Exhibit 1
Contact: Douglas Duran Marina Echavarria/Ashley Chapman
Tevecap Ludgate Communications
(011 55 11) 821-8554 (212) 688-5144
TEVECAP ANNOUNCES FOURTH QUARTER AND YEAR-END
---------------------------------------------
1996 RESULTS
------------
Sao Paulo, April 29, 1997-TEVECAP, S.A., (TVA) Brazil's leading pay
television operator and programming distributor, today announced results for
the twelve months ended December 31, 1996.
1996 Highlights
- - - Consolidated net revenues for twelve months ended December 31, 1996 reached
US$198.1 million, an increase of 110% versus US$94.5 million in 1995.
- - - Net loss for year end 1996 was US$48.2 million compared to a loss of
US$41.1 million during 1995.
- - - Subscription revenue, 62% of net revenues, amounted to US$123.0 million in
1996, up 97% from 1995.
- - - Installation revenue, 31% of net revenues, reached US$61.7 million in 1996,
137% more than in 1995.
- - - Direct operating expenses increased to US$110.1 million from US$62.0
million, a growth of 78% as a result of the increasing number of subscribers.
- - - Selling, general and administrative expenses for 1996 reached US$83.6
million, up 78% compared with US$46.9 million during the same period in
1995. Selling, general and administrative expenses, as a percentage of
revenues, decreased from 50% to 42%.
- - - Capital expenditures amounted to US$151.3 million for year end 1996, up
193% from US$51.7 million during 1995.
- - - EBITDA reached US$4.3 million in 1996, a turnaround over negative EBITDA of
US$14.4 million in 1995.
- - - Consolidated net revenues for fourth quarter 1996 reached US$66.3 million,
representing an increase of 117% compared to US$30.6 million during the same
quarter in 1995.
- - - Total Operating Expenses for the fourth quarter 1996 increased by 84% from
US$40.3 million to US$73.9 million.
- - - Net Loss for the quarter decreased 18 percent to US$11.2 million compared
to US$13.7 for the same period a year ago.
- - - EBITDA for the quarter increased 135% to US$1.9 million from a loss of
US$5.3 million last year.
Tevecap, S.A.
CONSOLIDATED RESULTS
Consolidated net revenues for the twelve months ended December 31, 1996
reached US$198.1, a 110% growth over 1995. The Company has more than doubled
its revenues every year for the last three years. Revenues consist primarily
of subscription, installation, advertising, indirect programming and other
revenues, excluding taxes.
Subscription revenue contributed to 62% of net revenues, and amounted to
US$123.0 million in 1996, up 97% from US$62.5 million in 1995. It can be broken
down by distribution technology into MMDS (82%), cable (5%), C-band (11%) and
Ku-band (2%). Revenue increased as a result of an expanded subscriber base
and a higher average fee for MMDS, which improved 32%, from US$30.65 in 1995
to US$40.33 in 1996. Revenues increased because of an improvement in signal
transmission enabling the Company to offer premium packages to all
subscribers.
Subscription Revenue ($000)
Technology 1996 1996% 1995 1995% Change%
- - ---------- ---- ----- ---- ----- -------
MMDS 100,830 82.0% 58,163 93.1% 73%
Cable 6,855 5.6% 2,378 3.8% 188%
C-band 13,069 10.6% 1,955 3.1% 568%
Ku-band 2,266 1.8% -- 0.0% n/c
Total 123,020 100% 62,496 100% 97%
Installation revenue contributed to 31% of net revenues, reaching US$61.7
million in 1996, 137% more than in 1995. This increase is attributed to:
subscriber growth, expansion of C-Band service and higher installation fees
due to the operation of DirecTV in the second half of 1996.
Advertising revenue amounted to US$7.5 million in 1996, a decline of 10%
versus 1995. This was primarily a result of a shift in ESPN International's
advertising sales from Tevecap to ESPN Brasil.
Indirect programming revenue amounted to US$11.4 million in 1996, a 297%
growth over 1995 due to the expansion of the indirect subscriber base. This
revenue consists of payments made to the Company for the sale of its
programming to affiliated companies and independent operators.
Other revenues increased 268% to US$8.2 million. They include the ESPN
commission, magazine sales and equipment rental, among others. Revenue taxes
increased 83% to US$13.7 million.
Direct operating expenses amounted to US$110.1 million from US$62.0 million,
or a rise of 78%, due to subscription growth. Direct operating expenses as a
percentage of revenues dropped from 66% in 1995 to 56% in 1996.
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Tevecap, S.A.
Selling, general and administrative expenses reached US$83.6 million, a 78%
growth versus US$46.9 million in 1995 due to the expansion of the Company's
activities and their associated costs. As a percentage of revenues, selling,
general and administrative expenses decreased from 50% to 42% as a result of
fixed expense dilution of payroll and benefits which increased only by 37%.
As a result, EBITDA reached US$4.3 million, a turnaround over the negative
EBITDA of US$14.4 million in 1995.
Depreciation and amortization was US$28.2 million as compared with US$13.3
million in 1995, a 113% increase. This includes depreciation of systems,
equipment, installation materials, installation personnel and amortization of
organizational costs and concessions. Allowance for inventory obsolescence
reached US$2.3 million in 1996 from US$0.0 million in 1995. It represents
changes for obsolescence of certain equipment and material.
Operating loss during 1996 was US$26.1 million, 6% less than the loss of
US$27.7 million reported in 1995, despite the Galaxy operation, which is
still in the early stage of growth.
Interest income was US$6.0 million, a 91% growth versus US$3.1 million in
1995. Interest expense was US$17.669 million, a flat variation from US$17.745
million in 1995. The improvement in the net interest expenses of US$11.7
million in 1996 from US$14.6 million in 1995 is attributed to the capital
injection in the second half of 1995 and the securities issue in 1996,
proceeds of which were used in part to repay higher cost debt.
Equity in losses (income) of affiliates amounted to a loss of US$8.5 million
in 1996 versus a loss of US$3.7 million in the previous year. That loss
resulted from ESPN Brasil (US$5.6 million), HBO (US$1.2 million) and Canbras
(US$2.1 million), and was offset by income from TV Filme (US$300,000).
Other non-operating expenses reached US$3.7 million versus income of US$4.4
million in 1995. The 1996 expenses consisted primarily of fees paid for the
investment of Falcon International and Hearst/ABC.
Minority interest amounted to US$1.8 million, representing the minority
shareholder's portion of the US$14.0 million aggregate losses of TVA Sul.
As a result, net loss for the twelve months ended December 31, 1996 was
US$48.2 versus a net loss of US$41.1 million reported in 1995.
Capital expenditures (cash basis) for 1996 amounted to US$151.2 million, a
193% increase from US$51.7 million in 1995. Funds were directed mainly to:
purchase decoders for all distribution systems; implement internal networks
for MMDS and cable; purchase Ku-band equipment and installation for the
Uplink Center in Tambore (greater Sao Paulo) used to uplink programming to
the Galaxy III-R satellite and customer
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TEVECAP, S.A.
services for Galaxy Brasil; acquisition of cable companies in southern Brazil
and cable network build-out, mainly in Sao Paulo and Curitiba.
SUBSCRIBER PERFORMANCE
Total subscriber base for 1996 totalled 999,266, a 68% growth over 596,419 in
1995. To be considered a subscriber by TVA, the customer must be installed
and paying on a current basis. Uninstalled backlog and disconnected
subscribers are not included in TVA's subscriber base.
Owned systems, or proprietary systems, grew to 349,511 subscribers due to the
less mature systems of cable and DBS in opposition to the traditional MMDS
system. The Company emphasized the strategic development of cable service,
reaching 1,139 kilometers of cable, and started the Ku-band service.
Through independent operators, Tevecap reached 564,499 subscribers as of
December 31, 1996, a growth of 65% over 1995, representing an additional
222,800 households during the year.
The table below outlines the number of subscribers at December 31, 1995 and
December 31, 1996 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:
SUBSCRIBER BASE--TOTAL
1996 1995 Change %
MMDS 230.320 188.893 22%
Cable 46.011 15.129 204%
Digital C-band 49.858 15.126 230%
Ku-band 23.322 0 n/c
TOTAL OWNED SYSTEMS 349.511 219.148 59%
Operating Ventures* 85.256 35.572 140%
Independent Operators 564.499 341.699 65%
HOUSEHOLDS RECEIVING
TVA PROGRAMMING 999.266 596,419 68%
*REPRESENTS 100% OF SUBSCRIBERS; ON AN EQUITY SUBSCRIBER BASIS THERE WERE
7,050 SUBSCRIBERS AT DECEMBER 31, 1995 AND 13,955 SUBSCRIBERS AT DECEMBER 31,
1996.
The company intensified the disconnection of delinquent subscribers during
1996. Since its decoders are fully addressable, they can be disconnected
easily and immediately by computer from the base without the extra costs of
sending a team to the subscriber's location. Additionally, a special effort
was made to clean-up the system by either
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Tevecap, S.A.
reactivating disconnected subscriber accounts or eventually retrieving their
decoders. Thus, the Company could regain revenues and reduce the purchase of
new equipment.
REVENUES BY OPERATION
The table below outlines consolidated net revenue for the year ended December
31, 1996 and December 31, 1995 for owned systems according to different
operations:
Consolidated Net Revenue by Operation
1996 1995 Change %
TVA Sao Paulo 69,829 48,809 43%
TVA Rio de Janeiro 35,466 16,716 112%
TVA Sul 14,061 5,993 135%
Digital C-band 36,800 10,129 263%
Ku-band 16,530 0 n/c
Total 172,686 81,647 112%
TVA Sao Paulo: Net revenues amounted to US$69.8 million in 1996, up 43% due
to price and volume increases. There was an improvement in average monthly
fee since more subscribers chose the premium package. At the end of 1996,
the subscriber base totalled 148,149, comprising both MMDS and cable systems,
a 9% growth over 1995. The performance in Sao Paulo was partially affected by
disconnection of delinquent subscribers and a delay in the company's cable
construction which will be intensified in 1997. At the end of 1996, the cable
network extended approximately 642 Km, connecting approximately 238,000 homes.
TVA Rio: Net revenues amounted to US$35.5 million, 112% more than in 1995. At
the end of 1996, the subscriber base was 79,928, a 55% growth over 1995. This
good performance was achieved despite the growing cable competition.
TVA Sul: Net revenues amounted to US$14.1 million, 135% higher than in 1995.
At the end of 1996, subscriber base was 48,254, a 192% growth over 1995, due
to the business expansion and the purchase of new operations. The MMDS system
in Curitiba, increased 55% to 23,595 subscribers. During 1996, Tevecap
acquired two cable operations in Curitiba, one in Foz do Iguacu and one in
Camboriu, in addition to a cable license for Florianopolis. The four newly
acquired systems are being upgraded to 550 MHz bandwidth capacity while the
system in Florianopolis is being constructed for the same capacity. TVA Sul
ended 1996 with a cable network of 497 kilometers, connecting 127,000 homes.
Curitiba, in particular, had a cable network of 180 kilometers, equivalent
to 53,000 homes. As in the case of TVA Sao Paulo, cable construction will be
intensified in 1997.
C Band: Net revenues amounted to US$36.8 million, a 263% growth versus
US$10.1 million in 1995. The subscriber base increased by 230% from 15,126 to
49,858 subscribers and there were price improvements in both monthly and
hook-up fees.
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Tevecap, S.A.
TVA is the only pay television operator to deliver a digital C-band signal in
Brazil, offering 26 channels (including nine second audio programming "SAP"
channels) to the whole country. By comparison, TVA's only significant C-band
competitor offers six analog channels.
DirecTV: Net revenues amounted to US$16.5 million in 1996, while the
subscriber base reached 23,322. 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 85,256 subscribers
as of December 31, 1996, as outlined in the table below:
Subscribers Base - Ventures
1996 1995 Change %
Canbras 8,126 ------ n/c
- - --Brasilia 50,602 24,791 104%
- - --Goiania 10,426 4,775 118%
- - --Belem 16,102 6,006 168%
- - --TV Filme 77,130 35,572 117%
Total 85,256 35,572 140%
TVA holds a 14.3% equity interest in TV Filme which operates MMDS in
Brasilia, Goiania and Belem. The 1996 subscriber base more than doubled in
each city, increasing by 117% in total from 35,572 to 77,130. In order to
fund its expansion and bid for new licenses, TV Filme raised US$28 million
through an IPO in July 1996 followed by a US$140 million Sr. Note issue last
December. TV Filme's shares are listed on the Nasdaq Stock Market.
TVA holds a 36% equity interest in Canbras which obtained a base of 8,126
subscribers at year end 1996. This operating venture has constructed cable
networks in ten cities in greater Sao Paulo extending approximately 176
kilometers.
In 1996, two exclusive channels were launched, combining international and
Brazilian programming: Bravo Brasil, based on Bravo Channel, offers arts and
movies; and CMT Brasil, based on Country Music Television, provides country
music.
TVA has three joint ventures in programming, ESPN Brasil is a 50-50
association with ESPN International, which offers sports and has exclusive
distribution rights to Brazil's most important soccer championships. HBO
Brasil offers films through an association
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Tevecap, S.A.
with Time Warner and Sony, in which TVA had a 33.3% equity interest (reduced
to 24% after an interest acquired by Disney, as discussed later). A third
venture has been formed between TVA (66.6%) and CMT International (33.3%),
which provides Brazilian and American country music.
FINANCIAL SITUATION
TVA issued US$250 million in debt securities last November, US$25 million
more than originally planned due to oversubscription. The Company was the
first in Brazil to issue securities without put or call options. The 8 year
12 5/8% Senior Notes were placed under the Rule 144A to qualified
institutional buyers from about 60 institutions in over 30 cities in the
United States. Subsequently, TVA proposed to exchange the notes for new notes
registered under the Securities Act of 1933 in order they may be publicly
tradable.
Net proceeds after fees and expenses of approximately US$241.2 million were
used to repay short term loans from affiliated companies (US$107.9 million)
and banks (US$5.4 million) as well as to fund capital expenditures in 1996
and 1997, mainly the extension of cable networks in Sao Paulo and Curitiba.
Total debt reached US$267.8 million as of December 31, 1996, 6% of which was
due in short term representing the refinancing of certain supplier payables
(US$14.7 million) and the accrued interest on the High Yield (US$3.2
million). The remaining US$250 million was the principal amount of the High
Yield.
###
TVA is Brazil's largest and fastest growing pay-TV operator with over 335,000
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. TVA is
also the country's largest Pay-TV programming distributor, reaching over
955,000 households. In conjunction with Abril, TVA has formed strategic
alliances and programming partnerships to deliver Brazil's branded versions
of channels ESPN, HBO, MTV, CMT and BRAVO in Portuguese. TVA's partners
include Falcon International Communications, Disney/ABC, The Hearst
Corporation, The Chase Manhattan Bank, US West 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)
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TEVECAP, S.A.
Consolidated Balance Sheet
For the Year Ended
December 31, 1996 and 1995
(in thousands of US dollars)
- - --------------------------------------------------------------------------------
Dec. 31 Dec. 31 %
1996 1995* Change
------- -------
Cash and cash equivalents 104,801 24,201 333%
Accounts receivable, net 32,296 11,253 187%
Inventories 13,095 13,076 0%
Film exhibition rights 1,061 30 3437%
Prepaid and other assets 1,914 2,968 (36%)
Other accounts receivable 5,105 985 418%
------- ------- ------
Total current assets 158,272 52,513 201%
------- ------- ------
Property, plant and equipment 233,612 131,266 78%
Investments
- Equity affiliates 9,227 3,462 167%
- Cost basis investees 14,766 11,240 31%
- Concessions, net 17,574 7,978 120%
Loans to related companies 15,308 6,732 127%
Prepaid expenses 7,990 - n/c
Other 2,422 3,657 (34%)
------- ------- ------
Total assets 459,171 216,848 112%
------- ------- ------
------- ------- ------
- - --------------------------------------------------------------------------------
Short-term bank loans 17,361 - n/c
Film suppliers 7,012 5,892 19%
Other suppliers 52,932 52,078 2%
Taxes payable other than income taxes 6,485 6,171 5%
Accrued payroll and related liabilities 6,141 4,571 34%
Advances payments received from subscribers 6,782 3,986 70%
Other accounts payable 8,952 3,272 174%
------- ------- ------
Total current liabilities 105,665 75,970 39%
------- ------- ------
Long-term bank loans 250,464 - n/c
Loans from related companies 4,610 586 687%
Loans from shareholders 23 3,086 (99%)
Provision for claims 4,309 3,763 15%
Liability to fund joint venture and equity
investee 1,107 2,169 (49%)
Deferred hook up fee revenue 4,883 - n/c
Other 3,244 - n/c
------- ------- ------
Total long-term liabilities 268,640 9,604 2697%
------- ------- ------
Minority interest 1,779 - n/c
Paid-in capital 287,962 292,029 (1%)
Accumulated deficit (204,875) (160,755) 27%
------- ------- ------
Total shareholder's equity 83,087 131,274 (37%)
------- ------- ------
Total liabilities and shareholder's equity 459,171 216,848 112%
------- ------- ------
------- ------- ------
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TEVECAP, S.A
Consolidated Statement of Income
For the Year Ended
December 31, 1996 and 1995
(in thousands of US dollars)
Year % Net Year % Net %
1996 revenue 1995* revenue Change
Monthly subscriptions 123,020 62% 62,496 66% 97%
Installation 61,717 31% 26,045 28% 137%
Advertising 7,532 4% 8,377 9% (10%)
Indirect programming 11,377 6% 2,866 3% 297%
Other 8,195 4% 2,226 2% 268%
--------- ------ --------- ------ ------
Gross revenues 211,841 107% 102,010 108% 108%
Revenue taxes (13,747) (7%) (7,506) (8%) 83%
--------- ------ --------- ------ ------
Net revenue 198,094 100% 94,504 100% 110%
Direct operating expenses 110,124 56% 62,026 66% 78%
Selling, general and
administrative expenses 83,629 42% 46,902 50% 78%
--------- ------ --------- ------ ------
EBITDA 4,341 2% (14,424) (15%) (130%)
Allowance for inventory
and obsolescence 2,250 1% -- -- n/c
Depreciation and amortization 28,216 14% 13,268 14% 113%
--------- ------ --------- ------ ------
Operating loss (26,125) (13%) (27,692) (29%) (6%)
Interest income 5,962 3% 3,118 3% 91%
Interest expenses (17,669) (9%) (17,745) (19%) (0%)
Translation (loss) gain 179 0% (339) (0%) (153%)
Equity in income (losses)
of affiliates (8,532) (4%) (3,672) (4%) 132%
Other nonoperating (expenses)
income, net 3,692 2% 4,389 5% 184%
--------- ------ --------- ------ ------
Loss before income taxes and
minority interest (49,877) (25%) (41,941) (44%) 19%
Income taxes (156) 0% -- 0% n/c
Minority interest 1,849 1% 871 1% 112%
--------- ------ --------- ------ ------
Net income (loss) (48,184) (24%) (41,070) (43%) 17%
--------- ------ --------- ------ ------
--------- ------ --------- ------ ------
*1995 results have been restated to account for HBO Brasil which was 33.33%
owned by TVA, on an equity basis.
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TEVECAP, S.A
Fourth Quarter Consolidated Statement of Operations
Ended March 31, 1997 and 1996
(in thousands of US dollars)
% Net % Net %
4Q96 revenue 4Q95 revenue Change
Monthly subscriptions 37,719 57% 21,200 69% 78%
Installation 22,321 34% 8,050 26% 177%
Advertising 2,170 3% 2,872 9% (24%)
Indirect programming 6,099 9% 752 2% 711%
Other 2,900 4% 32 0% 8963%
-------- ------ --------- ------ -------
Gross revenues 71,209 107% 32,906 108% 116%
Revenue taxes (4,866) (7%) (2,335) (8%) 108%
-------- ------ --------- ------ -------
Net revenue 66,343 100% 30,571 100% 117%
Direct operating expenses 34,567 52% 19,747 65% 75%
Selling, general and
administrative expenses 29,919 45% 16,115 53% 86%
-------- ------ --------- ------ -------
EBITDA 1,857 3% (5,291) (17%) (135%)
Allowance for inventory
and obsolescence (243) 0% -- -- n/c
Depreciation and amortization 9,669 15% 4,403 14% 120%
-------- ------ --------- ------ -------
Operating loss (7,569) (11%) (9,694) (32%) (22%)
Interest income 2,312 3% 1,758 6% 32%
Interest expenses (7,544) (11%) (5,252) (17%) 44%
Translation (loss) gain (64) (0%) (298) (1%) (79%)
Equity in income (losses)
of affiliates (1,890) (3%) (1,588) (5%) 19%
Other nonoperating (expenses)
income, net 3,326 5% 1,122 4% 196%
-------- ------ --------- ------ -------
Loss before income taxes and
minority interest (11,429) 17% (13,952) (46%) (18%)
Income taxes (51) 0% -- n/c
Minority interest 316 0% 299 1% 6%
-------- ------ --------- ------ -------
Net income (loss) (11,164) (17%) (13,653) (45%) (18%)
-------- ------ --------- ------ -------
-------- ------ --------- ------ -------
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