-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, hSklFGz4rJBnq4g8adQWmbaZfaTjXamk+YoE+Q/oaBcnK1ZuYMes9PhOJ0jizIZn cvKw4cGO8jhm7JxdGttnlg== 0000950109-94-002243.txt : 19941206 0000950109-94-002243.hdr.sgml : 19941206 ACCESSION NUMBER: 0000950109-94-002243 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940808 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19941205 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TELE COMMUNICATIONS INC /CO/ CENTRAL INDEX KEY: 0000925692 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 841260157 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20421 FILM NUMBER: 94563179 BUSINESS ADDRESS: STREET 1: 5619 DTC PARKWAY CITY: ENGLEWOOD STATE: CO ZIP: 80111 BUSINESS PHONE: 3032675500 MAIL ADDRESS: STREET 1: 5619 DTC PARKWAY CITY: ENGLEWOOD STATE: CO ZIP: 90111 FORMER COMPANY: FORMER CONFORMED NAME: TCI LIBERTY HOLDING CO DATE OF NAME CHANGE: 19940620 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TCI COMMUNICATIONS INC CENTRAL INDEX KEY: 0000096903 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 840588868 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-05550 FILM NUMBER: 94563163 BUSINESS ADDRESS: STREET 1: TERRACE TOWER II STREET 2: 5619 DTC PKWY CITY: ENGLEWOOD STATE: CO ZIP: 80111 BUSINESS PHONE: 3032675500 MAIL ADDRESS: STREET 1: TERRACE TOWER II STREET 2: 5619 DTC PKWY CITY: ENGLEWOOD STATE: CO ZIP: 80111 FORMER COMPANY: FORMER CONFORMED NAME: TELE COMMUNICATIONS INC DATE OF NAME CHANGE: 19920703 8-K 1 FORM 8-K 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 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. 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) (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. 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 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)
1994 1993 --------- --------- 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 ========= =========
See accompanying notes to condensed consolidated financial statements TELECABLE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED)
SEPTEMBER 30, DECEMBER 31, 1994 1993 ------------- ------------ 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 ========= =========
(continued) TELECABLE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED)
SEPTEMBER 30, DECEMBER 31, 1994 1993 ------------- ------------ 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 ========= =========
See accompanying notes to condensed consolidated financial statements TELECABLE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT NINE MONTHS ENDED SEPTEMBER 30, 1994 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED)
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 ----- ------ --------- ---------- -------- ---------- -------- 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) ==== ====== ========= ======= ======== ====== ========
See accompanying notes to condensed consolidated financial statements TELECABLE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993 (DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED)
1994 1993 -------- -------- 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 ======== ========
See accompanying notes to condensed consolidated financial statements 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. 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 TCI COMMUNICATIONS, INC. AND SUBSIDIARIES (formerly Tele-Communications, Inc.) Condensed Pro Forma Combined Balance Sheet (unaudited)
September 30, 1994 ----------------------------------------------------------------------- International Pro forma TCIC TeleCable Transfer Adjustments TCIC Historical Historical(1) Historical(2) (1)(2)(3) Pro forma ---------- ------------- ------------- ----------- --------- amounts in millions 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 ======= ==== ==== ===== ======
See accompanying notes to unaudited condensed pro forma combined financial statements. 2 TCI COMMUNICATIONS, INC. AND SUBSIDIARIES (formerly Tele-Communications, Inc.) Condensed Pro Forma Combined Statement of Operations (unaudited)
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 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 ======= ==== === ==== ======
See accompanying notes to unaudited condensed pro forma combined financial statements. 3 TCI COMMUNICATIONS, INC. AND SUBSIDIARIES (formerly Tele-Communications, Inc.) Condensed Pro Forma Combined Statement of Operations (unaudited)
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 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 ======= ==== ===== ====== ======
See accompanying notes to unaudited condensed pro forma combined financial statements. 4 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 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 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 TELE-COMMUNICATIONS, INC. AND SUBSIDIARIES (formerly TCI/Liberty Holding Company) Condensed Pro Forma Combined Balance Sheet (unaudited)
September 30, 1994 ---------------------------------------------------------- TCI TeleCable Pro forma TCI Historical Historical (2) adjustments (2) Pro forma ----------- -------------- ----------------- ---------- amounts in millions 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 ======= ==== ===== ======
See accompanying notes to unaudited condensed pro forma combined financial statements. 8 TELE-COMMUNICATIONS, INC. AND SUBSIDIARIES (formerly TCI/Liberty Holding Company) Condensed Pro Forma Combined Statement of Operations (unaudited)
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 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) ======
See accompanying notes to unaudited condensed pro forma combined financial statements. 9 TELE-COMMUNICATIONS, INC. AND SUBSIDIARIES (formerly TCI/Liberty Holding Company) Condensed Pro Forma Combined Statement of Operations (unaudited)
Year ended December 31, 1993 ---------------------------------------------------------------------------- TCI Liberty TeleCable Pro forma TCI Historical Historical(1) Historical(2) adjustments(1)(2) Pro forma ---------- ------------- ------------- ---------------------- --------- 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) ======
See accompanying notes to unaudited condensed pro forma combined financial statements. 10 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 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 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 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 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. EX-99 2 PRESS RELEASE 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. 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. -----END PRIVACY-ENHANCED MESSAGE-----