<PAGE>
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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, 1997
|_| 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 [X].
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF
THE REGISTRANT AS OF APRIL 22, 1998 WAS APPROXIMATELY $12,358,894.
AS OF APRIL 22, 1998, 10,825,139 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, 1997 (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 1998
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 be 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 the brother of Mr. Carlos Andre Studart Lins de
Albuquerque. Mr. Lins is 35 years old.
DAVID E. LIBOWITZ has served as a director of the Company since April 1997.
Mr. Libowitz has been a Managing Director of E.M. Warburg, Pincus & Co., LLC
since January 1998. Mr. Libowitz 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. and several
privately held companies. Mr. Libowitz is 35 years old.
CARLOS ANDRE STUDART LINS DE ALBUQUERQUE one of the co-founders of the
Company, has served as President, Chief Operating Officer and a director of the
Company since its incorporation. Mr. Lins also served as Treasurer of the
Company from its incorporation until July 1997. 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 the
brother of Mr. Hermano Studart Lins de Albuquerque. Mr. Lins is 33 years old.
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., Journal Register Company and several
privately held companies. Mr. Karp is 42 years old.
RAUL ROSENTHAL has served as a director of the Company since July 1997. Mr.
Rosenthal has been the Executive Vice President of Strategic Planning and
Corporate Development and of five business units of Abril S.A. (including
Telephone Directories, Abril Collections and Database Marketing) since September
1996. Prior to joining Abril S.A., from 1986 to 1996 Mr. Rosenthal held several
senior management positions with American Express, including President of
American Express do Brazil, a position in which he was responsible for the
Credit Card business and the American Express Bank from 1994 to 1996, President
of the Establishments Service Group for Latin American and the Caribbean from
1995 to 1996, and President of American Express in Argentina and Uruguay from
1990 to 1993. Mr. Rosenthal is a director of a privately held Company. Mr.
Rosenthal is 49 years old.
<PAGE>
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 31 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 54 years old.
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 II directors are to be
elected at the 1998 Annual Meeting of Stockholders, Class III directors are to
be elected at the 1999 Annual Meeting of Stockholders and Class I directors are
to be elected at the 2000 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, 1997.
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, 1997 by its Chief Executive Officer and
each of the Company's other executive officers whose total salary and bonus
exceeded $100,000 during the past three fiscal years (collectively, the "Named
Executive Officers"):
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
----------------
ANNUAL COMPENSATION AWARDS
-------------------------------------------------- ----------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND POSITION YEAR SALARY ($) BONUS ($) COMPENSATION OPTIONS (#) COMPENSATION ($)
----------------- ----- ---------- --------- ------------ ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Hermano Studart
Lins de Albuquerque,...... 1997 $143,750 $150,000(1) $-0- 100,000 $6,250(2)
Chief Executive Officer 1996 113,979 200,000(1) -0- 110,000 6,250
1995 98,463 111,500 -0- 49,788(3) -
Carlos Andre Studart
Lins de Albuquerque,...... 1997 143,750 150,000(1) -0- 100,000 6,250(2)
President and Chief 1996 113,979 200,000(1) -0- 110,000 6,250
Operating Officer 1995 98,463 111,500 -0- 49,788(3) -
Alvaro J. Aguirre,........... 1997 143,750 150,000(1) -0- 100,000 6,250(2)
Chief Financial Officer(4) 1996 62,499 200,000(1)(5) -0- 110,000 6,250
- ---------------------
</TABLE>
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<PAGE>
(1) Includes non-cash bonus payments made to the Named Executive Officers in
the form of Common Stock in the following amounts (i) for 1997, $25,000 to
each Named Executive Officer and (ii) for 1996, $123,333 to Messrs. Hermano
Lins and Carlos Andre Lins and $25,000 to Mr. Aguirre.
(2) Represents Company paid life insurance premiums.
(3) These options were exercised by Messrs. Hermano Lins and Carlos Andre Lins
in 1995.
(4) Mr. Aguirre joined the Company in June 1996.
(5) 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 of the Company, Mr.
Carlos Andre Lins has agreed to serve full time as President and Chief Operating
Officer 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 are 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 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 also 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 is 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 in amounts 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.
-3-
<PAGE>
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
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 are 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 are 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.
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.
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<PAGE>
STOCK OPTION GRANTS
The following table sets forth information regarding grants of options to
purchase Common Stock during the fiscal year ended December 31, 1997 to each of
the Named Executive Officers. No stock appreciation rights were granted during
1997.
<TABLE>
<CAPTION>
OPTION GRANTS IN 1997
INDIVIDUAL GRANTS
---------------------------------------------------- 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 (#) 1997 (1) ($/SHARE)(2) DATE (5%) (10%)
- ---- ----------- ---------- ------------ ------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Hermano Studart Lins
de Albuquerque................. 50,000(4) 10.3% $6.00 10/31/07 $188,669 $478,123
50,000(4) 10.3 5.625 12/26/07 176,877 448,240
Carlos Andre Studart Lins
de Albuquerque................. 50,000(4) 10.3 6.00 10/31/07 188,669 478,123
50,000(4) 10.3 5.625 12/26/07 176,877 448,240
Alvaro J. Aguirre................. 50,000(4) 10.3 6.00 10/31/07 188,669 478,123
50,000(4) 10.3 5.625 12/26/07 176,877 448,240
</TABLE>
- -----------
(1) The Company granted options to purchase a total of 483,500 shares
of Common Stock in 1997.
(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, 1997 was $5.750 per share.
(3) Amounts reported in these columns represent amounts that may be
realized upon exercise of options immediately prior to the expiration
of their term assuming the specified compounded rates of appreciation
(5% and 10%) on the Common Stock over the term of the options. These
assumptions are based on rules promulgated by the Commission and do not
reflect the Company's estimate of future stock price appreciation.
Actual gains, if any, on the stock option exercises and Common Stock
holdings are dependent on the timing of such exercise and the future
performance of the underlying Common Stock. There can be no assurance
that the rates of appreciation assumed in this table can be achieved or
that the amounts reflected will be received by the option holder.
(4) These options vest and become fully exercisable as to 20% on the first
anniversary of the date of grant and as to an additional 20% on each
anniversary thereafter until all such options are fully vested and
exercisable.
YEAR-END VALUE TABLE
The following table sets forth information regarding the number and
year end value of unexercised options held at December 31, 1997 by each of the
Named Executive Officers. No stock appreciation rights were exercised by the
Named Executive Officers during fiscal 1997.
-5-
<PAGE>
<TABLE>
<CAPTION>
FISCAL 1997 OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED "IN-THE-MONEY" (1)
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR-END (#) YEAR-END ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------------------- -------------------------
<S> <C> <C>
Hermano Studart Lins
de Albuquerque......................... 22,000/188,000 $0/$6,250
Carlos Andre Studart Lins
de Albuquerque......................... 22,000/188,000 0/6,250
Alvaro J. Aguirre......................... 22,000/188,000 0/6,250
</TABLE>
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(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 $5.750 per share, the fair
market value of the Common Stock issuable upon exercise of options at
December 31, 1997, and the exercise price of the option, multiplied by
the applicable number of options.
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 27, 1998, 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.
-6-
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENTAGE
OF BENEFICIAL OF
NAME AND ADDRESS (1) OWNERSHIP (2) CLASS (2)
-------------------- ---------------- ----------
<S> <C> <C> <C>
Warburg, Pincus Investors, L.P.
466 Lexington Avenue
New York, New York 10017(3)........................................ 4,530,708 41.9%
Tevecap S.A.
Rua do Rocio, 313
Suite 101
Sao Paulo, Brazil.................................................. 1,500,455 13.9
Maria Nise Studart Lins de Albuquerque................................ 1,069,520 9.9
Hermano Studart Lins de Albuquerque(4)................................ 291,134 2.7
Carlos Andre Studart Lins de Albuquerque(4)........................... 291,134 2.7
Douglas M. Karp(5).................................................... 4,530,708 41.9
Jose Augusto Pinto Moreira(6)......................................... 1,500,455 13.9
Raul Rosenthal(6)..................................................... 1,500,455 13.9
David E. Libowitz(5).................................................. 4,530,708 41.9
Alvaro J. Aguirre(4).................................................. 31,294 *
All executive officers and directors
as a group (7 persons).............................................. 6,644,725 61.0
</TABLE>
- ----------------------------
* Less than 1%.
(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 27, 1998
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 the following number of shares of Common Stock which the
executive officers have the right to acquire through the exercise of
options within 60 days of April 27, 1998: Mr. Hermano Lins, 22,000; Mr.
Carlos Andre Lins, 22,000; and Mr. Aguirre, 22,000.
(5) All of the shares indicated as owned by Messrs. Karp and Libowitz are
owned directly by Warburg, Pincus and are included because of their
affiliation with Warburg, Pincus. Mr. Karp, the Chairman of the Board
of the Company, and Mr. Libowitz, a Director of the Company, are
Managing Directors and Members of E.M. Warburg and General Partners of
WP. As such, Messrs. Karp and Libowitz 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 Warburg, Pincus and WP.
-7-
<PAGE>
Messrs. Karp and Libowitz disclaim "beneficial ownership" of these
shares within the meaning of Rule 13d-3 under the Exchange Act.
(6) All of the shares indicated as owned by Mr. Moreira and Mr. Rosenthal
are owned directly by Tevecap and are included because of Mr. Moreira's
and Mr. Rosenthal's respective affiliations with Tevecap. Mr. Moreira
and Mr. Rosenthal 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.
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 had
an exercise price of $6.52 per share.
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. The warrants were exercisable for
cash, the cancellation of indebtedness or on a cashless exercise basis. In
September 1997, Warburg, Pincus exercised its warrants for cash and Tevecap
exercised its warrants on a cashless exercise basis. The Tevecap warrants were
converted into shares of Common Stock based on the difference between the
exercise price of $6.52 per share and the average closing price of the Common
Stock on the Nasdaq National Market during the five trading days preceding the
date of exercise ($8.25).
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, each of which have been repaid in full.
-8-
<PAGE>
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. In the
years ended December 31, 1997, 1996 and 1995, TVA Sistema's and its affiliates'
revenues from the Company aggregated approximately $10.4 million, $6.7 million
and $1.3 million, respectively, net of discounts in 1995 of $539,000 on
programming fees compared to list prices. No discounts were received in 1996 or
1997 and no such discounts are expected in the future. Through September 1997,
the Company purchased from Tevecap a program guide which it distributed to its
subscribers monthly. Amounts paid to Tevecap in 1995, 1996 and 1997 were
$113,000, $750,000 and $679,000, 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
Sistema 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. No amounts remain outstanding.
In connection with the Initial Public Offering, the Company entered
into the restructuring (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. As of November 1997, the licenses to
operate the existing wireless cable systems were transferred from TV Filme
Servicos to the respective operating companies, TV Filme Brasilia, TV Filme
Goiania and TV Filme Belem.
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 30th day of April, 1998.
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 30th day of April, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE(S)
--------- --------
<S> <C> <C>
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 Officer
Carlos Andre Studart Lins de Albuquerque and Director
/S/ ALVARO J. AGUIRRE
- ------------------------------------------------------- Chief Financial Officer (Principal
Alvaro J. Aguirre Financial and Accounting Officer)
and Director
DOUGLAS M. KARP*
- ------------------------------------------------------- Chairman of the Board and
Douglas M. Karp Director
- -------------------------------------------------------- Director
Jose Augusto Pinto Moreira
RAUL ROSENTHAL*
- -------------------------------------------------------- Director
Raul Rosenthal
DAVID E. LIBOWITZ*
- --------------------------------------------------------- Director
David E. Libowitz
*By: /S/ ALVARO J. AGUIRRE
-----------------------------------------------------
Alvaro J. Aguirre
Attorney-in-fact
</TABLE>
-10-
