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 2003 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 3-2(b): 82-____________.] |
CF CABLE TV INC. Documents index |
1. | Unaudited Consolidated Financial Statements of CF Cable TV Inc. for the quarter ended September 30, 2003; and Report to bondholders (Management Discussion and Analysis for the quarter ended September 30, 2003). |
Unaudited financial informationForm 6-K*for the quarter endedSeptember 30, 2003 |
* | This document has not been filed with the U.S. Securities and Exchange Commission (SEC) but has been delivered to the SEC for informational purposes only. |
November 26, 2003 |
HighlightsNine-month period ended September 30FINANCIAL HIGHLIGHTS |
(in thousands of Canadian dollars) | 2003 | 2002 | Change | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Revenues | $ | 116,637 | $ | 121,162 | -3.7 | % | |||||
EBITDA | $ | 40,361 | $ | 42,679 | -5.4 | % | |||||
Depreciation and amortisation | $ | 14,971 | $ | 14,674 | 2.0 | % | |||||
Operating income | $ | 25,390 | $ | 28,005 | -9.3 | % | |||||
Net income | $ | 27,718 | $ | 13,712 | 102.1 | % | |||||
Cash flows from operating activities | $ | 23,511 | $ | 37,895 | -38.0 | % | |||||
Capital expenditures | $ | 9,870 | $ | 10,095 | -2.2 | % | |||||
OPERATIONAL HIGHLIGHTS |
Subscribers | 2003 | 2002 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Basic Cable | |||||||||||
Basic Subscribers (1) | 417,370 | 428,598 | -2.6 | % | |||||||
Home passed (2) | 657,817 | 654,527 | 0.5 | % | |||||||
% Penetration (3) | 63.4 | % | 65.5 | % | |||||||
Basic Subscribers - Residential (4) | 362,651 | 374,160 | -3.1 | % | |||||||
Extended Basic Tier - Residential Subscribers | 289,293 | 299,083 | -3.3 | % | |||||||
% Penetration - Residential Basic Subscribers | 79.8 | % | 79.9 | % | |||||||
Digital Cable | |||||||||||
Digital Subscribers | 47,711 | 33,615 | 41.9 | % | |||||||
% Penetration (5) | 11.4 | % | 7.8 | % | |||||||
Number of digital terminals | 51,354 | 35,823 | 43.4 | % | |||||||
(1) | Basic subscribers are subscribers who received basic cable service and includes analog and digital basic subscribers. |
(2) | Homes passed are number of living units, such as residence homes, apartments and condominium units, passed by the cable television distribution network in a given cable system service area to which we offer the named service. |
(3) | Represents subscribers as a percentage of homes passed. |
(4) | Residential basic subscribers are residential subscribers who received basic cable service and includes analog and digital basic subscribers. |
(5) | Represents digital subscribers as a percentage of basic subscribers. |
1 |
REPORT TO BONDHOLDERSQuarter ended September 30, 2003Consolidated operating revenues for the quarter ended September 30, 2003, were $38.7 million compared to $39.6 million for the 2002 corresponding period, a decrease of $0.9 million, or 2.3%. The decrease is mainly due to the loss of 11,228 basic service subscribers. Operating income before depreciation and amortisation (EBITDA) decreased by $1.1 million, or 7.5%, from $14.7 million realised in the same quarter last year, mainly due to the loss of basic service subscribers. Last year’s results were impacted by a labour conflict which resulted in higher costs. These higher costs were however more than compensated by a one time network property tax recovery of $2.1 million from prior years. Depreciation and amortisation totalled $5.1 million, an increase of 4.1% over the quarter of the previous year, mainly due to amortisation of higher capital expenditures in the prior years. Net income was $4.4 million for the third quarter of 2003 compared to $0.3 million for the third quarter of 2002. The increase in net income is due to lower financial expenses and lower exchange losses compared to the same quarter last year. Nine months ended September 30, 2003Consolidated Statements of Income Gross profit margins fell to 69.3% from 70.0% for the nine months ended September 30, 2003, a decrease of 0.7%. The reduction in gross profit margin is due to the increase in monthly programming fees and an increase in programming rebates to customers. Operating and administrative expenses decreased to $40.4 million from $42.1 million, down by $1.7 million, or 4.0%. The decrease reflects the avoidance of labor conflict related costs of 2002 and the results of the cost reduction program including labor force downsizing. Financial expenses totalled $5.1 million in 2003 compared to $8.3 million in 2002, a decrease of $3.2 million, or 38.6%, mainly due to an improvement in cash management. Exchange rate fluctuations on US-denominated debt generated a non-materialised gain of $17.2 million for the nine months ended September 30, 2003, compared $0.9 million for the same period last year, an increase of $16.3 million. The Company reported a net income of $27.7 million for the nine months ended September 2003 compared to $13.7 million for the same period last year, an increase of $14.0 million. The change in results is mainly attributable to exchange gains on US-denominated long-term debt in 2003 compared to 2002. Liquidity and Capital Resources 2 |
Investing activities resulted in cash outflows of $9.9 million in 2003 compared to $10.1 million in the same period in 2002. Financing activities resulted in cash outflows of $13.6 million in 2003 compared to $28.0 million in 2002. The variation in cash flows is mainly due to the change in advances to parent company and to proceeds from the sale of preferred shares of an affiliated company which occurred in 2002. As at September 30, 2003, the Company’s cash position was $0.1 million compared to an indebtedness of $0.2 million at the end of the same period last year. Raymond Morissette 3 |
CF CABLE TV Inc.CONSOLIDATED STATEMENTS OF INCOME |
For the three-month period ended | For the nine-month period ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands of Canadian dollars) (Unaudited) | September 30, 2003 | September 30, 2002 | September 30, 2003 | September 30, 2002 | ||||||||||||
Operating revenues | $ | 38,743 | $ | 39,550 | $ | 116,637 | $ | 121,162 | ||||||||
Direct costs | 11,947 | 12,103 | 35,833 | 36,409 | ||||||||||||
26,796 | 27,447 | 80,804 | 84,753 | |||||||||||||
Operating and administrative expenses | 13,155 | 12,732 | 40,443 | 42,074 | ||||||||||||
Operating income before depreciation and amortisation | 13,641 | 14,715 | 40,361 | 42,679 | ||||||||||||
Depreciation and amortisation | 5,054 | 4,914 | 14,971 | 14,674 | ||||||||||||
Operating income | 8,587 | 9,801 | 25,390 | 28,005 | ||||||||||||
Financial expenses (note 3) | 1,787 | 4,744 | 5,128 | 8,265 | ||||||||||||
Exchange (gain) loss on US-denominated | ||||||||||||||||
long-term debt (note 1b) | 182 | 5,368 | (17,214 | ) | (902 | ) | ||||||||||
6,618 | (311 | ) | 37,476 | 20,642 | ||||||||||||
Income taxes | ||||||||||||||||
Current | 157 | 171 | 481 | 514 | ||||||||||||
Future | 2,149 | (751 | ) | 9,351 | 6,432 | |||||||||||
2,306 | (580 | ) | 9,832 | 6,946 | ||||||||||||
4,312 | 269 | 27,644 | 13,696 | |||||||||||||
Share in the results of a company subject to | ||||||||||||||||
significant influence | 47 | 30 | 74 | 104 | ||||||||||||
Non-controlling interest in a subsidiary | — | — | — | (88 | ) | |||||||||||
Net income | $ | 4,359 | $ | 299 | $ | 27,718 | $ | 13,712 | ||||||||
4 |
CF CABLE TV Inc.CONSOLIDATED STATEMENTS OF DEFICIT |
For the three-month period ended | For the nine-month period ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands of Canadian dollars) (Unaudited) | September 30, 2003 | September 30, 2002 | September 30, 2003 | September 30, 2002 | ||||||||||||
Balance at beginning | $ | (12,280 | ) | $ | (38,244 | ) | $ | (35,639 | ) | (45,038 | ) | |||||
Cumulative effect of accounting change (note 1b) | — | — | — | (8,480 | ) | |||||||||||
Balance at beginning restated | (12,280 | ) | (38,244 | ) | (35,639 | ) | (53,518 | ) | ||||||||
Net income | 4,359 | 299 | 27,718 | 13,712 | ||||||||||||
Excess of the fair value over the carrying valueof | ||||||||||||||||
the assets sold to an affiliated company (note 2a) | — | — | — | 1,861 | ||||||||||||
Balance at end | $ | (7,921 | ) | $ | (37,945 | ) | $ | (7,921 | ) | $ | (37,945 | ) | ||||
5 |
CF CABLE TV Inc.CONSOLIDATED CASH FLOWS |
For the three-month period ended | For the nine-month period ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands of Canadian dollars) (Unaudited) | September 30, 2003 | September 30, 2002 | September 30, 2003 | September 30, 2002 | ||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net income | $ | 4,359 | $ | 299 | $ | 27,718 | $ | 13,712 | ||||||||
Adjustments for the following items: | ||||||||||||||||
Amortisation of fixed assets | 5,027 | 4,813 | 14,889 | 14,295 | ||||||||||||
Amortisation of deferred charges | 27 | 101 | 82 | 379 | ||||||||||||
Amortisation of financing expenses | 66 | 67 | 200 | 200 | ||||||||||||
Future income taxes | 2,149 | (751 | ) | 9,351 | 6,432 | |||||||||||
Share in the results of a company subject to | ||||||||||||||||
significant influence | (47 | ) | (30 | ) | (74 | ) | (104 | ) | ||||||||
Exchange (gain) loss on US-denominated | ||||||||||||||||
long-term debt | 182 | 5,368 | (17,214 | ) | (902 | ) | ||||||||||
Other items | — | (7 | ) | — | 47 | |||||||||||
Cash flows from operations | 11,763 | 9,860 | 34,952 | 34,059 | ||||||||||||
Net change in non-cash operating items: | ||||||||||||||||
Receivable (payable) from (to) parent and | ||||||||||||||||
affiliated companies | (6,478 | ) | (1,153 | ) | (8,076 | ) | (1,655 | ) | ||||||||
Income taxes receivable | 35 | 161 | (603 | ) | 230 | |||||||||||
Prepaid expenses and other current assets | (114 | ) | (78 | ) | (256 | ) | 744 | |||||||||
Accounts payable and accrued liabilities | 188 | 1,250 | (1,464 | ) | 6,105 | |||||||||||
Deferred revenue and prepaid services | (277 | ) | (466 | ) | (1,042 | ) | (1,588 | ) | ||||||||
(6,646 | ) | (286 | ) | (11,441 | ) | 3,836 | ||||||||||
Cash flows from operating activities | 5,117 | 9,574 | 23,511 | 37,895 | ||||||||||||
Cash flows from investing activities | ||||||||||||||||
Acquisition of fixed assets | (3,599 | ) | (3,353 | ) | (9,870 | ) | (10,324 | ) | ||||||||
Proceeds on disposal of fixed assets | — | 15 | — | 200 | ||||||||||||
Deferred charges transferred to affiliated companies | — | — | — | 29 | ||||||||||||
Cash flows from investing activities | (3,599 | ) | (3,338 | ) | (9,870 | ) | (10,095 | ) | ||||||||
Cash flows from financing activities | ||||||||||||||||
Repayment of long-term debt | (10 | ) | (7 | ) | (25 | ) | (3,404 | ) | ||||||||
Advances to parent company | (1,512 | ) | (5,852 | ) | (13,699 | ) | (30,601 | ) | ||||||||
Proceeds on disposal of preferred shares | ||||||||||||||||
of an affiliated company (note 2a) | — | — | — | 6,820 | ||||||||||||
Acquisition of non-controlling interest (note 2c) | — | — | — | (800 | ) | |||||||||||
Other | — | — | 88 | (32 | ) | |||||||||||
(1,522 | ) | (5,859 | ) | (13,636 | ) | (28,017 | ) | |||||||||
Net change in cash and cash equivalents | (4 | ) | 377 | 5 | (217 | ) | ||||||||||
Cash and cash equivalents at beginning | 69 | (563 | ) | 60 | 31 | |||||||||||
Cash and cash equivalents at end | $ | 65 | $ | (186 | ) | $ | 65 | $ | (186 | ) | ||||||
Cash and cash equivalents are comprised of: | ||||||||||||||||
Cash | $ | 143 | $ | 3 | $ | 143 | $ | 3 | ||||||||
Issued and outstanding cheques | (78 | ) | (189 | ) | (78 | ) | (189 | ) | ||||||||
$ | 65 | $ | (186 | ) | $ | 65 | $ | (186 | ) | |||||||
6 |
CF CABLE TV Inc.CONSOLIDATED BALANCE SHEETS |
(in thousands of Canadian dollars) (Unaudited) | September 30, 2003 | December 31, 2002 | ||||||
---|---|---|---|---|---|---|---|---|
Assets | ||||||||
Current assets | ||||||||
Cash | $ | 143 | $ | 72 | ||||
Amounts receivable from an affiliated company | 1,167 | 767 | ||||||
Amounts receivable from parent company | 8,092 | 627 | ||||||
Advance receivable from parent company | 69,237 | 55,538 | ||||||
Prepaid expenses and other current assets | 779 | 523 | ||||||
Income taxes receivable | 603 | — | ||||||
80,021 | 57,527 | |||||||
Investments | 865 | 878 | ||||||
Fixed assets (note 4) | 179,100 | 184,119 | ||||||
Deferred charges (note 5) | 4,532 | 4,814 | ||||||
Future income tax assets | 1,123 | 1,123 | ||||||
Goodwill | 167,892 | 167,892 | ||||||
$ | 433,533 | $ | 416,353 | |||||
Liabilities and Shareholder’s Equity | ||||||||
Current liabilities | ||||||||
Issued and outstanding cheques | $ | 78 | $ | 12 | ||||
Accounts payable and accrued liabilities (note 6) | 28,156 | 29,619 | ||||||
Amounts payable to affiliated companies (note 7) | 317 | 528 | ||||||
Deferred revenue and prepaid services | 19,577 | 20,619 | ||||||
48,128 | 50,778 | |||||||
Long-term debt (note 8) | 102,052 | 119,291 | ||||||
Due to parent company (note 9) | 25,969 | 25,969 | ||||||
Future income taxes | 30,295 | 20,944 | ||||||
Non-controlling interest in a subsidiary (note 2c) | 10 | 10 | ||||||
206,454 | 216,992 | |||||||
Shareholders’ equity | ||||||||
Share capital | 235,000 | 235,000 | ||||||
Deficit | (7,921 | ) | (35,639 | ) | ||||
227,079 | 199,361 | |||||||
$ | 433,533 | $ | 416,353 | |||||
7 |
CF CABLE TV INC. |
1. | Significant Accounting Principles: |
(a) | Consolidated financial statements: |
These consolidated financial statements, expressed in Canadian dollars, are prepared in accordance with Canadian generally accepted accounting principles. |
The consolidated financial statements include the accounts of CF Cable TV inc. (the “Company”) and all its subsidiaries from the date of acquisition of their control. |
(b) | Foreign currency translation: |
In November 2001, the CICA issued Handbook Section 1650, Foreign Currency Translation. It recommends to eliminate the deferral and amortisation of unrealised foreign currency translation gains and losses on long-lived monetary items for a recognition in the statement of operations. In the first quarter of 2002, the Company adopted the new recommendations retroactively and the comparative figures have been restated. The effect of adopting the new recommendation resulted in a decrease in deferred charges in the amount of $8.5 million and an increase in deficit in the amount of $8.5 million |
2. | Business reorganisation: |
(a) | On February 8, 2002, the Company and its subsidiaries sold to an affiliated company, Câblage QMI Inc., all their rights and obligations in their internal wire for a total consideration of $6.8 million which represents the transaction price agreed between affiliated companies. As consideration, the Company received 6,820 preferred shares of Câblage QMI Inc. in the amount of $6.8 million. Since this transaction is between companies under common control, the excess of fair value over the carrying value of the assets sold, representing $1.9 million has been credited to deficit. On February 8, 2002, Câblage QMI Inc. redeemed the preferred shares issued previously. |
(b) | In 2002, CF Cable TV Inc. proceeded to a reorganisation of the subsidiaries under the control of CF Cable TV Inc.: Vidéotron (RDL) Ltéee, Vidéotron (Granby) Ltée, TDM Newco Ltée, Vidéotron (Richelieu) Ltée, Vidéotron (Laurentien) Ltée. These subsidiaries were merged or wound up into a parent company, renamed Vidéotron (Regional) Ltée, subsidiary of CF Câble TV Inc. |
(c) | In March and December 2002, Télécâble Charlevoix (1977) Inc., a subsidiary of the Company, redeemed respectively from its non-controlling shareholder 80,000 and 109,000 of Class “D” Preferred Shares for a total consideration of $0.8 million and $1.2 million including cumulative unpaid dividends of $0.1 million. |
8 |
CF CABLE TV INC. |
3. | Financial expenses: |
September 30, 2003 | September 30, 2002 | ||||||||
---|---|---|---|---|---|---|---|---|---|
(in thousands of dollars) | |||||||||
Third parties | |||||||||
Interest on long-term debt | $ | 7,451 | $ | 8,269 | |||||
Amortisation of deferred financing costs | 200 | 200 | |||||||
(Gain) loss on foreign denominated short-term monetary items | (466 | ) | 27 | ||||||
7,185 | 8,496 | ||||||||
Parent company: | |||||||||
Interest - other | (2,057 | ) | (231 | ) | |||||
$ | 5,128 | $ | 8,265 | ||||||
4. | Fixed assets: |
September 30, 2003 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Cost | Accumulated depreciation | Net book value | ||||||||||
(in thousands of dollars) | ||||||||||||
Receiving and distribution networks | $ | 328,703 | $ | 155,103 | $ | 173,600 | ||||||
Furniture and equipment | 19,295 | 17,563 | 1,732 | |||||||||
Buildings | 4,767 | 1,736 | 3,031 | |||||||||
Land | 737 | — | 737 | |||||||||
$ | 353,502 | $ | 174,402 | $ | 179,100 | |||||||
December 31 , 2002 | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Cost | Accumulated depreciation | Net book value | |||||||||||
(in thousands of dollars) | |||||||||||||
Receiving and distribution networks | $ | 318,860 | $ | 140,755 | $ | 178,105 | |||||||
Furniture and equipment | 19,269 | 17,142 | 2,127 | ||||||||||
Buildings | 4,767 | 1,617 | 3,150 | ||||||||||
Land | 737 | — | 737 | ||||||||||
$ | 343,633 | $ | 159,514 | $ | 184,119 | ||||||||
9 |
CF CABLE TV INC. |
5. | Deferred charges: |
September 30, 2003 | December 31, 2002 | ||||||||
---|---|---|---|---|---|---|---|---|---|
(in thousands of dollars) | |||||||||
Long-term financing | $ | 972 | $ | 1,172 | |||||
Development and pre-operating costs | 103 | 185 | |||||||
Employee future benefit costs | 3,457 | 3,457 | |||||||
$ | 4,532 | $ | 4,814 | ||||||
6. | Accounts payable and accrued liabilities: |
September 30, 2003 | December 31, 2002 | ||||||||
---|---|---|---|---|---|---|---|---|---|
(in thousands of dollars) | |||||||||
Trade accounts payable | $ | 3,690 | $ | 4,294 | |||||
Royalties and service providers’ dues | 20,006 | 17,723 | |||||||
Employees’ salaries and dues | 1,091 | 1,153 | |||||||
Provincial and federal sales tax | 1,403 | 1,366 | |||||||
Interest due | 1,966 | 5,083 | |||||||
$ | 28,156 | $ | 29,619 | ||||||
7. | Amounts payable to affiliated companies: |
September 30, 2003 | December 31, 2002 | ||||||||
---|---|---|---|---|---|---|---|---|---|
(in thousands of dollars) | |||||||||
Quebecor Media Inc. | $ | 3 | $ | 4 | |||||
Vidéotron Télécom ltée | — | 147 | |||||||
Groupe TVA Inc. | — | 255 | |||||||
Câblage QMI Inc. | 33 | 69 | |||||||
Vidéotron TVN Inc. | 281 | 53 | |||||||
$ | 317 | $ | 528 | ||||||
10 |
CF CABLE TV INC. |
8. | Long-term debt: |
September 30, 2003 | December 31, 2002 | ||||||||
---|---|---|---|---|---|---|---|---|---|
(in thousands of dollars) | |||||||||
Senior Secured First Priority Notes at 9.125 % interest rate (a) | $ | 102,052 | $ | 119,266 | |||||
Mortgage (b) | — | 25 | |||||||
$ | 102,052 | $ | 119,291 | ||||||
(a) | Senior Secured First Priority Notes: |
Senior Secured First Priority Notes having a par value of US$75.6 million (2002 - - US$75.6 million), bear interest at the rate of 9.125%, and mature in 2007. The Notes are redeemable at the option of the Company on or after July 15, 2005 at 100% of the principal amount. These Notes are secured by first-ranking hypothecs on substantially all of the assets of CF Cable TV Inc. and certain of its subsidiaries. In addition, CF Cable TV Inc. and its subsidiaries have provided, to the extent permitted under the Notes Trust Indenture, guarantees in favour of the lenders under its parent credit agreement. In the case of realisation on the assets of CF Cable TV Inc. and its subsidiaries, the proceeds thereof would be firstly used to repay, on a pro rata basis, and as described in an inter-creditor agreement entered into on September 29, 2001, between, among others, the agent under the parent’s credit agreement and the trustee under the Notes Trust Indenture, the Senior Secured First Priority Notes and the first priority guarantees provided to the lenders under the parent’s credit agreement. In May 2002, the Company repurchased US$2.2 million of these Notes. |
(b) | Mortgage: |
The mortgage bears interest at a rate of 11% and matures in 2003. |
9. | Due to parent company: |
September 30, 2003 | December 31, 2002 | ||||||||
---|---|---|---|---|---|---|---|---|---|
(in thousands of dollars) | |||||||||
Inter-company Deeply Subordinated Debt, bank prime rate | |||||||||
plus 2% and repayable after the total repayment of | |||||||||
the Senior Secured First Priority Notes | $ | 25,969 | $ | 25,969 | |||||
The repayment of capital and interest on the inter-company Deeply Subordinated Debt is subordinated to the repayment of the Senior Secured First Priority Notes maturing in 2007. The parent company waives annually the interests on this debt. |
11 |
CF CABLE TV INC. |
10. | Comparative figures: |
Certain figures of 2002 have been reclassified to conform with the presentation adopted in the figures for the nine months ended September 30, 2003. |
12 |
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. (Signed) Claudine Tremblay ——————————————— Date: November 28, 2003 |