<PAGE>
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
AUGUST 10, 1998
Date of Report (Date of earliest event reported)
@ Entertainment, Inc.
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(Exact name of Registrant as Specified in Charter)
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<S> <C> <C>
Delaware 000-22877 06-1487156
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(State or Other Juris. of (Commission) (IRS Employer)
Incorporation) File Number) Identification No.)
One Commercial Plaza
Hartford, Connecticut 06103-3585
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(Address of Principal
Executive Offices)
(860) 549-1674
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(Registrant's
telephone number,
including area code)
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Item 5. Other Events.
On August 10, 1998, @ Entertainment, Inc. (the "Company") issued a
press release related to the Company's financial results for the quarter
ended June 30, 1998. A copy of the press release is attached as Exhibit 99
and is incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
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Number Description
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99 Press Release of @ Entertainment,
Inc. dated August 10, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
@ Entertainment, Inc.
Date: August 10, 1998 By: /s/ Donald Miller-Jones
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By: Donald Miller-Jones
Its: Chief Financial Officer,
Vice President and Treasurer
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EXHIBIT INDEX
NUMBER DESCRIPTION
99 Press Release of @Entertainment, Inc. dated August 10, 1998.
<PAGE>
Exhibit 99
@ENTERTAINMENT, INC. REPORTS FINANCIAL RESULTS
FOR 1998'S SECOND QUARTER
- Second Quarter Revenue Increases 43.8% -
- Total Cable Subscribers Increase to 871,000
- - - Wizja TV on Track for Official Launch on September 18th -
HARTFORD, CT., August 10, 1998 -- @Entertainment, Inc. (Nasdaq: ATEN) today
announced that revenues for the quarter ended June 30, 1998 increased 43.8%
over the same period last year, rising from $8.9 million to $12.8 million
primarily as a result of a 21.2% increase in combined basic and intermediate
cable subscribers from 580,200 to 703,300 over the past 12 months as well as
an increase in monthly subscription rates. The Company reported a net loss of
$31.0 million for the quarter, which was mainly attributable to investments
made to develop its Wizja TV programming service and its digital satellite
direct-to-home platform ("D-DTH"). The Company reported a net loss of $0.93
per share for the quarter ending June 30, 1998, as compared to a net loss of
$0.75 per share for the quarter ending June 30, 1997.
@Entertainment, Inc. is the largest provider of pay television in Poland.
Through its subsidiary, Poland Communications, Inc. ("PCI"'), the Company owns
and operates the largest network of cable television systems in the Polish
market with 871,000 total subscribers as of June 30, 1998.
On June 5, 1998 the Company began broadcasting its Wizja TV package across
its cable networks. Wizja TV's initial channel line-up under exclusive
agreements for D-DTH transmission, includes eleven channels that are produced
by third parties, and one channel, Atomic TV, which is owned and operated by
the Company. On July 22 1998, the Company added HBO Polska to the Wizja TV
digital platform to be available to its DTH customers on an exclusive basis.
At June 30, 1998, the Company's cable systems passed 1,547,000 homes and
served 871,000 subscribers, representing a quarter-over-quarter increase of
2.7% and 4.9%, and a year-over -year increase of 19.0% and 26.2%
respectively. During the quarter, the Company added 39,350 subscribers
through organic growth, and 11,500 homes passed with 5,750 subscribers
through acquisitions. Basic cable revenue per basic subscriber per month
increased from $5.19 to $5.29. Total cable revenue per basic subscriber per
month increased year-on-year from $5.58 to $6.47.
<PAGE>
Robert Fowler, Chief Executive Officer, commented: "During the second
quarter, we continued to expand our national cable television network, while
making substantial progress in the roll-out of Wizja TV, Poland's first DTH
platform. We are particularly pleased with the continued strong organic
growth of our cable systems, as well as with our progress in increasing our
revenue per basic subscriber. We continue to focus on further consolidating
our leadership position in cable television through strategic acquisitions,
while driving organic growth through the development of additional
high-quality, Polish language channels, superior customer service and
aggressive sales programs. Our competitive position is solid and we are well
positioned to benefit from the ongoing growth of Poland's television
advertising marketplace."
Mr. Fowler continued, "During the past three months, we also posted
substantial progress in our pre-launch initiatives for Wizja TV. We further
solidified our exclusive DTH programming package through the addition of both
HBO and MTV, increasing Wizja's content offering to an unprecedented 12
Polish language channels. In addition, our soft launch with Philips on
July1st was met by strong demand from both individual subscribers and cable
homes. All of the elements are in place, including financing from our recent
144A offering and the roll-out of our nationwide promotional campaign, to
support the continued development and wide-scale launch of Wizja TV on
September 18th."
Revenue increased $3.9 million, or 43.8%, from $8.9 million for the three
months ended June 30, 1997 to $12.8 million for the same period in 1998. This
increase was primarily attributable to a 21.2% increase in the number of
basic subscribers from approximately 580,200 at June 30, 1997 to
approximately 703,300 at June 30, 1998, as well as an increase in monthly
tariffs.
Direct operating expenses increased $15.5 million, or 85.6%, from $18.1
million in the second quarter of 1997 to $33.6 million for the comparable
period in 1998. This increase was the result of higher levels of technical
personnel and increased expenses associated with the establishment of the
Maidstone up-link and studio facility; recently acquired cable networks which
have not yet been integrated within the Company's networks and standards; the
increased size of the Company's cable television system, the $5 million
payment to Philips Business Electronics B.V. to compensate it for costs
incurred as a result of a suspension of the production process for the D-DTH
Reception Systems, and costs associated with the lease of three transponders
on the Astra 1F satellite which provide the capability to deliver the
Company's Polish- language programming platform to cable and D-DTH customers
in Poland.
<PAGE>
1997 charges included non-cash compensation expense relating to options
granted to key executives. Direct operating expenses increased from 203.4% of
revenues for the second quarter of 1997 to 262.5% of revenues for the second
quarter of 1998.
Depreciation and amortization expenses increased by $2.9 million, or 93.5%,
from $3.1 million in the second quarter of 1997 to $6.0 million in the second
quarter of 1998, due principally to commencing the depreciation of Maidstone
facility assets, and also as a result of depreciation of additional cable
television networks acquired and the continued build-out of the Company's
networks. Depreciation and amortization expense as a percentage of revenues
increased from 34.8 % in the second quarter of 1997 to 46.9% in the second
quarter of 1998.
Amortization of acquired sports rights incurred in the second quarter of 1998
amounted to $1.6 million. The Company incurred no such costs in the second
quarter of 1997.
Interest expense decreased $1.0 million, or 22.7%, from $4.4 million for the
three months ended June 30, 1997 to $3.4 million for the three months ended
June 30, 1998.
Interest and investment income decreased $0.7 million, or 50.0%, from $1.4
million in the second quarter of 1997 to $0.7 million in the first quarter of
1998. This was due to a decrease in cash available for investment due to
preparations for the launch of Wizja TV.
For the three months ended June 30, 1998 and 1997, foreign exchange loss
amounted to $0.1 million.
Minority interest in subsidiary gain was $0.1 million for the second quarter
of 1998, compared to minority interest loss of $2.1 million for the
comparable period in 1997.
For the second quarters of 1997 and 1998, the Company reported net losses of
$13.2 million and $31.0 million, respectively. These losses were the result
of the factors discussed above.
Net loss applicable to common stockholders increased from a loss of $14.2
million in the second quarter of 1997 to a loss of $31.0 million in the
second quarter of 1998 due to the factors discussed above.
Operating cash flow decreased by $11.6 million, from ($9.2) million for the
second quarter of 1997 to ($20.8) million for the second quarter of 1998.
Operating cash flow for PCI increased by $8.4 million, from ($6.1) million to
$2.3 million. Operating cash flow consists of net income (loss) as measured
by U.S. GAAP adjusted for interest and investment income, depreciation and
amortization, interest expense, foreign currency translation gains and
losses, income taxes, extraordinary items, non-recurring items, gains and
losses from the sale of assets other than in the normal course of business
and minority interest in subsidiary income and loss.
<PAGE>
The aforementioned remarks contain forward-looking statements that involve
risks and uncertainties including without limitation those related to the
timing, costs and revenue of establishing and marketing the Company's digital
satellite direct-to-home broadcasting platform, those relating to pending and
future acquisitions and those relating to regulatory approvals. The Company's
actual results could differ materially from those discussed above.
@Entertainment, Inc. owns and operates Polska Telewizja Kablowa (PTK), the
largest cable television network in Poland with 871,000 subscribers as of
June 30, 1998. The company also owns and operates Wizja TV, Poland's first
digital DTH broadcasting service, set to launch on September 18, 1998.
@Entertainment also owns DTC Productions, a company which invests in the
Polish television and film industry. @Entertainment is traded on the Nasdaq
Stock Market under the symbol: ATEN.
@ Entertainment, Inc.
Second Quarter Press Release
Summary of Selected Operating Statistics
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June 30 December 31 June 30
Cable 1998 1997 1997
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Homes Passed 1,546,540 1,408,100 1,297,119
Basic Subscribers 660,067 606,630 546,078
Subscriber Growth
Organic 5.9% 7.8% N/A
Through Acquisitions 2.9% 3.3% N/A
Total 8.8% 11.1% N/A
Basic penetration 42.7% 43.1% 42.1%
Basic and intermediate subscribers 703,271 636,283 580,216
Intermediate subscribers 43,204 29,653 34,138
Broadcast subscribers 167,859 132,618 110,266
Total Subscribers 871,130 768,901 690,482
Premium subscribers - HBO 45,674 45,079 18,004
Premium penetration 6.9% 7.4% 3.3%
Basic revenue / basic sub./month 5.29 4.99 4.76
Total revenue/ basic sub/month 6.47 6.08 5.58
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Six months ended Three months ended
June 30, June 30,
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Movement Movement
1998 1997 % 1998 1997 %
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Basic cable 20,200 13,580 48.7% 10,293 7,434 38.5%
Intermediate 563 237 137.6% 368 115 220.0%
Broadcast 466 252 84.9% 261 135 93.3%
Premium (HBO, C+) 1,671 86 1,843.0% 879 82 972.0%
Installation 593 1,470 (59.7%) 136 747 (81.8%)
Other cable 1,078 786 37.2% 522 390 33.8%
Other non cable 906 N/A 332 N/A
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Total revenues 25,477 16,411 55.2% 12,791 8,903 43.7%
Programming costs 5,407 1,729 212.7% 3,684 904 307.5%
Plant operations 4,126 3,399 21.4% 2,062 2,124 (2.9%)
Marketing 1336 2,062 (35.2%) 804 1,413 (43.1%)
General and administrative 7,482 11,969 (1) (37.5%) 3,852 9,644 (1) (60.1%)
Other, net 160 894 (82.1%) (277) 894 (131.0%)
Satellite operating and administrative 37,189 3,168 1,073.9% 23,480 3,168 641.2%
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Direct operating expenses 55,700 23,221 139.9% 33,605 18,147 85.2%
Cable 6,060 (3,642) - 2,334 (6,076) -
DTH (36,283) (3,168) - (23,148) (3,168) -
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Total operating cash flow (30,223) (6,810) 343.8% (20,814) (9,244) 125.2%
Depreciation and amortisation 10,929 6,523 67.5% 5,980 3,073 94.6%
Amortization of sport rights 1,584 1,584
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Total operating expenses 68,213 29,744 129.3% 41,169 21,220 94.0%
(42,736) (13,333) 220.5% (28,378) (12,317) 130.4%
(7,002) (7,587) (7.7%) (3,353) (4,382) (23.5%)
1,545 2,119 (27.1%) 695 1,369 (49.2%)
(48) (422) (88.6%) (121) (117) 3.4%
721 N/A 451 N/A
(47,520) (19,223) 147.2% (30,706) (15,447) 98.8%
(562) (112) 401.8% (229) 159 -
(207) 2,599 - (58) 2,123 -
(48,289) (16,736) 188.5% (30,993) (13,165) 135.4%
========== ========= ========= ========= ========= ========
(1.45) (0.99) 46.5% (0.93) (0.75) 24.0%
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(1) Includes non - cash compensation expense in 1997
# # #
For further information please contact:
Robert E. Fowler, III Chris Plunkett/Mike Smargiassi
Chief Executive Officer Brainerd Communicators, Inc.
011-44-162-235-7060 212-986-6667
Donald Miller-Jones
Chief Financial Officer
011-44-162-235-7060
