FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a or 15d - 16 of
the Securities Exchange Act of 1934
For the month of August 1997
Tevecap S.A.
(Exact Name as Specified in its Charter)
Tevecap Inc.
(Translation of Name into English)
SEC FILE NUMBER: 0-22267
Rua do Rocio, 313
Sao Paulo, SP Brazil
04552-904
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
------- -------
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under Securities Exchange Act of 1934.
Yes No X
------- -------
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with rule 12g3-2(b):82 N/A
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TEVECAP S.A.
By: /s/ Jose Augusto P. Moreira
---------------------------
Jose Augusto P. Moreira
Officer
By: /s/ Claudio Cesar D'Emilio
---------------------------
Claudio Cesar D'Emilio
Officer
Date: August 20, 1997
EXHIBIT LIST
1. One copy of the press release published on August 20, 1997 containing
relevant information on Tevecap S.A. for the three-month period ended
June 30, 1997, with financial information prepared in accordance with
Brazilian GAAP.
Exhibit 1
Contact: Douglas Duran Marina Echavarria/Ashley Chapman
Tevecap Ludgate Communications
(011 55 11) 821-8554 (212) 688-5144
TEVECAP ANNOUNCES SECOND QUARTER 1997 RESULTS
Sao Paulo, August 20, 1997-- TEVECAP, S.A., (TVA) one of Brazil's largest and
fastest growing pay television operators and programming distributors, today
announced results for the second quarter ended June 30, 1997.
Second Quarter 1997 Highlights
o Consolidated net revenues for 2Q97 reached US$82.7 million,
representing a growth of 98% versus US$41.8 million in 2Q96, and a 23%
growth versus US$67.3 million in 1Q97.
o Subscription revenue amounted to US$53.1 million in 2Q97, a growth of
91% versus US$27.8 million in 2Q96. Subscription revenue represented
64% of net revenue and increased by 19% when compared with US$44.8
million in 1Q97.
o Installation revenue amounted to US$24.3 million in 2Q97, a growth of
97% versus US$12.3 million in 2Q96, and an increase of 34% versus
US$18.1 million in 1Q97. Installation revenue represented 29% of net
revenue for 2Q97.
o Direct operating expenses reached US$43.3 million in 2Q97, an 80%
growth versus US$24.1 million in 2Q96 or a 19% growth versus US$36.4
million in 1Q97.
o Selling, general and administrative expenses for 2Q97 reached US$31.5
million, representing 38% of net revenue, compared with US$17.2 million
during 2Q96 and US$25.9 million during 1Q97.
o EBITDA reached US$7.9 million in 2Q97, representing a growth of 1,606%
versus US$0.5 million in 2Q96, or a growth of 61% compared with US$4.9
million in 1Q97.
o Adjusted EBITDA for 2Q97 reached US$12.4 million, representing a growth
of 35% versus US$9.2 million in 1Q97.
o Total Operating Expenses for 2Q97 amounted to US$88.4 million, a 21%
increase versus US$72.8 million in 1Q97.
o Net loss for 2Q97 was US$20.9 million, a 73% increase compared with a
loss of US$12.1 million in 2Q96 and a 35% increase versus US$15.5
million in 1Q97.
o Capital expenditures (cash basis) amounted to US$69 million for 2Q97,
an 80% increase versus US$38.3 million during 2Q96, and a 78% increase
versus US$38.8 million in 1Q97.
Tevecap, S.A.
CONSOLIDATED RESULTS
Consolidated net revenues for the second quarter ended June 30, 1997 reached
US$82.7 million, versus US$67.2 million in the first quarter 1997 and US$33
million in the second quarter of 1996. The Company has more than doubled its
revenues every year for the last three years. Revenues consist primarily of
subscription fee but also include installation, advertising, indirect
programming and other revenues, excluding taxes.
Subscription revenue contributed to 64% of net revenues, and amounted to US$53.1
million in the second quarter of 1997, up 91% from US$27.8 million in the second
quarter of 1996 and an increase of 19% versus US$44.8 million in the first
quarter of 1997. It can be broken down by distribution technology as follows:
MMDS (56%), cable (12%), C-band (12%) and KU-band (20%). Revenue increased as a
result of an expanded subscriber base and a higher average monthly fee. The
increase in the average monthly fee was a result of an improvement in signal
transmission enabling the Company to offer premium packages to all subscribers.
Subscription Revenue ($000)
---------------------------
Technology 2Q97 % 2Q96 % Change%
- ---------- ---- - ---- - -------
MMDS 29,728 56% 23,506 85% 26%
Cable 6,186 12% 1,599 6% 287%
C-Band 6,329 12% 2,655 10% 138%
KU-band 10,888 20% 0 0% n/c
Total 53,131 100% 27,760 100% 91%
Subscription Revenue ($000)
Technology 2Q97 % 1Q97 % Change%
- ---------- ---- - ---- - -------
MMDS 29,728 56% 28,399 63% 4%
Cable 6,186 12% 4,745 11% 31%
C-Band 6,329 12% 5,799 13% 10%
KU-band 10,888 20% 5,866 13% 88%
Total 53,131 100% 44,819 100% 19%
Installation revenue comprised 29% of net revenues, reaching US$24.3 million in
2Q97, versus US$18.1 million in 1Q97. This increase was a result of a strong
sales performance during the second quarter of 1997.
Indirect programming revenue in the second quarter of 1997 reached US$6.5
million, an increase of 298% versus US$1.6 million in the second quarter of the
previous year. This revenue consists of
Tevecap, S.A.
payments made to the Company for the sale of its programming to affiliated
companies and independent operators.
Direct operating expenses amounted to US$43.3 million for the second quarter of
1997 versus US$36.4 million in the previous quarter, or an increase of 19%.
Direct operating expenses as a percentage of revenue dropped from 54% in the
first quarter of 1997 to 52% in the second quarter of 1997 as result of
productivity improvements.
Selling, general and administrative expenses reached US$31.5 million,
representing 38% of net revenue versus US$25.9 million in the first quarter of
1997. As a percentage of revenues, selling, general and administrative expenses
decreased from 39% to 38% as a result of dilution of fixed expenses.
As a result, EBITDA reached US$7.9 million, an increase of 61% versus the US$4.9
million in the first quarter of 1997.
Adjusted EBITDA reached US$12.4 million, an increase of 35% versus the US$9.2
million adjusted EBITDA for the first quarter of 1997. Adjusted EBIDTA includes
the deferment of KU band revenue of US$ 4.5 million for second quarter of 1997.
Depreciation and amortization for the second quarter of 1997 was US$13.5 million
as compared with US$10.4 million in the previous quarter, and US$7.3 million in
the second quarter of 1996. This includes depreciation of systems, equipment,
installation materials, installation labor, amortization of organizational costs
and concessions, and allowance for inventory obsolescence.
Operating loss during the second quarter of 1997 was US$5.6 million, versus
US$5.5 million in the first quarter of 1997, or an increase of 2%. The operating
loss for the quarter was also 17% less than the loss of US$6.8 million in the
second quarter of 1996.
Interest income reached US$1.4 million, versus US$5.0 million in the previous
quarter, as a result of the company's expansion investments. Interest expenses
were US$13.6 million, versus US$11.3 million in the first quarter of 1997,
representing a 21% increase.
Equity in losses (income) of affiliates amounted to a loss of US$3.2 million in
the second quarter of 1997 versus a loss of US$2.5 million in the previous
quarter. That loss resulted from ESPN Brasil (US$2.0 million), TV Filme
(US$619,000), Canbras (US$617,000), and HBO (US$36,000).
Other non-operating revenues/expenses amounted to an income of US$528,000 versus
losses of US$763,000 in the first quarter of 1997.
Minority interest amounted to US$200,000, representing the minority
shareholder's portion of the US$1 million aggregate losses of TVA Sul. As a
result, net loss for the second quarter ended June
Tevecap, S.A.
30, 1997 was US$20.9 million versus a net loss of US$15.5 million reported in
the first quarter of 1997 and US$12.1 million reported in the second quarter of
1996.
Capital expenditures (cash basis) for the second quarter of 1997 amounted to
US$69.0 million, an 78% increase from US$38.8 million in the previous quarter.
Funds were directed mainly to the purchase of decoders for all distribution
systems, the construction of internal networks for MMDS and cable, and cable
network build-out primarily in Sao Paulo and Curitiba.
SUBSCRIBER PERFORMANCE
Total subscriber base for the second quarter of 1997 totaled 1.2 million, an 11%
growth versus the previous quarter, and an increase of 48% versus the second
quarter of 1996.
Owned or proprietary systems grew to 460,704 subscribers, or 17% when compared
to the first quarter of 1997. This performance was achieved by extending the
Cable system to 1,697 kilometers and completing the Distribution and Sales
Operations of the KU business to include the entire Brazilian KU market. In the
case of MMDS, it is important to note that even with the transfer of 7,719
subscribers to the Cable Operation, the MMDS operation grew by 3% in the second
quarter of 1997 when compared to the previous period.
Tevecap's installation backlog as of June 30, 1997 was 30,000 subscribers,
representing less than 30 days of installations.
Through independent operators, Tevecap reached 649,159 subscribers as of June
30, 1997, compared with 605,606 subscribers during the previous quarter.
Tevecap, S.A.
The table below outlines the number of subscribers at June 30, 1997 and March
30, 1997, for owned systems according to different distribution technologies as
well as the number of households which receive TVA programming through operating
ventures and independent operators:
Total Subscriber Base
---------------------
2Q97 1Q97 Change %
---- ---- --------
MMDS 236,823 230,002 3%
Cable 73,514 57,263 28%
Digital C-band 68,761 58,821 17%
KU-band 81,606 48,407 69%
Total Owned Systems 460,704 394,493 17%
Operating Ventures* 110,091 93,578 18%
Independent Operators 649,159 605,606 7%
Households Receiving
TVA Programming 1,219,954 1,093,677 12%
*Represents 100% of subscribers; on an equity subscriber basis there were 16,187
subscribers at March 31, 1997 and 19,884 subscribers at June 30, 1997.
REVENUES BY OPERATION
The table below outlines consolidated net revenue by operation for owned system
for the second quarter ended June 30, 1997 and the first quarter ended March 31,
1997.
Consolidated Net Revenue by Operation
-------------------------------------
2Q97 1Q97 % Change
---- ---- --------
TVA Sao Paulo 18,449 17,656 4%
TVA Rio de Janeiro 12,011 10,436 15%
TVA Sul 6,801 5,654 20%
Digital C-Band 8,964 8,848 1%
KU-Band 24,863 15,707 58%
Total 71,088 58,301 22%
TVA Sao Paulo: Net revenues amounted to US$18.4 million in the second quarter of
1997, up 4% compared with US$17.7 million in the previous quarter due to the
higher number of installations and an increase in the average hook-up fee. At
June 30, 1997, the subscriber base for both MMDS and
Tevecap, S.A.
cable systems totaled 154,461, an increase of 5% versus the first quarter of
1997 which had a subscriber base of 147,239.
TVA Rio: Net revenues reached US$12 million, an increase of 15% versus the
previous quarter. At the end of the second quarter of 1997, the subscriber base
reached 93,920, representing an 11% growth over the previous quarter's
subscriber base of 84,573. This solid performance was achieved despite the
growing cable competition in this region.
TVA Sul: Net revenues amounted to US$6.8 million, 20% higher than the US$5.7
million in the previous quarter. As of June 30, 1997, subscriber base reached
61,956, a growth of 12% over the previous quarter. The MMDS system in Curitiba
grew by 11% to 29,535 subscribers.
C Band: Net revenues amounted to US$9 million, a 1% increase versus US$8.8
million in the previous quarter. The subscriber base increased by 17% from
58,821 to 68,761 subscribers between the first and the second quarter of 1997.
DirecTV: Net revenues amounted to US$24.9 million in the second quarter of 1997,
representing an increase of 58% versus the US$15.7 million in the previous
quarter. The subscriber base increased by 69% as compared with the previous
quarter, reaching a total of 81,606 subscribers as of June 30, 1997.
TVA, through Galaxy Brasil, launched Brazil's first KU-band service in July 1996
in a limited regional roll-out in the Sao Paulo area. The company became fully
operational in November 1996 when it began a nationwide publicity campaign
supported by a network of trained installers.
OPERATING VENTURES
Through the operating ventures, TVA has minority interests in two pay television
operators, Canbras and TV Filme, which served 110,091 subscribers as of June 30,
1997, as outlined in the table below:
Subscriber Base-Ventures (*)
2Q 97 1Q 97 Chg%
----- ----- ----
Canbras 19,082 12,928 48%
Brasilia 55,083 52,256 5%
Goiania 14,297 11,258 27%
Belem 21,629 17,136 26%
TV Filme 91,009 80,650 13%
Total 110,091 93,578 18%
(*) Represents paying subscribers
Tevecap, S.A.
FINANCIAL SITUATION
Total debt reached US$363.8 million as of June 30, 1997, 10% of which was short
term, representing the refinancing of certain supplier payables (US$22.2
million), the accrued interest on the High Yield bonds (US$3.2 million), leasing
agreements with Citibank (US$10 million) and Eximbank financing (US$1.3
million).
The remaining US$ 327.2 million is long term and includes of the principal
amount of the High Yield bonds (US$250.0 million), the Citibank leasing (US$39.3
million), Eximbank financing (US$8.8 million), certain supplier payables (US$2.6
million) and US$26.5 million with Abril Group relative to the acquisition of KU
decoders in order to avoid an increase in import taxes.
###
TVA is one of Brazil's largest and fastest growing pay-TV operators with over
1.2 million subscribers. TVA's current owners are Abril, 56.5%; Falcon
International, 14.2%; Hearst, 10%; ABC, 10%; and CMIF, 9.3%. The company uses
five technologies: MMDS, cable, digital KU band, digital C-band and UHF to reach
the Brazilian Pay-TV Market. TVA is also the country's largest Pay-TV
programming distributor, reaching over 1.2 million households. In conjunction
with Abril, TVA has formed strategic alliances and programming partnerships to
deliver Brazil's branded versions of ESPN, HBO, MTV, CMT and BRAVO in
Portuguese. TVA's partners include Falcon International Communications,
Disney/ABC, The Hearst Corporation, The Chase Manhattan Bank and Hughes
Communications.
Abril Group is Latin America's largest publishing and printing company. Of the
10 highest circulating magazines in Brazil, nine are published by Editora Abril,
the company's publishing division. The company publishes 200 magazines in
Brazil, nine in Portugal and four in Argentina. It pioneered the development of
electronic media in Brazil with the launch of TVA, Brazil's first subscription
television operation. It is the leader in the Brazilian home video market and is
the largest publisher of telephone directories in Latin America.
(Tables Follow)
Tevecap, S.A.
TEVECAP S.A.
Second Quarter Consolidated Balance Sheet
For the Periods Ended
June 30, 1997 and 1996
(in thousands of US dollars)
June 30 June 30 %
1997 1996 Change
-------- -------- --------
Cash and cash equivalents 32,381 1,228 2537%
Accounts receivable, net 47,759 15,634 205%
Inventories 15,582 14,506 7%
Film exhibition rights 606 574 6%
Prepaid and other assets 10,457 1,877 457%
Other accounts receivable 7,288 2,164 237%
-------- -------- --------
Total current assets 114,073 35,983 217%
-------- -------- --------
Property, plant and equipment 337,845 166,157 103%
Investments
- - Equity affiliates 7,682 5,498 40%
- - Cost basis investees 27,734 16,339 70%
- - Concessions, net 16,276 7,558 115%
Loans to related companies 20,277 2,128 853%
Advances payments for investments -- 10,965 n/c
Prepaid expenses 8,576 -- n/c
Other 2,193 3,766 -42%
-------- -------- --------
Total assets 534,656 248,394 115%
======== ======== ========
Short-term bank loans 36,594 -- n/c
Film suppliers 15,536 6,004 159%
Other suppliers 47,271 47,924 -1%
Taxes payable other than
income taxes 9,369 7,991 17%
Accrued payroll and related
liabilities 7,891 7,136 11%
Advances payments received
from subscribers 5,850 6,955 -16%
Other accounts payable 13,340 4,067 228%
-------- -------- --------
Total current liabilities 135,851 80,077 70%
-------- -------- --------
Long-term bank loans 300,718 -- n/c
Loans from related companies 26,453 51,021 -48%
Loans from shareholders 3,802 2,842 34%
Provision for claims 5,089 4,081 25%
Liability to fund joint venture
and equity investee 561 3,310 -83%
Deferred hook up fee revenue 13,754 -- n/c
-------- -------- --------
Total long-term liabilities 350,377 61,254 472%
-------- -------- --------
Minority interest 1,401 -- n/c
Paid-in-capital 287,962 287,962
Accumulated deficit (240,935) (180,899) 33%
-------- -------- --------
Total shareholder's equity 47,027 107,063 -56%
-------- -------- --------
Total liabilities and
shareholders' equity 534,656 248,394 115%
======== ======== ========
Tevecap, S.A.
TEVECAP S.A.
Second Quarter Consolidated Balance Sheet
For the Periods Ended
June 30, 1997 and March 31, 1997
(in thousands of US dollars)
June 30 March 31 %
1997 1996 Change
------------- ------------- -----------
Cash and cash equivalents 32,381 65,066 -50%
Accounts receivable, net 47,759 35,928 33%
Inventories 15,582 16,906 -8%
Film exhibition rights 606 856 -29%
Prepaid and other assets 10,457 4,058 158%
Other accounts receivable 7,288 4,443 64%
------------- ------------- -----------
Total current assets 114,073 127,257 -10%
------------- ------------- -----------
Property, plant and equipment 337,845 260,284 30%
Investments
- - Equity affiliates 7,682 9,454 -19%
- - Cost basis investees 27,734 23,734 17%
- - Concessions, net 16,276 16,710 -3%
Loans to related companies 20,277 16,693 21%
Prepaid expenses 8,576 8,379 2%
Other 2,193 2,154 2%
------------- ------------- -----------
Total assets 534,656 464,665 15%
============= ============= ===========
Short-term bank loans 36,594 30,279 21%
Film suppliers 15,536 10,955 42%
Other suppliers 47,271 51,984 -9%
Taxes payable other than
income taxes 9,369 8,843 6%
Accrued payroll and related
liabilities 7,891 7,163 10%
Advances payments received
from subscribers 5,850 6,303 -7%
Other accounts payable 13,340 8,107 65%
------------- ------------- -----------
Total current liabilities 135,851 123,634 10%
------------- ------------- -----------
Long-term bank loans 300,718 250,456 20%
Loans from related companies 26,453 2,670 891%
Loans from shareholders 3,802 3,228 18%
Provision for claims 5,089 4,547 12%
Liability to fund joint venture
and equity investee 561 1,391 -60%
Deferred hook up fee revenue 13,754 9,224 49%
------------- ------------- -----------
Total long-term liabilities 350,377 271,516 29%
------------- ------------- -----------
Minority interest 1,401 1,589 -12%
Paid-in-capital 287,962 287,962
Accumulated deficit (240,935) (220,036) 9%
------------- ------------- -----------
Total shareholder's equity 47,027 67,926 -31%
------------- ------------- -----------
Total liabilities and
shareholders' equity 534,656 464,665 15%
============= ============= ===========
Tevecap, S.A.
TEVECAP S.A.
Second Quarter Consolidated Statement of Income
For the Periods Ended
June 30, 1997 and 1996
(in thousands of US dollars)
% Net % Net %
2Q97 Revenue 2Q96 Revenue Change
---- ------- ---- ------- ------
Monthly subscriptions 53,131 64% 27,260 66% 91%
Installation 24,279 29% 12,329 29% 97%
Advertising 1,136 1% 1,548 4% -27%
Indirect programming 6,459 8% 1,624 4% 298%
Other 3,936 5% 1,571 4% 151%
----- - ----- - ---
Gross revenues 88,941 108% 44,832 107% 98%
Revenue taxes (6,222) -8% (3,029) -7% 105%
------ - ------ - ---
Net revenue 82,719 100% 41,803 100% 98%
Direct operating expenses 43,286 52% 24,109 58% 80%
Selling, general and
administrative expenses 31,518 38% 17,230 41% 83%
------ -- ------ -- --
EBITDA 7,915 10% 464 1% 1606%
Allowance for inventory
and obsolescence 999 1% 1,638 4% -39%
Depreciation and
amortization 12,547 5% 5,629 13% 123%
------ - ----- -- ---
Operating loss (5,631) -7% (6,803) -16% -17%
Interest income 1,357 2% 994 2% 37%
Interest expenses (13,644) -16% (2,959) -7% 361%
Translation (loss) gain (469) -1% (54) 0% 769%
Equity income (losses)
of affiliates (3,239) -4% (3,025) -7% 7%
Other nonoperating
(expenses) income, net 528 1% (364) -1% -245%
--- - ---- - ---
Loss before income taxes
and minority interest (21,098) -26% (12,211) -29% 73%
Income taxes
Minority interest 200 0% 152 0% 32%
--- - --- - --
Net income (loss) (20,898) -25% (12,059) 29% 73%
======= == ======= == ==
FASB
Tevecap, S.A.
TEVECAP S.A.
Second Quarter Consolidated Statement of Income
For the Periods Ended
June 30, 1997 and March 31, 1997
(in thousands of US dollars)
% Net % Net %
2Q97 Revenue 1Q97 Revenue Change
---- ------- ---- ------- ------
Monthly subscriptions 53,131 64% 44,819 67% 19%
Installation 24,279 29% 18,149 27% 34%
Advertising 1,136 1% 1,810 3% -37%
Indirect programming 6,459 8% 5,114 8% 26%
Other 3,936 5% 2,624 4% 50%
----- -- ----- -- ---
Gross revenues 88,941 108% 72,516 108% 23%
Revenue taxes (6,222) -8% (5,286) -8% 18%
------- --- ------- --- ---
Net revenue 87,719 100% 67,230 100% 23%
Direct operating expenses 43,286 52% 36,438 54% 19%
Selling, general and
administrative expenses 31,518 38% 25,891 39% 22%
------ --- ------ --- ---
EBITDA 7,915 10% 4,901 7% 61%
Allowance for inventory
and obsolescence 999 1% 38 0%
Depreciation and
amortization 12,547 15% 10,397 15% 21%
------ --- ------ --- ---
Operating loss (5,631) -7% (5,534) -8% 2%
Interest income 1,357 2% 5,035 7% -73%
Interest expenses (13,644) -16% (11,316) -17% 21%
Translation (loss) gain (469) -1% (610) -1% -23%
Equity income (losses)
of affiliates (3,239) -4% (2,466) -4% 31%
Other nonoperating
(expenses) income, net 528 1% (763) -1% -169%
--- -- ----- --- -----
Loss before income taxes
and minority interest (21,098) -26% (15,654) -23% 35%
Income taxes
Minority Interest 200 0% 191 0% 5%
--- - --- - -
Net income (loss) (20,898) -25% (15,463) -23% 35%
======= == ======= == ==
FASB