- 232
Company-obligated mandatorily redeem-
able preferred securities of subsidiary
trusts holding solely subordinated debt
securities of the Company 1,500 -- 1,500
Common stockholder's deficit:
Class A common stock 1 -- 1
Class B common stock -- -- --
Additional paid-in capital 1,800 -- 1,800
Accumulated other comprehensive earnings 44 -- 44
Accumulated deficit (956) -- (956)
Investment in Tele-Communications,
Inc. ("TCI"), at cost (1,144) -- (1,144)
Due from related parties (170) -- (170)
-------- -------- --------
(425) -- (425)
-------- -------- --------
$ 21,094 (655) 20,439
======== ======== ========
</TABLE>
See accompanying notes to unaudited condensed pro forma financial statements.
2
<PAGE> 6
TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
(A Subsidiary of Tele-Communications, Inc.)
Condensed Pro Forma Statement of Operations
(unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30, 1998
--------------------------------------------------------------------------------
IP-VI Transaction (2) Cablevision Transaction (3)
------------------------------- -------------------------------
Contribution
of
Kentucky Contribution of
TCIC Systems to Pro forma NJ/NY Systems Pro forma
historical IP-VI adjustments To New CSC adjustments
---------- ---------- ----------- --------------- -----------
amounts in millions,
except per share amounts
<S> <C> <C> <C> <C> <C>
Revenue $ 4,429 (64) -- (80) --
Operating, selling, general and administrative
expenses, Year 2000 costs and stock
compensation (2,698) 40 -- 43 --
Depreciation and amortization (1,079) 15 -- 14 --
---------- ------------ ---------- ------------- ----------
Operating income 652 (9) -- (23) --
Interest expense (728) 21 -- 7 --
Share of losses of CSC (89) -- -- -- (41) (6)
Share of losses of other affiliates, net (3) -- (3) (5) -- --
Other income, net 314 (2) -- -- --
---------- ------------ ---------- ------------- ----------
Earnings before income taxes 146 10 (3) (16) (41)
Income tax expense (145) (4) 1 (8) 4 16 (8)
---------- ------------ ---------- ------------- ----------
Net earnings (loss) 1 6 (2) (12) (25)
Dividend requirements on preferred stocks (7) -- -- -- --
---------- ------------ ---------- ------------- ----------
Net loss attributable to common
stockholder $ (6) 6 (2) (12) (25)
========== ============ ========== ============= ==========
</TABLE>
<TABLE>
<CAPTION>
Nine months ended September 30, 1998
---------------------------------------------
Joint Venture (1)
-------------------------------
Contribution to Pro forma TCIC
Joint Venture (4) adjustments pro forma
----------------- ----------- ---------
amounts in millions,
except per share amounts
<S> <C> <C> <C>
Revenue (191) -- 4,094
Operating, selling, general and administrative
expenses, Year 2000 costs and stock
compensation 104 -- (2,511)
Depreciation and amortization 40 -- (1,010)
------------- ----------- ----------
Operating income (47) -- 573
Interest expense 36 -- (664)
Share of losses of CSC -- -- (130)
Share of losses of other affiliates, net -- 6 (7) --
Other income, net -- -- 312
------------- ----------- ----------
Earnings before income taxes (11) 6 91
Income tax expense 4 (2) (8) (126)
------------- ----------- ----------
Net earnings (loss) (7) 4 (35)
Dividend requirements on preferred stocks -- -- (7)
------------- ----------- ----------
Net loss attributable to common
stockholder (7) 4 (42)
============= =========== ==========-
</TABLE>
See accompanying notes to unaudited condensed pro forma financial statements.
3
<PAGE> 7
TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
(A Subsidiary of Tele-Communications, Inc.)
Condensed Pro Forma Statement of Operations
(unaudited)
<TABLE>
<CAPTION>
Year ended December 31, 1997
--------------------------------------------------------------------------------
IP-VI Transaction (2) Cablevision Transaction (3)
------------------------------- -------------------------------
Contribution
of
Kentucky Contribution of
TCIC Systems to Pro forma NJ/NY Systems Pro forma
historical IP-VI adjustments To New CSC adjustments
---------- ---------- ----------- --------------- -----------
amounts in millions,
except per share amounts
<S> <C> <C> <C> <C> <C>
Revenue $ 6,167 (185) -- (428) --
Operating, cost of sales, selling, general and
administrative expenses, stock
compensation and restructuring charges (3,546) 102 -- 231 --
Depreciation and amortization (1,393) 39 -- 75 --
---------- ------------- ---------- ------------- --------
Operating income 1,228 (44) -- (122) --
Interest expense (1,064) 57 -- 39 --
Share of losses of CSC -- -- -- -- (182) (6)
Share of losses of other affiliates, net (54) 1 (3) (5) -- --
Other expense, net (209) 2 -- 1 --
---------- ------------- ---------- ------------- --------
Loss before income taxes (99) 16 (3) (82) (182)
Income tax benefit 39 (7) 1 (8) 20 71 (8)
---------- ------------- ---------- ------------- --------
Net loss (60) 9 (2) (62) (111)
Dividend requirements on preferred stocks (10) -- -- -- --
---------- ------------- ---------- ------------- --------
Net loss attributable to common
stockholder $ (70) 9 (2) (62) (111)
========== ============= ========== ============== =========
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31, 1997
---------------------------------------------
Joint Venture (1)
-------------------------------
Contribution to Pro forma TCIC
Joint Venture (4) adjustments pro forma
----------------- ----------- ---------
amounts in millions,
except per share amounts
<S> <C> <C> <C>
Revenue (244) -- 5,310
Operating, cost of sales, selling, general and
administrative expenses, stock
compensation and restructuring charges 134 -- (3,079)
Depreciation and amortization 45 -- (1,234)
------------- ---------- ------------
Operating income (65) -- 997
Interest expense 48 -- (920)
Share of losses of CSC -- -- (182)
Share of losses of other affiliates, net -- 9 (7) (47)
Other expense, net -- -- (206)
------------- ---------- ------------
Loss before income taxes (17) 9 (358)
Income tax benefit 7 (4) (8) 127
------------- ---------- ------------
Net loss (10) 5 (231)
Dividend requirements on preferred stocks -- -- (10)
------------- ---------- ------------
Net loss attributable to common
stockholder (10) 5 (241)
============= ========== ============
</TABLE>
See accompanying notes to unaudited condensed pro forma financial statements.
4
<PAGE> 8
TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
(A Subsidiary of Tele-Communications, Inc.)
Notes to Condensed Pro Forma Financial Statements
September 30, 1998
(unaudited)
(1) Effective December 31, 1998, TCI Communications, Inc. ("TCIC") and Time
Warner, Inc., Time Warner Entertainment Company, L.P. and Time Warner
Entertainment Advance/Newhouse (collectively, "Time Warner") formed a
50-50 joint venture (the "Joint Venture"). TCIC and Time Warner each
contributed cable television systems in Houston, Texas and portions of
Southern Texas serving approximately 540,000 customers to the Joint
Venture. In addition, the parties to the Joint Venture transferred debt
aggregating $1.3 billion to the Joint Venture, of which $637 million
was transferred by TCIC. The amount of debt transferred to the Joint
Venture by each party was based on arm's-length negotiations between
the parties. Time Warner will manage the Joint Venture. The
accompanying condensed pro forma financial statements reflect the
effects of TCIC's contribution to the Joint Venture. The effect on TCIC
of Time Warner's contribution to the Joint Venture was not significant
to TCIC pursuant to Rule 3-05 of Regulation S-X, accordingly, the
accompanying condensed pro forma financial statements do not reflect
the effects of Time Warner's contribution to the Joint Venture.
(2) On April 30, 1998 (the "InterMedia Closing Date"), TCI IP-VI, LLC ("TCI
LLC"), a limited liability company wholly-owned by subsidiaries of TCI,
transferred to InterMedia Capital Partners VI, L.P. ("IP-VI"), a
Delaware limited partnership, and certain of its affiliates, cable
television systems owned and operated by TCIC serving, as of March 31,
1998, approximately 435,000 basic customers. The transfer (the "IP-VI
Transfer") was completed pursuant to the terms of a Contribution
Agreement dated as of October 30, 1997, by and among TCI TKR of
Southern Kentucky, Inc., TCI TKR of Northern Kentucky, Inc., TCI TKR of
Jefferson County, Inc. TCI Cablevision of Kentucky, Inc., TCI
Cablevision of North Central Kentucky, Inc., TCI of North Central
Kentucky, Inc., TCI of Lexington, Inc. and TCI of Radcliff, Inc.
(collectively the "TCI Parties") and InterMedia Capital Management VI,
L.P., as amended. The systems transferred were located in and around
the following Kentucky communities: Dawson Springs, Providence, St.
Charles, Caldwell County, Hopkins County, Webster County,
Shepherdsville, Danville, Lexington, Radcliff, Warren County, Bowling
Green, Oakland, Plum Springs, Smith's Grove, Woodburn, Louisville,
Boone County, Campbell County, Kenton County and Newport (the "Kentucky
Systems"). IP-VI and its affiliates also assumed rights and obligations
under a programming rights agreement with Satellite Services, Inc., an
affiliate of TCIC. TCI LLC received a 49.005% limited partnership
interest in IP-VI, and IP-VI assumed approximately $812 million in debt
associated with the Kentucky Systems.
Leo J. Hindery, Jr., the President and Chief Executive Officer of TCIC,
and William R. Fitzgerald, an Executive Vice President of TCIC, are on
the advisory board of IP-VI. Mr. Hindery also owns a .495% limited
partnership interest in IP-VI. Additionally, the TCI Parties, TCI LLC
and CVC Keep Well LLC, an affiliate of TCIC, have agreed to take
certain steps to support compliance by subsidiaries of IP-VI with their
payment obligations under senior credit facilities, up to a total
contingent commitment of approximately $490 million.
5
<PAGE> 9
TCI COMMUNICATIONS, INC. AND SUBSIDIARIES
(A Subsidiary of Tele-Communications, Inc.)
Notes to Condensed Pro Forma Financial Statements
September 30, 1998
(unaudited)
(3) On March 4, 1998 (the "CSC Closing Date"), TCIC transferred to CSC
Parent Corporation, a Delaware corporation (to be known immediately
after the closing as Cablevision Systems Corporation) ("New CSC"),
cable television systems owned and operated by TCIC serving
approximately 830,000 subscribers, as of January 31, 1998. The systems
transferred were located in Union, Mercer, Monmouth, Somerest,
Middlesex, Morris, Sussex, Bergen and Passaic counties in New Jersey
and in Rockland, Suffolk and Westchester counties in New York (the
"NJ/NY Systems"). In addition to its ownership interest in the NJ/NY
Systems, New CSC will hold all of the common stock of the former
Cablevision Systems Corporation (to be known immediately after the
closing as CSC Holdings, Inc.). The NJ/NY Systems were transferred
either directly by the transfer of the assets of such cable systems or
indirectly by the transfer of partnership interests or capital stock in
the entities owning such cable systems, in exchange for approximately
48.9 million shares of Class A common stock, par value $0.01 per share,
of New CSC representing an approximate 33% common equity ownership
interest in New CSC and assumption by New CSC of certain liabilities,
including approximately $669 million in debt, relating to the cable
television systems transferred by TCIC to New CSC. Such exchange was
made pursuant to the terms of the Contribution and Merger Agreement
dated as of June 6, 1997, as amended and restated by the Amended and
Restated Contribution and Merger Agreement dated as of June 6, 1997, by
and among TCIC, New CSC, and certain affiliates of New CSC (the
"Cablevision Transaction"). The amount of the consideration payable in
the Cablevision Transaction was based on arm's-length negotiations
between the parties.
(4) Represents TCIC's contribution of cable television systems to the Joint
Venture and the transfer of $637 million of debt to the Joint Venture.
(5) Represents TCIC's proportionate share of IP-VI's pro forma losses for
the applicable period up to the Intermedia Closing Date, including the
amortization, over an estimated 20 year life, of the difference between
the recorded value of TCIC's investment in IP-VI and TCIC's
proportionate share of IP-VI's pro forma net assets.
(6) Represents TCIC's proportionate share of New CSC's pro forma losses for
the applicable period, up to the CSC Closing Date, including the
amortization, over an estimated 10 year life, of the difference between
the fair value of consideration received and TCI's proportionate share
of New CSC's net deficiency.
(7) Represents TCIC's proportionate share of losses for the cable
television systems contributed and the debt transferred by TCIC to the
Joint Venture. TCIC has not included in this amount the proportionate
share of losses for the cable television systems contributed and the
debt transferred by Time Warner to the Joint Venture, as such
contribution was not significant to TCIC pursuant to Rule 3-05 of
Regulation S-X.
(8) Represents the estimated tax effect of the pro forma adjustments,
assuming an effective tax rate of 39%.
6
<PAGE> 10
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
(99.1) TCIC press release dated January 4, 1999
</TABLE>
<PAGE> 1
EXHIBIT (99.1)
FOR IMMEDIATE RELEASE
January 4, 1999
Contacts: TCI Media Relations, Katina Vlahadamis or LaRae Marsik (303) 267-5273
Time Warner Cable, Michael Luftman (203) 328-0613
TCIC AND TIME WARNER FORM TEXAS PARTNERSHIP SERVING
APPROXIMATELY ONE MILLION CUSTOMERS
ENGLEWOOD, CO/STAMFORD, CT - TCI Communications, Inc. (TCIC), the cable
television systems arm of Tele-Communications, Inc. (TCI), and Time Warner Inc.,
Time Warner Entertainment Company, L.P. and Time Warner Entertainment
Advance/Newhouse (collectively, Time Warner) announced today that they have
successfully formed a 50-50 joint venture that serves over one million customers
in the Houston, Texas area and portions of Southern Texas.
TCIC contributed its Houston area systems and systems in Southern Texas serving
approximately 540,000 customers to the joint venture, while Time Warner
contributed systems in Houston, El Paso, and certain systems in Southern Texas
serving approximately 540,000 customers. Time Warner will manage the combined
properties. A few small systems expected to be part of the transaction were not
included in this closing pending final regulatory approvals.
The transaction will result in a reduction of approximately $640 million of debt
currently held by Time Warner Inc. that will be transferred to the joint
venture. TCI's debt will be reduced by approximately $640 million that will also
be transferred to the joint venture. Additional terms of the agreement were not
disclosed.
Tele-Communications, Inc. is traded through the TCI Group, the TCI Ventures
Group and the Liberty Media Group common stocks. The Series A and Series B TCI
Group common stocks are traded on the National Market tier of the Nasdaq Stock
Market under the symbols of TCOMA and TCOMB, respectively.
Time Warner Cable serves 12 million customers across the United States with 80
percent of them in systems of 100,000 subscribers or more. It is a division of
Time Warner Entertainment.
