SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of March 2005
Matav Cable Systems Media Ltd.
(Translation of registrant’s name into English)
42 Pinkas Street
North Industrial Park
P.O. Box 13600
Netanya 42134
Israel
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-Fx Form 40-Fo
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yeso Nox
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| 21 March 2005 | Matav – Cable Systems Media Ltd. (Registrant) BY: /S/ Amit Levin —————————————— Amit Levin Chief Executive Officer |
FOR IMMEDIATE RELEASE
Matav Reports Financial Results for the Fourth Quarter and Full-Year 2004
NETANYA, Israel, March 21, 2005 – Matav-Cable Systems Media Ltd. (Nasdaq: MATV), a leading Israeli provider of digital cable television services, today reported fourth-quarter and full-year 2004 financial results. In this quarter, as in the previous three quarters, Matav’s financial results are proportionally consolidated with HOT Vision Ltd. (formerly ICP Ltd). The consolidation has no substantial effect on Matav’s financial results. Since the results for the year 2003 do not include proportional consolidation with HOT Vision, for comparison reasons the figures below will be presented assuming no consolidation with HOT Vision.
Revenues for the full-year 2004 reached NIS 578.7 million (US$134.3 million) compared with NIS 545.5 million (US$126.6 million) for 2003. Revenues for the fourth-quarter reached NIS 138.5 million (US$32.1 million) compared with NIS 142.9 million (US$33.2 million) for the fourth quarter of 2003. The fourth quarter year- over- year decrease in revenues is a result of increased competition in the Israeli multi-channel market as evident in Matav’s certain subscriber loss in the period. However, the decrease in revenues was partially off-set by the increase in Matav’s broadband Internet access revenues.
As of December 31, 2004, Matav had approximately 257,300 subscribers, compared with approximately 259,300 at September 30, 2004. During fourth-quarter 2004, the company’s ARPU reached NIS 202.7 (monthly, including 17% value-added tax) compared to NIS 204.1 in the fourth quarter of 2003. The company’s broadband Internet access service has attracted more than 92,000 subscribers to date.
Operating expenses for the year 2004 totaled NIS 474.2 million (US$110 million) compared with NIS 466.7 million (US$108.3 million) for the year 2003. The increase in operating expenses is mainly due to an increase in content expenses related to increased tiering services as well as an increase in operating expenses associated with its broadband Internet services. This increase was slightly off-set by a decrease in depreciation costs. Fourth-quarter operating expenses totaled NIS 115.3 million (US$26.8 million) compared with NIS 116.6 million (US$27 million) in the year-earlier period.
Gross profit for the year 2004 reached NIS 104.5 million (US$24.3 million) compared with NIS 78.8 million (US$18.3 million) for the year 2003. Fourth-quarter gross profit reached NIS 23.2 million (US$5.4 million) compared with NIS 26.3 million (US$6.1 million) in fourth-quarter 2003.
Selling and marketing expenses for the year 2004 reached NIS 60.4 million (US$14 million) compared with NIS 44.0 million (US$10 million) for the year 2003. The increase is due mainly to higher marketing expenses associated with the penetration of the “HOT” brand in the Israeli market and due to higher marketing expenses related to its broadband Internet services. Fourth-quarter selling and marketing expenses totaled NIS 12.9 million (US$3 million), compared with NIS 14.5 million (US$3.4 million) for fourth-quarter 2003
G&A expenses for the year 2004 totaled NIS 43.3 million (US$10.1 million), compared with NIS 42.7 million (US$9.9 million) for the year 2003. Fourth-quarter G&A expenses totaled NIS 13.2 million (US$3.1 million), compared with NIS 8.8 million (US$2 million) in fourth-quarter 2003. The fourth-quarter increase is due to one time expenses relating to the operational merger.
EBITDA for the year 2004 totaled NIS 139.6 million (US$32.4 million), compared with NIS 147 million (US$34.1 million) for the year 2003. Fourth-quarter EBITDA reached NIS 30.9 million (US$7.2 million) compared with NIS 40.1 million (US$9.3 million) in fourth-quarter 2003.
Financing expenses for the year 2004 decreased to NIS 48.5 million (US$11.2 million) from NIS 84 million (US$19.5 million) in the year 2003. Fourth-quarter financing expenses declined to NIS 11 million (US$2.6 million) from NIS 16.7 million (US$3.9 million) in the comparable quarter of 2003. The numbers are not precisely comparable since this year’s figures are nominal while the results for the year earlier are adjusted for the CPI. However, a substantial part of the reduction could be attributed to two factors: a reduction in the Company’s net debt and a decrease in interest rates.
Other expenses for the year 2004 reached NIS 42.2 million (US$9.8 million) compared with other revenues of NIS 81 million (US$18.8 million) for the year 2003. The expenses for the year 2004 are mainly attributed to Matav’s allocation of NIS 23.5 million related to the Warner Bros. International lawsuit and to the NIS 16.2 million Barak investment write-off. Other revenues in 2003 resulted from the sale of part of Matav’s holding in Partner.
Matav’s share in affiliated companies’ profits for the year 2004 totaled NIS 14.3 million (US$3.3 million). This includes Matav’s share in Partner Communications’ profits totaling NIS 17.6 million which was off-set by Matav’s share in Hot Telecom’s losses totaling NIS 3.2 million. For the year 2003 Matav’s share in affiliated companies’ profits totaled NIS 40.9 million (US$ 9.5 million). This is mainly attributed to Matav’s share in Partner Communications’ profits.
The net loss for the year 2004 was NIS 83 million (US$19.3 million), or NIS 2.83 (US$0.66) per ordinary share, compared with net loss of NIS 5.5 million (US$1.3 million), or NIS 0.19 (US$0.04) per ordinary share, in 2003. Matav reported fourth-quarter net loss of NIS 6.6 million (US$1.5 million), or NIS 0.22 (US$0.05) per ordinary share, compared with a net profit of NIS 61.3 million (US$14.2 million), or NIS 2.04 (US$0.5) per ordinary share, for the year-ago quarter.
Matav’s CEO, Amit Levin, commented “The second half of 2004 was characterized by intense competition in the Israeli multi-channel television market. During this period, along with the other two Israeli cable companies, we allocated substantial resources in order to realize our operational merger. The result was the successful integration of the operations, engineering, selling & marketing and customer service systems of all three cable companies. Also in 2004, we allocated both managerial and financial resources for the following operations: our launch of fixed telephone services in 2005, our new television services such as VOD, and our preparation for broadcasting new TV channels”.
“Looking forward to 2005, I foresee the continued broadening of our services, in addition to the continued launch of our new IP fixed telephone services to the entire Israeli public. We believe that in 2005 the competition in the multi-channel television market will cease to be focused on price and instead will be based on content and brand value. In addition, we foresee that we will succeed in providing our subscribers with innovative products and top quality service in all our lines of business”.
Management will conduct a teleconference today at 10:00 a.m. U.S. Eastern Time. To participate, please dial +1-866-860-9642 in the United States and +972-3-9180610 internationally, several minutes prior to the start of the conference.
Matav is one of Israel’s three cable television providers, serving roughly 26 percent of the population. Matav’s investments include 5.3 percent of Partner Communications Ltd., a GSM mobile phone company, and 10 percent of Barak I.T.C. (1995), one of the three international telephony-service providers in Israel.
(This press release contains forward-looking statements with respect to the Company’s business, financial condition and results of operations. These forward-looking statements are based on the current expectations of the management of Matav Cable only, and are subject to risk and uncertainties, including but not limited to changes in technology and market requirements, decline in demand for the Company’s products, inability to timely develop and introduce new technologies, products and applications, loss of market share and pressure on pricing resulting from competition, which could cause the actual results or performance of the Company to differ materially from those contemplated in such forward-looking statements. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. For a more detailed description of the risk and uncertainties affecting the Company, reference is made to the Company’s reports filed from time to time with the Securities and Exchange Commission.)
Contacts:
Ori Gur-Arieh, Counsel
Matav Cable Systems
Telephone: +972-9-860-2261
Ayelet Shaked Shiloni
Integrated IR
Telephone US: +1-866-447-8633 / Israel: +972-3-635-6790
E-Mail:ayelet@integratedir.com
MATAV – CABLE SYSTEMS MEDIA LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| Convenience translation | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | December 31, | |||||||||||||
| 2003 | 2004 | 2004 | ||||||||||||
| Adjusted (2) | Reported (1) | |||||||||||||
| NIS In thousands | U.S. dollars | |||||||||||||
| ASSETS: | ||||||||||||||
CURRENT ASSETS: | ||||||||||||||
| Cash and cash equivalents | 37,948 | 24,250 | 5,629 | |||||||||||
| Short term deposit | - | 50 | 12 | |||||||||||
| Accounts Receivables: | Trade | 83,151 | 75,458 | 17,516 | ||||||||||
| Other | 19,765 | 20,010 | 4,645 | |||||||||||
| Total current assets | 140,864 | 119,768 | 27,802 | |||||||||||
| INVESTMENTS AND LONG-TERM LOANS: | ||||||||||||||
| Investments in affiliates | 66,807 | 101,736 | 23,616 | |||||||||||
| Investments in other company | 16,241 | - | - | |||||||||||
| Investment in limited partnerships | 2,057 | 1,656 | 384 | |||||||||||
| Rights to broadcast movies and programs | 34,927 | 26,509 | 6,153 | |||||||||||
| Other receivables | 885 | 601 | 140 | |||||||||||
| 120,917 | 130,502 | 30,293 | ||||||||||||
| FIXED ASSETS: | ||||||||||||||
| Cost | 2,028,447 | 2,119,060 | 491,890 | |||||||||||
| Less - accumulated depreciation | 1,151,622 | 1,293,549 | 300,267 | |||||||||||
| 876,825 | 825,511 | 191,623 | ||||||||||||
| OTHER ASSETS AND DEFERRED CHARGES | ||||||||||||||
| Net of accumulated amortization | 3,946 | 3,101 | 720 | |||||||||||
| 1,142,552 | 1,078,882 | 250,438 | ||||||||||||
| (1) | Nominal financial reporting beginning January 1, 2004. |
| (2) | Adjusted to the NIS of December 2003. |
MATAV – CABLE SYSTEMS MEDIA LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| Convenience translation | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | December 31, | ||||||||||
| 2003 | 2004 | 2004 | |||||||||
| Adjusted (2) | Reported (1) | ||||||||||
| NIS In thousands | U.S. dollars | ||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY: | |||||||||||
CURRENT LIABILITIES: | |||||||||||
| Bank credit | 435,403 | 465,339 | 108,017 | ||||||||
| Current maturities of debentures | 33,701 | 34,005 | 7,893 | ||||||||
| Accounts payable and accruals: | |||||||||||
| Trade | 94,699 | 104,282 | 24,207 | ||||||||
| Jointly controlled entity | 17,690 | 18,112 | 4,204 | ||||||||
| Other | 158,982 | 201,943 | 46,876 | ||||||||
| Total current liabilities | 740,475 | 823,681 | 191,197 | ||||||||
| LONG-TERM LIABILITIES: | |||||||||||
| Severance pay liability, net | 2,106 | 2,483 | 577 | ||||||||
| Loans and debentures (net of current maturities): | |||||||||||
| Loans from bank and others | 127,403 | 101,457 | 23,551 | ||||||||
| Debentures | 66,145 | 33,201 | 7,707 | ||||||||
| Customers' deposits for converters, net of accumulated | |||||||||||
| amortization | 25,675 | 20,279 | 4,708 | ||||||||
| Total long-term liabilities | 221,329 | 157,420 | 36,543 | ||||||||
Total liabilities | 961,804 | 981,101 | 227,738 | ||||||||
| SHAREHOLDERS' EQUITY: | |||||||||||
| Share capital | 48,882 | 48,899 | 11,351 | ||||||||
| Additional paid-in capital | 375,538 | 375,538 | 87,172 | ||||||||
| Accumulated deficit | (243,672 | ) | (326,656 | ) | (75,825 | ) | |||||
Total shareholders' equity | 180,748 | 97,781 | 22,698 | ||||||||
| 1,142,552 | 1,078,882 | 250,438 | |||||||||
| (1) | Nominal financial reporting beginning January 1, 2004. |
| (2) | Adjusted to the NIS of December 2003. |
MATAV – CABLE SYSTEMS MEDIA LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share and per ADS data)
| Convenience translation | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three months ended December 31, | Year ended December 31, | Three months ended December 31, | |||||||||||||||
| 2003 | 2004 | 2003 | 2004 | 2004 | |||||||||||||
| Adjusted (2) | Reported (1) | Adjusted (2) | Reported (1) | U.S. dollars | |||||||||||||
Revenue | 142,948 | 140,424 | 545,480 | 584,564 | 32,596 | ||||||||||||
operating expenses | 116,612 | 119,105 | 466,686 | 472,488 | 27,647 | ||||||||||||
Gross profit | 26,336 | 21,319 | 78,794 | 112,076 | 4,949 | ||||||||||||
| Selling, marketing, general and administrative | |||||||||||||||||
| expenses: | |||||||||||||||||
| Selling and marketing | 14,508 | 13,621 | 43,954 | 63,676 | 3,162 | ||||||||||||
| General and administrative | 8,818 | 11,255 | 42,659 | 45,391 | 2,613 | ||||||||||||
| 23,326 | 24,876 | 86,613 | 109,067 | 5,775 | |||||||||||||
Operating profit (loss) | 3,010 | (3,557 | ) | (7,819 | ) | 3,009 | (826 | ) | |||||||||
| Financial expenses, net | (16,659 | ) | (9,869 | ) | (83,958 | ) | (50,333 | ) | (2,291 | ) | |||||||
| Other income )expenses), net | 85,420 | 3,914 | 80,996 | (42,680 | ) | 909 | |||||||||||
Income (loss) before taxes on income | 71,771 | (9,512 | ) | (10,781 | ) | (90,004 | ) | (2,208 | ) | ||||||||
Taxes on income | 35,576 | 393 | 35,576 | 7,281 | 91 | ||||||||||||
| Income (loss) from operations of the Company and | |||||||||||||||||
| its subsidiaries | 36,195 | (9,905 | ) | (46,357 | ) | (97,285 | ) | (2,299 | ) | ||||||||
| Equity in earnings of affiliated companies, net | 25,108 | 3,318 | 40,907 | 14,301 | 770 | ||||||||||||
Net income (loss) | 61,303 | (6,587 | ) | (5,450 | ) | (82,984 | ) | (1,529 | ) | ||||||||
Earnings (loss) per ordinary share | 2.04 | (0.22 | ) | (0.19 | ) | (2.83 | ) | (0.05 | ) | ||||||||
Earnings (loss) per ADS | 4.08 | (0.44 | ) | (0.37 | ) | (5.66 | ) | (0.10 | ) | ||||||||
| Weighted average number of shares outstanding in | |||||||||||||||||
| thousands | 30,109 | 29,364 | 29,347 | 29,360 | 29,364 | ||||||||||||
| Weighted average number of ADSs outstanding in | |||||||||||||||||
| thousands | 15,055 | 14,682 | 14,674 | 14,680 | 14,682 | ||||||||||||
Operating profit (loss) | 3,010 | (3,557 | ) | (7,819 | ) | 3,009 | (826 | ) | |||||||||
| Net of the effect of proportional consolidation | 657 | (2,280 | ) | 153 | |||||||||||||
| Depreciation and amortization (included Income | |||||||||||||||||
| from amortization of deposits for converters) | 37,084 | 33,804 | 154,811 | 138,915 | 7,847 | ||||||||||||
Memo EBITDA(*)- not including proportional | |||||||||||||||||
| consolidation | 40,094 | 30,904 | 146,992 | 139,644 | 7,174 | ||||||||||||
| (1) | Nominal financial reporting beginning January 1, 2004. |
| (2) | Adjusted to the NIS of December 2003. |
| (*) EBITDA is presented because it is a measure commonly used in the telecommunications industry and is presented soley in order to improve the understanding of the Company’s operating results and to provide futher a perspective regarding these results. EBITDA, however, should not be considered as an alternative to operating income or income for the year as an indicator of the operating performance of the Company. Similarly, EBITDA should not be considered as an alternative to cash flows from operating activities as a measure of liquidity. EBITDA is not a measure of financial performance under generally accepted accounting principles and may not be comparable to other similarly titled measures for other companies. |
| EBITDA may not be indicative of the historic operating results of the Company. nor is meant to be predictive of potential future results. |
| Reconciliation between the operating profit in the financial statements and EBIDTA is presented in the attached summary financial statements. |