FORM 6-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE FOR THE MONTH OF NOVEMBER 2002 CF CABLE TV INC. 300 Viger Avenue East, Montreal, Canada, H2X 3W4 [Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or |
Form 20-F ___ | Form 40-F ___ |
[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 12g 3-2(b) under the Securities Exchange Act of 1934.] |
Yes ___ | No _X_ |
[If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g |
CF CABLE TV INC. Documents index |
1. | Unaudited Consolidated Financial Statements of CF Cable TV Inc. for the quarter ended September 30, 2002; and Report to bondholders (Management Discussion and Analysis for the quarter ended September 30, 2002). |
Unaudited financial informationForm 6-Kfor the quarter endedSeptember 30, 2002October 22, 2002 |
HIGHLIGHTSFINANCIAL DATA |
Nine months ended | ||||||||
---|---|---|---|---|---|---|---|---|
September 30, 2002 | September 30, 2001 | |||||||
(in thousands of Canadian dollars) | (restated) | |||||||
INCOME STATEMENT | ||||||||
Gross revenue | $ | 121,162 | $ | 126,440 | ||||
Operating income before depreciation and amortization | $ | 42,679 | $ | 51,921 | ||||
Net income (net loss) | $ | 13,712 | $ | (71 | ) | |||
CASH FLOWS | ||||||||
Cash flows from operating activities | $ | 37,895 | $ | 22,498 | ||||
Capital expenditures | $ | 10,124 | $ | 16,888 | ||||
SUBSCRIBERS |
As at September 30, 2002 | As at September 30, 2001 | |||||||
---|---|---|---|---|---|---|---|---|
Basic services | 428,598 | 450,656 | ||||||
Extended basic tier services | 343,599 | 365,094 | ||||||
Pay-television services | 37,807 | 35,729 | ||||||
Digital television services | 33,615 | 19,014 | ||||||
REPORT TO BONDHOLDERSConsolidated gross revenue for the three-month period ended September 30, 2002 was $39,550,000 compared to $42,127,000 in the corresponding quarter of 2001. For nine-month period ended September 30, 2002, operating revenue amounted to $ 121,162,000 compared to $ 126,440,000 for the same period last year. The decrease in the third quarter and nine-month period result mainly from the loss of 22 058 basic services subscribers from Q3-2001 to Q3-2002 and to special rebates to customers affected by temporary interruption of service due to the labor dispute since May 8, 2002. Net income for the third quarter ended September 30, 2002 was $299,000 as compared to a net loss of $7,641,000 in the same quarter of 2001. The Company recorded a net income of $13,712,000 during the nine-month period ended September 30, 2002 compared to a net loss of $71,000 in the same period of 2001. The improvement in earnings resulted mainly from lower interest on long-term debt, favourable exchange gain or loss when compared with last year periods. Lower revenues and increases in direct costs offset part of those savings. Gross profit margins for the nine-month period ended September 30 fell to 70.0 % from 72.3 %, a decrease of 2.3 %. This reduction is mainly due to the increase in the monthly programming fees for certain suppliers, to the reduction of the number of subscribers, largely attributable to fierce competition from direct broadcast satellites (DBS) and to special rebates compensating service interruption during the labour strike. Operating and administrative expenses increased to $ 42,074,000 from $ 39,547,000, up $ 2,527,000 or 6.4 % due to the cost of aggressive advertising campaigns focusing on the advantages of digital services features, as well as to the cost of maintaining the company operations since the beginning of the labour strike on May 8, 2002. The Company obtained a reimbursement of network municipal real estate taxes from previous years of $ 2,100,000. Operating income before depreciation and amortization totalled $ 42,679,000 compared to $ 51,921,000 in 2001, a decrease of 17.8 % due to the combined effect of the decrease of revenue and the increase of operating and administrative expenses. Depreciation and amortization totalled $ 14,674,000 compared to $ 15,135,000 in 2001, a decrease of 3.0 %. This reduction is mainly due to the reduction in deferred charges and fixed assets spending in 2002. Financial expenses decreased to $ 8,265,000 compared to $ 20,630,000 for the similar period of last year. The change in interests expense is due to a reduction in long term debt and to the $ 230,000,000 repayment of advances to the parent company in August 2001. In November 2001, the Canadian Institute of Chartered Accountants (CICA) introduced a change in accounting rules (Handbook section 1650) recommending to expense the exchange gain or losses on US dollar denominated debt in net income starting January 2002 with retroactive restatement for comparative figures. As a result of this accounting change, the Company reported an exchange gain of $902,000 for the nine-month period ended in September 2002 compared to an exchange loss of $ 5,268,000 for the same period in 2001 restated financial statements. On February 8, 2002, the Company sold to an affiliated company all its rights and obligations in its internal wire for a total consideration of $ 6,820,000 which represents its fair market value. Since this transaction occurred between companies under common control, the excess of fair value over the carrying value of the assets sold has been credited to deficit. At the end of the third quarter of 2002, the Company had 428,598 subscribers to its basic services, 343,599 of which had opted for extended basic tier services, 37,807 for pay-television services and 33,615 for digital television services. Yvan Gingras |
CF CABLE TV Inc.CONSOLIDATED STATEMENTS OF INCOME |
For the three-month periods ended | ||||||||
(in thousands of Canadian dollars) (Unaudited) | September 30, 2002 | September 30, 2001 | ||||||
(restated) | ||||||||
Operating revenue | $ | 39,550 | $ | 42,127 | ||||
Direct costs | 12,103 | 11,598 | ||||||
27,447 | 30,529 | |||||||
Operating and administrative expenses | 12,732 | 12,926 | ||||||
Operating income before depreciation and amortization | 14,715 | 17,603 | ||||||
Depreciation | 4,914 | 5,611 | ||||||
Operating income | 9,801 | 11,992 | ||||||
Financial expenses | 4,744 | 7,006 | ||||||
Exchange (gain) loss on US denominated long-term debt (note 1 a)) | 5,368 | 10,115 | ||||||
Net premium, write-off of financing costs and charges (gains) | ||||||||
upon early redemption of long-term debt | — | (510 | ) | |||||
10,112 | 16,611 | |||||||
(311 | ) | (4,619 | ) | |||||
Income taxes | ||||||||
Current | 171 | 118 | ||||||
Future | (751 | ) | 1,722 | |||||
(580 | ) | 1,840 | ||||||
269 | (6,459 | ) | ||||||
Share in the results of a company subject to significant influence | 30 | 59 | ||||||
Non-controlling interest in a subsidiary | — | (13 | ) | |||||
Income before amortization of goodwill | 299 | (6,413 | ) | |||||
Amortization of goodwill (note 1 b)) | — | 1,228 | ||||||
Net income | $ | 299 | $ | (7,641 | ) | |||
4 |
CF CABLE TV Inc.CONSOLIDATED STATEMENTS OF INCOME |
For the nine-month periods ended | ||||||||
(in thousands of Canadian dollars) (Unaudited) | September 30, 2002 | September 30, 2001 | ||||||
(restated) | ||||||||
Operating revenue | $ | 121,162 | $ | 126,440 | ||||
Direct costs | 36,409 | 34,972 | ||||||
84,753 | 91,468 | |||||||
Operating and administrative expenses | 42,074 | 39,547 | ||||||
Operating income before depreciation and amortization | 42,679 | 51,921 | ||||||
Depreciation | 14,674 | 15,135 | ||||||
Operating income | 28,005 | 36,786 | ||||||
Financial expenses | 8,265 | 20,630 | ||||||
Exchange (gain) loss on US denominated long-term debt (note 1 a)) | (902 | ) | 5,268 | |||||
Net premium, write-off of financing costs and charges (gains) | ||||||||
upon early redemption of long-term debt | — | 1,566 | ||||||
7,363 | 27,464 | |||||||
20,642 | 9,322 | |||||||
Income taxes | ||||||||
Current | 514 | 547 | ||||||
Future | 6,432 | 5,313 | ||||||
6,946 | 5,860 | |||||||
13,696 | 3,462 | |||||||
Share in the results of a company subject to significant influence | 104 | 164 | ||||||
Non-controlling interest in a subsidiary | (88 | ) | (13 | ) | ||||
Income before amortization of goodwill | 13,712 | 3,613 | ||||||
Amortization of goodwill (note 1 b)) | — | 3,684 | ||||||
Net income | $ | 13,712 | $ | (71 | ) | |||
5 |
CF CABLE TV Inc.CONSOLIDATED STATEMENTS OF DEFICIT |
For the nine-month periods ended | ||||||||
(in thousands of Canadian dollars) (Unaudited) | September 30, 2002 | September 30, 2001 | ||||||
(restated) | ||||||||
Balance at beginning | $ | (45,038 | ) | $ | (51,895 | ) | ||
Cumulative effect of accounting changes (note 1 a)) | (8,480 | ) | (3,176 | ) | ||||
Balance at beginning restated | (53,518 | ) | (55,071 | ) | ||||
Net income | 13,712 | (71 | ) | |||||
Excess of the fair value over the carrying value | ||||||||
of the assets sold to an affiliated company (note 2) | 1,861 | — | ||||||
Balance at end | $ | (37,945 | ) | $ | (55,142 | ) | ||
6 |
CF CABLE TV Inc.CONSOLIDATED CASH FLOWS |
For the three-month periods ended | ||||||||
(in thousands of Canadian dollars) (Unaudited) | September 30, 2002 | September 30, 2001 | ||||||
(restated) | ||||||||
Cash flows from operating activities | ||||||||
Net income | $ | 299 | $ | (7,641 | ) | |||
Adjustments for the following items: | ||||||||
Amortization of fixed assets | 4,813 | 4,809 | ||||||
Amortization of deferred charges | 101 | 802 | ||||||
Amortization of goodwill | — | 1,228 | ||||||
Amortization of financing expenses | 67 | 66 | ||||||
Future income taxes | (751 | ) | 1,722 | |||||
Share in the results of a company subject to significant influence | (30 | ) | (59 | ) | ||||
Exchange (gain) loss on US denominated long-term debt | 5,368 | 10,115 | ||||||
Net premium, write-off of financing costs and charges | ||||||||
upon early redemption of long-term debt | — | (510 | ) | |||||
Other items | (7 | ) | (313 | ) | ||||
Cash flows from operations | 9,860 | 10,219 | ||||||
Net change in non-cash operating items: | ||||||||
Accounts receivable | 32 | 296 | ||||||
Current income taxes | 161 | 39 | ||||||
Prepaid expenses and other current assets | (110 | ) | 386 | |||||
Accounts payable and accrued liabilities | 1,250 | (3,189 | ) | |||||
Receivable (payable) from (to) affiliated companies | (1,153 | ) | (864 | ) | ||||
Deferred revenue and prepaid services | (466 | ) | (220 | ) | ||||
(286 | ) | (3,552 | ) | |||||
Cash flows from operating activities | 9,574 | 6,667 | ||||||
Cash flows from investing activities | ||||||||
Acquisition of fixed assets | (3,353 | ) | (4,954 | ) | ||||
Net change in deferred charges | — | (772 | ) | |||||
Proceeds on disposal of fixed assets | 15 | — | ||||||
Deferred charges transferred to affiliated companies | — | (2,030 | ) | |||||
Cash flows from investing activities | (3,338 | ) | (7,756 | ) | ||||
Cash flows from financing activities | ||||||||
Repayment of long-term debt | (7 | ) | (6 | ) | ||||
Net premium on early redemption of long-term debt | — | — | ||||||
Advances to parent company | (5,852 | ) | (228,582 | ) | ||||
Issuance of shares | — | 230,000 | ||||||
Proceeds on disposal of preferred shares of an affiliated company (note 2) | — | — | ||||||
Acquisition of non-controlling interest (note 10) | — | (600 | ) | |||||
Others | — | (13 | ) | |||||
Cash flows from financing activities | (5,859 | ) | 799 | |||||
Net change in cash and cash equivalents | 377 | (290 | ) | |||||
Cash and cash equivalents at beginning | (563 | ) | (637 | ) | ||||
Cash and cash equivalents at end | $ | (186 | ) | $ | (927 | ) | ||
Cash and cash equivalents are comprised of: | ||||||||
Cash | $ | 3 | $ | 156 | ||||
Issued and outstanding cheques | (189 | ) | (1,083 | ) | ||||
$ | (186 | ) | $ | (927 | ) | |||
7 |
CF CABLE TV Inc.CONSOLIDATED CASH FLOWS |
For the nine-month periods ended | ||||||||
(in thousands of Canadian dollars) (Unaudited) | September 30, 2002 | September 30, 2001 | ||||||
(restated) | ||||||||
Cash flows from operating activities | ||||||||
Net income | $ | 13,712 | $ | (71 | ) | |||
Adjustments for the following items: | ||||||||
Amortization of fixed assets | 14,295 | 14,258 | ||||||
Amortization of deferred charges | 379 | 877 | ||||||
Amortization of goodwill | — | 3,684 | ||||||
Amortization of financing expenses | 200 | 208 | ||||||
Future income taxes | 6,432 | 5,313 | ||||||
Share in the results of a company subject to significant influence | (104 | ) | (164 | ) | ||||
Exchange (gain) loss on US denominated long-term debt | (902 | ) | 5,268 | |||||
Net premium, write-off of financing costs and charges | ||||||||
upon early redemption of long-term debt | — | 1,566 | ||||||
Other items | 47 | (898 | ) | |||||
Cash flows from operations | 34,059 | 30,041 | ||||||
Net change in non-cash operating items: | ||||||||
Accounts receivable | 456 | 74 | ||||||
Current income taxes | 230 | (171 | ) | |||||
Prepaid expenses and other current assets | 288 | 36 | ||||||
Accounts payable and accrued liabilities | 6,105 | (4,267 | ) | |||||
Receivable (payable) from (to) affiliated companies | (1,655 | ) | (2,257 | ) | ||||
Deferred revenue and prepaid services | (1,588 | ) | (958 | ) | ||||
3,836 | (7,543 | ) | ||||||
Cash flows from operating activities | 37,895 | 22,498 | ||||||
Cash flows from investing activities | ||||||||
Acquisition of fixed assets | (10,324 | ) | (16,109 | ) | ||||
Net change in deferred charges | — | (780 | ) | |||||
Proceeds on disposal of fixed assets | 200 | 1 | ||||||
Deferred charges transferred to affiliated companies | 29 | (2,030 | ) | |||||
Cash flows from investing activities | (10,095 | ) | (18,918 | ) | ||||
Cash flows from financing activities | ||||||||
Repayment of long-term debt | (3,404 | ) | (26,363 | ) | ||||
Net premium on early redemption of long- term debt | — | (263 | ) | |||||
Advances to parent company | (30,601 | ) | (206,244 | ) | ||||
Issuance of shares | — | 230,000 | ||||||
Proceeds on disposal of preferred shares of an affiliated company (note 2) | 6,820 | — | ||||||
Acquisition of non-controlling interest (note 10) | (800 | ) | (600 | ) | ||||
Others | (32 | ) | (13 | ) | ||||
Cash flows from financing activities | (28,017 | ) | (3,483 | ) | ||||
Net change in cash and cash equivalents | (217 | ) | 97 | |||||
Cash and cash equivalents at beginning | 31 | (1,024 | ) | |||||
Cash and cash equivalents at end | $ | (186 | ) | $ | (927 | ) | ||
Cash and cash equivalents are comprised of: | ||||||||
Cash | $ | 3 | $ | 156 | ||||
Issued and outstanding cheques | (189 | ) | (1,083 | ) | ||||
$ | (186 | ) | $ | (927 | ) | |||
8 |
CF CABLE TV Inc.CONSOLIDATED BALANCE SHEETS |
(in thousands of Canadian dollars) (Unaudited) | September 30, 2002 | September 30, 2001 | ||||||
(restated) | ||||||||
Assets | ||||||||
Current assets | ||||||||
Cash | $ | 3 | $ | 191 | ||||
Amounts receivable from affiliated companies (note 3) | 47,827 | 12,077 | ||||||
Advance receivable from parent company | 733 | 4,300 | ||||||
Prepaid expenses and other current assets | 299 | 1,043 | ||||||
Income taxes receivable | 140 | 370 | ||||||
49,002 | 17,981 | |||||||
Fixed assets (note 4) | 185,564 | 194,670 | ||||||
Goodwill | 167,892 | 167,892 | ||||||
Investments | 316 | 212 | ||||||
Deferred charges (note 5) | 5,400 | 6,047 | ||||||
Future income tax assets | 610 | 3,807 | ||||||
$ | 408,784 | $ | 390,609 | |||||
Liabilities and Shareholder’s Equity | ||||||||
Current liabilities | ||||||||
Issued and outstanding cheques | $ | 189 | $ | 160 | ||||
Accounts payable and accrued liabilities (note 6) | 23,816 | 17,711 | ||||||
Amounts payable to affiliated companies (note 7) | 841 | 914 | ||||||
Deferred revenue and prepaid services | 20,917 | 22,505 | ||||||
45,763 | 41,290 | |||||||
Long-term debt (note 8) | 120,022 | 124,328 | ||||||
Due to parent company (note 9) | 25,969 | 25,969 | ||||||
Future income tax liabilities | 18,875 | 15,640 | ||||||
Non-controlling interest in a subsidiary (note 10) | 1,100 | 1,900 | ||||||
211,729 | 209,127 | |||||||
Shareholders’ equity | ||||||||
Share capital | 235,000 | 235,000 | ||||||
Deficit | (37,945 | ) | (53,518 | ) | ||||
197,055 | 181,482 | |||||||
$ | 408,784 | $ | 390,609 | |||||
9 |
CF CABLE TV INC. |
1. | Significant Accounting Principles |
a) | Foreign currency translation |
In November 2001, the Company adopted the recommendations of the Canadian Institute of Chartered Accountants (CICA) Handbook section 1650, foreign currency translation, which eliminates the deferral and amortization method for unrealized translation gains and losses on non-current monetary assets and liabilities, and require the disclosure of exchange gains and losses included in net income. The Company applied the new recommendations of section 1650 retroactively. The cumulative effect of this accounting change is reported as a restatement which increased opening balance of deficit for the year ended December 31, 2001 by $ 3,176,000. |
b) | Business combinations |
In 2001, the Accounting Standards Board of the CICA issued new accounting standards for business combinations and for goodwill and intangible assets. The new standards recommend that the goodwill acquired in a business combination completed on or after July 1st, 2001, should not be amortized. The Company applied the new recommendation as of January 1st, 2002. |
The Company periodically reviews the net recoverable amount of its goodwill to determine its long-term recovery, using the undiscounted future cash flow method. Any impairment of the carrying value of the goodwill is charged to income. |
2. | Sale of assets |
On February 8, 2002, the Company sold to an affiliated company, Câblage QMI Inc., all its rights and obligations in its internal wire for a total consideration of $ 6,820,000 which represent its fair value. As consideration, the Company received 6,820 preferred shares of Câblage QMI Inc. capital in the amount of $ 6,820,000. Since this transaction is between companies under common control, the excess of fair value over the carrying value of the assets sold, representing $ 1,861,000, has been credited to deficit. On February 8, 2002, Câblage QMI Inc. redeemed the preferred shares issued previously. |
3. | Amounts receivable from affiliated companies: |
September 30, 2002 | December 31, 2001 | |||||||
(in thousands of dollars) (restated) | ||||||||
Vidéotron ltée | $ | 47,127 | $ | 11,797 | ||||
Vidéotron (1998) ltée | 700 | 280 | ||||||
$ | 47,827 | $ | 12,077 | |||||
10 |
CF CABLE TV INC. |
4. | Fixed assets: |
September 30, 2002 | |||||||||||
Cost | Accumulated depreciation | Net book value | |||||||||
(in thousands of dollars) | |||||||||||
Receiving and distribution networks | $ | 315,415 | $ | 136,093 | $ | 179,322 | |||||
Furniture and equipment | 19,270 | 16,957 | 2,313 | ||||||||
Buildings | 4,767 | 1,576 | 3,191 | ||||||||
Land | 738 | — | 738 | ||||||||
$ | 340,190 | $ | 154,626 | $ | 185,564 | ||||||
December 31, 2001 | |||||||||||
Cost | Accumulated depreciation | Net book value | |||||||||
(in thousands of dollars) (restated) | |||||||||||
Receiving and distribution networks | $ | 320,196 | $ | 132,646 | $ | 187,550 | |||||
Furniture and equipment | 19,407 | 16,449 | 2,958 | ||||||||
Buildings | 4,827 | 1,468 | 3,359 | ||||||||
Land | 803 | — | 803 | ||||||||
$ | 345,233 | $ | 150,563 | $ | 194,670 | ||||||
5. | Deferred charges: |
September 30, 2002 | December 31, 2001 | |||||||
(in thousands of dollars) (restated) | ||||||||
Long-term financing | $ | 1,238 | $ | 1,471 | ||||
Development and pre-operating costs | 793 | 1,207 | ||||||
Employee future benefit costs | 3,369 | 3,369 | ||||||
$ | 5,400 | $ | 6,047 | |||||
11 |
CF CABLE TV INC. |
6. | Accounts payable and accrued liabilities: |
September 30, 2002 | December 31, 2001 | |||||||
(in thousands of dollars) (restated) | ||||||||
Expenses and accounts payable | $ | 1,920 | $ | 3,421 | ||||
Salaries and fringe benefits | 331 | 127 | ||||||
Holidays and sick days | 207 | 247 | ||||||
GST and PST | 1,156 | 1,511 | ||||||
Municipal real estate tax | 1,784 | 770 | ||||||
Licence fees | 12,159 | 5,153 | ||||||
CRTC licence fees | 2,611 | 990 | ||||||
Programming funds | 1,286 | 387 | ||||||
Interest | 2,362 | 5,105 | ||||||
$ | 23,816 | $ | 17,711 | |||||
7. | Amounts payable to affiliated companies: |
September 30, 2002 | December 31, 2001 | |||||||
(in thousands of dollars) (restated) | ||||||||
Le Groupe Vidéotron Ltée | $ | 25 | $ | 550 | ||||
Vidéotron Télécom ltée | 136 | 159 | ||||||
Quebecor Inc. | — | 2 | ||||||
Quebecor Media Inc. | 4 | — | ||||||
Groupe TVA Inc. | 264 | 148 | ||||||
Câblage QMI Inc. | 358 | — | ||||||
Vidéotron TVN Inc. | 54 | 55 | ||||||
$ | 841 | $ | 914 | |||||
12 |
CF CABLE TV INC. |
8. | Long-term debt: |
September 30, 2002 | December 31, 2001 | |||||||
(in thousands of dollars) (restated) | ||||||||
Senior Secured First Priority Notes at 9.125 % interest rate (a) | $ | 119,992 | $ | 124,278 | ||||
Mortgage (b) | 30 | 50 | ||||||
$ | 120,022 | $ | 124,328 | |||||
(a) | Secured First Priority Notes: |
Senior Secured First Priority Notes having a par value of US $ 75,600,000 (2001- US $ 77,800,000) bearing interest at the rate of 9.125 %, maturing in 2007. The Notes are redeemable at the option of the Company on or after July 15, 2005 at 100% of the principal amount. In May 2002, the Company repurchased US $ 2,200,000 of these Notes. These Notes are secured by first-ranking hypothecs on substantially all of the assets of CF Cable TV Inc. and certain of its subsidiaries. |
(b) | Mortgage: |
The mortgage bears interest at a rate of 11% and matures in 2003. |
9. | Due to parent company: |
September 30, 2002 | December 31, 2001 | |||||||
(in thousands of dollars) (restated) | ||||||||
Inter-company Deeply Subordinated Debt | $ | 25,969 | $ | 25,969 | ||||
The repayment of the inter-company subordinated debt is subordinated to the repayment of the Senior Secured First Priority Notes maturing in 2007, as mentioned in note 8. |
13 |
CF CABLE TV INC. |
10. | Non-controlling interest: |
On March 5, 2002, the Company repurchased 80 000 shares of category A detained by the non-controlling partner in a subsidiary for a cash consideration of $ 800,000. In addition, the Company paid all cumulative dividends unpaid on those 80 000 shares from January to December 2001 representing a total of $ 32,865. |
14 |
SIGNATUREPursuant 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, thereunto duly authorized. CF CABLE TV INC./s/ Claudine Tremblay Date: November 28, 2002 |