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 November 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: November 20, 1997
EXHIBIT LIST
1. One copy of the press release published on November 19, 1997,
containing relevant information on Tevecap S.A. for the three-month
period ended September 30, 1997, with financial information prepared in
accordance with Brazilian GAAP.
Exhibit 1
Contact: Douglas Duran Marina Echavarria
Tevecap Ludgate Communications
(011 55 11) 821-8554 (212) 688-5144
TEVECAP ANNOUNCES THIRD QUARTER 1997 RESULTS
Sao Paulo, November 19th, 1997 -- TEVECAP, S.A., (TVA) one of Brazil's
largest and fastest growing pay television operators and programming
distributors, today announced results for the third quarter ended
September 30, 1997.
Third Quarter 1997 Highlights
Consolidated net revenues for 3Q97 totaled US$92.4 million, representing
a growth of 62% versus US$56.9 million in 3Q96, and a 12% growth versus US$82.7
million in 2Q97.
Subscription revenue amounted to US$61.1 million in 3Q97, a growth of 71%
versus US$35.7 million in 3Q96. Subscription revenue represented 66% of net
revenue and increased by 15% when compared with US$53.1 million in 2Q97.
Installation revenue reached US$26.8 million in 3Q97, a growth of 58%
versus US$17.0 million in 3Q96, and an increase of 10% versus US$24.3 million in
2Q97. Installation revenue represented 27% of net revenue for 3Q97.
Direct operating expenses were US$49.2 million in 3Q97, a 57% increase as
compared to US$31.4 million in 3Q96 or a 14% growth versus US$43.3 million in
2Q97.
Selling, general and administrative expenses for 3Q97 were US$32.3
million, representing 35% of net revenue, as compared to US$20.5 million during
3Q96 and US$31.5 million during 2Q97.
EBITDA totaled US$10.9 million in 3Q97, representing a growth of 116%
versus US$5.0 million in 3Q96, and a growth of 38% as compared to US$7.9 million
in 2Q97.
Adjusted EBITDA for 3Q97 reached US$14.6 million, representing a growth
of 17% versus a US$12.4 million in 2Q97.
Total Operating Expenses for 3Q97 were US$96.7 million, a 9% increase
versus US$88.4 million in 2Q97.
Net loss for 3Q97 was US$18.6 million, a 45% increase as compared to a
loss of US$12.8 million in 3Q96 and an 11% decrease versus US$20.9 million in
2Q97.
Capital expenditures (cash basis) amounted to US$65.1 million for 3Q97, a
97% increase versus US$33 million during 3Q96, and a 6% decrease versus US$69
million in 2Q97.
CONSOLIDATED RESULTS
Consolidated net revenues for the third quarter ended September 30, 1997 totaled
US$92.4 million, versus US$82.7 million in the second quarter of 1997 and
US$56.9 million in the third quarter of 1996. The increase in net revenues
continues the strong, steady revenue growth the Company has always demonstrated.
Revenues consist primarily of subscription fees but also include, installation,
advertising, indirect programming and other revenues, excluding taxes.
Subscription revenues were 66% of net revenues and amounted to US$61.1 million
in the third quarter of 1997, up 71% from US$35.7 million in the third quarter
of 1996 and an increase of 15% versus US$53.1 million in the second quarter of
1997. Subscription revenue by distribution technology is divided as follows:
MMDS 49%, cable 14%, C-band 11%, and Ku-band 26%. Revenue increased as a result
of an expanded subscriber base and a higher percentage of Ku-band subscribers.
The Ku-band has a higher monthly fee than other technologies.
Subscription Revenue ($000)
Technology 3Q97 % 3Q96 % Change %
MMDS 29,685 49% 29,666 83% 0%
Cable 8,289 14% 1,956 6% 324%
C-Band 6,940 11% 3,583 10% 94%
Ku-band 16,182 26% 502 1% 3,124%
Total 61,096 100% 35,707 100% 71%
Subscription Revenue ($000)
Technology 3Q97 % 2Q97 % Change %
MMDS 29,685 49% 29,728 56% 0%
Cable 8,289 14% 6,186 12% 34%
C-Band 6,940 11% 6,329 12% 10%
Ku-band 16,182 26% 10,888 20% 49%
Total 61,096 100% 53,131 100% 15%
Installation revenue comprised 29% of net revenues, reaching US$26.8 million in
3Q97, versus US$24.3 million in 2Q97. This increase was the result of a strong
sales performance during the third quarter of 1997, especially for the Ku-band.
Indirect programming revenue in the third quarter of 1997 reached US$6.5
million, an increase of 169% versus US$2.4 million in the third quarter of the
previous year. This revenue consists of payments made to the Company for the
sale of its programming to affiliated companies and independent operators.
Direct operating expenses were US$49.2 million for the third quarter of 1997
versus US$43.3 million in the previous quarter, or an increase of 14%.
Selling, general and administrative expenses were US$32.3 million, representing
35% of net revenue versus US$31.5 million in the second quarter of 1997. As a
percentage of revenues, selling, general and administrative expenses decreased
from 38% to 35%.
As a result, EBITDA reached US$10.9 million, an increase of 38% versus the
US$7.9 million in the second quarter of 1997.
Adjusted EBITDA reached US$14.6 million, an increase of 17% versus the US$12.4
million adjusted EBITDA of the second quarter of 1997. Adjusted EBITDA includes
the deferral of Ku-band revenues of US$3.7 million for the third quarter of
1997.
Depreciation and amortization for the third quarter of 1997 was US$15.2 million
as compared with US$13.5 million in the previous quarter, and US$8.7 million in
the third 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 third quarter of 1997 was US$4.3 million, versus
US$5.6 million in the second quarter of 1997, or a decrease of 24%. The
operating loss for the third quarter was also 18% less than the loss of US$3.6
million in the third quarter of 1996.
Interest income was US$1.8 million, versus US$1.4 million in the previous
quarter. Interest expenses were US$15.0 million, versus US$13.6 million in the
second quarter of 1997.
Equity in losses (income) of affiliates amounted to a loss of US$1.7 million in
the third quarter of 1997 versus a loss of US$3.2 million in the previous
quarter. That loss resulted from ESPN Brasil (US$944,000), TV Filme
(US$710,000), Canbras (US$317,000), but was offset by income from HBO
(US$238,000).
Other nonoperating revenues/expenses resulted in a loss of US$310,000 versus a
gain of US$528,000 in the second quarter of 1997.
Minority interest amounted to US$151,000, representing the minority
shareholder's portion of the US$1 million aggregate losses of TVA Sul. As a
result, net loss for the third quarter ended September 30, 1997 was US$18.6
million versus a net loss of US$20.9 million reported in the second quarter of
1997 and US$12.8 million reported in the third quarter of 1996.
Capital expenditures (cash basis) for the third quarter of 1997 amounted to
US$65.1 million, a 6% decrease from the US$69 million of 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 third quarter of 1997 reached 1.4 million, an 11%
growth versus the previous quarter, and an increase of 45% versus the third
quarter of 1996.
Owned or proprietary systems, grew to 531,490 subscribers or 15% when compared
to the second quarter of 1997. This performance was achieved by extending the
Cable system and through the continued development of the distribution and sales
operations of the Ku business which now include the entire Brazilian Ku market.
In the case of MMDS, it is important to note that even with the transfer of
5,694 subscribers to the Cable Operation, the MMDS operation grew by 5% in the
third quarter of 1997 when compared to the previous period.
Through independent operators, Tevecap reached 701,537 subscribers as of
September 30, 1997, as compared to 649,159 subscribers during the previous
quarter.
The table below outlines the number of subscribers at September 30, 1997 and
June 30, 1997 both for the owned systems (separated by the different
distribution technologies) as well as the number of households that receive TVA
programming through operating ventures and independent operators:
Subscriber Base - Total
3Q97 2Q97 Change %
MMDS 248,732 236,823 5%
Cable 86,584 73,514 18%
Digital C-band 70,081 68,761 2%
Ku-band 126,093 81,606 55%
Total Owned Systems 531,490 460,704 15%
Operating Ventures* 140,123 122,852 14%
Independent Operators 701,537 649,159 8%
Households Receiving
TVA Programming 1,373,150 1,232,715 11%
*Represents 100% of subscribers. On an equity subscriber basis, there were
21,709 subscribers at June 30, 1997 and 25,508 subscribers at September 30,
1997.
REVENUES BY OPERATION
The table below outlines consolidated net revenue by operation for owned systems
for the third quarter ended September 30, 1997 and the second quarter ended June
30, 1997.
Consolidated Net Revenue by Operation
3Q97 2Q97 % Change
TVA Sao Paulo 18,228 18,449 0%
TVA Rio de Janeiro 12,613 12,011 5%
TVA Sul 7,246 6,801 7%
Digital C-Band 8,724 8,964 -3%
Ku-Band 33,672 24,863 35%
Total 80,483 71,088 13%
TVA Sao Paulo: Net revenues amounted to US$18.2 million in the third quarter of
1997, down 1% when compared to US$18.4 million in the previous quarter. While
the number of new subscribers increased this was offset by lower average hook-up
fees. At September 30, 1997, the subscribers of both MMDS and cable systems
totaled 170,277, an increase of 10% versus the second quarter of 1997 which had
a subscriber base of 154,461.
TVA Rio: Net revenues reached US$12.6 million, an increase of 5% versus the
previous quarter. At the end of the third quarter of 1997, the subscriber base
was 99,215, representing a 6% growth over the previous quarter's subscriber base
of 93,920. TVA Rio is continuing to demonstrate continued growth despite growing
cable competition in this region.
TVA Sul: Net revenues amounted to US$7.2 million, 7% higher than the US$6.8
million of the previous quarter. As of September 30, 1997, the subscriber base
reached 65,824, a growth of 6% over the previous quarter. The MMDS system in
Curitiba, grew by 2% to 30,013 subscribers.
C Band: Net revenues amounted to US$8.7 million, a 3% decrease versus US$9
million in the previous quarter. While the subscriber base increased by 2%
during the third quarter and subscription fees for the quarter increased to
US$7.0 million, this was offset by lower hook-up fees.
DirecTV: Net revenues amounted to US$33.7 million in the third quarter of 1997,
representing an increase of 35% versus the US$24.9 million of the previous
quarter. The subscriber base grew by 55% when compared with the previous
quarter, reaching a total of 126,093 subscribers as of September 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. Galaxy Brasil continues to lead
the Brazilian Ku-band market in number of subscribers, programming offer to the
customer and signal quality. Galaxy Brasil is clearly recognized as the leader
in the Brazilian DTH market, by both the consumer and the competition.
OPERATING VENTURES
Through the operating ventures, TVA has minority interests in two pay television
operators, Canbras and TV Filme, which served 140,123 subscribers as of
September 30, 1997, as outlined in the table below:
Subscriber Base-Ventures(*)
3Q 97 2Q 97 Change %
------- ------- --------
Canbras 25,210 19,082 32%
TV Filme 114,913 103,770 11%
Total 140,123 122,852 14%
- ----------
(*) Represents paying subscribers
FINANCIAL SITUATION
Total debt reached US$408.7 million as of September 30, 1997, 15% of which was
short term representing the financing of certain supplier payables (US$32
million), the accrued interest on the High Yield bonds (US$11.2 million),
leasing agreements with Citibank (US$10 million) and Eximbank financing (US$6.4
million). The remaining US$349.1 million is long term and includes the principal
amount of the High Yield bonds (US$250.0 million), the Citibank leasing (US$36
million), Eximbank financing (US$20.8 million), certain supplier payables
(US$1.5 million) and US$40.8 million with Abril Group.
###
As of November 1st, TVA added 6 new channels to its already impressive line-up.
Included in this new offer are: Cinemax, Nickelodeon, Discovery Kids, Fox Kids
and Travel Channel.
TVA also launched a tiered programming offer on November 1st in both Sao Paulo
and Rio de Janeiro, allowing consumers to pick a pay-TV package corresponding to
their interest. The tiering program was launched seamlessly given TVA's existing
100% addressable base.
Both the additions to the programming line-up and the tiering initiative will
support the continued growth TVA has always demonstrated.
###
Demonstrating their belief in the future of the Brazilian pay-tv market,
Tevecap's Board of Directors, on October 28th approved a US$100 million equity
infusion, to be used to expand the current business.
This new capital is for on going operations and is in addition to commitments
made for the acquisition of new cable and MMDS licenses.
###
TVA is one of Brazil's largest and fastest growing pay-TV operators with over
1.4 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, eight 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.
Third Quarter Consolidated Balance Sheet
For the Periods Ended
September 30, 1997 and 1996
(in thousands of US dollars)
September 30, September 30, %
1997 1996 Change
------------- ------------- -------
Cash and cash equivalents 8,574 619 1285%
Accounts receivable, net 48,151 21,645 122%
Inventories 24,583 15,840 55%
Film exhibition rights 503 725 -31%
Prepaid and other assets 15,170 2,511 504%
Other accounts receivable 9,781 2,259 333%
---------- ---------- ------
Total Current assets 106,762 43,599 145%
---------- ---------- ------
Property, plant and equipment 377,818 188,063 101%
Investments
- - Equity affiliates 8,867 6,231 42%
- - Cost basis investees 27,735 16,371 69%
- - Concessions, net 14,202 18,743 -24%
Loans to related companies 20,688 15,793 31%
Prepaid expenses 8,269 - n/c
Other 2,537 2,354 8%
---------- ---------- -------
Total assets 566,878 291,154 95%
========== =========== =======
Short-term bank loans 59,570 5,441 995%
Film suppliers 24,491 5,738 327%
Other suppliers 44,663 51,055 -13%
Taxes payable other than
income taxes 10,785 8,205 31%
Accrued payroll and related
liabilities 8,204 7,777 5%
Advances payments received from
subscribers 5,514 7,473 -26%
Other accounts payable 7,333 3,683 99%
--------- ----------- -------
Total current liabilities 160,560 89,372 80%
---------- ----------- -------
Long term bank loans 308,237 - n/c
Loans from related companies 40,861 91,926 -56%
Loans from shareholders 3,953 4,607 -14%
Provisions for claims 5,220 5,854 -11%
Liability to fund joint venture
and equity investee 877 - n/c
Deferred hook up fee revenue 17,455 2,943 493%
---------- ---------- ------
Total long-term liabilities 376,603 105,330 258%
---------- ---------- ------
Minority interest 1,288 2,198 -41%
Paid-in-capital 287,962 287,962
Accumulated deficit (259,535) (193,708) 34%
---------- ---------- -------
Total shareholder's equity 28,427 94,254 -70%
---------- ---------- -------
Total liabilities and
shareholders' equity 566,878 291,154 95%
========== =========== =======
TEVECAP S.A.
Third Quarter Consolidated Balance Sheet
For the Periods Ended
September 30, 1997 and June 30, 1997
(in thousands of US dollars)
September 30, June 30, %
1997 1997 Change
------------- ------------- ------
Cash and cash equivalents 8,574 32,381 -74%
Accounts receivable, net 48,151 47,759 1%
Inventories 24,583 15,582 58%
Film exhibition rights 503 606 -17%
Prepaid and other assets 15,170 10,457 45%
Other accounts receivable 9,781 7,288 34%
--------- ------- -----
Total Current assets 106,762 114,073 -6%
--------- ------- -----
Property, plant and equipment 377,818 337,845 12%
Investments
- - Equity affiliates 8,867 7,682 15%
- - Cost basis investees 27,735 27,734 0%
- - Concessions, net 14,202 16,276 -13%
Loans to related companies 20,688 20,277 2%
Prepaid expenses 8,269 8,576 -4%
Other 2,537 2,193 16%
--------- ------- -----
Total assets 566,878 534,656 6%
========= ======= =====
Short-term bank loans 59,570 36,594 63%
Film suppliers 24,491 15,536 58%
Other suppliers 44,663 47,271 -6%
Taxes payable other than income
taxes 10,785 9,369 15%
Accrued payroll and related
liabilities 8,204 7,891 4%
Advance payments received from 5,514 5,850 -6%
subscribers
Other accounts payable 7,333 13,340 -45%
--------- ------- -----
Total current liabilities 160,560 135,851 18%
--------- ------- -----
Long term bank loans 308,237 300,718 3%
Loans from related companies 40,861 26,453 54%
Loans from shareholders 3,953 3,802 4%
Provision for claims 5,220 5,089 3%
Liability to fund joint venture
and equity investee 877 561 56%
Deferred hook up fee revenue 17,455 13,754 27%
--------- ------- -----
Total long-term liabilities 376,603 350,377 7%
--------- ------- -----
Minority interest 1,288 1,401 -8%
Paid-in-capital 287,962 287,962
Accumulated deficit (259,535) (240,935) 8%
--------- ------- ------
Total shareholder's equity 28,427 47,027 -40%
--------- ------- ------
Total liabilities and shareholders'
equity 566,878 534,656 6%
========= ======= ======
TEVECAP S.A.
Third Quarter Consolidated Statement of Income
For the Periods Ended
September 30, 1997 and 1996
(in thousands of US dollars)
% Net % Net %
3Q97 Revenue 3Q96 Revenue Change
------ ------- ---- ------- ------
Monthly subscriptions 61,096 68% 35,707 63% 71%
Installation 26,802 29% 16,989 30% 58%
Advertising 973 1% 2,873 5% -66%
Indirect programming 6,459 7% 2,399 4% 169%
Other 3,791 4% 2,657 5% 43%
-------- ---- -------- ----- -----
Gross revenues 99,121 107% 60,625 106% 63%
Revenue taxes (6,739) -7% (3,682) -6% 83%
-------- ---- -------- ----- -----
Net revenue 92,382 100% 56,943 100% 62%
Direct operating expenses 49,165 53% 31,368 55% 57%
Selling, general and
administrative expenses 32,311 35% 20,528 36% 57%
-------- ---- -------- ----- -----
EBITDA 10,906 12% 5,047 9% 116%
Allowance for inventory
and obsolescence (96) 0% 855 2% -111%
Depreciation and
amortization 15,283 17% 7,821 14% 95%
-------- ---- -------- ----- -----
Operating loss (4,281) -5% (3,629) -6% 18%
Interest income 1,777 2% 1,260 2% 41%
Interest expenses (15,019) -16% (6,078) -11% 147%
Translation (loss) gain 815 1% 374 1% 118%
Equity income (losses) of
affiliates (1,733) -2% (395) -1% 339%
Other nonoperating
(expenses) income, net 310 0% (5,498) -10% -94%
-------- ---- -------- ----- -----
Loss before income taxes (18,751) -20% (13,966) -25% 34%
and minority interest
Income taxes (105) 0%
Minority interest 151 0% 1,262 2% -88%
-------- ---- -------- ----- -----
Net income (loss) (18,600) -20% (12,809) -22% 45%
======== ==== ======== ==== ====
TEVECAP S.A.
Third Quarter Consolidated Statement of Income
For the Periods Ended
September 30, 1997 and June 30, 1997
(in thousands of US dollars)
% Net % Net %
3Q97 Revenue 2Q97 Revenue Change
------ ------- ---- ------- ------
Monthly subscriptions 61,096 66% 53,131 64% 15%
Installation 26,802 29% 24,279 29% 10%
Advertising 973 1% 1,136 1% -14%
Indirect programming 6,459 7% 6,459 8%
Other 3,791 4% 3,936 5% -4%
-------- ---- -------- ----- -----
Gross revenues 99,121 107% 88,941 108% 11%
Revenue taxes (6,739) -7% (6,222) -8% 8%
-------- ---- -------- ----- -----
Net revenue 92,382 100% 82,719 100% 12%
Direct operating expenses 49,165 53% 43,286 52% 14%
Selling, general and
adminsitrative expenses 32,311 35% 31,518 38% 3%
-------- ---- -------- ----- -----
EBITDA 10,906 12% 7,915 10% 38%
Allowance for inventory
and obsolescence (96) 0% 999 1% -110%
Depreciation and
amortization 15,283 17% 12,547 15% 22%
-------- ---- -------- ----- -----
Operating loss (4,281) -5% (5,631) -7% -24%
Interest income 1,777 2% 1,357 2% 31%
Interest expenses (15,019) -16% (13,644) -16% 10%
Translation (loss) gain 815 1% (469) -1% -274%
Equity income (losses) of
affiliates (1,733) -2% (3,239) -4% -46%
Other nonoperating
(expenses) income, net 310 0% 528 1% -159%
-------- ---- -------- ----- -----
Loss before income taxes (18,751) -20% (21,098) -26% -11%
and minority interest
Income taxes
Minority interest 151 0% 200 0% -25%
-------- ---- -------- ----- -----
Net income (loss) (18,600) -20% (20,898) -25% -11%
======== ==== ======== ==== ====