Exhibit 1
[LOGO]
Contact: Douglas Duran Marina Echavarria/Ashley Chapman
Tevecap Ludgate Communications
(011 55 11) 821-8554 (212) 688-5144
TEVECAP ANNOUNCES FIRST QUARTER 1997 RESULTS
Sao Paulo, May 27, 1997-- TEVECAP, S.A., (TVA) one of Brazil's largest and
fastest growing pay television operators, today announced results for the
first quarter ended March 31, 1997.
First Quarter 1997 Highlights
- - Consolidated net revenues for 1Q97 reached US$67.2 million, representing a
growth of 104% versus US$33 million in 1Q96, and a 1% growth versus US$66.3
million in 4Q96.
- - Subscription revenue amounted to US$44.3 million in 1Q97, a growth of 103%
versus US$21.8 million in 1Q96. Subscription revenue represented 66% of net
revenue and increased by 17% when compared with US$37.7 million in 4Q96.
- - Installation revenue amounted to US$17.5 million in 1Q97, a growth of 73%
versus US$10.1 million in 1Q96, and a decrease of 22% versus US$22.3 million
in 4Q96. Installation revenue represented 26% of net revenue for 1Q97.
- - Direct operating expenses reached US$36.4 million in 1Q97, an 81% growth
versus US$20.1 million in 1Q96 or a 5% growth versus US$34.6 million in
4Q96.
- - Selling, general and administrative expenses for 1Q97 reached US$25.9
million, representing 39% of net revenue, compared with US$16 million during
1Q96 and US$29.9 million during 4Q96.
- - EBITDA reached US$4.9 million in 1Q97, representing a growth of 262% versus
a loss of US$3 million in 1Q96, or a growth of 164% compared with US$1.9
million in 4Q96.
- - Adjusted EBITDA for 1Q97 reached US$9.2 million, representing a growth of
50% versus a US$6.2 million in 4Q96.
- - Total Operating Expenses for 1Q97 amounted to US$72.8 million, a 2% decrease
versus US$73.9 million in 4Q96.
- - Net loss for 1Q97 was US$15.5 million, a 27% increase compared with a loss of
US$12.2 million in 1Q96 and a 38% increase versus US$11.2 million in 4Q96.
- - Capital expenditures (cash basis) amounted to US$38.8 million for 1Q97, a
49% increase versus US$26 million during 1Q96, and a 28% decrease versus
US$54 million in 4Q96.
CONSOLIDATED RESULTS
Consolidated net revenues for the first three months ended March 31, 1997
reached US$67.2 million, versus US$66.3 million in the fourth quarter and
US$33 million in the first quarter of 1996. 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 66% of net revenues, and amounted to
US$44.3 million in the first quarter of 1997, up 103% from US$21.8 million in
the first quarter of 1996 and US$37.7 in the fourth quarter of 1996. It can
be broken down by distribution technology as follows: MMDS (64%), cable
(11%), C-band (13%) and Ku-band (12%). Revenue increased as a result of an
expanded subscriber base and a higher average monthly fee.
Subscription Revenue ($000)
TECHNOLOGY 1Q97 % 1Q96 % CHANGE%
- ---------- -------- -------- -------- --------- -------
MMDS........... 28,399 64% 18,831 86% 51%
Cable.......... 4,745 11% 1,136 5% 318%
C-Band......... 5,799 13% 1,867 9% 211%
Ku-band........ 5,339 12% 0 0% n/c
-------- -------- -------- ---------
Total.......... 44,282 100% 21,834 100% 103%
Subscription Revenue ($000)
TECHNOLOGY 1Q97 % 4Q96 % CHANGE%
- ---------- -------- -------- -------- --------- -------
MMDS........... 28,399 64% 27,097 72% 5%
Cable.......... 4,745 11% 3,467 9% 37%
C-Band......... 5,799 13% 5,391 14% 8%
Ku-band........ 5,339 12% 1,764 5% 203%
-------- -------- -------- ---------
Total.......... 44,282 100% 37,719 100% 17%
Installation revenue contributed to 26% of net revenues, reaching US$17.5
million in 1Q97, versus US$22.3 million in 4Q96. This decrease is attributed
to a reduction in the hook-up fee for KU-Band and C-Band.
Advertising revenue amounted to US$1.8 million in the first quarter of 1997,
representing a 92% increase, versus US$1 million in the first quarter of 1996.
2
Indirect programming revenue in the first quarter of 1997 reached US$5.1
million, an increase of 308% versus US$1.3 million in the first 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 amounted to US$36.4 million for the first three
months of 1997 versus US$34.6 million in the previous quarter, or a rise of 5%.
Direct operating expenses as a percentage of revenue dropped from 61% in the
first quarter of 1996 to 54% in the first quarter of 1997.
Selling, general and administrative expenses reached US$25.9 million,
representing 39% of net revenue versus US$29.9 million in the fourth quarter of
1996. As a percentage of revenues, selling, general and administrative expenses
decreased from 45% to 39% as a result of dilution of fixed expenses.
As a result, EBITDA reached US$4.9 million, an increase of 164% versus the
US$1.9 million in the fourth quarter of 1996.
Adjusted EBITDA reached US$9.2 million, an increase of 50% versus US$ 6.2
million adjusted EBITDA for the fourth quarter of 1996. The positive EBITDA of
US$9.2 million for the first quarter of 1997 represented a turnaround versus
the loss of US$3 million during the first quarter of 1996. Adjusted EBITDA
includes the deferment of KU band revenue of US$4.3 million for first quarter
of 1997.
Depreciation and amortization for the first quarter of 1997 was US$10.4
million as compared with US$9.7 million in the previous quarter, and US$5.1
million in the first quarter of 1996. This includes depreciation of systems,
equipment, installation materials, installation personnel and amortization of
organizational costs and concessions.
Operating loss during the first quarter of 1997 was US$5.5 million, 27% less
than the loss of US$7.6 million reported in the fourth quarter of 1996. The
operating loss for the quarter was also 32% less than the loss of US$8.1 million
in the first quarter of 1996.
Interest income reached US$5.0 million, versus US$2.3 million in the
previous quarter, or an increase of 118%. Interest expenses were US$11.3
million, versus US$7.5 million in the fourth quarter of 1996, representing a 50%
increase.
Equity in losses (income) of affiliates amounted to a loss of US$2.5 million
in the first quarter of 1997 versus a loss of US$1.9 million in the previous
quarter. That loss resulted from ESPN Brasil (US$1.9 million), TV Filme
(US$449,000), and Canbras (US$205,000), and was offset by income from HBO
(US$38,000).
3
Other non-operating expenses amounted to US$763,000 versus income of US$3.3
million in the fourth quarter of 1996. The unusually high income in the fourth
quarter was due to a capital gain from TV Filme's equity offering issued in
1996.
Minority interest amounted to US$191,000, representing the minority
shareholder's portion of the US$1 million aggregate losses of TVA Sul.
As a result, net loss for the first three months ended March 31, 1997 was
US$15.5 million versus a net loss of US$11.2 million reported in the fourth
quarter of 1996 and US$12.2 million reported in the first quarter of 1996.
Capital expenditures (cash basis) for the first quarter of 1997 amounted to
US$38.8 million, a 28% decrease from US$54 million in the previous quarter.
Funds were directed mainly to: purchase decoders for all distribution systems;
implement internal networks for MMDS and cable; and cable network build-out,
mainly in Sao Paulo and Curitiba.
SUBSCRIBER PERFORMANCE
Total subscriber base for the first quarter of 1997 totaled 1,093,677, a 9%
growth versus the previous quarter, and an increase of 61% versus the first
quarter of 1996.
Owned systems, or proprietary systems, grew to 394,493 subscribers due the
higher maturity systems of cable and DBS. The Company emphasized the strategic
development of cable service, reaching 1.369 kilometers of cable.
Through independent operators, Tevecap reached 605,606 subscribers as of
March 31, 1997, compared with 564,499 subscribers during the previous quarter,
and 401,744 subscribers in the first quarter of 1996. The number of subscribers
through independent operators increased by 7%, from the first quarter of 1997
and the fourth quarter of 1996, representing an additional 41,107 households
between the fourth quarter of 1996 and the first quarter of 1997.
4
The table below outlines the number of subscribers at March 31, 1997 and
March 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
1Q97 1Q96 CHANGE %
-------- -------- --------
MMDS....................... 230,002 194,589 18%
Cable...................... 57,263 16,645 244%
Digital C-band............. 58,821 22,122 166%
Ku-band.................... 48,407 -- --
-------- --------
Total Owned Systems........ 394,493 233,356 69%
Operating Ventures*........ 93,578 44,768 109%
Independent Operators...... 605,606 401,744 51%
-------- --------
Households Receiving
TVA Programming............ 1,093,677 679,868 61%
* Represents 100% of subscribers; on an equity subscriber basis there were
6,402 subscribers at March 31, 1996 and 13,955 subscribers at December 31,
1996 and 16,187 subscribers at March 31, 1997.
REVENUES BY OPERATION
The table below outlines consolidated net revenue for the first quarter
ended March 31, 1997 and 1996 and the fourth quarter ended December 31, 1996 for
owned systems by operation:
Consolidated Net Revenue by Operation
1Q97 4Q96 % CHANGE 1Q97 1Q96 % CHANGE
------ ------ -------- ------ ------ --------
TVA Sao Paulo......... 17,656 19,030 (7%) 17,656 14,290 24%
TVA Rio de Janeiro.... 10,436 9,437 11% 10,436 6,396 63%
TVA Sul............... 5,654 4,300 31% 5,654 1,941 191%
Digital C-Band........ 8,848 10,017 (12%) 8,848 7,269 22%
Ku-Band............... 15,707 13,336 18% 15,707 0 n/c
------ ------ ------ ------
Total................. 58,301 56,120 4% 58,301 29,896 95%
5
TVA Sao Paulo: Net revenues amounted to US$17.7 million in the first quarter
of 1997, down 7% compared with US$19 million in the previous quarter. This
decrease was due to a fewer number of installations and a reduction in the
average hook-up fee . At March 31, 1997, the subscriber base totaled 147,239,
comprising both MMDS and cable systems, a 7% growth over the same period of
1996 and a minor decrease by less than 1% versus the fourth quarter of 1996
which had a subscriber base of 148,149. At the end of the first quarter of
1997, the cable network extended approximately 245 Km, connecting
approximately 67,849 homes.
TVA Rio: Net revenues amounted to US$10.4 million, an increase of 11% versus
the previous quarter and 63% higher than US$6.4 million during the first
quarter of 1996. At the end of the first quarter of 1997, the subscriber base
reached 84,573, a 6% growth over the previous quarter's subscriber base of
79,928. This solid performance was achieved despite the growing cable
competition in this region.
TVA Sul: Net revenues amounted to US$5.7 million, 31% higher than US$4.3
million in the previous quarter and 191% higher than the first quarter of
1996. As of March 31, 1997, subscriber base was 55,453, a 15% growth over the
previous quarter. The MMDS system in Curitiba, increased 13% to 26,620
subscribers.
C Band: Net revenues amounted to US$8.8 million, a 12% decline versus US$10
million in the previous quarter primarily as a result of reduction in the
average hook-up fee. The subscriber base increased by 18% from 49,858 to
58,821 subscribers between the fourth quarter of 1996 and the first quarter
of 1997. 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$15.7 million in the first quarter of
1997, representing an increase of 18% versus the US$13.3 million in the
previous quarter. The subscriber base increased by 108% compared with the
previous quarter, amounting to 48,407 subscribers. 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.
6
OPERATING VENTURES
Through the operating ventures, TVA has minority interests in two pay
television operators, Canbras and TV Filme, which served 93,578 subscribers
as of March 31, 1997, as outlined in the table below:
Subscriber Base-Ventures (*)
1Q 97 1Q 96 CHG% 1Q 97 4Q 96 CHG%
------- ------- ------ ------- ------- ------
Canbras........ 12,928 -- n/c 12,928 8,126 59%
Brasilia....... 52,256 30,787 70% 52,256 50,602 3%
Goiania........ 11,258 6,223 81% 11,258 10,426 8%
Belem.......... 17,136 7,758 121% 17,136 16,102 6%
TV Filme....... 80,650 44,768 80% 80,650 77,130 5%
------- ------- ------- -------
Total.......... 93,578 44,768 109% 93,578 85,256 10%
(*) Represents only paying subscribers
FINANCIAL SITUATION
Total debt reached US$280.7 million as of March 31, 1997, 11% of which was
due in short term representing the refinancing of certain suppliers payable
(US$19.3 million) and the accrued interest on the High Yield (US$11.0
million). The remaining US$ 250.4 million was the principal amount of the
High Yield.
TVA is one of Brazil's largest and fastest growing pay-TV operators reaching
over one million households. 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 1
million 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.
7
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)
8
TEVECAP S.A.
First Quarter Consolidated Balance Sheet
For the Periods Ended
March 31, 1997 and December 31, 1996
(in thousands of US dollars)
MARCH 31 DEC 31 %
1997 1996 CHANGE
---------- ---------- -----------
Cash and cash equivalents............... 65,066 104,801 (38%)
Accounts receivable, net................ 35,928 32,296 11%
Inventories............................. 16,906 13,095 29%
Film exhibition rights.................. 856 1,061 (19%)
Prepaid and other assets................ 4,058 1,914 112%
Other accounts receivable............... 4,443 5,105 (13%)
---------- ---------- -----------
Total current assets.................... 127,257 158,272 (20%)
---------- ---------- -----------
Property, plant and equipment........... 260,284 233,612 11%
Investments
- -Equity affiliates...................... 9,454 9,227 2%
- -Cost basis investees................... 23,734 14,766 61%
- -Concessions, net....................... 16,710 17,574 (5%)
Loans to related companies.............. 16,693 15,308 9%
Prepaid expenses........................ 8,379 7,990 5%
Other................................... 2,154 2,422 (11%)
---------- ---------- -----------
Total assets............................ 464,665 459,171 1%
---------- ---------- -----------
---------- ---------- -----------
Short-term bank loans................... 30,279 17,361 74%
Film suppliers.......................... 10,955 7,012 56%
Other suppliers......................... 51,984 52,932 (2%)
Taxes payable other than income taxes... 8,843 8,999 (2%)
Accrued payroll and related
liabilities............................ 7,163 6,141 17%
Advances payments received
from subscribers....................... 6,303 6,782 (7%)
Other accounts payable.................. 8,107 8,952 (10%)
---------- ---------- -----------
Total current liabilities............... 123,634 108,179 14%
---------- ---------- -----------
Long term bank loans.................... 250,456 250,464
Loans from related companies............ 2,670 4,610 (42%)
Loans from shareholders................. 3,228 23 13935%
Provision for claims.................... 4,547 5,039 (10%)
Liability to fund joint venture and
equity investee........................ 1,391 1,107 26%
Deferred hook up fee revenue............ 9,224 4,883 89%
---------- ---------- -----------
Total long-term liabilities............. 271,516 266,126 2%
---------- ---------- -----------
Minority interest....................... 1,589 1,779 (11%)
Paid-in-capital......................... 287,962 287,962
Accumulated deficit..................... (220,036) (204,875) 7%
---------- ---------- -----------
Total shareholder's equity.............. 67,926 83,087 (18%)
---------- ---------- -----------
Total liabilities and shareholders'
equity................................. 464,665 459,171 1%
---------- ---------- -----------
---------- ---------- -----------
TEVECAP S.A.
First Quarter Consolidated Balance Sheet
For the Periods Ended
March 31, 1997 and 1996
(in thousands of US dollars)
MARCH 31 MARCH 31 %
1997 1996 CHANGE
---------- ---------- -----------
Cash and cash equivalents............... 65,066 560 11519%
Accounts receivable, net................ 35,928 11,689 207%
Inventories............................. 16,906 15,984 6%
Film exhibition rights.................. 856 405 111%
Prepaid and other assets................ 4,058 646 528%
Other accounts receivable............... 4,443 4,730 (6%)
---------- ---------- -----------
Total current assets.................... 127,257 34,014 274%
---------- ---------- -----------
Property, plant and equipment........... 260,284 141,479 84%
Investments
- -Equity affiliates...................... 9,454 4,584 106%
- -Cost basis investees................... 23,734 13,266 79%
- -Concessions, net....................... 16,710 7,768 115%
Loans to related companies.............. 16,693 12,157 37%
Prepaid expenses........................ 8,379 -- n/c
Other................................... 2,154 3,584 (40%)
---------- ---------- -----------
Total assets............................ 464,665 216,852 114%
---------- ---------- -----------
Short-term bank loans................... 30,279 454 6569%
Film suppliers.......................... 10,955 6,641 65%
Other suppliers......................... 51,984 47,248 10%
Taxes payable other than income taxes... 8,843 6,872 29%
Accrued payroll and related
liabilities............................ 7,163 5,235 37%
Advances payments received
from subscribers....................... 6,303 4,837 30%
Other accounts payable.................. 8,107 1,248 550%
---------- ---------- -----------
Total current liabilities............... 123,634 72,535 70%
---------- ---------- -----------
Long term bank loans.................... 250,456 -- n/c
Loans from related companies............ 2,670 13,983 (81%)
Loans from shareholders................. 3,228 2,887 12%
Provision for claims.................... 4,547 3,660 24%
Liability to fund joint venture and
equity investee........................ 1,391 4,665 (70%)
Deferred hook up fee revenue............ 9,224 -- n/c
---------- ---------- -----------
Total long-term liabilities............. 271,516 25,195 978%
---------- ---------- -----------
Minority interest....................... 1,589 -- n/c
Paid-in-capital......................... 287,962 287,962
Accumulated deficit..................... (220,036) (168,840) 30%
---------- ---------- -----------
Total shareholder's equity.............. 67,926 119,122 (43%)
---------- ---------- -----------
Total liabilities and shareholders'
equity................................. 464,665 216,852 114%
---------- ---------- -----------
---------- ---------- -----------
TEVECAP S.A.
First Quarter Consolidated Statement of Income
For the Periods Ended
March 31, 1997 and 1996
(in thousands of US dollars)
% NET % NET %
1Q97 REVENUE 1Q96 REVENUE CHANGE
------ --------- ------ --------- ------
Monthly subscriptions....... 44,282 66% 21,834 66% 103%
Installation................ 17,456 26% 10,078 31% 73%
Advertising................. 1,810 3% 941 3% 92%
Indirect programming........ 5,115 8% 1,255 4% 308%
Other....................... 3,854 6% 1,067 3% 261%
-------- --- -------- --- ---
Gross revenues.............. 72,517 108% 35,175 107% 106%
Revenue taxes............... (5,286) (8%) (2,170) (7%) 144%
-------- --- -------- --- ---
Net revenue................. 67,231 100% 33,005 100% 104%
Direct operating expenses... 36,438 54% 20,080 61% 81%
Selling, general and
administrative expenses.... 25,891 39% 15,952 48% 62%
-------- --- -------- --- ---
EBITDA...................... 4,902 7% (3,027) (9%) n/c
Allowance for inventory
and obsolescence........... 38 0% -- -- n/c
Depreciation and
amortization............... 10,397 15% 5,097 15% 104%
-------- --- -------- --- ---
Operating loss.............. (5,533) (8%) (8,124) (25%) (32%)
Interest income............. 5,035 7% 1,396 4% 261%
Interest expenses........... (11,316) (17%) (1,088) (3%) 940%
Translation (loss) gain..... (610) (1%) (77) 0% 692%
Equity income (losses)
of affiliates.............. (2,466) (4%) (3,222) (10%) (23%)
Other nonoperating
(expenses) income, net..... (763) (1%) (1,156) (4%) (34%)
-------- --- -------- --- ---
Loss before income taxes and
minority interest.......... (15,653) (23%) (12,271) (37%) 28%
Income taxes
Minority interest........... 191 0% 119 0% 61%
-------- --- -------- --- ---
Net income (loss)........... (15,462) (23%) (12,152) (37%) 27%
-------- --- -------- --- ---
-------- --- -------- --- ---
TEVECAP S.A.
First Quarter Consolidated Statement of Income
For the Periods Ended
March 31, 1997 and December 31, 1996
(in thousands of US dollars)
% NET % NET %
1Q97 REVENUE 4Q96 REVENUE CHANGE
------ --------- ------ --------- ------
Monthly subscriptions....... 44,282 66% 37,719 57% 17%
Installation................ 17,456 26% 22,321 34% (22%)
Advertising................. 1,810 3% 2,170 3% (17%)
Indirect programming........ 5,115 8% 6,099 9% (16%)
Other....................... 3,854 6% 2,900 4% 33%
--------- --- --------- --- ---
Gross revenues.............. 72,517 108% 71,209 107% 2%
Revenue taxes............... (5,286) (8%) (4,866) (7%) 9%
--------- --- --------- --- ---
Net revenue................. 67,231 100% 66,343 100% 1%
Direct operating expenses... 36,438 54% 34,567 52% 5%
Selling, general and
administrative expenses.... 25,891 39% 29,919 45% (13%)
--------- --- --------- --- ---
EBITDA...................... 4,902 7% 1,857 3% 164%
Allowance for inventory
and obsolescence........... 38 0% (243) 0% (116%)
Depreciation and
amortization............... 10,397 15% 9,669 15% 8%
--------- --- --------- --- ---
Operating loss.............. (5,533) (8%) (7,569) (11%) (27%)
Interest income............. 5,035 7% 2,312 3% 118%
Interest expenses........... (11,316) (17%) (7,544) (11%) 50%
Translation (loss) gain..... (610) (1%) (64) 0% 853%
Equity income (losses) of
affiliates................. (2,466) (4%) (1,890) (3%) 30%
Other nonoperating
(expenses) income, net..... (763) (1%) 3,326 5% (123%)
--------- --- --------- --- ---
Loss before income taxes
and minority interest...... (15,653) (23%) (11,429) (17%) 37%
Income taxes................ (51) 0% (100%)
Minority interest........... 191 0% 316 0% (40%)
--------- --- --------- --- ---
Net income (loss)........... (15,462) (23%) (11,164) (17%) 38%
--------- --- --------- --- ---
--------- --- --------- --- ---