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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 10-K/A NO. 1
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTIONS 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER : 0-28670
TV FILME, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 98-0160214
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
C/o ITSA - Intercontinental Telecomunicacoes Ltda.
SCS, Quadra 07-Bl.A
Ed. Executive Tower, Sala 601
70.300-911 Brasilia - DF
Brazil
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 011-55-61-314-9908
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, PAR VALUE $0.01 PER SHARE
INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. [X] YES [ ] NO
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K [ ].
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF
THE REGISTRANT AS OF APRIL 24, 1997 WAS APPROXIMATELY $41,186,548.
AS OF APRIL 24, 1997, 10,166,176 SHARES OF THE REGISTRANT'S COMMON STOCK,
$0.01 PAR VALUE, WERE OUTSTANDING.
DOCUMENTS INCORPORATED BY REFERENCE. NONE.
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<PAGE>
The information required by Part III (Items 10, 11, 12 and 13) of the
undersigned Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (the "Annual Report"), filed pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), was to
be incorporated by reference to the definitive Proxy Statement for the 1997
Annual Meeting of Stockholders of the Company, which Proxy Statement was to be
filed pursuant to Regulation 14A under the Exchange Act within 120 days
following the end of the Company's fiscal year as permitted under General
Instruction G of Form 10-K ("Instruction G"). However, the definitive Proxy
Statement will not have been filed within such period. Accordingly, pursuant to
Instruction G, the Company hereby amends Items 10, 11, 12 and 13 of the Annual
Report as follows:
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information with respect to executive officers of the Company is presented
in Item 4 of this Report under the caption "Executive Officers of the Company."
HERMANO STUDART LINS DE ALBUQUERQUE, one of the co-founders of the Company,
has served as Chief Executive Officer, Secretary and a director of the Company
since its incorporation. Mr. Lins received a Master's degree in Artificial
Intelligence from the University of Sussex, England and a Bachelor of Science
degree in Electronic Engineering from the University of Brasilia. Mr. Lins was a
member of the MMDS Regulation Commission, a Brazilian government advisory board
and is a member of the Technical Advisory Board for National Satellite
Publishing Inc. Mr. Lins is 34 years old. Mr. Lins is the brother of Mr. Carlos
Andre Studart Lins de Albuquerque.
DAVID E. LIBOWITZ has served as a director of the Company since April 1997.
Mr. Libowitz is a Vice President of E.M. Warburg, Pincus & Co., LLC and has been
associated with E.M. Warburg Pincus & Co., LLC (or its predecessor E.M. Warburg,
Pincus & Co., Inc.) since July 1991. Mr. Libowitz is a director of Caribiner
International, Inc. Mr. Libowitz is 34 years old.
CARLOS ANDRE STUDART LINS DE ALBUQUERQUE, one of the co-founders of the
Company, has served as President, Chief Operating Officer, Treasurer and a
director of the Company since its incorporation. Mr. Lins received a Bachelor of
Science degree in Physics from the University of Brasilia and a Bachelor of
Science degree in Mathematics from the University of Ceub. Mr. Lins is 32 years
old. Mr. Lins is the brother of Mr. Hermano Studart Lins de Albuquerque.
DOUGLAS M. KARP has served as Chairman of the Board of the Company since
its incorporation. Mr. Karp has been a Managing Director of E.M. Warburg, Pincus
& Co., LLC (or its predecessor, E.M. Warburg, Pincus & Co., Inc.) since May
1991. Prior to joining E.M. Warburg, Pincus & Co., LLC, Mr. Karp held several
positions with Salomon Inc, including Managing Director from January 1990 to May
1991, Director from January 1989 to December 1989 and Vice President from
October 1986 to December 1988. Mr. Karp is a director of LCI International,
Inc., TresCom International, Inc. and several privately held companies. Mr. Karp
is 41 years old.
CLAUDIO DASCAL has served as a director of the Company since July 1996. Mr.
Dascal has been a Vice President of Tevecap, S.A. since April 1996. Prior to
joining Tevecap, S.A., Mr. Dascal held several senior management positions at
Alcatel Standard Electrica, S.A. and its affiliates from 1991 to 1996. Mr.
Dascal is 53 years old.
ALVARO J. AGUIRRE has served as Chief Financial Officer and a director of
the Company since June 1996. Prior to joining the Company, Mr. Aguirre was a
member of the Latin America Corporate Finance Group of Morgan Stanley & Co.,
Incorporated from 1994 to 1996 and a securities attorney at the law firm of
Sullivan & Cromwell from 1991 to 1994. Mr. Aguirre is 30 years old.
JOSE AUGUSTO PINTO MOREIRA has served as a director of the Company since
its incorporation. Mr. Moreira has been the Executive Vice-President of Finance
and Administration of Abril S.A. since 1982. Mr. Moreira is a director of
several privately held companies. Mr. Moreira is 53 years old.
<PAGE>
The number of directors of the Company, as determined by the Board of
Directors is seven. The Board of Directors of the Company consists of three
classes: Class I, Class II and Class III, as nearly equal in number as possible.
One of the three classes, comprising approximately one-third of the directors,
is elected each year to succeed the directors whose terms are expiring.
Directors hold office until the annual meeting for the year in which their terms
expire and until their successors are elected and qualified unless, prior to
that date, they have resigned, retired, or otherwise left office. In accordance
with the Company's Certificate of Incorporation, Class I directors are to be
elected at the 1997 Annual Meeting of Stockholders, Class II directors are to be
elected at the 1998 Annual Meeting of Stockholders and Class III directors are
to be elected at the 1999 Annual Meeting of Stockholders.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors, certain
officers and persons holding more than 10% of a registered class of the
Company's equity securities to file reports of ownership and reports of changes
in ownership with the Securities and Exchange Commission (the "Commission") and
the Nasdaq National Market. Directors, certain officers and greater than 10%
stockholders are also required by Commission regulations to furnish the Company
with copies of all such reports that they file. Based on the Company's review of
copies of such forms provided to it, the Company believes that all filing
requirements were complied with during the fiscal year ended December 31, 1996,
except for one late filing for each of Messrs. Lins and Mr. Aguirre.
ITEM 11. EXECUTIVE COMPENSATION.
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of the compensation paid or
accrued by the Company for services rendered to the Company in all capacities
for the fiscal year ended December 31, 1996 by its Chief Executive Officer and
each of the Company's other executive officers whose total salary and bonus
exceeded $100,000 during the last fiscal year (collectively, the "Named
Executive Officers"):
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
------------------------------------------ ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND POSITION YEAR SALARY ($) BONUS ($) COMPENSATION OPTIONS (#) COMPENSATION ($)
----------------- ---- ---------- --------- ------------ ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Hermano Studart.............. 1996 $113,979 $200,000(1) -0- 110,000 $6,520(2)
Lins de Albuquerque, 1995 98,463 111,500 -0- 49,788(3) -
Chief Executive Officer
Carlos Andre Studart......... 1996 113,979 200,000(1) -(4) 110,000 6,520(2)
Lins de Albuquerque, 1995 98,463 111,500 -0- 49,788(3) -
President, Chief Operating
Officer and Treasurer
Alvaro J. Aguirre,........... 1996 62,499 200,000(1)(6) -0- 110,000 6,520(2)
Chief Financial Officer(5)
</TABLE>
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(1) Includes non-cash bonus payments made to the Named Executive Officers in
the form of Common Stock in the amounts of $123,333 for Messrs. Hermano
Lins and Carlos Andre Lins and $25,000 for Mr. Aguirre.
(2) The compensation reflected in this column represents Company paid life
insurance premiums.
(3) These options were exercised by Messrs. Hermano Lins and Carlos Andre Lins
in 1995.
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<PAGE>
(4) The aggregate value of perquisites and other personal benefits have not
been reflected because the amounts were below the Commission's threshold
for disclosure (i.e., the lesser of $50,000 or 10% of the total of annual
salary and bonus for such officer).
(5) Mr. Aguirre joined the Company in June 1996.
(6) Includes a special one-time sign on bonus in the amount of $50,000.
EMPLOYMENT AGREEMENTS
The Company and ITSA have entered into employment agreements with each of
Messrs. Hermano Lins and Carlos Andre Lins, pursuant to which Mr. Hermano Lins
has agreed to serve full time as Chief Executive Officer and Secretary of the
Company, Mr. Carlos Andre Lins has agreed to serve full time as President, Chief
Operating Officer and Treasurer of the Company, and each has agreed to serve in
comparable executive positions at ITSA. The annual base salary under such
agreements for each of Messrs. Lins is $125,000. Such salaries will be reviewed
at least annually by the Board of Directors and may be increased but not
decreased. In addition, each of Messrs. Lins are eligible to receive an annual
bonus, payable by ITSA, in amounts to be determined by the Board of Directors
taking into consideration, among other things, the financial and operating
performance of the Company. Pursuant to each of Messrs. Lins's employment
agreements, if the Company terminates the executive's employment either without
"cause" (as defined therein) or because of the death of the executive, ITSA is
required to pay the executive any unpaid base salary accrued through the date of
termination, plus an amount equal to an additional 12 months' base salary.
Although Brazilian law does not permit employment agreements of this type to be
for a fixed term, each agreement does include a non-competition provision and a
prohibition on the solicitation of clients and employees.
The Company has entered into an employment agreement with Mr. Aguirre,
pursuant to which Mr. Aguirre has agreed to serve full time as Chief Financial
Officer of the Company until December 31, 1998, unless terminated earlier in
accordance with the terms of such agreement. The annual base salary under such
agreement is $125,000. Such salary will be reviewed at least annually by the
Board of Directors of the Company and may be increased but not decreased. In
addition, Mr. Aguirre is eligible to receive an annual bonus. Such annual bonus
will be at least $125,000 for the period ending December 31, 1996, with amounts
for subsequent years to be determined by the Board of Directors of the Company,
taking into consideration among other things, the financial and operating
performance of the Company. Upon executing his employment agreement, Mr. Aguirre
received a one-time bonus of $50,000. Pursuant to Mr. Aguirre's employment
agreement, if the Company terminates Mr. Aguirre's employment because of the
death or disability of Mr. Aguirre, the Company is required to pay Mr. Aguirre
or his estate any unpaid base salary accrued through the date of termination,
plus an amount equal to an additional 12 months' base salary. If the Company
terminates Mr. Aguirre without "cause" (as defined therein), the Company is
required to pay Mr. Aguirre any unpaid base salary accrued through the date of
termination, plus an amount equal to the unpaid base salary for the balance of
the term and the pro rata portion of any agreed upon annual bonus. The agreement
includes a non-competition provision and a prohibition on the solicitation of
clients and employees.
STOCK OPTIONS
1996 STOCK OPTION PLAN
On July 18, 1996, the Board of Directors adopted and the stockholders of
the Company approved the 1996 Stock Option Plan (the "1996 Stock Option Plan"),
which provides for the grant to officers, key employees and consultants of the
Company of both "incentive stock options" within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), and
stock options that are non-qualified for U.S. federal income tax purposes. The
total number of shares of Common Stock for which options may be granted pursuant
to the 1996 Stock Option Plan is 936,432, subject to certain adjustments
reflecting changes in the Company's capitalization. In addition, no employee may
receive options for more than 200,000 shares of Common Stock in the aggregate in
any fiscal year. The 1996 Stock Option Plan is administered by the Compensation
-3-
<PAGE>
Committee of the Board of Directors (the "Compensation Committee"). The
Compensation Committee determines, among other things, which officers, employees
and consultants receive options under the plan, the time when options are
granted, the type of option (incentive stock options or non-qualified stock
options, or both) to be granted, the number of shares subject to each option,
the time or times when the options become exercisable, and, subject to certain
conditions discussed below, the option price and duration of the options.
Members of the Compensation Committee are not eligible to receive options under
the 1996 Stock Option Plan.
The exercise price for incentive stock options will be determined by the
Compensation Committee, but may not be less than the fair market value on the
date of grant and the term of any such option may not exceed ten years from the
date of grant. With respect to any participant in the 1996 Stock Option Plan who
owns stock representing more than 10% of the voting power of the outstanding
capital stock of the Company, the exercise price of any incentive stock option
may not be less than 110% of the fair market value of such shares on the date of
grant and the term of such option may not exceed five years from the date of
grant.
The exercise price of non-qualified stock options will be determined by the
Compensation Committee on the date of grant, but may not be less than the par
value of the Common Stock on the date of grant, and the term of such option may
not exceed ten years from the date of grant.
Payment of the option price may be made by certified or bank cashier's
check, by tender of shares of Common Stock then owned by the optionee or by any
other means acceptable to the Company. Options granted pursuant to the 1996
Stock Option Plan are not transferrable, except by will or the laws of descent
and distribution in the event of death. During an optionee's lifetime, the
options are exercisable only by the optionee.
The Board of Directors has the right at any time from time to time to amend
or modify the 1996 Stock Option Plan, without the consent of the Company's
stockholders or optionees; provided that no such action may adversely affect
options previously granted without the optionee's consent, and provided further
that no such action, without the approval of the stockholders of the Company,
may increase the total number of shares of Common Stock which may be purchased
pursuant to options under the plan, expand the class of persons eligible to
receive grants of options under the plan, decrease the minimum option price,
extend the maximum term of options granted under the plan or extend the term of
the plan. The expiration date of the 1996 Stock Option Plan after which no
option may be granted thereunder is 2006.
Options to purchase 407,000 shares of Common Stock were granted upon the
consummation of the Initial Public Offering, of which 297,000 are exercisable at
$10.00 per share and 110,000 of which are exercisable at $11.00 per share, and
which generally vest and become exercisable at the rate of 20% per year for five
years beginning on August 2, 1997. Options to purchase an additional 10,000
shares of Common Stock were granted in each of December 1996 and February 1997
at an exercise price of $11.75.
The Company has filed with the Commission a Registration Statement on Form
S-8 covering the shares of Common Stock underlying options granted under the
1996 Stock Option Plan.
STOCK OPTION GRANTS
The following table sets forth information regarding grants of options to
purchase Common Stock during the fiscal year ended December 31, 1996 to each of
the Named Executive Officers. No stock appreciation rights were granted during
1996.
-4-
<PAGE>
<TABLE>
<CAPTION>
OPTION GRANTS IN 1996
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
--------------------------------------------------------- AT ASSUMED ANNUAL
NUMBER OF PERCENT OF RATES OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM (3)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------------
NAME GRANTED (#) 1996 (1) ($/SHARE)(2) DATE (5%) (10%)
- ---- ----------- ---------- ------------ ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Hermano Studart Lins de
Albuquerque.................... 110,000(4) 26.4% $10.00 08/02/06 $691,784 $1,753,116
Carlos Andre Studart Lins
de Albuquerque................. 110,000(4) 26.4 10.00 08/02/06 691,784 1,753,116
Alvaro J. Aguirre................. 110,000(4) 26.4 11.00 07/26/06 760,962 1,928,428
</TABLE>
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(1) The Company granted options to purchase a total of 417,000 shares of
Common Stock in 1996.
(2) Each of the Company's stock options were granted at or above the fair
market value on the date of grant. The fair market value of the
Common Stock on December 31, 1996 was $13.00 per share.
(3) Amounts reported in these columns represent amounts that may
be realized upon exercise of options immediately prior to the
expiration of their term assuming the specified compounded rates of
appreciation (5% and 10%) on the Common Stock over the term of the
options. These assumptions are based on rules promulgated by the
Commission and do not reflect the Company's estimate of future stock
price appreciation. Actual gains, if any, on the stock option
exercises and Common Stock holdings are dependent on the timing of
such exercise and the future performance of the underlying Common
Stock. There can be no assurance that the rates of appreciation
assumed in this table can be achieved or that the amounts reflected
will be received by the option holder.
(4) These options vest and become fully exercisable as to 20% on the first
anniversary of the date of grant (August 2, 1997 for each of
Messrs. Hermano Lins and Carlos Andre Lins and July 26, 1997 for Mr.
Aguirre) and as to an additional 20% on each anniversary thereafter
until all such options are fully vested and exercisable. Mr. Aguirre's
options also vest, to the extent not then vested, on December 31,
1998, if his employment agreement with the Company is not renewed.
YEAR-END VALUE TABLE
The following table sets forth information regarding the number and year
end value of unexercised options held at December 31, 1996 by each of the Named
Executive Officers. No stock appreciation rights were exercised by the Named
Executive Officers during fiscal 1996.
-5-
<PAGE>
<TABLE>
<CAPTION>
FISCAL 1996 OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED "IN-THE-MONEY" (1)
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR-END (#) YEAR-END ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------------------- -------------------------
<S> <C> <C>
Hermano Studart Lins
de Albuquerque......................... 0/110,000 $0/$330,000
Carlos Andre Studart Lins
de Albuquerque......................... 0/110,000 0/330,000
Alvaro J. Aguirre......................... 0/110,000 0/220,000
- ------------
(1) Options are "in-the-money" if the fair market value of the underlying
securities exceeds the exercise price of the options. The amounts set forth
represent the difference between $13.00 per share, the fair market value
of the Common Stock issuable upon exercise of options at December 31, 1996,
and the exercise price of the option, multiplied by the applicable number
of options.
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company did not have a Compensation Committee during the first seven
months of 1996. As a result, Messrs. Karp, Gary D. Nusbaum (a former director
and Vice President of the Company), Hermano Lins, Carlos Andre Lins and Moreira
participated in deliberations concerning executive officer compensation. In
connection with the Initial Public Offering, the Board of Directors established
a Compensation Committee comprised of Messrs. Karp, Nusbaum and Moreira. Mr.
Karp is a general partner of Warburg, Pincus & Co., a New York general
partnership ("WP") which is the sole general partner of Warburg, Pincus
Investors, L.P. ("Warburg, Pincus"). Mr. Moreira is the Executive Vice-President
of Finance and Administration of Abril S.A. Mr. Libowitz became a member of the
Compensation Committee in April 1997 to fill the vacancy created by the
resignation of Mr. Nusbaum.
COMPENSATION OF DIRECTORS
Independent directors are eligible to receive an annual fee of $10,000, a
meeting fee of $1,000 for every meeting of the Board of Directors attended and
each committee meeting held separately and a $500 fee for each meeting of the
Board of Directors or committee meeting participated in by telephone. All
directors are reimbursed for out-of-pocket expenses. Under the 1996 Stock Option
Plan, the Company may, from time to time and in the sole discretion of the Board
of Directors, grant options to directors who are not members of the Compensation
Committee.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock, as of April 24, 1997, by (i) each person known to
the Company to be the beneficial owner of more than 5% of the Common Stock, (ii)
each of the Company's directors, (iii) each of the Named Executive Officers, and
(iv) all directors and executive officers as a group. All information with
respect to beneficial ownership has been furnished to the Company by the
respective stockholders of the Company.
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<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENTAGE
OF BENEFICIAL OF
NAME AND ADDRESS (1) OWNERSHIP (2) CLASS (2)
-------------------- ---------------- ----------
<S> <C> <C>
Warburg, Pincus Investors, L.P.
466 Lexington Avenue
New York, New York 10017(3)(4)...................... 4,530,708 42.2
Tevecap S.A.
Rua do Rocio, 313
Suite 101
Sao Paulo, Brazil(5)................................ 1,665,132 16.1
Maria Nise Studart Lins de Albuquerque................. 1,069,520 10.5
Hermano Studart Lins de Albuquerque.................... 254,472 2.5
Carlos Andre Studart Lins de Albuquerque............... 254,472 2.5
Douglas M. Karp(4)(6).................................. 4,530,708 42.2
Jose Augusto Pinto Moreira(5)(7)....................... 1,665,132 16.0
Claudio Dascal(5)(7)................................... 1,665,132 16.0
David E. Libowitz...................................... -- --
Alvaro J. Aguirre...................................... 3,000 *
All Executive officers and directors
as a group (7 persons)............................... 6,707,784 61.3%
- ------------
* Less than 1%.
</TABLE>
(1) Unless otherwise indicated above, the address for each stockholder
identified above is TV Filme, Inc. c/o ITSA-Intercontinental
Telecomunicacoes Ltda, SCS, Quadra 07-Bl.A, Ed. Executive Tower, Sala 601,
70.300-911 Brasilia-DF, Brazil.
(2) Beneficial ownership is determined in accordance with the rules of the
Commission. In computing the number of shares beneficially owned by a
person and the percentage ownership of that person, shares of Common Stock
subject to options and warrants held by that person that are currently
exercisable or exercisable within 60 days of April 24, 1997 are deemed
outstanding. Such shares, however, are not deemed outstanding for the
purposes of computing the percentage ownership of any other person. Except
as indicated in the footnotes to this table, each stockholder named in the
table has sole voting and investment power with respect to the shares set
forth opposite such stockholder's name.
(3) E.M. Warburg, Pincus & Co., LLC, a New York limited liability company
("E.M. Warburg"), manages Warburg, Pincus. WP, the sole general
partner of Warburg, Pincus, has a 20% interest in the profits of Warburg,
Pincus. Lionel I. Pincus is the managing partner of WP and the managing
member of E.M. Warburg and may be deemed to control both WP and E.M.
Warburg. The members of E.M. Warburg are substantially the same as the
partners of WP.
(4) Includes 567,952 shares of Common Stock which Warburg, Pincus has the right
to acquire through exercise of a warrant issued by the Company in March
1996.
(5) Includes 208,372 shares of Common Stock which Tevecap has the right to
acquire through exercise of a warrant issued by the Company in March 1996.
(6) All of the shares indicated as owned by Mr. Karp are owned directly by
Warburg, Pincus and are included because of Mr. Karp's affiliation
with Warburg, Pincus. Mr. Karp, the Chairman of the Board of the Company,
is a Managing Director and member of E.M. Warburg and a general partner of
WP. As such, Mr. Karp may be deemed to have an indirect pecuniary interest,
within the meaning of Rule 16a-1 under the Exchange Act, in an
indeterminate portion of the shares of Common Stock beneficially owned by
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<PAGE>
Warburg, Pincus and WP. Mr. Karp disclaims "beneficial ownership" of these
shares within the meaning of Rule 13d-3 under the Exchange Act.
(7) All of the shares indicated as owned by Mr. Moreira and Mr. Dascal,
respectively, are owned directly by Tevecap and are included because
of Mr. Moreira's and Mr. Dascal's respective affiliations with Tevecap. Mr.
Moreira and Mr. Dascal each disclaim "beneficial ownership" of these shares
within the meaning of Rule 13d-3 under the Exchange Act.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company has been a party to the following transactions with its
executive officers, directors and five percent stockholders.
In May 1993, the Company issued and sold 1,169,096 shares of Common Stock
to Tevecap for a purchase price of $1.3 million.
In July 1994, the Company effected a recapitalization pursuant to which
Mrs. Maria Nise Studart Lins de Albuquerque, Mr. Hermano Lins, Mr. Carlos Andre
Lins and Tevecap exchanged all of their shares of common stock of TV Filme
Servicos de Telecomunicacoes S.A. on a one-for-one basis for shares of common
stock of ITSA (the predecessor company of the Company).
In July 1994, the Company issued and sold 2,126,132 shares of Common Stock
(after giving effect to the Restructuring to Warburg, Pincus for an aggregate
purchase price of $5.0 million.
In August 1995, the Company issued and sold 1,052,924 shares of Common
Stock (after giving effect to the Restructuring) to Warburg, Pincus for an
aggregate purchase price of $3.3 million.
In March 1996, the Company issued and sold 783,700 shares of Common Stock
and warrants to purchase an additional 567,952 shares of Common Stock (after
giving effect to the Restructuring) to Warburg, Pincus for approximately $5.1
million, and issued and sold 287,664 shares of Common Stock and warrants to
purchase an additional 208,372 shares of Common Stock (after giving effect to
the Restructuring) to Tevecap for approximately $1.9 million. Such warrants are
exercisable at $6.52 per share.
Immediately prior to the consummation of the Initial Public Offering in
connection with the Restructuring the Company issued 3,962,756, 1,456,760,
254,472, 254,472 and 1,069,520 shares of Common Stock to Warburg, Pincus,
Tevecap, Mr. Hermano Lins, Mr. Carlos Andre Lins and Mrs. Maria Nise Lins,
respectively, with a value of $39.6 million, $14.6 million, $2.5 million, $2.5
million and $10.7 million, respectively, based on the price of the Common Stock
sold in the Initial Public Offering. Such shares were issued in exchange for all
of their shares of common stock of ITSA, which had the same value as the shares
of Common Stock received in the exchange.
Immediately prior to the consummation of the Initial Public Offering,
in connection with the Restructuring the Company issued warrants to purchase
567,952 shares of Common Sock to Warburg, Pincus and warrants to purchase
208,372 shares of Common Stock to Tevecap in exchange for all of their warrants
to purchase shares of common stock of ITSA.
From time to time during January 1994 to March 1996, Tevecap and
certain of its affiliates made short-term loans to the Company for working
capital purposes. During this period, the maximum amount outstanding pursuant to
such loans was approximately $6.4 million. During April 1996, the Company
resumed borrowing from Tevecap and its affiliates for working capital purposes,
all of which borrowings were repaid with the proceeds of the Initial Public
Offering with the exception of $200,000 due February 1997 and $200,000 due
February 1998.
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<PAGE>
From December 1993 to April 2, 1996, certain members of the Lins Family,
including Mr. Hermano Lins, Chief Executive Officer and Secretary of the
Company, Mr. Carlos Andre Lins, the President, Chief Operating Officer and
Treasurer of the Company, their mother Mrs. Maria Nise Lins and several of her
other children, owned in the aggregate 100% of Prava Sistemas de Comunicacoes
Ltda. ("Prava"), which provides wireless cable installation services to hotels,
hospitals and single-family houses, among other services. Messrs. Lins each
owned approximately 7% of Prava and Mrs. Maria Nise Lins owned approximately 40%
of Prava during such period. In the years ended December 31, 1995, 1994, and
1993, respectively, Prava's revenues from the Company were approximately
$260,000, $70,000 and $0 representing, respectively approximately 65%, 37% and
0% of Prava's total revenues for such year. On April 2, 1996, the Lins Family
sold all of their interests in Prava to unrelated third parties.
In July 1994, the Company, Tevecap and certain other parties thereto
entered into an agreement pursuant to which Tevecap agreed to provide
programming exclusively to the Company in certain areas. In June 1996, the
Programming Agreement was amended and restated effective August 2, 1996. From
time to time, in connection with the Programming Agreement, the Company enters
into agreements with TVA Sistema and certain of its affiliates regarding
specified channels. The agreements typically have a two-year term and determine
the monthly fees which the Company pays for such channels. In the years ended
December 31, 1996, 1995 and 1994, TVA Sistema's and its affiliates' revenues
from the Company aggregated approximately $6.7 million, $1.3 million and
$178,000, respectively, net of discounts on programming fees compared to list
prices. Such discounts received by the Company during 1994 and the first ten
months of 1995 were $340,000 and $539,000 in 1994 and 1995, respectively. No
discounts were received in 1996 and such discounts are not expected to recur.
The Company purchases from Tevecap a program guide which it distributes to its
subscribers monthly. Amounts paid to Tevecap in 1994, 1995 and 1996 were $0,
$113,000 and $750,000, respectively.
In late 1994, TV Filme Servicos purchased licenses to operate the Company's
wireless cable systems in Goiania and Belem from an affiliate of TVA Sistem for
a purchase price of $400,000 each. The Company believes such prices were below
fair market value. Such purchase prices were payable in equal annual
installments of $100,000 per license, due in February of each of the years 1995,
1996, 1997 and 1998. Such installment payments do not bear interest. As of April
24, 1997, $200,000 remained outstanding.
In connection with the Initial Public Offering, the Company entered into
the Restructuring pursuant to which all of the preferred stock of ITSA was
converted into common stock of ITSA and each share of common stock of ITSA was
exchanged for 1,844 shares of Common Stock of the Company. Pursuant to the
Restructuring, (i) 51% of the voting stock of TV Filme Servicos was transferred
to TVTEL Ltda., an entity all the stock of which is owned by certain
stockholders of the Company who are Brazilian nationals, including certain
directors and executive offices of the Company (namely Tevecap, Mrs. Maria Nise
Lins, Messrs. Hermano Lins and Carlos Andre Lins and Ms. Maria Veronica Lins),
with ITSA retaining 49% of the voting stock and 83% of the economic interests in
TV Filme Servicos; (ii) the operating assets of the wireless cable systems of
Brasilia were transferred from TV Filme Servicos to TV Filme Brasilia; and (iii)
TV Filme Servicos entered into various agreements with ITSA and its subsidiaries
pursuant to which, among other things, TV Filme Servicos has authorized ITSA to
operate the existing wireless cable systems under its current licenses and to
operate future cable systems under future license grants. The Company has a
representative on the executive management team of TV Filme Servicos and any
sale or transfer of any current or future license held by TV Filme Servicos is
prohibited. ITSA entered into various agreements with TV Filme Servicos which
authorize ITSA's subsidiaries to operate the existing wireless cable systems
under its current licenses and all other pay television systems under future
licenses.
The Company believes that the above transactions were or are on terms no
less favorable to the Company than could have been obtained in transactions with
independent third parties. All future transactions between the Company and its
officers, directors, principal stockholders or their respective affiliates, will
be on terms no less favorable to the Company than can be obtained from
unaffiliated third parties.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment to the
Report to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Brasilia, Brazil, on the 24th day of April, 1997.
TV FILME, INC.
By: HERMANO STUDART LINS DE ALBUQUERQUE*
----------------------------------------
Hermano Studart Lins de Albuquerque
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on the 24th day of April, 1997.
SIGNATURE TITLE(S)
HERMANO STUDART LINS DE ALBUQUERQUE*
- --------------------------------------------- Chief Executive Officer,
Hermano Studart Lins de Albuquerque Secretary and Director
(Principal Executive Officer)
CARLOS ANDRE STUDART LINS DE ALBUQUERQUE*
- --------------------------------------------- President, Chief Operating
Carlos Andre Studart Lins de Albuquerque Officer, Treasurer and Director
/S/ ALVARO J. AGUIRRE
- --------------------------------------------- Chief Financial Officer
Alvaro J. Aguirre (Principal Financial and
Accounting Officer and Director
DOUGLAS M. KARP*
- --------------------------------------------- Chairman of the Board and
Douglas M. Karp Director
JOSE AUGUSTO PINTO MOREIRA*
- --------------------------------------------- Director
Jose Augusto Pinto Moreira
CLAUDIO DASCAL*
- --------------------------------------------- Director
Claudio Dascal
By:/S/ ALVARO J. AGUIRRE
-------------------------------------------
Alvaro J. Aguirre
Attorney-in-fact
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